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TDS/TCS (AY 08-09)

192 Salary: RATE:

Avg of Income Tax.
- Will be deducted by the Employer, other than CG/ SG, and in case of multiple employer, then the employer chosen by the
employee. LIMIT:
- TDS will be deducted at the time of payment and not at the time of credit. Only if Salary income exceeds
the max. amount not chargeable
Computation: to tax, ie Rs 110,000/ 145,00/
195,000, as the case may be.
Options: 1 [Including Other Income] Options: 2[Excluding Other Income]
Salary...............................................................................xxxx Salary........................................................................xxxx
(-) Loss from HP...............................................................xxxx (-) Loss from HP........................................................xxxx
(+) Other Income [ NOT loss ]..........................................xxxx (-) Deduction u/s 80C - 80U.......................................xxxx
(-) Deduction u/s 80C – 80U.............................................xxxx [A]Taxable income for TDS........................................XXX
[A]Taxable income for TDS...............................................XXX
Tax on [A].......................................................yyyy
Tax on [A]...............................................................yyyy (+) Surcharge/ Ed. Cess.................................yyyy
(-) Rebate u/s 80E..................................................yyyy Total TDS for the year...................YYY
(+) Surcharge/ Ed. Cess.........................................yyyy
Total TDS for the year...............................YYY
- Higher of Option 1 & Option 2 will be the TDS, to be deducted from salary as percentage of total salary ie.
Average Rate = Total TDS ÷ Total Annual Salary.
- Non-cash Perquisite may not be considered for TDS calculation at the option of the employer.

193 Interest on Securities: RATES:

10% for non-corporate,
To be deducted by the payer, at the time of credit or actual payment, whichever is earlier, to a resident. 20% for corporate.
EXEMPTED from TDS:
• Central/State Govt securities. However, TDS is attracted in case of 8% Savings (Taxable) Bonds 2003, if interest
payable exceeds Rs 10,000 during the FY,(Amd-07)
• Debentures issued by any institution/authority/public sector company/co-operative society notified by CG,
• Debentures issued by widely held company, which is listed in a recognized stock exchange in India, if interest is paid out
by account payee cheque and the aggr amt of interest paid/payable to the holder in the FY does not exceed Rs 2,500,
• Securities beneficially owned by LIC/ GIC/ any other insurer,
• Interest accruing Army Welfare Fund,
• Interest accruing to PF,
• Deep Discount Bond. Tax is payable at the time of redemption. If tax is paid on interest, then at the time of redemption,
relief can be claimed, u/s 197 or 197A
• Application is made in Form 13 or declaration is made in Form 15G.
194 Dividends: 20%
Only in case of deemed dividend u/s 2(22)(e)

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EXEMPTED from TDS

• Dividends u/s 115O [i.e. normal dividend]
• Dividends u/s 2(22)(e), received by and individual, where,
- the dividend is paid by the company by an A/C Payee cheque, and
- aggr of dividend distributed by the company to the individual does not exceed RS 2,500
• Application is made in Form 13 or declaration is made in Form 15G.
194A Interest other than interest on securities: RATES:
10% for non-corporate,
To be deducted by any payer, other than Individual or HUF, at the time of credit or actual payment, whichever is earlier, to a 20% for corporate.
resident
NB: Individual or HUF, will be liable to TDS, under this section, if gross receipt/ sales/ TO exceed Rs 40 lakh in case of business LIMITS:
or Rs 10 lakh in case of profession in FY, preceding the current FY. Only if aggr amt during the FY
- TDS is to be deducted from gross amount and not from the net amount payable after adjustment of mutual debts. exceeds Rs 5,000.
In case of:
EXEMPTED from TDS: - time deposits with a banking
• Paid by a firm to its partners, company/ co-operative society
• Paid by a co-operative to its members or other co-operatives, engaged in banking business,
• Paid by C/G under any scheme of direct tax, - deposits with PO under notified
• Paid to a banking company/ co-operative/ public financial inst/ LIC/ UTI, schemes,
• Paid in respect of deposits in PO(Time deposits/ Recurring/ MIS), IVP, KVP,NSC, Banks(excluding Time deposits), Co- the limit is Rs 10,000.(Amd-07)
operative society,
• Paid as compensation awarded by Motor Accidents Claims Tribunal if such payment does not exceed Rs 50,000,
• Paid by Offshore Banking Unit, on deposits/ borrowal, to RNOR,
• Paid by Infrastructure Capital fund/ comp. or public sector company on Zero Coupon bonds.
• Application is made in Form 13 or declaration is made in Form 15G
Interest includes:
- Interest under Land Acquisition Act. But interest on delayed compensation in case of compulsory acquisition is not hit by
this section.
- Interest on Hundi.
- Interest paid by the consignor to the commission agents.
NB: If deposit is made in joint names, in absence of evidence, both the joint holders will be treated as payees and sec 194A will
be applicable accordingly.
194B Winning from lotteries or crossword puzzles or any other game: 30% Only if exceeds Rs 5,000
in a FY
To be deducted at the time of payment of full prize, or if paid in installments, at the time of payment of each installment.
If prize consists of both cash and kind, TDS will be calculated on the total value of prize.
194BB Winning from Horse race: 30% Only if exceeds Rs 2,500
in a FY

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194C Payment to Contractors/ Sub-contractors: RATES:

2% for contractors.
TDS is to be deducted at the time of payment or credit under the following 2 circumstances. 1% for sub-contractors/ Adv.
1. To be deducted by the specified persons, in respect of payment to any resident contractor for carrying out any work (including
supply of labour for carrying out any work), in pursuance of a contract between them. LIMTS:
Specified persons are as follows: TDS, only if any of the 2
• CG/SG conditions is satisfied:
• Local Authority 1. Payment exceeds Rs 20,000
• Corporation established by or under a Central/State/Provincial Act in single payment, or;
• Company 2. Payment exceeds Rs 50,000
• Firm in aggr in a FY.
• Individual or HUF, if gross receipt/ sales/ TO exceed Rs 40 lakh in case of business or Rs 10 lakh in case of profession
in FY, preceding the current FY. However any personal payment is outside the scope of this section.(Amd-07)
• Co-operative society
• Any authority constituted in India, engaged for the purpose of,
- dealing with and satisfying the need for housing accommodation, or
- planning, development or improvement of cities, towns and villages or both
• Society registered under Society Registration Act or any other law
• Trust
• University

2. To be deducted by a resident contractor (not being an individual/HUF whose accounts are not audited u/s 44AB), in respect of
payment made to a resident sub-contractor, for carrying out (or for the supply of labour for carrying out) the whole/part of the
work undertaken by the contractor.
Payment to sub-contractor will be exempted from TDS, if
• Sub-contractor is individual, and
• The payment is to be made in the course of business of plying, hiring or leasing of goods carriage, and
• The resident sub-contractor owns more than 2 goods carriages at any time during the PY, and
• The resident sub-contractor submits a declaration to the payer in Form 15I.
Contract: Contract must be “works contract” or a “contract to supply labour”. Works contract includes:
• Advertising
• Broadcasting and telecasting including production of programmes for such broadcasting or telecasting
• Carriage of goods and passengers by any mode of transport other than by railways
• Catering
NB:- Contract for sale is not covered by this section. However, if contract for sale is on specification of the buyer, where, if the
buyer rejects the products, it cannot be sold to general public, then, it is service contract, hence works contract, and sec 194C is
attracted.
- Commission paid to a travel agent by an individual is not covered by this section. However where a transport is chartered by an
individual, sec 194C is attracted.
194D Insurance Commission: RATES:

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10% for non-corporate,

To be deducted by the payer, at the time of actual payment or credit, whichever is earlier, to a resident. 20% for corporate.
Commission shall be in respect of soliciting or procuring insurance business, including business relating to the continuance,
renewal or revival of policies of insurance. LIMITS:
Only if aggr commission
exceeds Rs 5,000 in a FY
194E Payment to Non-Resident Sportsman or Sports Association: RATE:
10%
1.Non-resident foreign citizen :Income is by way of:
• Participation in India in any game (other than card game, gambling etc.)
• Advertisement,
• Contribution of articles relating to any game or sport in India in newspapers,
magazines or journals.
2.Non-resident Sports Association :Any amount guaranteed to be paid or payable ,
in relation of any game(other than
card, gambling etc.) or sports
played in India.
194EE Payments in respect of NSC: 20% Only if aggr
exceeds Rs 2,500
Payment is in respect of any amount (principal and interest) out of NSC in a FY
194F Payments in respect of repurchase of units by MF/ UTI: 20%
194G Commission on Lottery Tickets: 10%

If any authorised agent purchases lottery tickets in bulk at a discount from the State Govt and sells the same at the price of his
choice, this sec is NOT attracted.
194H Commission or Brokerage: 10% (Amd-07) Only if aggr
exceeds Rs
To be deducted by any payer, other than Individual/ HUF, at the time of credit or actual payment to a resident. [Also see 2,500 in a FY
NB: Individual or HUF, will be liable to TDS, under this section, if gross receipt/ sales/ TO exceed Rs 40 lakh in case of business Note#1]
or Rs 10 lakh in case of profession in FY, preceding the current FY.
Commission/Brokerage: It means, any payment,
• received/receivable, directly/indirectly, by a person acting on behalf of the payer, and
• is received for the services rendered (not being professional services) or for any service in the course of buying/ selling
of goods or in relation to any transaction relating to any asset, valuable article or thing not being securities, and
• it is not insurance commission covered by sec 194D.
NB:- Commission paid by PRINCIPAL to his AGENT is covered by this section. The AGENCY relationship between the payer
and payee must exist.
- Commission retained by consignee is covered by this section. Hence, consignor will have to pay TDS on such retained
commission.

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- Turnover commission paid by Govt to RBI, is not covered by this section.

Professional Service: It means services mentioned u/s 44AA.
EXEMPTED from TDS:
Any commission/ brokerage paid/payable by BSNL/MTNL to their Public Call Office (PCO) Agents.(Amd-07)
194I Rent: Land/Bld/Furn/ Only if aggr
Fixtures: rent exceeds
To be deducted by any payer, not being an individual/HUF, at the time of credit or actual payment, whichever is earlier, to a 15% -Ind./HUF/ Rs 1,20,000 in
resident. AOI/BOI. a FY.
NB: Individual or HUF, will be liable to TDS, under this section, if gross receipt/ sales/ TO exceed Rs 40 lakh in case of business 20% - Others
or Rs 10 lakh in case of profession in FY, preceding the current FY.
Rent: It includes; Plant/Mach/Eq:
• Payment made under any lease, sub-lease, tenancy or any other agreement or arrangement, 10% (Amd-07)
• Payment for the use of only land or building (including factory building) or for the use of any land or building (including
factory building) together with furniture, fittings and the land appurtenant thereto, [Also see
It is immaterial whether or not such building is owned by the person to whom rent is paid. Note#1]
• Payment in respect of plant, machinery, equipment, furniture or fittings.
NB:
- If a building is let out along with furniture/ fittings, but rent is payable under 2 separate agreements, the entire rent for
both i.e. the composite rent, is subject to TDS u/s 194I.
- Advance rent is subject to TDS u/s 194I
- Non-refundable deposit is subject to TDS u/s 194I
- Refundable deposit is not subject to TDS.
- Interest on any deposit is subject to TDS u/s 194A.
- Rent shall exclude any tax recovered from the tenant.
- Payment for hotel accommodation:
ü When an employee or a representative of a company (e.g. auditor) makes any such payment, which is
reimbursed by the company, for his stay in hotel, TDS is not attracted.
ü When hotel accommodation is taken on regular basis, TDS u/s 194I is attracted.
ü In case of Rate Contract agreement TDS is not attracted. A rate-contract can be said to be a contract for
providing specified types of hotel rooms at pre-determined rates, during the agreed period, e.g. contracts
entered by tour operators to put up their guests/customers.
- If there are more than one payee/co-owners and each has definite and ascertainable share in the property, the limit is
applicable to each one of them.

Advance Rent:
Advance rent spreading over more than one FY Credit for the TDS shall be allowed in the same proportion in which
the income is offered for assessment in different AY

Subsequent to TDS on advance rent, Credit for the balance of TDS shall be allowed in the same AY
i. rent agreement gets terminated/ cancelled relevant to the FY, in which the cancelled, or is agreement is
ii. the property is transferred with the tenant still terminated or property transferred and balance of rent refunded.

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residing, or
iii. for any other reason, advance rent is refunded.
194J Fees for Professional/Technical Services/Royalty: RATE:
10% (Amd-07)
To be deducted by any payer, not being an individual/HUF, at the time of credit or actual payment, whichever is earlier, to a
resident. [Also see Note#1]
NB: Individual or HUF, will be liable to TDS, under this section, if gross receipt/ sales/ TO exceed Rs 40 lakh in case of business
or Rs 10 lakh in case of profession in FY, preceding the current FY. LIMIT:
Professional Service: It has the same meaning as u/s 44AA Only if the aggr in a FY does not
Technical Service/Royalty: It has the same meaning as u/s 9 exceed Rs 20,000 for Prof.
NB: Service or Tech. Service or
• Providing cellular/fixed telephone service is not a technical service for this purpose. Royalty or specified services u/s
• Fees paid through normal banking channels to a resident CA/ Lawyer/ Advocate/ Solicitor, by a non-resident, who do not 28va
have any agent or business connection or permanent establishment in India MAY not be subject to TDS.
• Any amount paid to a Director of a company is subject to TDS, because Director provides service of technical nature.
• If a consolidated bill is given by a professional for his fees as well as out of pocket expenditure, then the entire amount is
subject to TDS. If, however, separate bill is given for reimbursement of out of pocket expenditure, then reimbursement fo
expenditure is not subject to TDS.
194LA Compensation on compulsory acquisition of immovable property: 10% Only if aggr
exceeds Rs
To be deducted by the payer, at the time of payment to a resident. 1,00,000 in a FY.
Payment means payment of compensation/ enhanced compensation/ consideration/ enhanced consideration, for compulsory
acquisition of immovable property (other than agricultural land)
195 Payment made to a Non-Resident: Rates as specified in the above
sections on the basis of nature
To be deducted by the payer, at the time of credit or actual payment ,which ever is earlier, to a non-corporate non-resident of income.
assessee/ foreign company.
EXEMPTED from TDS under this section:
• Salary
• Dividend u/s 115O
• If payment is made by an Offshore Banking Unit, as interest on deposits made by a NR or interest on borrowings taken
from a NR.
NB: TDS is applicable only on that portion of the income which is chargeable to tax in India. In cases where part of income is not
chargeable in India, application is to be made to the AO for determination of chargeable part of income.

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Tax Collected At Source (TCS)

206C TCS is to be deducted at the time of actual receipt or debit, whichever is earlier, by
• the seller in respect of the specified goods, and
• the person who grants lease or a license in respect of parking lot or toll plaza or mine or quarry, to another person, not being a public sector company.
Seller means, CG/ SG/ Local Authority/ Corporation or authority established under Central, State or Provincial Act/ Company/ Firm/ Co-operative Society/
Individual or HUF, will be liable to TDS, under this section, if gross receipt/ sales/ TO exceed Rs 40 lakh in case of business or Rs 10 lakh in case of profession
in FY, preceding the current FY.
Buyer means, a person who obtains in any sales by way of auction, tender or any other mode, specified goods, or the right to receive any such goods. It
excludes the following:
• public sector company/ CG/ SG, and an Embassy/ High Commission/ Legation/ Commission/ Consulate/ the trade representation, of a foreign state
and a club, or
• a buyer in the retail sale of such goods purchased by him for personal consumption.

The specified goods are:

Goods Rate
Alcoholic Liquor for human consumption 1%
Tendu leaves 5%
Timber obtained under a forest lease or any other mode 2.50%
Any other forest produce not being timber or tendu leaves 2.50%
Scrap 1%
Parking lot, toll plaza, mining and quarrying 2%
It excludes mining and quarrying of mineral oil (i.e. petroleum and natural gas)

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NOTE #1.
st st
The rates u/s 194H, 194I, 194J are effective from 1 June, 2007. All things remaining same, the rates effective till, 31 May, 2007 are as follows:
u/s 194H : 5%
u/s 194I :15% - Individual/ HUF
20% - Others
u/s 194J : 5%

NOTE #2.
Education cess and Secondary & Higher Education cess are applicable as usual.

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