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Delhi

Short Notes On TDS Rates

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Published in: Accountancy | Accounts | Indirect Tax
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TDS Rate short notes for 2019-20

C. G / Bangalore

2 years of teaching experience

Qualification: M.Com, ICWA Inter

Teaches: Accountancy, Costing, Statistics, Financial Management, Indirect Tax, Management Subjects

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  1. TDS - Tax Deduction at Source Income Tax Update : Budget 2019-20 Nil tax on income upto Rs. 5 Lakhs. The exemption limit of Rs. 5 lakh combined with deductions on savings available under Sector 80 will mean that people earning Rs 6.5 lakh may not be required to pay any Income Tax. Standard Deduction of Rs. 50,000 has been allowed for salaried taxpayers. T DS threshold on rental income raised to Rs. 2.4 Lakhs from Rs.1.8 Lakhs. T DS threshold on interest on bank and post office deposits raised to Rs. 40,000 from Rs. 10,000. Budget 2019 Updates Section TDS Rate TDS Rate for Individual/ for Non Section and Nature of Payment HUF (Indian Resident) Residents Section 192 Salaries Average rates as applicable 10% in case of payment by companies in excess of Rs. 200,000 per annum 5% - From 1st June 2017, in case of payment by individuals, HUF and businessmen in excess of Rs. 50,000 per month in India Average rates as applicable 192A 1941 1941 193 194 194A Payment of accumulated balance due to an employee Rent on plant and machinery Rent on land, building, houses, offices, flats, residential apartments, furniture and fittings Plant and machinery Land or building or furniture or fittings Interest on Securities Dividends Interest other than securities" "Interest on
  2. 194B 194BB 194C 194D 194DA 194E 194EE 194F 194G 194H 1941 A 194 J 194LA 194LB Section- Interest by way of winning from lotteries, crossword puzzles, games etc. Income by way of winning from horse race Payment to subcontractor contractor/ Insurance Commission Payment in respect of life insurance policy Payment to non- resident sports association Payment in respect of deposits under National Savings Scheme Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India Commission etc. on sale of lottery Commission or brokerage Payment on transfer of certain immovable property other than agricultural land Sum paid by way of fees for Professional Services Payment of compensation on acquisition of certain immovable 1% 5% 1% 5% 5% 1% property of Payment interest infrastructure debt fund on Business trust shall deduct tax while distributing, any interest received by it from SPV or from renting or 194LBA(1) leasing out any real estate asset owned by it Business trust shall deduct tax while Section- distributing any interest received by 194LBA(2) it from SPV to its unit holders Business trust shall deduct tax while distributing any income received by Section- it from renting or leasing out any 194LBA(3) real estate asset owned directly by it to its unit holders 5% 5% 5%
  3. Section- 194LBB Section- LBC Section- 194 LC Section- 194LD Investment fund paying an income to a unit holder Income in respect of investment made in securitization trust Payment of interest by an Indian Company in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or Qualified Foreign Investor including long term infrastructure bonds Individuals- 25% HUF- 5% 5% Above TDS rates are applicable when the deductee has provided its PAN number to the deductor. In case PAN of deductee is not updated, the deductor must deduct T DS at twice the normal rate. Income Tax TDS TDS applies to most forms of income including salary, professional income, commission, etc. T DS simply stands for tax deducted at source that is where the income gets generated. As per mentioned in the income tax act, a person who makes payments is required to deduct TDS at prescribed rates and deposit the same with the income tax department. The amount is adjustable by the tax department against the tax liability of the person or entity (identified by its PAN number) whose tax has been deducted. T DS is deducted as per the income tax rate for a particular financial year. TDS can be deducted from salaried employees, freelancers, commission payments etc. Process of online TDS payment The process of T DS is followed by making payment of TDS. The first step in T DS payment is to obtain TAN number. TDS payments cannot be made without TAN number. Every person or company or entity responsible for deducting T DS must mandatorily obtain a Tax deduction Account Number or TAN number. This is a ten digit alpha numeric number allotted by the income tax department on request. Note that TAN is different fro income tax permanent account number or PAN number. While one legal entity can obtain only one PAN, the same entity may obtain multiple TAN numbers if it operates multiple establishments
  4. responsible for deducting TDS. PAN number is a mandatory requirement for obtaining TAN number. Obtaining TAN number: Every person or company or entity responsible for deducting T DS must mandatorily obtain a Tax deduction Account Number or TAN number. aTAN number is a ten digit alpha numeric number allotted by the income tax department on request. Deductor who is liable to deduct TDS shall obtain TAN number and must quote the number in all returns. As per section 203A of income tax act, it is necessary for the asseesee to quote Tan number in all the communications related to TDS and if they fail to do so, a penalty of Rs. 10, 000 will be charged. TAN number can be easily obtained easily. A payment of Rs. 62 is to be made for application of TAN number. The employer can apply for TAN number online by visiting the link https://tin.tin.nsdl.com/tan/form49B.html. Note that TAN is different from income tax permanent account number or PAN number. Deductor is then required to select the challan 281 for T DS payment. After selecting the challan, Deductor needs to fill his Tan number. TAN number would be checked for the validity online automatically. Once the TAN number is validated, Deductor is required to fill other details such as accounting head under which the payment is to be made, address, name etc. Deductor is required to confirm the information filled and submit the challan for the further process of making the payment. Once an deductor submits the challan, the website will automatically route to the net banking page whereby the payment of T DS is made by logging in into the net banking page. On successful payment of TDS, a challan counterfoil is displayed that contains Challan Identification Number (CIN), payment details and the bank name through which the payment is made. CIN number is mainly divided into three parts that contains BSR code (7 digits) of bank, date of deposit and challan serial number. The counterfoil is the proof of payment being made. Deductor can also check the status of challan on "Challan status enquiry" on NSDL - TIN website after a week of making payment using the CIN so generated. After depositing TDS to the income tax department, Deductor shall to issue FORM 16 (in case of salary), Form 16A ( in case of other income) and Form 26QB ( in case of property) or T DS certificate to the employee on quarterly/ annually. Interest on late payment of TDS If a deductor delays the payment of T DS to the Central Government or if he delays the deduction then he is liable the penalty. to pay As per section 201, interest will be levied at the rate of 1% every month for delay in deduction and 1.5% every month for delay in remittance after deduction.
  5. Payments covered by TDS Almost all forms of payments common Following are the incomes covered under TDS: Salary Dividend Rent Transfer of immovable property Insurance commission Interest on securities Winning from lottery Winning from horse race Fees for technical or professional services Payment to contractor or sub contractor Commission on brokerage Commission on sale of lottery tickets Repurchase of units of Mutual Funds Deposits under NSS Due date for payment of TDS for FY 2016-17 are covered by TDS. Month April May June July August Due Date of TDS Payment 7th May 7th June 7th July 7th August 7th September September 7th October October 7th November November 7th December December 7th January January 7th February February 7th March March 30th April
  6. TDS Return Process TDS Return Form There are different forms for different taxpayers to file TDS returns. The following forms are: TDS Return Form Deductee type Form 24Q Form 26Q Form 27Q Deductions made in case of salaried employees Deductions made in case of non salaried employees Deductions made in case of NRIs TDS return due date Quarter 30th June Due Date for filing of Return for all deductors 31st July 30th September 31st October 31st December 31st January 31st March 31st May TDS Refund T DS is deducted in advance and most often there is an inconsistency in the investment claimed to be made in the year and the actual investment made. Hence, there is a chance of excess TDS deduction which is refundable by the government in accordance with the procedure as per TDS refund. TDS refund process There is no specific form that is required to be filled. You can claim your TDS refund while filling your income tax return. You have to show the computation of your income and the total T DS deducted. The income tax software will automatically check the details filled by you and will reflect your excess T DS if there is any. Once you apply for the TDS refund, it may take few months on part of income tax officer in sanctioning the refund. However, if the amount of T DS refund is more than 10% of total tax paid for the year, then government will be liable to pay you interest at the rate of 6% per annum for the delayed refund. TDS refund- check status online You can visit the website https://tin.tin.nsdl.com/oltas/refundstatuslogin.html to check the status of your refund. You are required to furnish your PAN details and the year for which the refund was filed.
  7. You can also check the status of your refund by contacting the help desk of SBI through email at [email protected] TDS on sale of property As per section 194- IA of Income Tax Act, when a buyer buys an immovable property costing more than Rs. 50 lakhs, he has to deduct T DS when he pays to seller. The immovable property can be any piece of land or building other than the agricultural land. The buyer is required to deduct 1% T DS of the total sale consideration. The notification on T DS on immovable property was announced in budget for the year 2013-14. Key Points T DS is to be deducted by buyer not the seller Property should cost more than Rs. 50 lakhs and then only T DS will be deducted. T DS will be deducted on the entire amount of sale Buyer does not need to obtain TAN number. In case the property is purchased by seller, PAN number is required or T DS will be deducted at the rate of 20%. Buyer is also required to show his PAN number. T DS has to be deposited along with Form 26QB within 7 days from the end of the month in which T DS was deducted. Buyer is required to present the T DS certificate to the seller. Seller is required to obtain Form 16 and buyer requires Form 26QB. T DS is required to be deducted in all cases irrespective of the capital gains arising to seller. In case of home loan, TDS is to be deducted at the time ofmaking payment to the seller, not at the time of paying EMI to the bank. In case of two or more buyers, separate Form 26QB is to be filled. Both buyer and seller are required to file income tax return in the year of purchase. Note: In case there are two buyers and the share of each individual is less than Rs. 50 lakhs but aggregate value of land is more than Rs. 50 lakh, the same procedure of deducting the TDS will be followed by buyer. Penalty for nonpayment or delayed TDS on property • In case TDS is not deducted by the buyer then he is required to pay interest at the rate of 1% per month as penalty on the amount not deducted. • In case TDS is deducted but not paid on time, then the buyer has to pay interest at the rate of 1.5% per month as penalty for delayed TDS payment. Penalty for late filing of form 26QB In case buyer gets late in filing T DS return, a penalty of Rs. 200 per day would be levied.
  8. 2019-03-01 : PAN link to bank accounts must for tax refunds The Income Tax department has advised all the taxpayers to link PAN with their bank accounts from March 1, 2019. The department also has cleared that it is mandatory to link PAN with your bank account (either savings, current, cash or overdraft) to receive the electronic funds directly from the department into their bank account. As earlier, the department had issued tax refunds either in bank accounts or through account payee cheques, depending on the category of taxpayers. 2019-02-18 : Linking Aadhaar-PAN is mandatory for tax filers announces CBDT The Central Board of Direct Taxes (CBD T) has announced that linking ofAadhar-PAN is necessary for all those who file an Income Tax Return (IT R). The procedure has to be completed by March 31, 2019. As per the source, only 23 crore PAN cardholders and over half of the total PAN card holders have so far linked their PAN cards with biometric ID Aadhar. 2019-02-01 : Government proposes to raise TDS on interest income to Rs. 40,000 The Finance Minister has proposed to increase the limit for tax deduction at source (TDS) on interest income on post offices and deposits in banks from Rs. 10,000 to Rs. 40,000 per annum. 2019-02-01 : No income tax for individuals with income up to Rs. 5 lakh Piyush Goyal announced much-awaited relief on Income Tax by increasing a tax rebate to Rs.12,500, this will effectively make the tax calculated on income up to Rs. 5 Lakhs as NIL. In addition, the investment made in the Provident Fund and prescribed equities will also be available for deduction upto Rs. 1.5 lakhs when calculating total income for tax calculation. However, it should be noted that there is no change in tax slab. 2019-01-25 : Upcoming budget to aim at making policies to reintroduce income tax deduction on home loan In a bid to reduce the ongoing stress in the real estate sector, the government is planning to take some aggressive measures to repair the stress in FY20. To stimulate housing demand in F Y 20, the budget should aim at policies to reintroduce income tax deduction on principal and interest on a second home loan. In addition, Income tax deduction limit on interest paid should be hiked to Rs. 5 lakhs especially in Tier 1 cities. Similarly, IT deduction allowed on principal paid should be increased.

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