TDS Awareness Program�Under income tax act ,1961.

ON 02 SEPTEMBER 2022

Income Tax Officer, TDS Ward,

Puducherry

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What is TDS ?�

• Tax Deducted at Source is a mean of collecting income tax in India, under the Indian Income Tax Act of 1961. 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.

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Section 191�

• Any PERSON RESPONSIBLE for making payment under the Head “as in Section 192 to 194” shall at the TIME OF PAYMENT, Deduct Income-Tax on the amount payable.

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• Section 191: If tax not deducted, then income tax shall be payable by the assessee direct.

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• Explanation: Deductor who has failed to deduct tax, shall be deemed to be an assessee in default as per sec.201(1) in respect of such tax.

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Advantages of TDS�

TAX DEDUCTED AT SOURCE

• TDS ON SALARIES SECTION 192
• TDS ON OTHER INCOMES SECTION 193 TO 194LD
• DEDUCTIONS IN RESPECT OF PAYMENT TO NON-RESIDENTS SECTION 194E, 195, 196A TO 196D

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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.

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Powers to DDO u/s 192(2D)

When to deduct tax - discretion of deductee?

Allowances to the extent exempt under Section 10 of the I.T.Act,1961

• Section 10(5) – Leave Travel Concession.
• Section 10(10) – Death –Cum-retirement gratuity.
• Section 10(10A) – Commuted Value pension.
• Section 10(10AA) – Cash equivalent of pension (leave encashment)
• Section 10(13A) – House rent allowance.
• Section 80GG – Deduction in respect of rent paid by the assessee.

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Deductions under section 16

• Standard deduction u/s 16(ia) :

Applicability :

1. Computation of Income from SALARY.
2. Amount of Rs.50,000/- or the amount of salary, whichever is less shall be allowed as deduction from computing under the head salary.

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Professional Tax u/s 16(iii)

• Professional tax or tax on employment paid by an employee, level under a state act shall be allowed as deduction, such deduction is available only on actual payment.
• If an employer pays professional tax on behalf of his employee, then it will first be included in the salary as a perquisite, and the allowed as a deduction.

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Deduction under chapter VI-A

• U/s 80C – Deduction for certain Investments/Payments

Amount of deduction: Maximum along with deduction u/s 80CCC and 80CCD(1) or independently u/s 80C, restricted to Rs.1,50,000/-.

(Deduction in respect of life insurance premium, contributions to provident fund etc.)

• U/s 80CCC – Deduction for Contribution made to Annuity plans

Amount of deduction: Lower of amount deposited or Rs.1,00,000/-

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Continued…

• U/s 80CCD(1)- Deduction for contribution towards pension scheme.

Amount of deduction:

• Employee: Amount paid or 10% salary. Whichever is less.
• Any other assessee: Amount paid or 20% of gross total income, whichever is less.

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• u/s 80D- Deduction for Medical Insurance Policy.

Deduction as follows:

• Premium towards medical insurance policy for own or family
• Contribution made to the Central Government Health Scheme (CGHS) or
• Payment n account preventive health check-up or
• Contribution to any Scheme notified by Central Government in this behalf.

Eligible amount for deduction:

• In the name of Individual/Spouse/Dependent child Rs.25,000/-
• If the deduction is claimed for senior citizen (above 60 years), the maximum deduction is Rs.50,000/-

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• u/s 80E- Deduction for repayment of loan for Higher Education.
• Applicability: All Individuals.
• Maximum amount: any amount paid towards interest during the previous year.
• Period: Deduction is available for a maximum period of 8 assessment year including first year of repayment or until the interest is fully repaid whichever is earlier

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• u/s 80TTA- Deduction for interest on deposits in savings bank account.
• Interest Income or Rs.10,000/- whichever is less.
• Interest on deposits in a savings account with:-
• Banking company.
• Co-Operative Society.
• Post Office.

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WHO IS THE DEDUCTOR �other than salary

Duties of deductor

TDs on Insurance commission :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.

• 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.

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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 –

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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
• Furniture; or
• Fittings

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• Advance Rent

The Advance rent is paid ,it is subject to tax deduction at time of “payment”.

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.

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DEDUCTION OF TAX AT SOURCE FROM PAYMENT ON TRANSFER OF CERTAIN IMMOVABLE PROPERTY (Sec. 194-IA)

• 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

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• 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.

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TDS on fees for Professional/ Technical Services – Sec. 194J

• 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:-

• Fees
• Professional or Technical service
• Royalty
• Non-compete fees – sec.28(va).
• Any remuneration or fees or commission other than those on which tax is deductible u/s 192 to a Director of a company (W.e.f. 1.7.2012).
• If the deductor is an Individual or HUF, whose total sales, gross receipts or turnover exceeding Rs.1 Crore, in case business or Rs.50 lakhs in case of profession during prior previous year
• All other than the above
• Aggregate amount does not exceeds Rs.30 thousand no TDS has to be deducted.
• Rate of TDS: 10%

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Section 194N –Payment of certain amount in cash

Continued….

• The Scope of TDS on cash withdrawal has been extended to the non filers of income tax return for the three asst. years.

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• TDS @ 2% is required to be deduced if the withdrawer has not filed his tax return for three years and withdrawal during the year exceeds Rs 20 lakhs but less than Rs 1 crore.

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• For withdrawal more than Rs 1 crore TDS @ 5% to be deducted.

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• Amendment of Section 194N will be with effect from 01 July 2020.

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194-O – TDS ON PAYMENT TO E-COMMERCE PARTICIPANT

• A new section 194-O has been inserted providing for levy of TDS to bring participants of e-commerce within tax net.
• An e-commerce operator facilitating sale of goods or provision of services of an ecommerce participant, through its digital electronic facility or platform, is required to deduct tax @ 1% of the gross amount of sales or services or both, at the time of credit or payment, whichever is earlier, to the e-commerce participant.
• For this purpose, any payment made by a purchaser of goods or recipient of services directly to an e-commerce participant shall be deemed to be the amount credited or paid by e-commerce operator to e-commerce participant.
• No TDS is required to be deducted by an e-commerce operator from the sum credited or paid to an e-commerce participant, being an individual or HUF, if the gross amount of sales or services or both, of such individual or HUF during the previous year, through the e-commerce operator does not exceed Rs. 5 lakh and the PAN or Aadhaar Number of e-participant is furnished to e-commerce operator.
• In case of non-furnishing of PAN or Aadhaar Number by e-commerce participant, the rate of TDS would be 5% instead of 1% provided in the section.

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194Q – Tax Deduction at Source (TDS) on purchase of goods

• 194Q – W.E.F. 01.07.2021
• TDS is required to be deducted by person responsible for paying any sum to any resident for purchase of goods. 
• Rate of TDS would be 0.1%.
• Tax is required to be deducted by that buyer whose total sales, gross receipts or turnover from the business carried on by him exceed ten crore rupees during the financial year immediately preceding the financial year in which the purchase of goods is carried out.
• Also, Tax is required to be deducted by such person, if the purchase of goods by him from the seller is of the value or aggregate of such value exceeding fifty lakh rupees in the previous year.
• Also, if on a transaction a TDS or tax collection at source (TCS) is required to be carried out under any other provision, then it would not be subjected to TDS under this section. There is one exception to this general rule. If on a transaction TCS is required under sub-section (1H) of section 206C as well as TDS under this section, then on that transaction only TDS under this section shall be carried out.
• No TDS u/s 194Q or TCS u/s 206C(1H) if the income of the other party is fully exempt.
• No TDS for transaction of securities and commodities through recongnised stock exchanges.
• No TDS for transaction in electricity; renewable energy certificates and energy saving certificates.

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194R – TDS on perquisites

194S – TDS on TRANSFER OF VIRTUAL ASSET

The tax deducted must be remitted to government account before the due date specified [S 200, rule 30].

FILING e-TDS/TCS Returns

Consequences of default…

• Belated filing of TDS return.
• Section 234E provides that a fee of Rs.200 per day would be levied on a person who deducts tax at source.
• Failure to submit or furnishing incorrect statements for totally TDS & TCS returns – Leavy of minimum penalty of Rs.10,000/- and maximum Rs.1,00,000/- u/s 271H
• Short deduction/ Late deduction/Non deduction as per section 201 1% of interest will be levied.
• Late deposits of Tax as per section 201 1.5 % of interest will be levied.
• Failure to deduct the whole or any part of the Tax will levy a penalty of the sum equal to the amount of tax which was required to be deducted or payable.

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THANK YOU

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R.GANESAN

INCOME TAX OFFICER, TDS

Puducherry

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