TDS
TDS is the abbreviation for the term- Tax Deducted at Source. As the name suggests, it is the deduction from the source of generation of Income. It means that it is deductible by the one making the payment known as Deductor. And it is deducted from the person receiving the payment known as the Deductee. It is an eternal source of income of Government, collect to eliminate Tax Evasion by taxing the income at its source rather than later through the self. It further administers the duty of tax collection between the Payers and the Tax Administration. The Income Tax Act, 1961 governs the TDS through the Central Board of Direct Taxes besides the Indian Revenue Services.
Any person who is making a payment concerning the above-given sections can deduct the TDS. They are also responsible to submit it to the Government. In the case of the payments related to Section 194 A, 194C, 194H, 194I, and 194J, TDS is only chargeable if the turnover is more than 1 crore and the professional receipts go up to Rs. 25 lakhs in the previous year.
The information relating to TDS deduction from an individual is accessible through form 26AS. From the TRACES website or through the net banking account of an individual. The TDS rates chargeable for the annual year 2017-18 are:
| SECTION | BASIS OF INCOME | RATE | LIMIT OF EXEMPTION |
|---|---|---|---|
| 192 | Salary | AS PER CALCULATION | INCOME TAX SLABS |
| 193 | Interest on Securities | 10% | |
| 194 | Dividends | 10% | |
| 194-A | Interest other than Interest on Securities | 10% | Banking-Rs.10,000 Others- Rs. 5000 |
| 194-B | Winnings from Lotteries and Crossword Puzzles | 30% | Rs. 10,000 |
| 194-C | Payments to Contractors and Sub- Contractors | 1% to HUF/Individual, 2% to other than Individuals/HUF | Rs. 30,000 per contract, Rs. 1,00,000 per annum |
| 194-D | Insurance Commission | 5% | Rs. 15,000 per annum |
| 194-E | Payment to Non-Resident Sportsmen or Sports Association | 20% | |
| 194EE | Payment in respect of NSC | 10% | |
| 194F | Payment in respect of repurchase of units of Mutual Funds or UTI | 20% | |
| 194G | Commission on Sale of Lottery Tickets | 10% | Rs. 1000 |
| 194H | Commission/Brokerage | 5% | Rs. 15,000 per annum |
| 194I | Rent | 10%-Land and Building 2%-Plant and Machinery | Rs. 1,80,000 per annum |
| 194J | Fees on Technical and Professional Services | 10% | Rs.30,000 per annum |
| 194LA | Payment on Compensation of certain immovable property | 1% | Rs. 50,00,000 per annum |
| 196B | Long Term Capital Gain | 10% | |
| 196C | Income or Long Term Gain from Foreign Currency Bonds/ Global Depository Receipts | 20% | |
| 196D | The income of Foreign Institutional Investors from Securities | 20% |
If a person has his TDS Deducted at any source of income, he is liable to file a TDS Return and default on this part attracts penalty under Section 234-E of the Income Tax Act, 1961. TDS returns are to be filed every quarter, i.e.,
April to June- 30th June
July to September- 30th September
October to December-31st December
January to March- 31st March
Upon Default, in payment of TDS, there is a fine of Rs. 200 per day with no maximum limit, an interest of 1.5% per month as per Section 201(A), a fine as much as the TDS amount may be levied. Further, there may be prosecuted under Section 276-B. Which the taxpayer may be subjected to a rigorous punishment of three months which may extend up to seven years with a fine.
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