Tax Deducted at Source

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Tax Deducted at Source (TDS) is a means of collecting income tax in India, governed under the Indian Income Tax Act of 1961. Any payment covered under these provisions shall be paid after deducting prescribed percentage. It is managed by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS). It has a great importance while conducting tax audits. Assessee is also required to file quarterly return to CBDT. Returns states the TDS deducted & paid to government during the Quarter to which it relates.

TDS on immovable property[edit]

Section 194IA of Income Tax Act by Freakans.[1]

  • This provision is applicable in respect of transactions effected on or after June 1, 2013.
  • It seeks deduction of tax at source on transfer of certain immovable property other than agricultural land
  • Any person being a transferee who is liable to Pay to a resident by way of consideration for transfer of any immovable property exceeding 50 Lakhs shall at the time of credit of such sum to the account of the transferor or at the time of payment in whatever manner, has to deduct tax at source at 1% only

This TDS is required to be deducted by buyer of the property, as against other TDS deduction where in, seller deducts income tax and deposit TDS with the government.[2]

TDS on contractor[edit]

Section 194C of Income Tax Act[3]

Section 194C of Income Tax Act - Tax need to be deducted 1% (for individual, HUF)/ 2% (for others) of payment where payment is made for carrying out any work (including supply of labour for carrying out any work and advertisements) by a contractor/sub-contractor. Such work must be in pursuance of a contract (including sub contract) between the contractor and payer. TDS is to be made at the time of credit to the account of contractor or at the time of payment in cash or by cheque or draft or by any other mode whichever is earlier.

TDS on rent[edit]

Section 194I covers TDS on Rent [4] and the present TDS rates in case of Land and Building rent is 10% and in case of Machinery it is 2%,

TDS Certificates[edit]

A deductor is required to issue a TDS certificate to the deductee within a specified time.[5]

He has to issue TDS Certificates within one month of the next financial year.

Impact of non-compliance to TDS[edit]

Income Tax Act, 1962[6]

  • Disallowance u/s. 40(a) (ia) of Income Tax Act, 1962 (Act)
  • Raising of demand u/s. 201(1) of the Act
  • Charging of Interest u/s. 201(1A) of the Act.
  • Levying penalty u/s. 271C of the Act.

TDS rate chart for PY 2014-15 & AY 2015-2016[edit]

For PY 2014-15 asd & AY 2015-16. Tax is deductible at source at the rates given in table (Infra). If PAN of the deductee is not intimated to the deductor, tax will be deducted at source by virtue of section AA either at the rate given in the table or at the rate of 20 per cent, whichever is higher. Further, under section 94A(5), if payment or credit is made or given to a deductee who is located in a notified jurisdictional area, tax is deductible at the rate given in the table or at the rate of 30 per cent, whichever is higher amount.[7]

See also[edit]


External links[edit]