Introduction To Tds And Tds Rate Chart | Ay 2019-20 Onwards

Written by KnowYourGST Team under GST

DEDUCTION AT SOURCE AND ADVANCE PAYMENT [SECTION 190]

The total income of an assessee for the previous year is taxable in the relevant assessment year. For example, the total income for the financial year (FY) 2018-19 is taxable in the assessment year (AY) 2019-20. However, income-tax is recovered from the assessee in the previous year itself through –

Another mode of recovery of tax is from the employer through tax paid by him under section 192(1A) on the non-monetary perquisites provided to the employee.

These taxes are deductible from the total tax due from the assessee. The assessee, while filing his return of income, has to pay self-assessment tax under section 140A, if tax is due on the total income as per his return of income after adjusting, inter alia, TDS, TCS and advance tax.

DIRECT PAYMENT [SECTION 191]

Section 191 provides that in the following cases, tax is payable by the assessee directly –

  • in the case of income in respect of which tax is not required to be deducted at source; and
  • income in respect of which tax is liable to be deducted but is not actually deducted

In view of these provisions of section 191, the proceedings for recovery of tax necessarily had to be taken against the assessee whose tax was liable to be deducted, but not deducted.

In order to overcome this difficulty, the Explanation to this section provides that if any person, including the principal officer of the company –

  • who is required to deduct tax at source; or
  • an employer paying tax on non-monetary perquisites under section 192(1A)

does not deduct the whole or part of the tax, or after deducting fails to pay such tax deducted, then, such person shall be deemed to be an assessee-in-default.

However, if the assessee himself has paid the tax, this provision will not apply.

What is TDS?

In simple words, it is tax deducted by deductor while making payment to deductee. Tax so deducted by deductor is then paid to Central Government on behalf of deductee.
Example : Mr A has to make payment of Rs 1,00,000/- to Mr B. On this, assume that on this tax has to be deducted at 10% as per Income tax rules. So, Mr A will deduct tax of Rs 10,000/- and pay balance of Rs 90,000/- to Mr B. Mr A will pay Rs 10,000/- to Central Government.
This Rs 10,000/- are paid to Central Government by Mr B through Mr A, So Mr A will get credit Rs 10,000/- at the time of filing return.
Here, Mr A is deductor and Mr B is deductee. Tax is not required to be deducted on all type of payment, it is required to be deducted only on specified payments.
In certain cases tax is deducted at the time of -

  • making payment or
  • credit to books of accounts, whichever is earlier.

'Credit to books of accounts' means the date on which transaction is recorded in books of accounts.

Which are those specified payments on which TDS is to be deducted and at what rate?

 

TDS Rate Chart

Nature of Payment Section TDS Rate (%) Criteria for deduction or limit Time of Deduction
Salary 192 As per slab rate applicable to Assessee (30% if not having PAN Not applicable At the time of payment
Premature withdrawal from Employees Provident Fund 192A 10 (30% if not having PAN) Deductible when amount of withdrawal exceeds Rs 30,000/- and Rs 50,000/- (from 01.06.2016) At the time of payment
Interest on Securities 193 10 (20% if not having PAN) TDS has to be deducted only if payment exceeds Rs 10,000/- in case of securities, and Rs 5,000/- in case of debentures during the FY. At the time of credit to books of accounts or payment, whichever is earlier
Dividends 194 10 (20% if not having PAN) TDS is deductible only if payment exceeds Rs 2,500/- and it is not covered u/s 115-O. DS is deductible at the time of payment.
Interest other than interest on securities 194A 10 (20% if not having PAN) In case of Banks (including Co-operative Societies) TDS is deductible when payment exceeds Rs 10,000/- during the FY.
In case of others TDS is deductible when payment exceeds Rs 5,000/- during the FY.
In case of senior citizens TDS is deductible when payment exceeds Rs 50,000/- during the FY.
At the time of credit to books of accounts or payment, whichever is earlier
Winning from Lotteries, Crossword Puzzles, Card Games & Other games of any sort 194B 30% If payment exceeds Rs 10,000/- At the time of making payment
Winning from Horse races 194BB 30% If payment exceeds Rs 10,000/- At the time of making payment
Payment to Contractors and Sub-Contractors 194C TDS rate is 1% is payee is Individual/HUF.
TDS rate is 2% if payee is other than Individual/HUF.
TDS rate is NIL if payee is engaged in transport business and PAN is furnished.
Deductible if consideration for contract exceeds Rs 30,000/- in a single payment or Rs 1,00,000/- in aggregate during the FY. At the time of credit to books of accounts or payment, whichever is earlier
Insurance Commission 194D 5% (20% if not having PAN) If payment exceeds Rs 15,000/- At the time of credit to books of accounts or payment, whichever is earlier
Payment under Life Insurance policy (including bonus) 194DA 1% (20% if not having PAN) If payment or aggregate of payment during the FY is Rs 1,00,000/- or more At the time of payment.
Payment to non-resident sportsmen or sports association 194E 20% (20% if not having PAN) Not applicable At the time of credit to books of accounts or payment, whichever is earlier
Payments in respect of deposits under National Saving Scheme 194EE 10% (20% if not having PAN) If payment or aggregate of payment during the FY exceeds Rs 2,500/- At the time of credit to books of accounts or payment, whichever is earlier
Payment on account of Repurchase of units by Mutual Fund or Unit Trust of India 194F 20% (20% if not having PAN) Not applicable At the time of credit to books of accounts or payment, whichever is earlier
Commission on sale of lottery tickets 194G 5% (20% if not having PAN)
10% in case of Company
If payment exceeds Rs 1,000/- At the time of credit to books of accounts or payment, whichever is earlier
Commission or Brokerage 194H 5% (20% if not having PAN)
10% in case of Company
If payment exceeds Rs 15,000/- At the time of credit to books of accounts or payment, whichever is earlier
Rent - Plant & Machinery or Equipments 194I (i) 2% (20% if not having PAN) If payment exceeds Rs 1,80,000/- in the financial year At the time of credit to books of accounts or payment, whichever is earlier
Rent - Land & Building 194I (ii) 10% (20% if not having PAN) If payment exceeds Rs 1,80,000/- in the financial year At the time of credit to books of accounts or payment, whichever is earlier
Payment on transfer of certain immovable property other than agricultural land 194-IA 1% (20% if not having PAN) If total amount of consideration exceeds Rs 50 Lakh. At the time of credit to books of accounts or payment, whichever is earlier
Rent payable by an individual or HUF not covered u/s 194I (from 1.06.2017) 194-IB 5% (20% if not having PAN) TDS has to be deducted only if the amount of such rent exceeds Rs 50,000/- for a month or part of a month during the financial year. This deduction is to be made at the time of credit of such 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 thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier.
Payment of consideration (not in kind) under Joint Development Agreement or other similar agreement 194-IC 10% (20% if not having PAN) Not applicable At the time of credit to books of accounts or payment, whichever is earlier

a) Fees for Professional services

b)Fees for technical services

c) remuneration/commission/fees to a Director

d) Royalty

e)for not carrying out any activity in relation to any business

f) for not sharing any know-how, patent, copyright etc

194J 2% for payee engaged in the business of call centre
10% for others
20% if not having PAN
If payment or aggregate of payment exceeds Rs 30,000/- in the financial year.
Above limit is separate for all the categories mentioned.
At the time of credit to books of accounts or payment, whichever is earlier
Payment on transfer of certain immovable property other than agricultural land 194LA 10% (Concessional rate of TDS is available only on interest payment for borrowings made before the 1st July 2020 (20% if not having PAN) If the payment or aggregate of the payment exceeds Rs 2,50,000/- during the financial year. At the time of credit to books of accounts or payment, whichever is earlier
Payment of interest on Infrastructure Debt Fund to Non-resident or Foreign Company 194LB 5% (Concessional rate of TDS is available only on interest payment for borrowings made before the 1st July 2020 (20% if not having PAN) Not applicable At the time of credit to books of accounts or payment, whichever is earlier
Payment of Interest by Indian Company or Business Trust to Foreign Company or Non-Corporate Non-resident 194LC 5% (20% if not having PAN). Borrowing should be made between 01.07.2012 to 30.06.2020 Not applicable At the time of credit to books of accounts or payment, whichever is earlier
Payment of interest to Foreign Institutional Investor (FII) or Qualified Foreign Investor (QFI) for investment in rupee denominated bond or Government Security 194LD 5%. Investment should be between 01.06.2013 and 30.06.2020. Not applicable At the time of credit to books of accounts or payment, whichever is earlier
Payment made to Non-Residents 195 As per rates prescribed under income tax or DTAA Not applicable At the time of credit to books of accounts or payment, whichever is earlier

 

Author
Posted by CA Ankit Sharma under Income-Tax

I am CA, you can contact me for resolving all your tax queries. Reach me at ankitsharma1141@gmail.comContact

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