TDS Rates 2020, Deduction, How to pay TDS, TDS Payment

TDS Rate Chart 2020-21 (Assessment Year) TDS (Tax Deducted at Source). Introduction of TDS: The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.

TDS

TDS is required to be deducted by responsible person at the appropriate rates, from payments of specific nature i.e. salary, rent, contract payments, consultancy fees, commission, etc.

Applicable to all assessees other than indv/HUF.

Generally, tax is required to be deducted at the time of the credit to account of the payee or at the time of payment, Whichever is earlier

However, In case of payment of salary and payment in respect of life insurance policy, tax is required to be deducted at the time of payment.

TDS Rate Chart for AY 2020-21

Taxes shall be deducted at the rates specified in the relevant provisions of the Act or the First Schedule to the Finance Act. However, in case of payment to non-resident persons, the withholding tax rates specified under the Double Taxation Avoidance Agreements shall also be considered

Briefs of Section and Rate for TDS

  • 192:- Salary. @ normal tax rate applicable for the financial year in which the payment is made
  • 192 A:- Payment of accumulated balance due to an employee from PF. @ 10%
  • 193:- Interest on Securities. @ 10%
  • 194:- Dividends. @ 10%
  • 194A:- Interest other than “ Interest on Securities”. @ 10%
  • 194 B:- Winnings from lottery or crossword puzzle. @30%
  • 194 BB:- Winning from horse race. @ 30%
  • 194 C:- Payments to contractors. @ 1% to individual or HUF and @ 2% other than individual or HUF i.e company, firm etc.,
  • 194 D:- Insurance commission. @ 5% for resident other than company, 10% for company
  • 194DA:- Payment in respect of life insurance policy. @ 5% w.e.f September 1, 2019. Up to 31st August, 2019 @ 1%
  • 194 E:– Payment to non-residents sportsmen or sports association. @ 20%
  • 194 EE:– Payments in respect of deposit under National Savings Scheme, etc. @ 10%
  • 194 F:- Payments on account of repurchase of units by Mutual Fund or Unit Trust of India. @ 20%
  • 194 G:- Commission, etc., on sale of lottery tickets. @ 5%
  • 194 H:- Commission or brokerage. @ 5%
  • 194 I:– Rent @ 2% for plant & machinery, @ 10% for land or building or furniture or fitting.
  • 194 IA:- Payment on transfer of certain immovable property other than agricultural land. @ 1%
  • 194 IB:- Payment of rent by certain individuals or HUF. @ 5%
  • 194 IC:- Payment under specified agreement. @ 10%
  • 194 J:- Fees for professional or technical services. @ 10%, @2% for technical services
  • 194 K:- Any income in respect of Units of Mutual Fund or units from specified undertaking or company @ 10% {Introduced in finance bill 2020 shall be effective from April 2020}
  • 194 LA:- Payment of compensation on acquisition of certain immovable property. @ 10%
  • 194 LB:- Income by way of interest from infrastructure debt fund. @ 5%
  • 194 LBA:- Certain income from units of a business trust. @ 10% to resident, @5% [sub sec. (a) of clause (23FC) of section 10 and @ 10% (b) of clause (23FC) of section 10] to non resident or a foreign company.
  • 194 LBB:- Income in respect of units of investment fund. @ 10%
  • 194 LBC:– Income in respect of investment in securitization of trust. @ 25%. @ 30% other than individual or HUF
  • 194 LC:- Income by way of interest from Indian Company. @ 5% [@4% in case interest income referred to clause (ib) of sub section (2)]
  • 194 LD:- Income by way of interest on certain bonds and Government securities. @ 5%
  • 194 M:- Payment of certain sums by certain individuals or Hindu undivided family. @ 5%
  • 194 N:- Payment of certain amounts in cash. @ 2%
  • 194 O :- Payment made by e- commerce operator to e -commerce participant. @ 1% {Introduced in finance bill 2020 shall be effective from April 2020}
  • 195:- Other sums. @ the rates in force
  • 195 A:-Income payable “net of tax” @ the rates in force
  • 196:- Interest or dividend or other sums payable to Govt., RBI or certain corporations. @ Nil
  • 196 A:- Income in respect of units of non- residents. @20%
  • 196 B:- Income from units. @ 10%
  • 196 C:- Income from foreign bonds or shares of Indian company. @ 10%
  • 196 D:- Income of Foreign Institutional Investors from securities. @ 20% 

Other Requirements of TDS/TCS

  •  If recipient not furnish his/its PAN Tax shall be deducted at the normal rate or at the rate of 20% , whichever is higher

How to pay Tax Deducted at source?

Tax deducted or collected at source shall be deposited to the credit of the Central Government by following modes:

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

CERTIFICATE FOR DEDUCTION AT LOWER RATE OR NO DEDUCTION AT SOURCE

  • On application made to Assessing officer, if he satisfied that the total income of recipient justifies the deduction of income tax at any lower rates or no deduction of income tax, the AO shall give him such certificate under section 197.
  • The person responsible for paying the income shall deduct income tax at the rates specified in such certificate or deduct no tax as the case may be, mentioned in certificate issued under section 197.
  • The person responsible for TDS, shall submit one copy before the Chief commissioner or commissioner of TDS.

NO DEDUCTION of TDS

  • Section 197A
  • Amount of any income does not exceed the maximum amount which is not chargeable to tax
  • An individual, resident in India has furnished Form 15G in duplicate to the deductor
  • An individual, resident in India ( Senior Citizen) has furnished form 15H in duplicate to the deductor
  • By Offshore Banking Unit from the interest paid to nonresident or a person not ordinarily resident in India
  • From any payment to any person for or on behalf of the New pension system[10(44)]
  • From such specified payment to such institution, association or body or class of institutions as may be notified by the Central Government whose income is unconditionally exempt under section 10 and who are not statutorily required to file return under section 139.
  • Local Authority, SAARC fund, IRDA, Prime minister’s National relief fund, Recognised provident fund, ESIC fund etc.

Threshold Limit for no deduction of TDS

  • 192 (Salary) Estimated salary does not exceeds exemption limit, i.e. Rs.250000/- , 300000/- ,500000/-. ( It is applicable even employee does not have PAN)
  • 192 A(Withdrawal from employees provident fund scheme) Withdrawal is less than Rs. 50000/-
  • 193 (Interest on securities) Does not exceed Rs. 5000/-
  • Bank, Post office, Co operative society engaged in banking business – Sr. citizen-on FD- Rs. 50000/-, To other person- Rs. 40000/-
  • 194 For an Individual aggregate of amount of Dividends does not exceed Rs. 5000/-
  • 194A(Interest other than interest on securities) Any other person- Rs. 5000/-
  • 194 B (Winning from lottery or crossword puzzles) Does not exceed Rs. 10000/-
  • 194BB(Winning from horse race) Exceeds Rs. 10000/-
  • 194 C (payment to contractors) Single payment does not exceeds Rs. 30000 and the aggregate of such payment during the financial year does not exceed Rs. 100000/
  • 194 C (payment to contractors) Payment to transport operators has furnished PAN to deductors and having 10 or less than 10 goods carriages at any time during the financial year. Payment by an individual or HUF to a resident contractors for personal purposes.
  • 194 D (Insurance Commission) Does not exceed Rs. 15000/- 
  • 194 DA (Life Insurance Policy) Does not exceed Rs. 100000/- 
  • 194 G (On sale of lottery tickets) Does not exceed Rs. 15000/-
  • 194 H (Commission or brokerage) Does not exceed Rs. 15000/- 
  • 194 I (Rent income) Does not exceed Rs. 240000/-
  • 194 IA (Transfer of certain immovable property other than agriculture land) Consideration for immovable property is less than Rs. 50 lakhs
  • 194 IB (by certain Individual or HUF whose books of account are not required to be audited u/s 44AB(a)/(b) in the immediate preceding F.Y.) Rent of land or building does not exceed Rs. 50000/ per month.
  • 194 J ( Professional or technical service) Does not exceed Rs. 30000/-
  • 194 K (Income from units of Mutual fund) Does not exceed Rs. 5000/-
  • 194 O (Payment by e-commerce operator to e- commerce participant). If payment made to Individual or HUF e-commerce participant during the previous year does not exceed Rs. 5 lakhs.

Time of Deposit TDS

By an office of the Govt. and tax is paid without production of income tax challan. TDS: On the same day on which tax is deducted
By an office of Govt. and tax is paid accompanied by Income tax challan (ITNS281) On or before 7 days from the end of month in which tax is deducted
Tax is deducted/ collected by a person other than office of Government Income is paid or credited before March: within 7 days from the end of month in which tax is deducted.

  • Income paid or credited in the month of March: Tax should be deposited by April 30.
is deducted by a person other than office of Govt. and The AO has permitted quarterly deposit of tax deducted u/s 192, 194A, 194D and 194H
  • Tax Quarter ending:
  • June 30: By July 7
  • September 30: By October 7
  • December 31: By January 7
  • March 31: By April 30.
  • Tax is deducted by a person u/s 194-IA (Challan – 26QB)
  • Tax is deducted u/s 194-IB ( Challan26QC)
Within 30 days from the last date of month in which tax is deducted

TDS Payment

  • TDS should be deposit in Challan No. 281
  • TDS will have to deposit through internet banking.
  • Indicate accurate PAN in challan
  • Minor Head of Challan – 200 : TDS payable by tax payer
  • Minor Head of Challan – 400: TDS Regular assessment raised by Income Tax Department.
  • Amount of TDS, Interest, Late filing fee, penalty etc, should be separately shown while filing the challan
  • Note down BSR code, Challan serial number, Date of payment, and amount of challan. This will help you in case challan is misplaced.

Time limit for issuing TDS certificate in case of other than salary

For the Quarter ending Form No 16A
June 30 August 15
September 30 November 15
December 31 February 15
March 31 June 15

Consequences for Failure

Late filing fees for TDS Return U/s 234E: Mandatory late filing fees U/s 234E of Rs 200/- per day subject to maximum of TDS amount.

Penalty for Late filing or non filing of TDS Return U/s 271H: Failure to filing TDS return within 1 year from specified date will attract minimum penalty of Rs. 10000 and maximum penalty of Rs. 100000/-

Applicability of Interest on Non/ Late deduction TDS and Late payment of TDS :

  • i) Late Deduction: Interest @ 1% p.m. for late deduction of TDS on applicable amount.
  • ii) Late remittance: Interest @ 1.5% p.m. for late remittence on applicable amount

Penalty U/s 271C upto the amount of TDS if not deducted and paid to the Government account

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