1. TDS Law and PRACTICE Under income tax act ,1961.
ON 27 SEPTMBER 2019
Aurangabad Chapter
CMA SURESH PIMPLE
B.Sc(Hons) FCMA DISA&C

4. What is TDS ?
Tax Deducted at Source is a mean of collecting income tax in India, under the Indian Income Tax Act of Any payment covered under these provisions shall be paid after deducting at prescribed percentage / rate.
The government uses TDS as a tool to collect tax evasion by taxing the income ( partially or wholly) at the time it is generated rather than at a later date.

5. Income from salary
TDS is applicable on the various incomes such as salaries,business/profession, interest received, Capital Gain, etc
DEDUCTION OF TAX AT SOURCE FROM SALARY
Scope and application of Section 192
Section 192 provides that any person responsible for paying any income chargeable

6. What payments are covered by Section 192
Under the head ‘Salaries’ is required to deduct tax on the amount payable.
What payments are covered by Section 192
Payment is made generally by the employer to the employee.
-Payment is in the nature of ‘salary’.
Payers , who are covered under section 192
The Payer will be the employer, but in certain exceptional cases, it may be a person other than.

7. the employer who is designated for this purpose.
PERSON, CONNOTATION OF – Section 2(31) of the Income Tax Act defines the term ‘person’ to include the folloeing:
Individual
Hindu undivided family ( HUF )

8. Firm
Company
Association of Persons (AOP)
Body of Individuals ( BOI)
Local authority

9. Payees, who are covered by section 192 Any Individual (known as ‘employee’ in common parlance) who receives any payment from his employer or from any other designated authority on behalf of the employer which is chargeable under the head ‘Salaries’ is covered by section 192.Pension is also ‘Salary’ , and though it is not received from ‘employed’, pensioners are also covered u/s 192.

10. WHEN TAX IS TO BE DEDUCTED
WHEN TAX IS TO BE DEDUCTED ? Tax is to be deducted at the time of payment of salary, i.e., tax is to be deducted at the time of ‘actual payment’ of the salary. Who is to deduct tax at source in case of ‘ Salary’ Any ‘person’ responsible for paying any income chargeable under the head ‘Salaries’ is required to deduct tax from the salary so payable.

11. Quarterly Deposit of tax
In special cases, the Assessing Officer may, with the prior approval of the Joint Commissioner, permit quarterly payment of the tax deducted as per Table given below :

12. Sl.No. Qtr of the Date for Qtr
F.Y.ended on payment
th June th July
th September th October
th December th January
th March th April

13. How to Deposit Tax
(1) Where tax has been deposited accompanied by an income-tax challan, the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it within the time specified into any branch of the Reserve Bank if India or of the State Bank of India or any authorized bank;

14. Which challan to be used
The tax deducted at source is required to be deposited in Challan.281.
Penalty for non- issue of certificate
If an employer fails to issue certificate in Form No.16, he shall be liable to pay, by way of penalty, a sum of Rs. 200 for every day during which the failure continues, subject to a maximum of the amount of tax deducted at source for which certificate is required to be issued.

15. Furnishing of statements by employer to department
In respect of tax deducted at source , or tax paid by employer on behalf of employee in respect of perquisites, every employer is required to prepare and transmit quarterly statements in the manner explained below:
Form of the quarterly statement.

16. Quarterly Return of TDS on salary 24Q
The statement must be prepared I Form No.24Q.
The following points must be noted while preparing the quarterly statements:
The employer must quote his tax deduction and collection account number (TAN) in the statement.
The employer must quote his permanent account number (PAN) in the statement except in the case where the deductor is an office of the Government.

17. Quarterly Return of TDS on salary 24Q
The Employer must quote the permanent account number of all deductees.
The employer must furnish particulars of the tax paid to the Central Government including book identification number or challan identification number , as the case may be.
Quarterly return cannot be submitted before deposit of TDS and interest (for late deposit) u/s 201as well as fees levied u/s 234E.

18. Penalty for non providing pan
TAN of the deductor should be quoted correctly, otherwise a penalty of Rs can be imposed by the Assessing Officer.
A deductee should intimate his PAN to the deductor. Failure to do so may attract penalty of Rs on deductee.
If the recipient does not furnish PAN,tax will be deducted u/s 192A at the max. marginal rate of tax (i.e % F.Y ) and not at the rate of 20%.

19. 2. DEDUCTION OF TAX AT SOURCE FROM INTEREST ON SECURITIES
Scope and application of section 193 Section 193 provides that where any person pays any income by way of interest on securities to payee, the tax will have to be deducted at source. Payments to non- residents will be a subjected to deduction of tax at source under section 195.

20. Sec 193 : Deduction of tax on securities.
What payments are covered by section 193
Payments which fulfil following conditions are covered by section 193;
Payment is in the nature of ‘interest on securities’
Such interest on securities is not exempt from tax by virtue of proviso to section 193.

21. What is ‘Interest on securities’-
The term ‘security’ has reference to written instrument, and such instruments are usually for the payment of money or to evidence a debt; they are more than a mere promise of the debtor to pay liability and have as collateral to such instruments pledges of property or some additional obligation.
EXEMPT SECURITIES –No tax will be deducted at source from interest on securities specified below:

22. Any Interest payable on 4
Any Interest payable on 4.25 per cent National Defence Bond,1972, where the bonds are held by a resident individual.
Any interest payable to an individual on 4.25 per cent National Defence Loan 1968,or 4.75 per cent National defence Loan 1972.
Any interest payable on National Development Bonds.

23. Interest on securities
Any Interest payable on 5- year National Saving Certificate.
Any interest payable to a resident individual or resident HUF on any debenture issued by a company in which the public are substantially interested, if the following conditions are satisfied:
the amount of interest or as the case may be the aggregate amount of such interest paid or likely to be paid on such debenture by the company to

24. Such individual or HUF does not exceed Rs.5000;
And
such interest is paid by the company by an account payee cheque.
Any interest payable to LIC/GIC/4 companies formed under GIC Act/ any other insurer in respect of any securities owned by it or in which it has beneficial interest.

25. Note the following points:
The expression ‘owner of the securities’ in occurring section 199 would include a beneficial owner name but in the name of a collecting bank is entitled to apply for the grant of an abatement or exemption certificate under section 197(1).
Where Government securities are registered in the name of a banking company, tax will be

26. deducted at source from the interest at the ‘rate in force’ applicable to the banking company without regard to the status of the beneficial owner of the securities. The tax deduction certificate under section 203 will also be furnished to the banking company. INTEREST ON 8 PER CENT SAVINGS (TAXBLE) BONDS-

27. Interest on securities
Section 193 has been amended to provide that the person responsible for paying to a resident any interest on 8 percent Saving Bonds shall deduct at source.
GENERAL EXMPTION- The CBDT have granted exemption from tax deduction/ collection at source on the receipts of corporarion which are established by a Central,State or Provincial Act for the welfare and economic upliftment

28. of ex- servicemen and whose income qualifies for a period.
WHO IS RESPONSIBLE TO DEDUCT TAX AT SOURCE
In the case of interest on securities payable by the Central or a State Government, the appropriate disbursing officers is the person responsible for paying interest on securities.

29. In the case of interest on securities payable by any other person, the person responsible for paying interest is the local authority, corporation or company itself including the principal officer. When payment is made to Government ,etc - Where the recipient of payment is any of the following persons, no tax shall be deducted at source:

30. No tax deduction for following persons
Central Government
State Government
R B I
U T I
LIC,GIC and its subsidiaries, and other insurer,in respect of any securities owned by them or in which they have full beneficial interest

31. Corporation established under Central Acts, whose income is exempt from tax
Mutual Funds as specified in section 10(23D).
WHEN TAX TO BE DEDUCTED
Tax has to be deducted either at the time of payment of interest or at the time of credit of such income to the account of the payee ,which

32. Is earlier. Any sum credited to Interest Suspense Account’ will be treated as interest credited to account of payee. When no tax need to be deducted or tax may be deducted at lower rate The payee has to make an application to the Assessing Officer in the prescribed form well in advance.If the Assessing Officer is satisfied that the existing and estimated tax liability of the payee

33. Justifies deduction at a lower rate or no deduction of tax, he shall issue an appropriate certificate to that effect
Form of Application – The application by the payee must be in Form No.13.
Quoting of Pan Mandatory – No certificate will be isssued if the application does not contain the PAN of the Payee.

34. Interest on securities
How Lower Rate/ Nil Rate is determined-
The assessing Officer is first required to determine the existing and estimated liability after taking into consideration the following:
Tax payable on estimated income of the previous year relevant to the assessment year;
Tax payable on the assessed or returned income, as the case may be, of the last three

35. Tax deduction on interest
Previous years; (3) Existing liability under the Income-Tax Act and Wealth – tax Act; (4) Advance tax payment for the assessment year relevant to the previous year till the date of making the application; (5) Tax collected at source at source for the assessment year relavant to the previous year till the date of making the application.

36. Interest on securities
Form of quarterly statement
The statement must be prepared in Form No.26Q.
Points to be noted
The deductor shall quote his tax deduction and collection account number (TAN) in the statement.
The deductor shall quote the PAN of Deductees.

37. 3 DEDUCTION OF TAX AT SOURCE FROM INTEREST OTHER THAN INTEREST ON SECURITIES
Scope and effect of section 194A
Under section 194A,any of the specified person is liable to deduct tax at source if such person makes payment of income by way of interest other than interest on securities to any resident person.

38. Interest other than on securities
What is interest
Interest means return for the use by one person of a sum belonging to another person. Where payment of interest is in kind, tax will be deducted at source.

39. ‘Interest’ means interest payable in any manner in respect of any moneys borrowed or debt incurred and includes any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised.
Hence, interest includes the following:
Interest on loan, debt, claim, ect.,

40. No TDS upto Rs. 50000 to sr. citizen
Service fee or other charges in respect of moneys borrowed.
Payees which are covered by section 194A
Any resident person who receives interest from any person specified in provided the total interest paid, or credited to his account, from F.y onwards no TDS will be deducted up Rs on senior citizens.

41. When tax is to deducted
Tax is to be deducted either at the time of credit of such income to the account of payee or at the time of payment thereof in cash or bank issue of a cheque or draft or by any other mode, whichever is ealier
Which Challan to be used
TDS is required to be deposited in Challan No.281.

42. TDS payment due dates Tax deducted as per the Table Below:
Qtr of F.Y. ended
Date of qtr payment
30th June
7th July
30th September
7th October
31 December
7th January
31st March
30th April

43. DEDUCTION OF TAX AT SOURCE FROM PAYMENTS TO CONTRACTORS/ SUB- cONTRACTORS
Scope and application of section 194C
Any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract between the contractor

44. 194 c: Payment to contractor
and a ‘ specified person’ will be liable to deduct tax at source at the prescribed rates. The term ‘contract’ will include a sub- contract also.
Meaning of ‘specified person’
The term ‘ specified person’
The Central Government or any State Government
Any local authority.

45. Persons required to deduct tax from contractor
Any corporation established by or under a Central Act or State Act or Provincial Act.
Any Company
Any Co-operative society.
Any authority constituted in India by or under any law, engaged for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning ,development or improvement

46. Persons required to deduct tds from contractor
of cities, towns and villages or for both.
Any society registered under the Society Registration Act, 1860 or under any law corresponding to that Act in force in any part of India.
Any Trust
Any university established or under Central, state or Provincial Act and an institution declared to be a university under section 3

47. Persons required to deduct tax from contractor
of the University Grants Commission Act, 1956.
Any Government of a foreign State or a foreign enterprise or any association or body established outside outside India.
Any firm. The term ‘firm’ will include a limited liability partnership as defined in the LLP Act,2008

48. 194 C : TDS on contractor What payments are covered by section 194C
Section 194C is applicable in relation to payments for any work (including supply of labour for carrying out any work). Provisions of section 194C relating to tax deduction from payment to contractors are applicable only where contract is either a ‘work contract’ or a ‘ contract for supply of labour for works contract’.

49. 194 C: Works contract tds Who is responsible to deduct tax
The ‘payer’ is responsible to deduct tax at source.
When tax to be deducted
Tax is to be deducted either (a) at the time of credit such sum to the account of the payee, or (b) or the time of payment thereof in cash or by

50. TDS on works contract
issue of cheque or by any other mode, whichever is earlier. Which challan to be used The tax deducted at source is required to be deposited in Challan no.281

51. DEDUCTION OF TAX AT SOURCE FROM INSURANCE COMMISSION
What is Insurance commission – The insurance commission contemplated under section 194D is ‘any remuneration or reward for soliciting or procuring insurance business, and remuneration or reward payable for the continuance, renewal or revival of policies of insurance’.

52. TDs on Insurance comission :194D
Payee who are covered by section 194D
Any resident person who receives insurance commission and quantum of such payment during financial year.
Who is responsible to deduct tax at source
The payer is responsible to deduct tax at source.

53. Insurance commission When tax to be deducted
Tax is to be deducted at source either –
at the time of credit of such income to the account of payee; or
at the time of payment thereof in cash or by issue or a cheque or draft or by any other mode which ever is early.

54. DEDUCTION OF TAX AT SOURCE FROM PAYMENT ON TRANSFER OF CERTAIN IMMOVABLE PROPERTY (Sec. 194-I)
WHAT PAYMENT IS COVERD BY SECTION 194-IA
Any sum paid by way of consideration for transfer of any immovable property ( other than agricultural land) is covered under section 194-IA
Provided the consideration for transfer of an immovable property of value more than Rs. 50 lakh

55. Transfer of immovable property
Immovable property means any land (other than agricultural land) or any building or part of building.
Who is payer
The payer is any person, being a transferee, responsible for paying to a resident transferor any sum by way of consideration for transfer of immovable property.

56. TDS on immovable property
Who is the payee
The payee is resident transferor of any immovable property.
Time of deduction of tax
Tax shall be deducted at the time of credit of such sum to the account of the transferor or at the time of payment of such sum by issue of a cheque or draft or by any other mode, whichever is earlier.

57. TDS on immovable property
Who is to deduct tax at source
The payer is to deduct tax at source.
Rate of TDS
Tax shall be deducted at the rate of 1%.
Challan for Tax is 26QB Form 16 A To be issued within a week.

58. ACQUISITION AND TRANSFER OF IMMOVABLE PROPERTY IN INDIA for NRI (195 )
A person resident outside India who is a citizen of India (NRI) can acquire by
way of purchase, any immovable property in India other than agricultural
land/plantation property/farm house. He can transfer any immovable property
other than agricultural or plantation property or farm house to:

59. Taxation of property transactions by NRI
a) A person resident outside India who is a citizen of India or
b) A person of Indian origin resident outside India or
c) A person resident in India
Payment for acquisition of property can be made out of:

60. Property transactions by NRI
Funds received in India through normal banking channels by way of
inward remittance from any place of India or
ii. Funds held in any non-resident account maintained in accordance with
the provisions of the Foreign Exchange Management Act, 1999 and the
regulations made by Reserve Bank Of India from time to time. There are various rates of tds for Individual/HUF, co-op societies and Non Domestic co. from 10.04% to 21.84% etc. i

61. DEDUCTION OF TAX AT SOURCE FROM FEES FOR PROFESSIONAL OR TECHNICAL SERVICES.
Scope and effect of section 194J
Section 194J, as amended by the Finance Act,2012 provides for deduction of tax at source on any sum payable to a resident by way of deduction of tax at source on any sum payable to a resident by way of

62. 194: Income from professional or technical services.
Fees for professional services or
Fees for technical services or
Any sum payable as royalty or any sum referred to in section 28 of the Act, generally known as ‘non – compete fees’
Payments covered by section 194J
Tax is required to be deducted at source on –

63. 194 J : Income from Professional or technical services.
Any payment by way of fees for professional services,or
Any payment by way of fees for professional services, or
Any payment by way of fees for technical services, or
Any payment by way of royalty,or
Any payment by way of non- compete fees

64. TDS on Director Remuneration
Any remuneration or fees or commission by whatever name called, other than those on which tax is deductible under section 192, paid to a director of a company.
Who is to deduct tax at source
The payer is to deduct tax at source.

65. TDS for the services of director
When tax is to be deducted at source
Tax must be deducted at that point of time at which any of the following events occur first:
At the time of credit of the sum to the account of the payee.
At the time of payment in cash or by issue of the cheque or draft or by any other mode.
When the sum is credited to any account, whether called ‘Suspense Account’ or by any

66. Contd… other name, in books of account of the payer.
Certificate/ statement for tax deducted at source
In respect of tax deducted at source during the financial year, the payer should furnish to the payee a certificate for tax deducted at source in Form no. 16 A

67. Form 16 A to be issued : Time schedule
Time within which certificate is to be issued
The certificate shall be furnished quarterly within the time limit specified below:
Quarter of the F.Y. ended
Due date
30th June
30th July of the F.Y.
30th September
30th October of the F.Y.
31st December
30th January of the F.Y.
31st March
30th May of the F.Y. immediately Following the F.Y. in which deduction is made.

68. DEDUCTION OF TAX AT SOURCE FROM RENT PAYMENT: 194 I
Scope and effect are covered by section 194-I
Section 194-I, as by the Finance Act,1994,with effect from , provides for deduction of tax at source from payments in the nature of ‘income by way of rent’.

69. TDS on Rent : 194 I What payments are covered by section 194-I
Payments of ‘income by way of rent’ by any person.
Payment of any ‘Income by way of Rent’ meaning
Rent means any payment under any lease / sub-lease / tenancy or any other agreement or arrangement for the use of any of the following –

70. Assets on which rent is taxable
Land; or
A building which includes factory building; or
Land appurtenant to a building which also includes factory building; or
Plant; or
Machinery; or
Furniture; or
Equipment; or

71. Furniture; or
Fittings
Advance Rent
The Advance rent is paid ,it is subject to tax deduction at time of “payment”.

72. DEDUCTION OF TAX AT SOURCE FROM RENT PAYMENT
Who is responsible for tax deduction
Any person (not being an individual or a Hindu undivided family) responsible for paying rent to a resident is required to deduct tax at source under the provision of section 194 –I .Payer himself is treated as person responsible for paying rent.

73. Rent on Assets: When tax has to be deducted
The person responsible for paying rent should deduct tax at source.
At the time of credit of such income to the account of payee; or
At the time of payment thereof in cash or by issue of a cheque or draft or by any other mode. Whichever is earlier.

74. TDS to be deducted by Companies on rent
Rate of Tax
Which challan to be used
The TDS is required to be deposited challan 281
Particulars
Rate of TDS
Renting of machinery/plant/equipment 2%
Renting of land or building (including factory building) or land appurtenant to a building or furniture or fittings
10% for company and 5% for Individuals

75. Time limite for issue of Form 1 A
Time within which certificate is to be issued
Quarter of the F.Y. ended on
Due date
30th June
30th July of the financial year
30th September
30th October of the financial year
31st December
30th January of the Financial year
31st March
30th May of the Financial year immediately F.y. Which deduction is made.

76. APPLICATION OF TAN( ONLINE)
Step 1 –Visit and select ‘Online Application for TAN ( form 49B)
Step 2 - Select Category of Deductors from the drop down menu and click on "Select Button“
Step 3 - Fill out the requisite details on the form (Fill all mandatory fields (marked with *));
Step 4 -If the data submitted by applicant fails in any format level validation, a response indicating the error(s) will be displayed on the screen

77. TAN Application
Step 5 - Forms need to be re-submitted after rectifying the error(s); In case form level error(s) do not exists a confirmation screen with data filled by the applicant will be displayed.
Step 6 - In case applicant required any amendment to the data displayed in the confirmation screen, it may choose the edit option

78. Step 7 -In case the displayed information is correct, applicant shall choose the confirm option.
Step 8 - On successful payment of Fees (in case the mode of payment is other than DD or Cheque) an acknowledgment slip will be generated

79. Contd…tan application
Step 8 - Applicant shall save and print the acknowledgment and send it to NSDL alongwith requisite documents at
NSDL e-Governance Infrastructure Limited,
5th floor, Mantri Sterling,
Plot No. 341, Survey No. 997/8,
Model Colony,
Near Deep Bungalow Chowk,
Pune –

80. Screen shot of Site.

81. Screen shot of challan

84. THANK YOU
CMA SURESH PIMPLE
B.Sc(Hons) FCMA DISA&C