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Deduction of Tax at Source and E-tds Return
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Transcript of Deduction of Tax at Source and E-tds Return
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DEDUCTION OF TAX AT
SOURCE
Dr.Dharuv Pal Singh
Associate Professor
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Agenda
Rationale for Tax Deducted at
Source (TDS)TDS on different types ofPaymentPerson making payment Obligations
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Rationale
Every citizen is liable to pay Income Tax on his income as per law
Tax on income shall be payable by deduction or collection at sourceor by advance payment in accordance with the other provision
Tax deduction liability is a vicarious liability and the principal liabilityis of the person who is taxable in respect of such income
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Why TDS?
Overview
Pay as you earn (PAYE) scheme
Ensure regular flow of funds for theGovernmentHelps in widening the tax base
Reporting of correct income
Check tax evasion
Early collection of the revenue by thegovernment
Cheapest mode of collection andrecovery of taxDeduction at the time ofpaymentor credit, whichever event is
earlier
Deposit within one week from end ofmonth of deduction
Income credited / paid on last day of
financial year, tax withheld depositedwithin period of two months from last day
Default attracts Disallowance of expenses
Penal Interest
Penalty
Prosecution
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When and How tax is be deducted at sourcefrom salary [ sec.192]
The summarized provision of section 192 are given below
Who is the payer Employer
Who is the recipient Employee
Payment covered Taxable salary of the employee
At what time tax has to be deducted at source At the time of payment
Maximum amount which can be paid without taxdeduction
The amount of exemption limit (i.e. Rs. 1,90,000 / Rs 2,40,000 / Rs 1,60,000for the financial year 2009-10
Rate of tax deduction at source Normal rates applicable to anindividual.
When the provisions are not applicable -
Is it possible to get the payment without taxdeduction or with lower tax deduction
The employee can make anapplication in Form No. 13 to theAssessing Officer to get a certificateof lower tax deduction or no taxdeduction
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Case StudyX is in employment of A Ltd, drawing salary of Rs.5,50,670, during the
financial year 2009-10. he contributes Rs 40,000 towards public providentfund. The following information is submitted by X in respect of other
income to his employer.Rs
Income from consultancy 70,000
Tax deducted by the payer under section 194J 7,000
Expenses on earning the above income 68,250
Short-term capital loss (-)6,000Loss from self occupied house property (-)40,000
Loss from let out house property (-)61,000
Tax deducted by the payer of rent 6,240
On receipt of the above information A Ltd will make the following two computations -
Computation -1:- Under this computation, all other income declared by theemployee will be considered
Computation- 2:- Only Salary income will be considered.
It may be noted that in the two computations, house property loss ( from let out aswell as self-occupied property) will be considered. How ever no other loss will be
considered
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Computation 1
Rs
Computation 2
Rs
Salary 5,50,670 5,50,670
House Property loss (-)1,01,000 (-)1,01,000
Short-term capital loss - -
Consultancy income [ Rs. 70,000(-) Rs.68,250 1,750 NA
Gross Total Income 4,51,420 4,49,670
Less: Deduction under section 80 C 40,000 40,000
Net income 4,11,420 4,09,670
Tax 37,373 37,012
Less: Tax deducted by others:-
By tenant under section 194-I 6,240 6,240
By payer of consultancy fees under section 194J 7,000 -Balance 24,133 30,772
Tax to be deducted by the employer is Rs 30,772
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When and how tax is to be deducted at source from interest on
securities[ Sec.193]
Who is the payer Payer of interest on securities
Who is the recipient A resident person holdingsecurities
Payment covered Interest on securities
At what time tax has to be deducted atsource
At the time of payment or at allthe time of credit, which ever isearlier
Maximum amount which can be paidwithout tax deduction
--
Rate of tax deduction at source 10%
When the provisions are not applicable Interest on Central/StateGovernment securities
Is it possible to get the payment without
tax deduction or with lower tax deduction
Application in Form no 13
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When and how tax is to be deducted atsource from dividends [ sec. 194]
Who is the payer Domestic Company
Who is the recipient Resident shareholder
Payment covered Deemed dividend undersection 2(22)(e)
At what time tax has to be deducted at
source
At the time of payment
Maximum amount which can be paidwithout tax deduction
--
Rate of tax deduction at source 10%
When the provisions are not applicable Dividends covered by section115-O
Is it possible to get the paymentwithout tax deduction or with lower tax
deduction
Dividends covered by section115-O,Form no 13,Form no15G
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When and how tax is to be deducted at source from
interest other than interest on securities [ Sec. 194A]Who is the payer Any person paying interest other than interest on
securities ( not being an individuals or a Hinduundivided family whose books of account are notrequired to be audited under section 44AB in theimmediately preceding financial year
Who is the recipient A resident person
Payment covered Interest other than interest on securitiesAt what time tax has to be deducted at source At the time of payment or at all the time of credit,
which ever is earlier
Maximum amount which can be paid withouttax deduction
If the amount of payment or credit is Rs5,000 orless than Rs 5,000 ( from June 1,2007 tax is notdeductible if payment/credit does not exceed the
amount Rs, 10,000Rate of tax deduction at source 10%
When the provisions are not applicable For a few cases
Is it possible to get the payment without taxdeduction or with lower tax deduction
Interest does not exceed limit ,interest iscredited or paid to banking co ,cop bank ,LIC
,UTI, by firm to partners ,PO deposits ,motoraccident claim not exceed 50,000
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When and how tax to be deducted at source from winningsfrom lotteries or crossword puzzles [ Sec.194B]
Who is the payer Any person paying winnings fromlotteries/crossword puzzles / cardgames/ others games.
Who is the recipient Any person
Payment covered Winnings from lotteries/crossword
puzzles/card games/other games
At what time tax has to be deducted atsource
At the time of payment
Maximum amount which can be paid withouttax deduction
If the amount of payment isRs5,000 or less than Rs, 5,000
Rate of tax deduction at source 30%
When the provisions are not applicable ----------
Is it possible to get the payment without tax
deduction or with lower tax deduction
Not possible
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When and how tax is to be deducted at source fromwinnings from horse races [ Sec. 194BB]
Who is the payer Any person paying winningsfrom horse races.
Who is the recipient Any person
Payment covered Winnings from horse races
At what time tax has to be deducted atsource At the time of payment
Maximum amount which can be paidwithout tax deduction
If the amount of payment isRs2,500 or less than Rs, 2,500
Rate of tax deduction at source 30%
When the provisions are not applicable ----------
Is it possible to get the payment withouttax deduction or with lower tax
deduction
Not possible
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When and how tax is to be deducted at sourcefrom insurance commission [ Sec.194D]
Who is the payer Any person paying insurancecommission
Who is the recipient A resident person
Payment covered Insurance commission
At what time tax has to be deducted at
source
At the time of payment or at the
time of credit, whichever isearlier
Maximum amount which can be paidwithout tax deduction
If the amount of payment isRs5,000 or less than Rs, 5,000
Rate of tax deduction at source 10%
When the provisions are not applicable ----------
Is it possible to get the payment withouttax deduction or with lower tax deduction
The recipient can make anapplication in Form No.13 to theAssessing Officer to get a
certificate of lower tax deductionor no tax deduction
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When and how tax is to be deductible at source from payment to non-
resident sportsmen or sports associations [Sec.194E]
Who is the payer Any person making payment to non-residentforeign citizen sportsmen or non-resident
sports association or institution
Who is the recipient Non-resident foreign citizen sportsman ornon-resident sports association or institution
Payment covered Payment to non-resident foreign citizensportsman or non-resident sports association
or institution
At what time tax has to be deducted atsource
At the time of payment or at the time of credit,whichever is earlier
Maximum amount which can be paidwithout tax deduction
Nil
Rate of tax deduction at source 10%
When the provisions are not applicable ----------
Is it possible to get the payment without tax
deduction or with lower tax deduction
No provision
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When and how tax is to be deductible from payment in respect of
National savings Scheme [ Sec. 194EE]
Who is the payer Post Office
Who is the recipient Any personPayment covered Payment (principal+ Interest)
out of National SavingScheme,1987
At what time tax has to be deducted at
source
At the time of payment
Maximum amount which can be paidwithout tax deduction
If the amount of payment is Rs2,500 or less than Rs 2,500
Rate of tax deduction at source 20%
When the provisions are notapplicable
The payment is made to legalheirs of the deceased depositor
Is it possible to get the paymentwithout tax deduction or with lower tax
deduction
If declaration is submitted u/ s197A
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When and how tax is to be deductible from payment on account of
repurchase of units of Mutual Funds or UTI [ Sec.194F]
Who is the payer Mutual Fund or UTI
Who is the recipient Unit holder under section80CCB
Payment covered Payment on account ofrepurchase of units referred toin section 80 CCB
At what time tax has to be deducted atsource
At the time of payment
Maximum amount which can be paidwithout tax deduction
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Rate of tax deduction at source 20%
When the provisions are notapplicable
-
Is it possible to get the payment
without tax deduction or with lower tax
No provision
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Wh d h t d d t t f i i b k
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When and how to deduct tax source from commission or brokerage[Sec.194H]
Who is the payer Any person is paying commission orbrokerage (not being an individual or a HUFwhose books of account are not required to
be audited under section 44AB in theimmediately preceding financial year)
Who is the recipient Any resident person
Payment covered Commission or brokerage (not beinginsurance commission)
At what time tax has to be deducted atsource
At the time of payment or at the time ofcredit, whichever is earliest
Maximum amount which can be paidwithout tax deduction
If the amount of payment is Rs 2,500 or lessthan RS.2,500
Rate of tax deduction at source 10%
When the provisions are not applicable -
Is it possible to get the payment withouttax deduction or with lower taxdeduction
The recipient can make an application inForm No.13 to the Assessing Officer to get acertificate of lower tax deduction or no tax
deduction
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When and how tax is to be deductible from Rent [Sec.194-I]
Who is the payer Any person paying rent (not being anindividual or a Hindu undivided family whosebooks of account are not required to be
audited under section 44AB in theimmediately preceding financial year)
Who is the recipient A resident person
Payment covered Rent
At what time tax has to be deductedat source
At the time of payment or at the time of credit,whichever is earlier
Maximum amount which can bepaid without tax deduction
If amount of payment during a financial year isRs.1,20,000 or less than Rs 1,20,000
Rate of tax deduction at source Use of machinery or plant or equipment-2%
Use of land or building or furniture 10%When the provisions are notapplicable
If payee is govt./local authority.
Is it possible to get the paymentwithout tax deduction or with lower
tax deduction
The recipient can make an application in FormNo.13
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When and how to deduct tax at source from payment of compensation
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When and how to deduct tax at source from payment of compensationon acquisition of certain immovable property [Sec.194LA]
Who is the payer Any person paying compensation/enhancedcompensation / consideration/enhanced considerationon account of compulsory acquisition of any land ( not
being rural agricultural land ) or building
Who is the recipient A resident person
Payment covered Compensation /enhanced compensation /consideration /enhanced consideration on account of compulsoryacquisition of land ( not being rural agricultural land ) orbuilding.
At what time tax has to be deducted atsource
At the time of payment or at the time of credit, whicheveris earlier
Maximum amount which can be paid withouttax deduction
If amount of payment is Rs 1,00,000 or less than Rs1,00,000 during a financial year
Rate of tax deduction at source 10%
When the provisions are not applicable Payment /credit before October 1,2004
Is it possible to get the payment without taxdeduction or with lower tax deduction
The recipient can make an application in Form No.13 tothe Assessing Officer to get a certificate of lower taxdeduction or no tax deduction
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When and how tax is to be deducted at source from other sums [ Sec.195]
Who is the payer Any person responsible for making payment to anon-resident.
Who is the recipient A non-resident person
Payment covered Any payment of non-resident other than salary
At what time tax has to be deducted atsource
At the time of payment or at the time of credit,whichever is earlier
Maximum amount which can be paidwithout tax deduction
-
Rate of tax deduction at source -
When the provisions are not applicable If in the hands of the recipients, the amount is notchargeable to tax in India
Is it possible to get the paymentwithout tax deduction or with lower tax
deduction
The recipient can make an application in FormNo.13 to the Assessing Officer to get a certificate
of lower tax deduction or no tax deduction
TDS from income or long term capital gain from foreign currency
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TDS from income or long-term capital gain from foreign currencybonds/Global Depository Receipts [ Sec.196C]
Who is the payer Any person responsible for paying inincome/long-term capital gain from
GDR/bondsWho is the recipient A non-resident person
Payment covered Income/long-term capital gain fromGDR/bonds
At what time tax has to bededucted at source At the time of payment or at the time ofcredit, whichever is earlier
Maximum amount which can bepaid without tax deduction
-
Rate of tax deduction at source 10%When the provisions are notapplicable
Dividend referred to in section 115-O
Is it possible to get the paymentwithout tax deduction or withlower tax deduction
No provision
When and how to deductible at source from income of Foreign
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When and how to deductible at source from income of Foreigninstitutional investors from securities [Sec.196D]
Who is the payer Any person responsible for paying income inrespect of securities referred to in section 115AD
Who is the recipient Foreign Institutional Investor
Payment covered Income in respect of securities referred to insection 115AD
At what time tax has to be deducted at
source
At the time of payment or at the time of credit,
whichever is earlier
Maximum amount which can be paidwithout tax deduction
-
Rate of tax deduction at source 20%
When the provisions are not applicable Dividend referred to in section 115-O; capital gainarising from transfer to securities referred to insection 115AD
Is it possible to get the paymentwithout tax deduction or with lower tax
deduction
No provision
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Quarterly return to the Income-tax DepartmentEvery person , deduction tax at source, is required to submit return of tax deducted as follow
Different payment When deductor is (a) company (b)Government (c) any person who is
required to get his account auditedunder section 44AB in theimmediately preceding financialyear; or (d) a person in whose casethe number of deductors records ina quarterly statement for anyquarter of the immediatelyproceeding financial year is equal toor more than 50
In case theperson
deducting taxis any otherperson
Time limit forsubmission of return by
the person deductingtax
Salary Form No.24Q in electronic format andForm No. 27A
Form No. 24Q Within 15 days from theend of each quarter (76days in the case of lastquarter
Payment (other thansalary ) to a resident
Form No. 26Q in electronic format andForm No. 27A
Form No. 26Q Within 15 days from theend of each quarter(76days in the case of lastquarter)
Payment (othersalary) to a non-resident
Form No. 27Q in electronic format andForm No. 27A (Quarterly )
Form No. 27Q(Quarterly)
do
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Non deduction or failure
to pay TDS
Non-Deduction
Consequences of Failure to Deduct or Pay
Deduction andFailure to pay
Deduction andDelay in Payment
Shortfall inDeduction
Penalty-271C
Disallowance ofExpenditure,subject to 40(a)(i)/ 40(a)(ia)
Interest-201(1A)
Penalty-271C
Prosecution-276BInterest-201(1A)
Disallowance ofExpenditure,subject to 40(a)(i)/ 40(a)(ia)
Penalty-271C
Disallowance ofExpenditure,subject to 40(a)(i)/ 40(a)(ia)
Interest-201(1A)
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