1. TAX DEDUCTED AT SOURCE
“PAY AS YOU EARN”
Presented By: Sowmya

2. TDS
Why – Tax Deducted At Source ?
What is Tax Deducted At Source ?

3. Relevant Sections Sec 192 – Salary Sec 193 – Interest on Securities
Sec – Dividends
Sec 194A – Interest other than Interest on Securities
Sec 194B – Winnings from Lotteries, Crosswords,
Puzzles etc.
Sec 194BB– Winnings from Horse race

4. Relevant Sections Sec 194C – Payment to Resident Contractors
Sec 194D – Insurance commission
Sec 194E – Payment to Non Resident Sportsmen
or Sports Association
Sec 194EE – Payments in respect of Deposit under
National Savings Scheme
Sec 194G – Commission on sale of Lottery Tickets

5. Relevant Sections Sec 194H – Commission and Brokerage Sec 194I – Rent
Sec 194J – Fees for Professional or Technical
Services
Sec 194K – Income in respect of units
Sec 194LA –Payment of Compensation on
acquisition of certain immovable
property

6. Insertion 2011 Section 194 LB ( w.e.f 01.06.2011 )
Income by way of Interest from
INFRASTRUCTURE DEBT FUND

7. Sec 192 – Salary Person responsible to deduct tax- Employer
Tax to be deducted at rate applicable to individuals.
Inclusion of income from other heads
Payment of tax on Non Monetary Perquisites.
Salary from more than one employer.
Adjustment of amount deducted U/s192.

8. Sec 192 – Salary Case Law: Judgment:
CIT Vs Venron Expat Services INC. (2010)
The assesse failed to deduct tax monthly, however deducted towards the end of FY.
Judgment:
Permits adjustment of excess or deficit.
No Interest U/s 201(1A).

9. Sec 193 - Interest on Securities
Person responsible to deduct tax –
Central or state govt.
Local authority.
Company or corporation established by govt.
Rate of tax %.
Exemptions:
Debentures (Resident Individuals)
Paid by Account Payee Cheque of amount not exceeding Rs 2,500

10. Sec 193 - Interest on Securities
List of interest payments- No TDS required
Interest on Listed Securities
Payment to New Pension Trust
National Defence Bonds
National Defence Loan
National Development Bond
7-year NSC
Gold Bonds
LIC, GIC or any of its subsidiaries

11. Sec 194 – Dividends
Person Liable to deduct tax is the principal officer.
Rate of tax %.
Applicable only if dividend is paid u/s 2(22)(e).

12. Sec194A– Interest other than Interest on Securities
Rate of tax – 10%
Exemption Limit –
Interest by Banking company - Rs 10,000
Others Rs 5,000
Credit or Payment, whichever is earlier.

13. Sec194A– Interest other than Interest on Securities
List of interest payments- No TDS required
LIC, UTI, Other Insurance Companies
To the Partner of the firm
By a Co-operative society to its members
By Primary Agricultural society
Saving, Current Account, Recurring Deposit.
Interest on compensation (Motor Accident Claim)
-Does not exceed Rs 50,000
Interest on Zero Coupon Bond.

14. Sec 194B- Winnings from Lotteries, Crosswords, Puzzles etc.
Deductor – Any person paying the sum by way of winning
Rate of tax – 30%
At the time of payment
Exemption limit –
Upto Rs 5,000
From Rs 10,000

15. Sec 194B- Winnings from Lotteries, Crosswords, Puzzles etc.
H. Anraj Vs Government of Tamilnadu
Essential elements that constitute lottery.
A prize or some advantage in the nature of prize,
Distribution thereof by chance and
Consideration paid or promised for purchasing the chance.

16. Sec 194B- Winnings from Lotteries, Crosswords, Puzzles etc.
Case Law:
ACIT Vs Director of State Lotteries, Assam.
Income accruing to an agent/trader in respect of prizes on unsold/unclaimed lottery tickets in his possession.
Judgment:
Income From Business, not winning from lottery. Hence not subject to TDS.

17. Sec 194BB– Winnings from Horse race
Deductor – Licensed by the govt. or licensed bookmaker
Rate of tax – 30%
At the time of payment
Exemption limit –
Upto Rs 2,500
From Rs 5,000

18. Sec 194BB– Winnings from Horse race
Case Law:
Royal Calcutta Turf Club
Limit u/s 194BB is applicable for each payment or entire winning for the FY?
Judgment:
Limit should be applied to each payment and not the entire winnings.

19. Sec 194C– Payment to Resident Contractors
Rate of Tax –
Individuals and HUFs - 1%
Others %
Exemption Limit-
Upto Rs 20,000/50,000
From Rs 30,000/75,000

20. Sec 194C– Payment to Resident Contractors
Exemption
Hiring or Renting equipments
Sale of goods
Supply of goods- Buyers specification
Payment to airlines – Air travel of individuals
Payment to banks for Discounting Bills
Individual/HUF- exclusively for personal purposes
Works executed under NREP & RLEGP

21. Sec 194C– Payment to Resident Contractors
Case law:
Mukta Arts Vs ACIT (2010)
Assessee was engaged in Film Financing and made certain payments by way of advances to another party for production of film.
Judgment:
Assessee was not acting as contractor nor the other party a contractee
Assessee was not required to deduct tax.

22. Sec 194D – Insurance commission
Person responsible to deduct tax- Insurance companies.
Rate of tax – 10%
Credit or Payment, whichever is earlier.
Exemption limit –
Upto Rs 5,000
From Rs 20,000

23. Sec 194E– Payment to Non Resident Sportsmen or Sports Association
Rate of tax – 10%+SC + EC 2% + SHEC 1%
Credit or Payment, whichever is earlier.
No Provision For deduction of Tax at lower rate.
Category of payee – Income to NR by way of
Participation in India in any game (excl card or gambling)
Advertisement
Contribution of article relating to any game or sport.

24. Sec 194EE– Payments in respect of Deposit under NSS
Rate of Tax-20%
At time of payment
Exemption Limit- Rs 2,500
No Provision For deduction of Tax at lower rate.
No TDS if payment to legal heir.

25. Sec 194G – Commission on sale of Lottery Tickets
Rate of tax – 10%
Exemptions –
Payment not exceeding Rs 1,000.
Payment to New Pension Trust.
Category of payee
Any person stocking, purchasing or selling lottery tickets

26. Sec 194G – Commission on sale of Lottery Tickets
Case Law:
MS hameed Vs director of State Lotteries (2001)
Discount given to an agent on bulk purchase of lottery ticket from state Govt.
Judgment:
Such Discount is not a commission and not liable for TDS

27. Sec 194H – Commission and Brokerage
Rate of Tax – 10%
Exemption limit –
Upto Rs 2,500
From Rs 5,000
Exemptions –
Payable by BSNL/MTNL to their PCO
franchisees.
Payment to New Pension Trust.

28. Sec 194H – Commission and Brokerage
Case Law:
Vodafone Essar Cellular Limited vs ACIT.
Sale of sim card and recharge coupons at discounted price to distributors
Judgment:
Such Discount given is a commission, hence liable for TDS

29. Sec 194I – Rent Rate of Tax – Land/building/ furniture/Fittings – 10%
Machinery/Plant/Equipment – 2%
Exemption limit –
Upto Rs 1,20,000
From Rs 1,80,000
Exemptions –
If Payee is govt or local authority.
Payment to New Pension Trust

30. Sec 194I – Rent Case Law: CIT Vs Asiana Airlines (2009)
Landing and Parking charges collected. Is it liable for TDS u/s 194I ?
Judgment:
Landing and Parking charges is “Deemed” to be rent and liable for TDS

31. Circulars and Cases U/S 194I
If a person has taken particular space on rent and sub-lets it.
Hotel Accomodation taken on regular basis.
Building is let-out along with furniture/ fittings.
Payment made for warehousing charges.
Payment made to landlord in nature of advance rent or non-refundable deposit.

32. Sec 194J – Fees for Professional or Technical Services
Rate of Tax – 10%
Exemption Limit-
Upto Rs 20,000
From Rs 30,000
Exemptions –
Payment by individual/HUF Exclusively for their
personal purposes
Payment to New Pension Trust.
Category of payee – Professional service or Technical service or Royalty or payments received U/s 28(1)(va)

33. Sec 194J – Fees for Professional or Technical Services
Case Law:
CIT Vs Bharthi cellular ltd
Interconnection/port charges paid
Judgment:
Fees for technical service includes only service rendered by human not robots/machines

34. Illustrative cases of TDS u/s 194J
Advertising agency makes payment to models.
Payment made to Recruitment agency.
Payment made by a company to share registrar.
Maintenance contract involving Technical services.
Service of professional cameraman.

35. Sec 194K – Income in respect of units
Not relevant now as income from units is exempt w.e.f. Assessment year 04-05

36. Sec 194LA–Compensation on acquisition of immovable property
Rate of Tax- 10%
Exemption Limit- Rs1,00,000
Exemption: Payment to New Pension Trust

37. Sec 194LA–Compensation on acquisition of immovable property
Case Law:
State of Kerala Vs Mariamma
Date of Deduction in case of delayed payment in compensation
Judgment:
Deduction to be made on the date of payment even though the acquisition may have been made much before.

38. Sec 194LB –Income from Infrastructure Debt Fund
Rate of Tax- 5%
Payment to
Non residents other than company
Foreign Company
Credit or Payment, whichever is earlier.
W.e.f

39. Sec 195 – TDS on Non Residents
Payment to
Non residents other than company
Foreign Company
Payment or Credit – whichever is earlier
Rate of Tax
Rate as per the Finance Act
Rate U/s 90
Rate U/s 90A

40. Sec 195 – Verdicts TDS liability only if income is taxable.
Soliciting exhibitors outside India for an event in India.
No TDS on income earned before PE established in India.
Managerial & Consultancy services liable to TDS.
Interest to non resident with no PE in India liable to TDS.

41. Sec 195 A – Grossing Up Income payable net of tax Gross Income
Less: TDS
Net Income
Obligation to furnish certificate to the Deductee (Net Income & TDS thereon)

42. Sec 196 – NO TDS No TDS in case payment to Govt RBI
Corp established by Central Act
Mutual Fund U/s 10(23D)

43. Sec 196 B – Income from Units purchased in Foreign currency
U/s 115 AB
LTCG on transfer of such units
Rate of Tax – 10% + SC + EC +SHEC

44. Sec 196 C – Foreign Currency Bonds / GDR’s
Payment to Non Resident
Income by way of
Interest/dividend on GDR’s & Bonds
LTCG on transfer of such bonds
Rate of Tax – 10% + SC + EC +SHEC

45. Sec 196 D – Income of Foreign Institutional Investors
Income from Securities
Rate of Tax – 20% + SC + EC +SHEC

46. Sec 197 - No Deduction or Lower Rate
Certificate for deduction at lower rate
Make application to AO
No deduction or less deduction
No Certificate to be issued if PAN is not provided

47. Other Issues Tax Deducted is deemed to be Income Received
TDS deducted & remitted – payment on behalf of the person from whom it was deducted
Service Tax – TDS
Where sum is used – Including Service tax
Where income is used – Excluding Service tax

48. Other Issues TDS to be deposited to the credit of Govt. Form 15H/15G
Tax deducted on behalf of Govt.
Without tax challan – same day
With tax challan – on or before 7days
Tax deducted by others
Credited or paid in March – on or before 30 April
Other case – on or before 7days
Form 15H/15G

49. Other Issues Assessee in default Interest U/s 201
Non deduction, non payment , Non payment of tax U/s 192(1A)
Interest U/s 201
Does not deduct tax
Fails to remit tax to the Govt.
Does not pay tax U/s 192(1A)
Rate of Interest for default
DOD – Actual DOD = 1%
DOD - Date of actual payment = 1.5%

50. Important Points Book entry Consolidated TDS certificate
Issue of duplicate TDS certificate
New Pension Trust

51. Important Points Failure to furnish PAN
Highest of
Rate in Finance Act
Rate in force( Fin Act)
20%
Deductor – 194A/194C/194H/194I/194J
Any assessee(other than individual/HUF who are not subject to tax audit U/s 44AB for the preceeding financial year)

52. E- Filing Assesses mandatorily required to e-file Govt. Company
Assessee subject to tax audit U/s 44AB
Deducteess or Collectees for previous FY quarter is = or > 50

53. Form 26AS
TIN facilitates a PAN holder to view Annual Tax Statement online
Form 26AS contains
Details of tax deducted on behalf of the taxpayer by deductors
Details of tax collected on behalf of the taxpayer by collectors
Advance tax/self assessment tax/regular assessment tax, etc. deposited by the taxpayers (PAN holders)
Details of paid refund received during the financial year

54. Tax Collected at Source
Responsibility of the receiver of payment.
Presumption that buyer of goods will have taxable income.

55. Tax Collected at Source
Rate of TCS
Specified goods
Rate
Alcoholic liquor for human consuption 1%
Tendu leaves 5%
Timber obtained
2.5%
Any other forest product
Scrap 2%
Parking lot
Toll Plaza
Mining And Quarring

56. Tax Collected at Source
No TCS
Buyer should be resident in India.
Furnish self declaration in writing.
Goods to be utilsed for manufacturing, processing or producing and not for trading.
Submit copy of declaration within 7th of following month.

57. THANK YOU