TDS Compliance

TDS or Tax Deducted at Source is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments.

Usually, the person receiving income is liable to pay income tax. But the government with the help of Tax Deducted at Source provisions makes sure that income tax is deducted in advance from the payments being made by you.

The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against his final tax liability. The recipient takes credit of the amount already deducted and paid on his behalf.

Documents Required for TDS Compliance

TDS Compliance Inquiry Form

When should TDS be deducted and by whom?

Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such specified payment. But no TDS has to deducted if the person making the payment is an individual or HUF whose books are not required to be audited.

However, in case of rent payments made by individuals and HUF exceeding Rs 50,000 per month, are required to deduct TDS @ 5% even if the individual or HUF is not liable for a tax audit. Also, such Individuals and HUF liable to deduct TDS @ 5% need not apply for TAN.

Your employer deducts TDS at the income tax slab rates applicable. Banks deduct TDS @10%. Or they may deduct @ 20% if they do not have your PAN information. For most payments rates of TDS are set in the income tax act and TDS is deducted by payer basis these specified rates.

If you submit investment proofs (for claiming deductions) to your employer and your total taxable income is below the taxable limit – you do not have to pay any tax. And therefore no TDS should be deducted on your income. Similarly, you can submit Form 15G and Form 15H to the bank if your total income is below taxable limit so that they don’t deduct TDS on your interest income.

In case you have not been able to submit proofs to your employer or if your employer or bank has already deducted TDS and your total income is below the taxable limit) – you can file a return and claim a refund of this TDS.

The complete list of Specified Payments eligible for TDS deduction along with the rate of TDS.

TDS Rate Chart for F.Y. 2020-21 (A.Y: 2021-22)

Section

Nature of payment

Threshold Limit

Applicable from 01/04/2020 to 13/05/2020

Applicable from 14/05/2020 to 31/03/2021

 

 

 

Resident

Non-resident *

Resident

Non-resident *

 

 

Rs. 

TDS Rate (%)

TDS Rate (%)

TDS Rate (%)

TDS Rate (%)

192

Salaries

Normal slab rate

Normal slab rate

Normal slab rate

Normal slab rate

192A

Premature withdrawal from EPF

50000

10

10

10

10

194C

Contractor-Single

transaction-Individual/HUF

           -Others

30000

 

1

2

 

 

0.75

1.5

 

194C

Contractor – Consolidated Payment During the F.Y.

– Individual/HUF

– Others

100000

 

 

1

2

 

 

 

 

0.75

1.5

 

 

194H

Commission/Brokerage

15000

5

3.75

194I

Rent of – Plant/Machinery /Equipment

– Land and Building/Furniture & Fixture

240000

2

10

1.5

7.5

194IA

Transfer of certain immovable property other than agriculture land

50 lakh

1

0.75

194IB

Rent by Individual/HUF

50000 per month

5

3.75

194IC

Payment under Joint Development Agreements to Individual/HUF

10

7.5

194J

Professional Fees

30000

10

7.5

194J

Technical Fees (w.e.f. 01.04.2020)

30000

2

1.5

194J

Director’s fees

10

7.5

195

Long-term capital gain

– Under Section – 115E/

112(1)(c)(iii)/112A

– Any Other Gains

 

 

 

 

10

20

 

 

 

 

10

20

195

Short-term capital gain – 111A

15

15

195

Royalty

10

10

195

Fees for technical services

10

10

What is the due date for depositing the TDS to the government?

The Tax Deducted at Source must be deposited to the government by 7th of the subsequent month

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