No. TDS is the portion of income tax reduced from the total amount at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments.
Usually, the person receiving income is liable to pay income tax. But with the help of TDS provisions makes government makes sure that income tax is deducted in advance by the person making such payments.
No. The income on which TDS has been deducted is not liable to subsequent income tax because the recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his total income and the amount of TDS is adjusted against his final tax liability. The recipient takes credit of the amount already deducted and paid on his behalf.
TDS can be deposited by generating Challan ITNS-281 on the government portal.
Where an employee has worked for part of the financial year only, the Deductor(employer) should deduct TDS from his salary and report the same in the quarterly Form 24Q of the respective quarter(s) up to the date the employee is with him.
Further, while submitting Form 24Q for the last quarter, the Deductorshould include particulars of that employee irrespective of the fact that the employee was not in employment with him on the last day of the year.
No. A single Form 26Q with separate annexure for each type ofpayment has to be filed for all payments made to residents. E-Return should comprise a single file with all the details of Form26Q.
Non-reflection of TDS credit in Form 26AS can be due to several reasons like non-filing of TDS statement by the Deductor, quoting of incorrect PAN of Deductee in the TDS statement filed by the Deductor, etc. Thus, in case of non-reflection of TDS credit in Form 26AS, the payee has to contact the Deductorfor ascertaining the correct reasons for non-reflection of the TDS credit in Form 26AS.
Yes. ADeducteecan approach the Deductorfor non-deduction of TDS but for that they have to furnish a declaration in Form No. 15G/15H. Upon receipt of such form, the Deductor shall furnish such details in return and can thus make the payment to Deductee without TDS deduction.
Yes.Any dealer or traders selling goods online would get the payment from theonline platform after deducting an amount @ 1 % under IGST Act. (0.5% in CGST & 0.5% in SGST)
No.Interest earned on Non Resident External (NRE) accounts and Foreign Currency Non Resident (FCNR) accounts are tax free in India. Hence, TDS would not be applicable.
No. Rentals received for letting out of the agricultural land is an agricultural income which is exempt from tax.
Section 195 of the Income Tax Act is a section that covers the TDS on Non-resident payments. This section identifies the tax rates and deductions on business transaction with a non-resident.
If any Individual, HUF, and Firm & Corporate etc. makes payment to any NRI and that payment falls under any TDS section, then they have to pay TDS tax as per section 195, irrespective of their status.
TDS is to be deducted at the time of credit or payment whichever is earlier.
No. Under this section, no threshold limit has been prescribed. TDS would be deducted on the entire amount of consideration without any threshold limit.
The exchange rate given by RBI on the day on which TDS is required to be deducted shall be taken into consideration.
The following details are needed to be submitted to a CA for Form 15 CB:
- Agreement and Invoices copy;
- Details of Payment
- Technical Advice
- In the case of Group Company transactions, Proof of rendering of services.
- 5. E-mails, remitting bank details, Rate of conversion of foreign currency and other general information.
Yes, as per section 195 (3) & Rule 29B, an NRI may make the application to the department for getting nil deduction certificate if he fulfills the following conditions
- He has filed all his ITR dues, as on the date of filing of an application.
- He should not be an assessee in default
- He should not be liable for the penalty u/s.271(1)(iii)
- If he is Carrying a business in India for continuously at least 5 years and the value of the fixed assets in India exceeds Rs.50 Lakhs.
Nil deduction certificate issued under section 195 (3) shall remain valid up to the expiry of the certificate or cancellation by the A.O whichever is earlier.
As we know that in case where the seller is resident then the TDS shall be deducted under section 194IA @ 1% on the sale value of consideration, in case the value exceeds Rs.50 Lakhs, however, in case the seller is being Non-Resident then the TDS shall be applicable at the rate as applicable under section 195 of Income-tax Act, 1961. For a resident, TDS shall be deducted at 1% and for NRI TDS shall be @ 20% of the value in the proportion of their holding.
TDS would have to be paid on or before the 7th day of next month.
Yes. TDS return is compulsory for those individuals whose accounts are audited. For other business entity it is applicable for all payments made to employees and vendors above certain threshold limit.
Yes. TAN number is the first requirement to start filing TDS or even for deducting TDS. Without TAN if someone deducts TDS then they may be prosecuted.
Yes.Employees/ Deducteesrequire PAN card. This is must, to file the return and to claim the TDS credit. The failure to furnish PANnumber will lead to deduction of tax at a higher rate i.e. 20%. If PAN number is not available, then, Deducteescannot claim the TDS amount.
The purchaser of Property is responsible for deducting, payment and filing of TDS return while the amount needs to be deducted by the buyer from the payment to be made to the seller.
For the NRI sellers,the rate of TDS is 20%. However, NRI can file an application for the lower or nil TDS certificate. Depending on his taxability, such certificate can be issued by the Income Tax Officer of their jurisdiction.
TDS rate will be 20% in such cases.
The threshold limit of Rs. 50 lakhs will be counted based on property and not on the basis of number of buyers or sellers.
TDS cum return needs to be filed within 30 days from the end of the month, from the date on which payment has been made to the selleri.e,if payment is made on October 10th, then, TDS payment plus challan needs to be deposited by November 30th.
Yes.TDS payment challan will serve the purpose of the proof of payment of TDS.There is no need to wait till the form 16B is issued online. Once online challan cum return is filed in form 26QB and the payment of TDS is made, the process will be completed from the purchaser’s side. The same challan can be submitted to the bank and to the builder as well to initiate the loan approval and for the first agreement registration process.
Along with depositing the tax, the Deductor should also file a TDS return.
TDS return is a quarterly statement that is to be filled with the IT department. It is compulsory for Deductors to submit a TDS return on time. The details required to file TDS returns are:
- PAN of the Deductor and the Deductee
- Amount of tax paid to the government
- TDS challan information
- Others, if any
TDS return can be filed by the employers or the organizations thathas availed a valid Tax Collection and Deduction Account Number (TAN). Any person making specified payments mentioned under the I-T Act are required to deduct tax at source and needs to deposit within the stipulated time for the following payments:
- Payment of Salary
- Income by way of “Income on Securities”
- Income by way of winning lottery, puzzles and others
- Income from winning horse races
- Insurance Commission
- Payment in respect of National Saving Scheme and many others
Form 16A(TDS) and 27D(TCS) is available after 15days from the filing of TDS/TCS Return.
Form 16 is available after filing of the fourth quarter return. This certificate includes all quarter’s data.
Following are the forms for filling TDS return:
|TDS on Salary
|TDS where Deductee is a non-resident, foreign company
|TDS on payment for transfer of immovable property
|TDS in any other case
Yes.Section 194J is applicable if payment is made for any professional and technical services. Section 194C is applicable if payments have been made for work contract or any contractual payment.
Yes. According to Section234E, if an assessee fails to file his/her TDS return before the due date, a penalty of Rs. 200 per day shall be paid by the assessee until the time the default continues. However, the total penalty should not exceed the TDS amount.
Yes. 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 be liable for the penalty. The penalty levied should not be less than Rs 10,000 and not more than Rs 1,00,000.
Act gives an option to file a revised TDS return. After submitting the return, if any error is detected, such as incorrect challan details or if PAN is not provided or incorrect PAN is provided, then, the tax amount credited with the government will not reflect in the Form16/ Form 16A/ Form 26AS. To facilitate conformity and make sure that the tax amount is properly credited and reflected in the Form 16/Form 16A/ Form 26AS, a revised TDS return has to be filed.
TDS is the tax amount deducted at the time of the payment. At the year end, while assessing the total tax liability, if there is a difference between the total tax deducted during the year and the actual tax liability i.e. if tax deducted at the source is less than the actual tax liability, then the difference between the two has to be paid by the assessee. On the other hand, if the tax deducted at source is more than the actual tax liability, it results in TDS refund.
The time period of TDS refund amount depends on whether you have filed your income tax return on or before the due date or not. If you have filed it on time, then excess TDS amount will be refunded between three to six months.
Yes. According to Section 200A of the Income Tax Act, 1961, if the income tax department does not pay the TDS refund amount within the specified time period, they will have to pay an interest at the rate 6% p.a. on the refund amount. This interest is calculated from the first month i.e. April of any financial year. However, no interest is applicable if the TDS refund amount is less than 10% of the actual tax liability.
No, loan is subject to payment of processing fees. Processing fess is paid to borrow the money and not as compensation after borrowing the money. Hence Processing Fees is not subject to TDS.
No, the TDS of the overbooked receipt cannot be claimed and the wrong booking will be rectified later.
Yes. Calculate your HRA allowance and show in the tax filing
Yes. If a person expects that his total income in a financial year will be below the exemption limit, he can ask the payer not to deduct the TDS by submitting the Form 15G/15H.
Once the TDS is deposited with the government by the deductor, then the TDS amount deposited will be reflected in the Form 26AS. Further, the deductor is required to issue you a TDS certificate.
The provisions of section 197 of the Income Tax Act, 1961 provide that the taxpayers can avail the facility of lower rate of tax or the NIL deduction of the TDS (TDS exemption).
Yes, in following cases, one can opt for lower or no TDS:
- Loss making businesses
- Least profitable business (profit margins being less than rate of tax deduction)
- Assessee having carried forward losses to set off with the future year’s Income
- Assessee eligible for deductions of profits (U/s. 10 or under chapter VI A etc.)
- Assessee eligible for weighted deduction of expenditure
- A non-resident selling immovable property
Yes. The interest from NBFC falls under section 194A. If the amount of interest exceeds more than the limit of Rs. 40,000 (Rs. 50,000 in case of senior citizen), the rate is 10%.
No. As per the section 194N of the IT Act, 1961, the TDS will be charged only when the amount of cash withdrawal exceeds one crore.
Yes. The tax credit will be reflected in the Form 26AS and Mr. X can check Form 26AS. At the time of filing the IT Return, he can claim the TDS amount that reflects in 26AS.
In the following cases, TDS deduction default will arise:
- Due to PAN Error.
- Due to the wrong quotation of lower deduction certificate.
- Due to the mistake in the deduction of tax at source.
- Due to the wrong quotation of 15G and 15H Certificates.
In case Mr. Z detects any mistake in the challan after the payment of the amount, he may approach the concerned bank branch within the 7 days of the payment for the necessary correction in the challan. If the changes are to be made after 7 days of the payment, kindly contact the Assessing officer for the correction.
The following are the consequences for non-payment of tax demand:
- Nonpayment of tax demand attracts penalty and prosecution as per the provisions of the Income tax Act, 1961.
- And also liable to pay the simple interest at the rate of one per cent for every month or part of a month for the period of the default.
A deductor who fails to deduct the whole or any part of the tax on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee-in-default in respect of such tax if such resident—
- Has furnished his return of income under section 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 deductor furnishes a certificate to this effect in Form No.26A from a chartered accountant.
As per section 206C (1), every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode; whichever is earlier, collect from the buyer. Hence, amount debited to the account of the buyer or payment shall be received by the seller inclusive of GST. TCS is to be collected from the amount inclusive of GST.
No tax is required to be deducted by any person from any sum payable to:-
- The Government, or
- The Reserve Bank of India, or
- A corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income-tax on its income, or
- A Mutual Fund specified under clause (23D) of section 10.
Where such sum is payable by way of interest or dividend in respect of any securities or shares owned by it or which has full beneficial interest, or any other income accruing or arising to it.
Section 194J levies TDS on technical and professional services. As per the provisions of the Companies Act, 2013, the director of the company is also a manager and thus, technical personnel. Hence, any payment made to the director in the nature of sitting fees, remuneration or any other sum other than those on which tax deductible, TDS @ 10% under section 194J is to be deducted.
The Payer/Deductor being an Individual or a HUF (not liable to audit u/s 44AB) would have to deduct the TDS and deposit the same in Government treasury.
Section206C(1G)(a) is related to TCS on foreign remittances through LRS. This has been made effective from 1st October, 2020. Section says that if any an authorized dealer receiving an amount or an aggregate of amounts of seven lakh rupees or more in a financial year for remittance out of India under the LRS of RBI, shall be liable to collect TCS, if he receives sum in excess of said amount from a buyer being a person remitting such amount out of India, at the rate of 5%.
IfPAN/Aadhaar is not available, then the rate shall be 10%.
Section 206C(1G)(b) explains about TCS on overseas tour package. This has been made effective from 1st October, 2020. If a seller of an overseas tour program package who receives any amount from any buyer, being a person who purchases such package, shall be liable to collect TCS at the rate of five per cent.
In no PAN/ Aadhaar cases the rate shall be ten per cent.
No. There is no monetary limit for this transaction.
No. This section will not be applicable in following cases:
- If the buyer is liable to deduct TDS under any other provisions and has deducted
- If a buyer is CG, SG, an embassy, a high commission, a legation, a commission, a consulate, the trade representation of a foreign state, a local authority or any other person as notified by CG.
It is the duty and responsibility of the payer to deduct TDS. If the payer fails to deduct tax at source, then the payee will not have to face any adverse consequences. However, in such a case, the payee will have to discharge his tax liability. Thus, failure of the payer to deduct tax at source will not relieve the payee from payment of tax on his income.
In such a case, the payee can claim the refund of entire/excess amount of TDS (as the case may be) by filing the return of income.
Yes. Payment to an architect falls under section 194J. This section deals with TDS deduction on payments made for availing professional and technical services. The payments considered under this section are: fees for professional services in the fields of medicine, architecture, law or engineering. TDS at the rate 10% is applicable on this payment as per section 194J
Penalty is levied for nonpayment of TDS and interest at the rate of 1.5% per month including part of the month is levied for non deduction of TDS. Total of penalty and interest does not exceed TDS liability to pay.
Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such specified payment. But no TDS has to deducted if the person making the payment is an individual or HUF whose books are not required to be audited.
However, in case of rent payments made by individuals and HUF exceeding Rs 50,000 per month, they are required to deduct TDS @ 5% even if the individual or HUF is not liable for a tax audit. Also, such Individuals and HUF liable to deduct TDS @ 5% need not apply for TAN.
A charitable trust or institution will have to apply at least 85% of the income to charitable purposes. If the income spent on charitable or religious purposes, during the previous year, falls short of 85% of the income derived during the year, such shortfall will be liable to tax.