TDS/TCS

S L Chhajed & Co. LLP 1

 Index
S.no Particulars Page no.
1 Introduction 3
2 Sec 192 5
Sections pgn
3 Sec 192A 12
4 Sec 193 14
5 Sec 194A 17
6 Sec 194C 21
7 Sec 194H 29
8 Sec 194I 34
9 Sec 194IA 39
10 Sec 194IB 41
11 Sec194J 42
12 Sec 195 47
13 Other TDS sections 54
14 TCS Provisions 56
14 Certificates, Due date of payment & return , penalties & 60
Interest S L Chhajed & Co. LLP 2
Introduction
What is TDS?
Deduction of tax at the source from where income is generated
Minimises tax evasion
Ensures a flow of regular income to the government
Reduces the burden of lump-sum tax payment

How to pay TDS?

Deposited to the credit of the Central Government.
1) Electronic mode: E-Payment is mandatory for
a) All corporate assesses; and
b) All assesses (other than company) to whom provisions of
section 44AB of the Income Tax Act, 1961 are applicable.

S L Chhajed & Co. LLP 3

2) Physical Mode: By furnishing the Challan 281 in the
authorized bank branch

What is the rate of TDS?

PAN available

YES NO
Prescribed 20% or
rate prescribed
under rate ,
relevant whichever
section is higher

S L Chhajed & Co. LLP 4

 SECTION 192

 Nature of payment: Salary

 Threshold Limit: Basic exemption limit

This is taken care of in computation of the average rate of

income-tax.
 Payer: Any person responsible for paying any income
chargeable under the head “Salaries”.
 Payee: Individual (Employee)
 Rate of TDS: Average rate
 Time of deduction: At the time of payment

S L Chhajed & Co. LLP 5

 Other Points

(i) Multiple Employers:

• Details of his previous employment may

Change of job during the be given in Form 12B to his new
year employer to deduct TDS properly

Engaged with two • Details about his salary and TDS in

or more employers Form 12B to any one of the employers.
simultaneously And one of the employers is required to
deduct TDS on aggregate salary.

(ii) Salaries payable in a foreign currency: Calculated at the

prescribed rate of exchange as specified in Rule 26 of the
Income-tax Rules, 1962.

S L Chhajed & Co. LLP 6

(iii) Tax payer having salary income in addition to other income
chargeable to tax for that F.Y, may send the particulars to the
employer. The employer shall take the particulars into account
while calculating tax deductible at source.

(iv)It is also provided that except in cases where loss from house
property has been adjusted against salary income, the tax
deductible from salary should not be reduced as a consequence of
making the above adjustments.

(v)Furnishing of statement of particulars of perquisites or

profits in lieu of salary by employer to employee

S L Chhajed & Co. LLP 7

(vi)Requirement to obtain evidence/ proof/ particulars of claims
from the employee by the employer

(vii) In respect of salary payments to employees of Government or

to employees of companies, co-operative societies, local
authorities, universities, institutions, associations or bodies,
deduction of tax at source should be made after allowing relief
under section 89(1), where eligible.

S L Chhajed & Co. LLP 8

 How to calculate Average rate of tax?

R is entitled to a salary of 80,000 p.m w.e.f. 1.4.2019. He has a

house property which is self-occupied. He paid an interest of
80,000 on loan, during the previous year 2019-20. The loan
was taken for construction of house. He has notified his
employer AB Ltd. that there will be a loss of 80,000 in respect
of this house property for financial year ended 31.3.2020.
Estimated deduction under Chapter VI A=Rs 1,00,000.

 Income under the head salaries (80,000 x 12) 9,60,000

 Less: Standard deduction u/s 16(ia) 50,000
  9,10,000
 Income under the head “house property” (80,000)
 Gross total income 8,30,000

S L Chhajed & Co. LLP 9

 Less: Deduction under Chapter VI-A (1,00,000)

Total Income
7,30,000
 Tax on 7,30,000 58,500
 Add: Health and Education cess@4% 2,340
 Net tax payable = Rs 60,840

Average rate =Rs 60,840/7,30,000*100

=8.33%.

Hence, TDS u/s 192 to be deducted per month

= Rs 80,000 * 8.33% = Rs 6,664.

S L Chhajed & Co. LLP 10

Clarification in respect of option u/s 115BAC of the Income-tax
Act, 1961 dated 13th April 2020

 Employers can seek a declaration from employees and deduct tax

at source (TDS) according to old tax regime or the new
concessional tax rates, as opted by employee.

 The circular clarifies that once the regime is opted by an individual

at the start of the F.Y, then such option cannot be changed during
the F.Y. However, the option can be changed at the time of filing of
income tax return.

 The employer should not be treated as an ‘assessee in default’ and

penalised for short deduction of tax (merely because he has not
adopted the normal tax rates). 

S L Chhajed & Co. LLP 11

 Whether “tips” received by the hotel-company from its
customers and distributed to the employees would fall
within the meaning of “Salaries” to TDS u/s 192?

 ITC Ltd v. CIT (2016) 384 ITR 14 (SC)

 no vested right
 voluntary amounts
 fiduciary capacity as trustee for payments that were received
from customers which they disbursed to their employees for
service rendered to the customer

S L Chhajed & Co. LLP 12

 SECTION 192A

•Nature of payment: Premature withdrawal from EPF

•Threshold Limit: Payment or aggregate payment ≥ 50,000
•Payer: Any person responsible for paying any income chargeable
under the head “Salaries”.
•Payee: Individual (Employee)
•Rate of TDS: 10%
•Time of deduction: At the time of payment

S L Chhajed & Co. LLP 13

 Amendment in rules
 COVID-19-related financial exigencies: an EPF member can
withdraw an amount equal to 3 months of basic and dearness
allowance (DA) or 75% of the credit balance in the account,
whichever is lower.
 Eg- Basic salary+ DA p.m. is Rs 30,000 and the EPF balance in
account is Rs 3 lakh. Then the amount of money that is eligible to
withdraw will be lower of:

a) Three months of basic + DA, i.e., Rs 90,000 (Rs 30,000 X 3); or

b) 75 per cent of the EPF balance , i.e., Rs 2,25,000 (75 per cent of
Rs 3 lakh)

S L Chhajed & Co. LLP 14

 SECTION 193
• Nature of payment: Interest on Securities
• Threshold Limit: >10,000 in a F.Y., in case of interest on 8%
Savings (Taxable) Bonds, 2003 / 7.75% Savings (Taxable)
Bonds, 2018.
> 5,000 in a F.Y., in case of interest on debentures issued by a
Co. in which the public are substantially interested, paid or
credited to a resident individual or HUF by an A/c payee
cheque.
No threshold specified in any other case.
• Payer: Any person responsible
• Payee: Any resident
• Rate of TDS :10%
• Time of deduction: At the time of credit of such income to the
account of the payee or at the time of payment, whichever is
earlier.
S L Chhajed & Co. LLP 15
List of interest to which provisions of section 193
doesn’t apply –

7 year National Savings Certificate (IV issue).

 National Development Bonds.
 4.25% National Defence Loan, 1968 or National Defence Loan,
1972 held by an Individual.
 4.25% National Defence Bonds, 1972 held by a resident
Individual.
 Security of the Central Government or a State Government
provided the interest amount doesn’t exceed INR 10,000.
 6.5% Gold Bonds, 1977 or 7% Gold Bonds, 1980 held by a
resident Individual only if the total nominal value of the bonds
didn’t exceed INR 10,000 at any time during the period to
which the interest relates.

S L Chhajed & Co. LLP 16

Debentures issued by notified institution/authority/public sector
company/a co-operative society.

Life Insurance Corporation & General Insurance Corporation on

the securities owned by it or in which it has a full beneficial
interest.

Interest to any other insurer on the securities owned by it or in

which it has a full beneficial interest.

Interest on securities only if issued by a company in

dematerialized form and listed on the recognized stock exchange.

S L Chhajed & Co. LLP 17

 SECTION 194A
 Nature of payment: Interest other than interest on securities
 Threshold Limit: > 40,000 in a F.Y., in case of interest credited or
paid by –
(i) a banking company;
(ii)a co-operative society engaged in banking business; and
(iii)a post office on any deposit under a notified Scheme.
In all the above cases, if payee is a resident senior citizen, tax
deduction limit is > 50,000.
> 5,000 in a F.Y., in other cases.

 Payer: Any person (other than an individual or HUF whose total

sales, gross receipts or turnover from business or profession do not
exceed the monetary limits specified u/s 44AB in the immediately
preceding F.Y.)

S L Chhajed & Co. LLP 18

 Payee: Any Resident
 Rate of TDS: 10%
 Time of deduction: At the time of credit of such income to the
account of the payee or at the time of payment, whichever is earlier.

S L Chhajed & Co. LLP 19

 Circular No.3/2010 dated 2.3.2010
 The CBDT has given a clarification regarding TDS on payment
of interest on time deposits u/s 194A by banks following
Core-branch Banking Solutions (CBS) software.

 Ithas been clarified that Explanation to section 194A is not

meant to apply in cases of banks where credit is made to
provisioning account on daily/monthly basis for the
purpose of macro monitoring only by the use of CBS
software.

 Since no constructive credit to the depositor’s/ payee’s account

takes place while calculating interest on time deposits on daily
or monthly basis in the CBS software used by banks, tax need
not be deducted at source on such provisioning of interest by
banks for the purposes of macro monitoring only.
S L Chhajed & Co. LLP 20
 In such cases, tax shall be deducted at source on accrual of
interest at the end of F.Y or at periodic intervals as per practice
of the bank or as per the depositor's/ payee's requirement or on
maturity or on encashment of time deposits, whichever event
takes place earlier, whenever the aggregate of amounts of
interest income credited or paid or likely to be credited or paid
during the financial year by the banks exceeds the limits
specified in section 194A.

S L Chhajed & Co. LLP 21

 SECTION 194C
 Nature of payment: Payments to Contractors
 Threshold Limit: Single sum > 30,000 (or) aggregate of sums
during the F.Y. > 1,00,000.
Individual/HUF need not deduct tax where sum is credited or paid
exclusively for personal purposes
 Payer: Central/State Govt. ,Local authority, Central/State/
Provincial Corpn., company, firm, trust, registered society, co-
operative society, university established under Central/State/
Provincial Act, declared university under the UGC Act, Govt.of
Foreign State or a foreign enterprise, individual/HUF liable to tax
audit u/s 44AB(a)/(b) in the immediately preceding F.Y.
 Payee: Any Resident contractor for carrying out any work
(including supply of labour)

S L Chhajed & Co. LLP 22

 Rate of TDS: Individual or HUF: 1% ; Others: 2%
 Time of deduction: At the time of credit of such sum to the
account of the contractor or at the time of payment, whichever is
earlier.

 Definition of work
includes –
• advertising;
• broadcasting and telecasting including production of
programmes for such as broadcasting or telecasting;
• carriage of goods or passengers by any mode of transport other
than by railways;
• catering;
• manufacturing or supplying a product according to the
requirement or specification of a customer by using material
purchased from such customer.
S L Chhajed & Co. LLP 23
Exception=manufacturing or supplying a product according to the
requirement or specification of a customer by using raw material
purchased from a person, other than such customer, as such a contract
is a contract for ‘sale’. However, this will not be applicable to a
contract which does not entail manufacture or supply of an article or
thing (e.g. a construction contract).

Non-applicability of TDS u/s 194C

S L Chhajed & Co. LLP 24

TDS on payment of gas transportation charges by the
purchaser of natural gas to the seller of gas
[Circular No. 9/2012 dated 17.10.2012]

In case the Owner/Seller of the natural gas sells as well as transports
the gas to the purchaser till the point of delivery, where the
ownership of gas to the purchaser is simultaneously transferred, the
manner of raising the sale bill (whether the transportation charges are
embedded in the cost of gas or shown separately) does not alter the
basic nature of such contract which remains essentially a ‘contract for
sale’ and not a ‘works contract’ as envisaged in section 194C.

However, transportation charges paid to a third party transporter of

gas, either by the Owner/Seller of the gas or purchaser of the gas or
any other person, shall continue to be governed by the appropriate
provisions of the Act and tax shall be deductible at source on such
payment to the third party at the applicable rates.

S L Chhajed & Co. LLP 25

 Reimbursement of actual expenses
 Reimbursement of expenses does not partake the nature of
income in the hands of the payee of such expenses.
 As already pointed out, an expenditure incurred by the payee
cannot form part of income in his hands and therefore, no tax will
be deductible at source therefrom
 In other words, no tax will be deductible at source at the time of
payment or reimbursement of the aforesaid expenses by the payer
or the tax-deductor to the payee or tax-deductee

S L Chhajed & Co. LLP 26

 SECTION 194H

 Nature of payment: Commission(other than IC) or brokerage

 Threshold Limit:>15,000 in a F.Y.
 Payer: Any person (other than an Individual or HUF whose
total sales, gross receipts or turnover from business or
profession do not exceed the monetary limits specified u/s
44AB in the immediately preceding F .Y.) responsible for
paying commission or brokerage.
 Payee: Any resident
 Rate of TDS: 5%
 Time of deduction: Credit or payment, whichever is earlier.

S L Chhajed & Co. LLP 27

Meaning of “Commission or brokerage”
 Includes any payment received or receivable,
 directly or indirectly, by a person acting on behalf of another person
for services rendered, or
 for any services in the course of buying or selling of goods, or
 in relation to any transaction relating to any asset, valuable article
or thing, other than securities.

S L Chhajed & Co. LLP 28

Applicability of TDS provisions on payments by television
channels and publishing houses to advertisement companies for
procuring or canvassing for advertisements [Circular No.
05/2016, dated 29-2-2016]

There are 2 types of payments involved in the advertising business:

-Payment by client to the advertising agency(TDS u/s 194C,), and
-Payment by advertising agency to the television channel/
newspaper company(no TDS u/s 194C)

Whether Fees/charges taken or retained by advertising companies

from media companies for canvasing/booking advertisements
(typically 15% of the billing) is 'commission' or 'discount' for
attracting the provisions of section 194H?

S L Chhajed & Co. LLP 29

The CBDT has clarified that no TDS is attracted on payments made
by television channels/newspaper companies to the advertising
agency for booking or procuring of or canvassing for
advertisements.

It is also further clarified that 'commission' referred to in Question

No.27 of the CBDT's Circular No. 715 dated 8-8-1995 does not
refer to payments by media companies to advertising companies
for booking of advertisements but to payments for engagement of
models, artists, photographers, sportspersons, etc. and, therefore, is
not relevant to the issue of TDS.

S L Chhajed & Co. LLP 30

Can discount given on supply of SIM cards and pre-paid cards by
a telecom company to its franchisee be treated as commission to
attract the TDS provisions under section 194H?

 Bharti Cellular Ltd. v. ACIT (2013) 354 ITR 507 (Cal.)

 relationship between the assessee and the franchisee is essentially
that of principal and agent, though the nomenclature used is
“franchisee”.
 The High Court held that there is an indirect payment of
commission, in the form of discount, by the assessee-telecom
company to the franchisee. Therefore, the assessee is liable to
deduct tax at source on such commission as per the provisions of
section 194H.

S L Chhajed & Co. LLP 31

 SECTION 194-I

 Nature of payment: Rent

 Threshold Limit: aggregate amount of rental income paid or
credited to a person exceeds >2,40,000 in a F.Y
 Payer: Any person (other than an individual or HUF whose
total sales, gross receipts or turnover from business or
profession carried on by him do not exceed the monetary limits
specified u/s 44AB in the immediately preceding F.Y.)
responsible for paying rent.
 Payee: Any resident
 Rate of TDS: For P & M or equipment- 2%

For L & B, land appurtenant to a building, furniture or fittings

-10%
 Time of deduction: At the time of credit of such income to the
account of the payee or at the time of payment, whichever is
earlier. S L Chhajed & Co. LLP 32
Meaning of Rent
“Rent” means any payment, by whatever name called, under any
lease, sub-lease, tenancy or any other agreement or arrangement
for the use of (either separately or together) any –

land; or
building (including factory building); or
land appurtenant to a building (including factory building); or
machinery; or
plant; or
equipment; or
furniture; or
fittings,
whether or not any or all of the above are owned by the payee.

S L Chhajed & Co. LLP 33

 In respect of a co-owned property, would the threshold limit
mentioned in section 194-I for non-deduction of tax at source
apply for each co-owner separately or is it to be considered for
the complete amount of rent paid to attract liability to deduct
tax at source?
CIT v. Senior Manager, SBI (2012) 206 Taxman 607 (All.)
Not been divided/partitioned by metes and bounds, it cannot be said
that any specified portion let out to the assessee was owned by a
particular person.

 Payments made by the customers on account of cooling charges

to the cold storage owners?
CBDT Circular No.1/2008 dated 10.1.2008 provides clarification.
-Incidental in nature.
-No right to use any demarcated space/place; not a tenant
-contractual in nature, the provision of section 194-C will be
applicable to the amounts paid as cooling charges by the customers
of the cold storage.
S L Chhajed & Co. LLP 34
Remittance of Passenger Service Fees (PSF) by an Airline to an
Airport Operator ?
Circular No. 21/2017, dated 12.06.2017
The Bombay High Court relied on the Apex Court ruling in Japan
Airlines and Singapore Airlines case
Payment must be for the use of land and building and mere
incidental/minor/insignificant use of the same while providing other
facilities and service would not make it a payment for use of land and
buildings so as to attract section 194-I

Applicability of TDS provisions u/s 194-I to GST component of

rental income?
Circular No. 23/2017 dated 19.07.2017
Wherever in terms of the agreement or contrac, the component of 'GST
on services' comprised in the amount payable to a resident is indicated
separately, tax shall be deducted without including such 'GST on
services' component.
S L Chhajed & Co. LLP 35
Whether payments made to a hotel for rooms hired during the
year would be of the nature of rent? (Circular No. 715 / 1995,
Circular No. 5/2002)

 TDS will only be applicable on payment of Room Rent to

Hotels where the rooms are taken on Regular Basis(earmarked
rooms are let out for a specified rate and specified period).
 Similar would be the case, where a room or set of rooms are not
earmarked, but the hotel has a legal obligation to provide such
types of rooms in agreement.
 However, where the arrangement is only for Rate-contract, this
will not be construed as Rooms taken on a regular basis and
therefore TDS shall not be applicable in such situation.

S L Chhajed & Co. LLP 36

 SECTION 194-IA
 Nature of payment: Payment on Transfer of certain
immovable property other than agricultural land
 Threshold Limit:≥ 50 lakh (Consideration for transfer)
 Payer:Any person, being a transferee (other than a person
referred to in section 194LA responsible for paying
compensation for compulsory acquisition of immovable
property)
 Payee:Resident transferor
 Rate of TDS:1%
 Time of deduction:At the time of credit of such sum to the
account of the transferor or at the time of payment, whichever
is earlier.

S L Chhajed & Co. LLP 37

 Meaning of consideration for transfer of any immovable
property: includes all charges of the nature of car parking fee,
electricity or water facility fee, maintenance fee, advance fee or
any other charges of similar nature, which are incidental to
transfer of the immovable property.
 No requirement to obtain TAN

S L Chhajed & Co. LLP 38

 Section194-IB
Nature of payment: Payment of rent by certain individuals or
HUF
Threshold Limit :> 50,000 for a month or part of a month
Payer: Individual/HUF (other than Individual/HUF whose total
sales, gross receipts or turnover from business or profession
carried on by him exceed the limits specified u/s 44AB in the
immediately preceding F.Y.) responsible for paying rent.
Payee: Any Resident
Rate :5%
Time of deduction: At the time of credit of rent, for the last
month of the previous year or the last month of tenancy, if the
property is vacated during the year, as the case may be, to the
account of the payee or at the time of payment, whichever is
earlier

S L Chhajed & Co. LLP 39

 SECTION 194J

 Nature of payment: Fees for professional /technical services/

Royalty/ Non- compete fees/ Director’s remuneration
 Threshold Limit:> 30,000 in a F.Y., for each category of income.
(However, this limit does not apply in case of payment made to
director of a company).
 Payer: Any person, other than an individual or HUF (not eligible
for tax audit u/s 44AB);
except where fees for professional service is credited or paid
exclusively for his personal purposes.
 Payee: Any Resident
 Rate of TDS:

2% - Payee engaged only in the business of operation of call

centre,
10%- Others
S L Chhajed & Co. LLP 40
 The CBDT has notified the services rendered by following
persons in relation to the sports as Professional Services for the
purpose of the section 194J:
 Sports Persons,
 Umpires and Referees,
 Coaches and Trainers,
 Team Physicians and Physiotherapists,
 Event Managers,
 Commentators,
 Anchors and
 Sports Columnists.
 The term “profession”, as such, is of a very wide import.
However, the term has been defined in this section exhaustively.

S L Chhajed & Co. LLP 41

Time of deduction: At the time of credit of such sum to the account
of the payee or at the time of payment, whichever is earlier.

Meaning of “Professional services”

Services in the course of carrying on legal, medical, engineering or
architectural profession or the profession of accountancy or
technical consultancy or interior decoration or advertising or such
other profession as is notified by the CBDT for the purposes of
section 44AA or of this section.

Other professions notified for the purposes of section 44AA are as

follows:
(a)Profession of “authorised representatives”;
(b)Profession of “film artist”;
(c)Profession of “company secretary”.

S L Chhajed & Co. LLP 42

Meaning of “Fees for technical services”
Any consideration (including any lump sum consideration) for
rendering of any of the following services:

(i)Managerial services;
(ii)Technical services;
(iii)Consultancy services;
(iv)Provision of services of technical or other personnel.

It is expressly provided it will not include following types of

consideration:

(i)Consideration for any construction, assembly, mining or like project,

or
(ii)Consideration which is chargeable under the head ‘Salaries’

S L Chhajed & Co. LLP 43

Transaction charges paid by the members of the stock
exchange for availing fully automated online trading facility

 CIT v. Kotak Securities Ltd (2016) 383 ITR 1 (SC)

 The Apex Court held that the service provided by the BSE for
which transaction charges are paid failed to satisfy the test of
specialized, exclusive and individual requirement of the user
or the consumer who may approach the service provider for such
assistance or service.
 Therefore, the transaction charges paid to BSE by its members
are not for technical services but are in the nature of payments
made for facilities provided by the stock exchange. Such
payments would, therefore, not attract the provisions of tax
deduction at source under section 194J.

S L Chhajed & Co. LLP 44

 Section 195
 Nature of payment: any sum being income assessable to tax
(other than salary income)
 Threshold Limit:> 30,000 in a F.Y., for each category of
income. (However, this limit does not apply in case of payment
made to director of a company)
 Payer: resident or non-resident
 Payee: non-resident as per Section 6 of the Act
 Time of deduction: At the time of credit of such sum to the
account of the payee or at the time of payment, whichever is
earlier.
 Certificate of non-deduction of tax at source
 Person responsible for paying any sum to non-resident to
furnish prescribed information

S L Chhajed & Co. LLP 45

Income deemed to accrue or arise in India
[Section 9]

S L Chhajed & Co. LLP 46

S L Chhajed & Co. LLP 47
Procedure for refund of TDS u/s 195 to the person deducting tax in
cases where tax is deducted at a higher rate prescribed in the
DTAA

 The CBDT has, through Circular No.7/2011 dated 27.9.2011,

modified Circular No.07/2007, dated 23.10.2007 which laid down
the procedure for refund of tax deducted at source u/s 195 of the
Income-tax Act, 1961 to the person deducting tax at source from the
payment to a non-resident.

 The said Circular allowed refund to the person making payment

u/s 195 in the circumstances indicated therein as the income does
not accrue to the non-resident or if the income is accruing, no
tax is due or tax is due at a lesser rate. The amount paid to the
Government in such cases to that extent does not constitute tax.

S L Chhajed & Co. LLP 48

Is tax required to be deducted u/s 195 on the demurrage
charges paid to a foreign shipping company which is governed
by section 172 for the purpose of levy and recovery of tax?

 CIT v. V.S. Dempo & Co P Ltd (2016) 381 ITR 303 (Bom)
(FB)\
 High Court’s Decision: The High Court, accordingly, held
that since section 172 dealing with shipping business of non-
residents contains a non-obstante clause and applies both for
the purpose of the levy and recovery of tax in the case of any
ship carrying passengers etc., belonging to or chartered by a
non-resident and shipping at a port in India, there would be no
obligation on the payer-assessee to deduct the tax at source u/s
195 on payment of demurrage charges to the non-resident
shipping company.

S L Chhajed & Co. LLP 49

 Other sections
Section Nature of Threshol Payer Payee Rat Time
payment d Limit e of
deduct
ion
194B Winnings from > 10,000 The person responsible for Any 30 At the
any lottery, paying income by way of Perso % time of
crossword such winnings n payment
puzzle or card
game or other
game of any sort

194BB Winnings >10,000 Book Maker or a person Any 30 At the

From horse race holding licence for horse Perso % time of
racing or for n payment
arranging for
wageringor betting in any
race
course.
S L Chhajed & Co. LLP 50
Section Nature of Limit Payer Payee Rate Time of
payment deduction
194D Insurance >15,000 in Any person responsible for Any 5% At the time of
Commission F.Y. paying any income by way Resident credit of such
of remuneration or reward income to the
nfor account of the
soliciting or procuring payee or at the
insurance business time of payment,
whichever is
earlier.

194LA Compensatio >2,50,000 Any person responsible for Any 10% At the time of
n on in F.Y. paying any sum in the Resident payment
acquisition of nature of compensation or
certain enhanced compensation on
immovable compulsory acquisition of
property immovable property
other than
agricultural
land

S L Chhajed & Co. LLP 51

 Tax Collection at source [Section 206C]

 Sellers of certain goods are required to collect tax from the

buyers at the specified rates. The specified percentage for
collection of tax at source is as follows:
Nature of goods Percentage
(i)Alcoholic liquor for human consumption 1%
(ii)Tendu leaves 5%
(iii)Timber obtained under a forest lease 2.5%
(iv) Timber obtained by any mode other than (iii) 2.5%
(v)Any other forest produce not being timber or tendu leaves 2.5%
(vi)Scrap 1%
(vii)Minerals, being coal or lignite or iron ore 1%
(viii)Purchase of Motor vehicle exceeding Rs. 10 Lakhs 1%
(ix)Parking lot, Toll Plaza and Mining and Quarrying 2%
S L Chhajed & Co. LLP 52
 TCS Exemptions
1)When the eligible goods are used for personal
consumption
2)The purchaser buys the goods for manufacturing,
processing or production and not for the purpose of trading of
those goods.

S L Chhajed & Co. LLP 53

 Classification of Sellers and Buyers for TCS
SELLER
1. Central Government
2. State Government
3. Local Authority
4. Statutory Corporation
or Authority
5. Company registered under
Companies Act
6. Partnership firms
7. Co-operative Society
8. Any person or HUF who is
subjected to an audit of
accounts under Income tax act
for a particular financial year.
BUYER
1. Public sector companies
2. Central Government
3. State Government
4. Embassy of High
commision
5. Consulate and other
Trade Representation of a
Foreign Nation
6. Clubs such as sports
clubs and social clubs
S L Chhajed & Co. LLP 54
 TCS Returns & payment due dates
Quarter Quarter Period Due date
1st 1st April to 30th June 15th July
2nd 1st July to 30th September 15th October

3rd 1st October to 31st December 15th January

4th 1st January to 31st March 15th May

 TCS returns are filed in Form 27EQ.

 Due date of Payment: 7th of the subsequent month
 Non-collection or non-remittance of TCS: Interest@1% p.m or
part of the month
 TCS Certificate: It is to be issued in  Form 27D  within 15
days from the date of filing TCS quarterly returns.

S L Chhajed & Co. LLP 55

 What is a TDS certificate?

TDS certificates have to be issued by a person deducting TDS to

the assessee from whose income TDS was deducted while making
payment.
Form Certificate of Frequency Due date
Form 16 TDS on salary payment Yearly 31st May

Form 16 A TDS on non-salary Quarterly 15 days from due date

payments of filing return
Form 16 B TDS on sale of Every transaction 15 days from due date
property of filing return
Form 16 C TDS on rent Every transaction 15 days from due date
of filing return

S L Chhajed & Co. LLP 56

 TDS RETURNS & RETURN FORMS

Quarterly statement to be given to the I-T department. It is

compulsory for deductors to submit a TDS return on time.

Quarter Quarter Period Due date

1st 1st April to 30th June 31st August
2nd 1st July to 30th September 31st October

3rd 1st October to 31st December 31st January

4th 1st January to 31st March 31st May

Particulars Form No.

TDS on Salary Form 24Q
TDS where deductee is a non-resident, foreign company Form 27Q

TDS on payment for transfer of immovable property Form 26QB

TDS in any other case Form 26Q
S L Chhajed & Co. LLP 57
Process flow

S L Chhajed & Co. LLP 58

 What is Form 26AS?
 
-Tax deducted on income
-Tax collected by collectors
-Advance tax
-Self-assessment tax
-Regular assessment tax
-Refund received
-High-value Transactions

Why there is mismatch between TDS statement and Form 26AS?

 Failure of the deductor to deposit TDS on time
 Failure of the deductor to file TDS return on time
 Incorrect particulars entered in the TDS return
S L Chhajed & Co. LLP 59
 Consequences of mismatch
 No credit for taxes actually deducted
 With the prefill facility made available in the website and
utilities, all the data available in the 26AS is automatically
filled in the ITR. In the event of mismatches, the value prefilled
will mismatch with our actual computations.
 Delay in processing Income tax return.
 Receipt of refund of excess tax deducted will be delayed.

Rectifying mismatches
 File a revised TDS return

S L Chhajed & Co. LLP 60

Late filing fees for TDS/TCS Returns
u/s 234E: fine of Rs 200 per day until return is filed. However, late
fees shall not exceed the TDS amount.

Non-filing of TDS/TCS Returns

If an assessee has not filed the return within 1 year from the due
date of filing return or if a person has furnished incorrect
information, he/she shall also be liable for penalty. The penalty
levied should not be less than Rs 10,000 and not more than Rs
1,00,000.

S L Chhajed & Co. LLP 61

 Due Dates for Payment of TDS

Deductors Amount Due date of TDS

paid/credited deposit
Without Challan Same Day
With Challan 7th of next month
Government Office
On perquisites opt to
be deposited by 7th of next month
employer

In month of March 30th April

Others
In other months 7th of next month

**Due to COVID-19 outbreak, relaxation in the delayed payments

of TDS/TCS made between 20th March 2020 to 30th June 2020.
Interest rate has been reduced to 9% p.a from existing 12% or 18%
p.a. Also, no late fee/ penalty shall be levied for TDS/TCS returns
during this period.
S L Chhajed & Co. LLP 62
 What if TDS not deducted?
Default Nature of Interest on such Period of interest payment
u/s Default default

201A Non-deduction 1% per month or part of From the date on which the tax
of TDS, either in a month was to be deducted to the actual
whole or part date of deduction
Non-payment of 1.5% per month or part From the date of deduction to
TDS (after of a month** date of actual payment
deduction)

Eg:TDS amount=5000
Date of deduction=1th Jan
Due date=7th Feb
Date of payment=8th Feb
Interest?
=Rs 5000*1.5%*2 (from Jan to Feb)= Rs 150
S L Chhajed & Co. LLP 63
Consequences of failure to deduct or pay [Section 201]

 Deemed assessee-in-default
 Non-applicability of deeming provision
 if such payee –

◦ has furnished his return of income u/s 139;

◦ has taken into account such sum for computing income in such
return of income; and
◦ has paid the tax due on the income declared by him in such
return of income,
 and the payer furnishes a certificate to this effect from an
accountant in such form as may be prescribed.
 No penalty u/s 221
 No penalty shall be charged u/s 221 from such person unless the
Assessing Officer is satisfied that such person has failed to deduct
and pay the tax without good and sufficient reasons.
S L Chhajed & Co. LLP 64
 Expenditures disallowed for TDS default
Nature of default Expenditure deductible Expenditure deductible
in current year in any previous year
Tax is deductible but not 30% of such expenditure If deducted in the
deducted is disallowed subsequent year,
expenditure is allowed
in the year in which tax
is deducted and
deposited
Tax is deducted but not 30% of such expenditure If deposited after due
deposited before the due is disallowed date or date of IT return,
date or date of I.T. return expenditure is allowed
in the year in which tax
is deposited

**Payment (for other than salaries) outside India or to a non-resident

or foreign company (for example payments for interest, royalty,
technical fee, etc.) Disallowance=100%
S L Chhajed & Co. LLP 65
Eligibility for Making an Application U/s 197
Application can be made where income of any person attracts TDS as
per above mentioned sections and income of the recipient justifies
non-deduction or lower deduction of income tax based on his
estimated final tax liability.
Form 15G/15H

S L Chhajed & Co. LLP 66

THANK YOU

S L Chhajed & Co. LLP 67