Tax Deducted at Source (TDS) is a mechanism that has been introduced by the Income Tax Department. Under this, the responsible person is supposed to deduct a certain percentage of tax before making the payment to the receiver. The payment includes salary, commission, professional fees, interest, rent, etc.
ABC Ltd. makes a payment of 50,000 INR by the way of fees to Mr. X. In this case, the company shall deduct a tax amounting to 5,000 INR. The net payment will be 45,000 INR. This amount will then be deposited to the Government’s account by ABC Ltd.
Every person who is responsible for making payment of nature covered under the TDS provisions of Income Tax Act, 1961 shall be liable to deduct tax at source. In case of payments made u/s 194A, 194C, 194H, 194I and 194J, all assesses other than individual and HUF whose accounts are not subject to Tax Audit Under Section 44AB of the Income-tax Act, 1961 during the preceding financial year, is required to deduct tax at source.
* If an individual/HUF (who is not required to deduct tax u/s 194C, 194H or 194J) paid more than Rs. 50 lakh during the year to a resident then section 194M is applicable and tax is required to be deducted at the rate of 5% on such payment.
Under section 203 of the Income Tax Act, the tax deductor requires to issue a TDS certificate to the deductee within a stipulated period. This certificate is proof regarding the deduction and payment of the respective TDS amount to the bank. The deductee needs to produce the details of the certificate during the regular assessment of income tax for the adjustment of the TDS amount against the tax payable by the deductee or assesse.
In this case, the certificate should be issued in FORM 16 containing details like computation, deductions, and payment of taxes. This refers to the details submitted in Form 24Q.
The certificate, in this case, should be issued in FORM 16A containing the tax deducted and tax paid. For each section, separate certificates should be issued. This refers to the details submitted in Form 26Q and Form 27Q.
TDS in case of Section 194IA:
The certificate, in this case, should be issued in FORM 16B containing the amount of property, tax deducted amount and address of the property, etc. For each seller, a separate certificate should be issued.
TDS in case of Section 194IB:
The certificate, in this case, should be issued in FORM 16C containing the amount of rent, tax deducted amount and address of the property, etc. For each landlord, a separate certificate should be issued.
TDS in case of Section 194M:
The certificate, in this case, should be issued in FORM 16D containing the amount of payment, tax deducted amount and nature of the transaction, etc.
The certificate, in this case, should be issued in FORM 27D containing the tax collected and paid. This refers to the details submitted in Form 27EQ.
|The due date for payment of TDS challan
|The due date for filing of return for all deductors
|For Govt. sector
|For other deductors
– The tax deducted/collected at source is paid to the credit of the Government.
– Late filing fees and interest (if any) is paid to the credit of the Government.
– The TDS/TCS return is filed before the expiry of a period of one year from the due date specified in this behalf.
|Nature of Default
|Amount of Interest
|Non-deduction of tax at source, in whole or in part
|1% per month
|From the date on which tax is deductible to the date on which tax is deducted
|After deduction of tax, non-payment of tax either in whole or in part
|1.5% per month
|From the date of deduction to the date of payment
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