The TDS compliance of the AY 2020-21 & FY 2019-20 started from 1-4-2019, I Prepared the brief about TDS and tax provision along with important details.
TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.
The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deductee. It is the deductor’s responsibility to deduct TDS before making the payment and deposit the same with the government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is linked to the PAN of the deductor and deductee.
TDS is deducted on the following types of payments:
- Salaries
- Interest payable by Assessee
- Rent payments
- Consultation fees
- Professional fees
The Assessee is mandatorily required to deduct tax at source (“TDS”) in applicable cases on various payments (by way of salaries, payment to vendors, rent, etc.) and deposit the same with the Government, within the stipulated time. A short deduction of TDS or non-deduction results in the Assessee being treated as an ‘assessee-in-default’ and consequently, the Assessee is liable for payment of interest on TDS, penalty, etc. Also, such payments are disallowed as a deduction under the Income-tax Act, 1961 where there is a default in deduction and/or deposit of TDS.
1) Finance Act, 2019 has brought some minor changes in the TDS provisions. For your ready reference, TDS rate chart for FY 2019-20 is provided below:
- 194A the interest limit is enhanced from Rs. 10,000/- to Rs. 40,000/- in case of payer is bank, co-operative society and post office. If the payee is senior citizen, the limit is Rs. 50,000.
- 194-I the monetary limit enhanced to Rs. 2,40,000/- from Rs. 1,80,000/-. Accordingly, if the rent payment does not exceed Rs. 2,40,000/- in a financial year, deductor is not require to deduct the TDS.
A) Commonly used TDS Provision for payments made to persons resident in India (Individuals, Firms, Companies, etc.):-
Commonly used TDS Provision for payments made to persons resident in India (Individuals, Firms, Companies, etc.):-
| Section | Nature of Payment for Domestic Transactions | Threshold Limit | Individual / HUF | Others |
| Rs. | TDS Rate (%) | |||
| 192 | Salaries (Annexure-I) | – | Basis on Slab | – |
| 192A | Premature withdrawal from EPF | 50,000 | 10 | – |
| 193 | Interest on Securities/ Debentures | 10,000 | 10 | 10 |
| 194A | Interest (Banks, co-operative society and post office)/ For Senior Citizen Rs. 50000 | 40,000/ 50000 | 10 | 10 |
| Interest (Others) | 5,000 | 10 | 10 | |
| 194C | Contractor – Single Transaction | 30,000 | 1 | 2 |
| Contractor – During the F.Y. | 1,00,000 | 1 | 2 | |
| Transporter (44AE) declaration with PAN | – | – | – | |
| 194H | Commission / Brokerage | 15,000 | 5 | 5 |
| 194I | Rent of Land and Building – F&F | 2,40,000 | 10 | 10 |
| Rent of Plant / Machinery / Equipment | 2,40,000 | 2 | 2 | |
| 194IB | Rent by Individual / HUF (wef 01.06.2017) | 50000/PM | 5 | – |
| 194IA | Transfer of certain immovable property other than agriculture land | 50,00,000 | 1 | 1 |
| 194J | Professional Fees / Technical Fees /Director fees/ royalty | 30,000 | 10 | 10 |
| Payment to Call Centre Operator (w.e.f. 01.06.2017) | 30,000 | 2 | 2 |