TDS – Rate Chart, Provisions, Penalty, Return Due Date

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CA Kapil Goel

Tax Deducted at Source (TDS) is one of the modes of

collecting income tax in India at the very source of income, governed
under the Indian Income Tax Act of 1961. It is controlled by the Central
Board for Direct Taxes (CBDT) and is part of the Department of
Revenue in-charge of Indian Revenue Service (IRS).

TDS is simply an indirect method of collection of tax which combines the concepts of
“pay as you earn” and “collect as it earned.” Its importance to the government lies in
the fact that it prepones the collection of tax, provides a greater reach and wider base
for tax. At the same time, it benefits to the tax payer also, it distributes the incidence
of tax and provides a simple and convenient mode of payment of taxes.

The concept of TDS requires that the person, on whom responsibility has been cast, is
to deduct tax at the appropriate rates, from payments of specific nature which are
being made to a specified recipient. The deducted sum is required to be deposited to
the credit of the Central Government. The recipient from whose income tax has been
deducted at source gets the credit of the amount deducted in his personal
assessment on the basis of the certificate issued by the deductor.

In the concept of TDS, Income Tax Act requires specified persons to deduct tax on
specified nature of payments being made by them. An Individual or an H.U.F. is not
liable to deduct TDS on such payment except where the individual or H.U.F. is
carrying on a business/profession where accounts are required to be audited u/s
44AB, in the immediately preceding financial year. A person is liable to get its
accounts audited u/s 44AB if during the relevant financial year its gross sales,
turnover or gross receipts exceeds Rs. 1 Crore in case of a business, or Rs. 25 lacs (wef
A.y 2017-18 this limit has been increased to Rs 50 Lakhs) in case of a profession.

There are also some conditions also where there is no liability of deductor to deduct
TDS which are as follows.

On declaration furnished by payee on Form 15G or Form 15H as the case may
be.
On certificate issued by ITO.
Payment to Government/RBI/ Corporation established by or under Central Act
which is exempt from income tax by virtue of any law/ Mutual Fund specified
under section 10(23D).
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 Exempt Incomes.
Interest Payment by Offshore Banking Units.
Payment to New Pension System Trust.
Notified payment to Notified Institutions / Associations.

Detailed TDS Rate Chart for Financial Year 2016-17, Financial Year 2017-18 and
Financial Year 2018-19 can be checked at below links-

TDS Rates and Returns for Assessment Year 2019-20 (Financial Year 2018-19)

TDS Rate on Payment of Salary and Wages:

Section Payment of Salary and Wages

192

Criterion TDS is deducted if the estimated income of the employee is taxable.Employer must
of not deduct tax on non-taxable allowances like conveyance allowance, rent
Deduction allowance, medical allowance and deductible investments under sections like
Section 80C, Section 80CCC, Section 80CCD, Section 80D, Section 80DD, Section
80DDB, Section 80E, Section 80G, Section 80 GGA, Section 80TTA. No tax is required
to be deducted at source if the estimated total income of the employee is less than
the minimum taxable income (Rs. 2,50,000/- in case of Individual, HUF, AOP, BOD
and AJP)

TDS Rate As per Income Tax, Surcharge and Education Cess rates applicable on the estimated
income of employee for the year.

Section Payment of Accumulated Balance Due of Employees’ Provident Fund Scheme,1952

192A to employees
(inserted
wef June
2015)

Criterion Tax is to be deducted by the trustees of Employees’ Provident Fund Scheme,1952 or

of any other person authorised under the scheme to make such accumulated
Deduction payments to employees and the amount of such payment is Rs 50,000 or more

TDS Rate In case of Resident Payee-10%(no surcharge or health and education cess)
In case of Non-Resident-10%(will be increased by surcharge and health and
education cess)

TDS Rates on Payments other than Salary and Wages to

Residents/Non-Resident

Section For Payment of On Payments Individual / HUF Others

Exceeding

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193 Interest on Securities Rs. 5000/- 10% 10%
However the
limit is Rs
10,000 for the
securities
mentioned
below:

i) Any security
of the central
government /
state
government

ii) 8% savings
taxable
bond,2003

iii) Wef 1st

April,2018 on
7.75% savings
(taxable)
Bonds, 2018

194 Deemed Dividend Rs 2500 10% 10%

194A Interest other than on securities Rs. 10000/- 10% 10%

by banks However this
limit has been
increased to Rs
50,000 wef 1st
April 2018 if
the payee is
senior citizen.

194A Interest other than on securities Rs. 5,000/- 10% 10%

by others

194B Winnings from Lotteries / Puzzle / Rs. 10,000/- 30% 30%

Game

194BB Winnings from Horse Race Rs. 10,000/- 30% 30%

194C Payment to Contractors/ Sub- Rs. 30000/- for 1% 2%

Contractors single payment
Rs. 1,00,000/-
for aggregate

payment
during
Financial Year

194 D Payment of Insurance Rs. 15,000/- 5% 10%

Commission
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194DA Payment of Life Insurance Policy Rs 100,000 1% 1%

194E Payment to Non- Resident – 20% 20%

Sportsman/sports association/
entertainer

194 EE Payment of NSS Deposits Rs. 2500/- 10% NA

194 F Repurchase of units by Mutual – 20% 20%

Funds / UTI

194 G Commission/ Remuneration on Rs. 15,000/- 5% 5%

Sale of Lottery tickets

194 H Commission or Brokerage Rs. 15,000/- 5% 5%

194I Rent of Land, Building or Rs. 180000/- 10% 10%

Furniture

Rent of Plant & Machinery Rs. 180000/- 2% 2%

194IA Transfer of Immovable Property Rs. 50 lacs or 1% 1%

(w.e.f. 01.06.2013) more

194IB Payment made by the individual/ Rs 50,000 per 5% 5%

Huf whose books of accounts are month or part
not required to be audit u/s 44AB of the month
in the immediately preceding
financial year for rent on land or
building to any resident .(w.e.f 1st
June 2017)

194IC Any person responsible for – 10% 10%

paying to a resident any sum by
way of consideration (not being
in kind)under a joint development
agreement.

194 J Professional/ technical services, Rs. 30,000/- i)10% 1i)10%

royalty ii) 2% in case the ii) 2% in case
payee is the payee is
engaged in the engaged in
business of the business
operation of call of operation
centre of call centre
%

194 J Any remuneration / fees / – 10% 10%

(1) commission paid to a director of
a company, other than those on
which tax is deductible u/s 192.

194 LA Compensation/ Enhanced Rs. 2,50,000/- 10% 10%

compensation on acquisition of
certain immovable property.

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 194 LB Interest to non- resident by – 5% 5%
infrastructure

194LBA Income from units of business – 10% (for 10% (for

trust. TDS is applicable if a resident) and resident) and
business trust distributes any 5% (for non- 5% (for non-
income referred to in section resident) resident)
section 115UA or to its unit
holders being in the nature of
Section 10(23FC)

Payment Received u/s 10(23FCA) – 10% (for 10% (for

– Rental Income received by the resident) and Indian
real estate distributed to the unit 30% (Surcharge company)
holders + HEC) {for non- and 40%
resident} (Surcharge +
HEC) {for
foreign
company}

194LBB Payment of income in respect of 10% (for 10% (for

units of Investment Fund resident) and Indian
30% (Surcharge company)and
+ HEC) {for non- 40%
resident} (Surcharge +
HEC) {for
foreign
company}

194LBC Payment of income in respect of i. 25% ( for i. 30-For

Investment Fund in securitization resident resident
fund individual/HU F) ii. 40%
ii. 30% (Surcharge +
(Surcharge + HEC) for
HEC) for non foreign
resident other company
than foreign
company.

194LC Payment of interest on (approved 5% 5%

by C.G) amount borrowed in (surcharge+HEC) (surcharge +
foreign currency during HEC)
01.07.2012 to 01.07.2020) by a
specified company or business
trust to NON-Resident/Foreign
company

194LD` Payment of interest To Foreign 5% (surcharge + 5%

institutional Investors, qualified HEC) (surcharge +
foreign investors between HEC)
01.06.2013 to 01.07.2020

Notes:

1. For the financial year 2018-19 there is no surcharge or health and education cess
on amount deductible / collectible at source on payments made to residents
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{Individuals / HUF / Society / AOP / Firm / Domestic Company) on payment of incomes
other than salary or wages. However if the recipient is non resident the rate of TDS
will be increased by surcharge or health and education

2.TDS at higher rate of 20% or TDS rate, whichever is higher, has to be deducted if the
deductee does not provide PAN to the deductor. (section 206AA)

All persons who are required to deduct tax at source or collect tax at source on behalf
of Income Tax Department are required to apply for and obtain Tax Deduction or Tax
Collection Account Number (TAN).

Point of Deduction of TDS

Salary: At the time of payment

Other Payments: When income paid or credited including credit to “Payable” or

“Suspense” account.

Consequences of Failure to deduct tax / TDS

Interest – at 1% for every month or part of the month on the amount of such tax
from the date on which such tax was deductible to the date on which such tax is
deducted; and

Penalty – equal to the amount of tax deductible but not deducted u/s 271C

Due Dates for depositing TDS

Quarter Salary Payments Other Payment

April to 7th of next 7th of next

February month month

March 30th April 30th April

Consequences of default in Payment of TDS:

Interest @ one and one-half percent for every month or part of a month on the
amount of such tax from the date on which such tax was deducted to the date on
which such tax is actually paid. Section 201(A)

Punishable with rigorous imprisonment for a term which shall not be less than three
months but which may extend to seven years and with fine under Section 276(B).

Issue of TDS Certificate

1. Section 192 (TDS on Salary) :

The certificate on Form No. 16 should be issued by the deductor by 15 th day of June
of the financial year immediately following the financial year in which the income was
paid and tax deducted.
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2. In all other cases :

The certificate on Form No. 16A should be issued within fifteen days from the due
date for furnishing the “statement of TDS” under rule 31A.

Penalty on Failure to Issue TDS Certificate

Rs. 100/- every day for the period failure continues subject to a maximum of TDS
amount.

Forms for submitting Quarterly Statements of Tax

Deducted at Source (Rule 31A)
(a) Statement of deduction of tax under section 192 in Form No. 24Q

(b) Statement of deduction of tax under sections 193 to 196D in :

1. Form No. 27Q in respect of the deductee who is a non-resident not being a
company or a foreign company or resident but not ordinarily resident; and

2. Form no. 26QB for tax deduction u/s 194-IA

3. Form no. 26QC for tax deduction u/s 194-IB

4. Form No. 26Q in respect of all other deductees.

Due Dates for submitting Quarterly Statements of Tax Deducted

at Source (Rule 31A)

Date of ending of Due date, if deductor is an office Due Date for others
the quarter of the of the Government
financial year

30th June 31st July of the financial year 31st July of the financial year

30th September 31st October of the financial year 31st October of the financial year

31st December 31st January of the financial year 31st January of the financial year

31st March 31st May of the financial year 31st May of the financial year
immediately following the financial immediately following the financial
year in which deduction is made year in which deduction is made.

However the above due date shall not apply to Form 26QB/26QC as in these
cases challan of electronic deposit of TDS is itself considered as return

Penal Provisions for failure / default in submitting TDS

returns /statements

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Section Failure to Penalty of Rs. 100/- every day during which the failure continues
272A(2) submit returns upto a maximum of TDS amount.
prescribed
under Section
200(3)

Section Failure to file Fine of Rs. 200/- every day during which the failure continues will be
234E TDS return on levied on deductor as long as the default continues, subject to a
time maximum of TDS amount.

Section (i) If deductor Penalty of sum which shall not be less than ten thousand rupees but
271H defaults in in which may extend to one lakh rupees.
filing TDS No penalty shall be levied for the failure to file TDS/TCS return on
Statement time,if the person proves that after paying tax deducted or collected
within the along with the fee and interest, if any, to the credit of the Central
prescribed Government, he has filed the return before the expiry of a period of
time one year from the time prescribed for delivering or causing to be
(ii) If deductor delivered such statement.
furnishes
incorrect
details like
PAN, TDS
amount,
Challan
particulars etc.

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