About TDS

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BALU.....

CCI STUDENT....

[ Scorecard : 42049]

Tax Deducted at Source or best known as TDS is one of the modes of collecting Income-

tax from the assessees in India. This is governed under Indian Income Tax Act, 1961, by

the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue

managed by indian revenue service, under the ministry of finance, Govt.of india.

OverviewIn simple terms, TDS is the tax getting deducted from the person receiving the amount

(Employee/Deductee) by the person paying such amount (Employer/Deductor). This is

applicable for certain types of payments, as a pplicable under the Act.

In the process of TDS, deduction of tax is effected at the source when income arises or

accrues. Hence where any specified type of income arises or accrues to any one, the

Income-tax Act enjoins on the payer of such income to deduct a stipulated percentage of

such income by way of Income-tax and pay only the balance amount to the recipient of

such income.

The tax so deducted at source by the payer, has to be deposited in the Government

treasury to the credit of Central Govt, within the specified time. The tax so deducted fromthe income of the recipient is deemed to be payment of Income-tax by the recipient at the

time of his assessment.

Income from several sources is subjected to tax deduction at source. Presently this

concept of TDS is also used as an instrument in enlarging the tax base. Some of such

income subjected to TDS are salary, interest, dividend, interest on securities, winnings

from lottery, horse races, commission and brokerage, rent, fees for professional and

technical services, payments to non-residents etc. It is always considered as an Advance

tax which is paid to the government.

Tax Deduction Account NumberTAN is a unique identification number for person deducting the tax. The person who is

liable to deduct the Tax should obtain a TAN before deducting such Tax. TAN should

applied through Form No 49B (prescribed under Income Tax Law). Such form can be

submitted online at NSDL website. OR can also be submitted at Tax Information Network

Facilitation Cente r (TIN-FC). These centers are established by NSDL (which is an appointed

intermediary by the Government) across India.

TAN Application should accompany a 'proof of identity' and a 'proof of address'

(photocopies) of the deductor. In case, the application is made online, these documents

need to be sent over mail (post/courier) to NSDL - TAN Application division.

Once NSDL receives the TAN application along with said documents (either through TIN FC

/ Online), the details are verified and then sent to Income Tax Department. Once

approved, Income Tax Department will allocate an unique number, and indicate the

applicant through NSDL.

TAN will be 10 characters' alpha numeric string comprising of 4 Alpha - 5 Numeric - 1 Alpha.

[Eg: BLRR02933A]. The first 3 characters consists of Income Tax Region Code (BLR =>

Bangalore) and the Fourth digit comprises of 'First Character' of deductor name (R =>

Relyon Softech Ltd). Remaining characters form an unique combination to get identified at

Income Tax Department.

DeductorUnder the process of TDS, Deductor is a person/company who is liable to deduct the Tax at

source, from the payment being made to the pa rty. Deductor is also termed as Employer in

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cases w ere e paymen s are un er a ares

DeducteeDeductee is the person, from whom the tax is being deducted or accrued for deduction.

Depending on the nature of the deduction being made, deductees and respective

submission forms are categorized to 4 types:

1. Salaries: In case of salaries, the deductee is termed as an Employee. All the

information of deductions and payments in this category should be submitted in

Form 24Q to the government.

2. Non-Salaries - Resident: In case of non-salaries and the payment is made to a

resident in India, the deductee is termed as a Deductee or a Party. All the



3. Non-Salaries Nonresident: In case o f non-salaries and the payment is made to anon-resident of India, the deductee is termed as a Deductee or a Party. All the



TDS CertificatesA tax deductor is also required to issue TDS certificate to the deductee within specified

timed under section 203 of the I T Act. The certification from the deductor, for the

deduction and payment of the respective TDS amount to the bank, issued to the deductee

is a TDS certificate

The deductee should produce the details of this certificate, during the regular assessment

of income tax, to adjust the amount of TDS against the Tax payable by the Deductee

[assessee].

Types of TDS certificates

Salaries - Form 16: In case of Salaries, the certificate should be issued in FORM 16

containing the Tax computation details and the Tax deducted & Paid details. This refers to

the details submitted over Form 24Q.

Non-salaries - Form 16A: In case of Non-Salaries, the certificate should be issued in

FORM 16A containing the Tax deducted & Paid details. Separate certificates should be

prepared for each Section [nature of payment]. This refers to the details submitted over

Form 26Q and 27Q.

Total thanks : 8 times

BALU.....

CCI STUDENT....


TDS rates for Financial Year 2010-11

Form 24Q:

Male Female Senior Citizen

Tax

(%)

For Income Between 0 to

1,60,000


1,90,000


2,40,000 0

For Income Between

1,60,001 to 5,00,000

For Income Between

1,90,001 to 5,00,000

For Income Between

2,40,001 to 5,00,000

10

For Income Between

5,00,001 to 8,00,000

For Income Between

5,00,001 to 8,00,000

For Income Between

5,00,001 to 8,00,000

20

For Income above

8,00,001

For Income above

8,00,001

For Income above

8,00,001

30

Surcharge 0

Education Cess 3

Form 26Q:

Section Nature of Payment Status Tax (%)

193 Interest on Debentures & Securities 10

194 Deemed Dividend 10

194A Other Interest

> Aggregate sum exceeding10,000 for Banking Cos ,

etc.per person during the financial year.

> Aggregate sum exceeding5,000 per person during

the financial year

10

194B Lottery/Crossword Puzzle > 10,000 30

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194BB Winnings from Horse Race >5,000 30

194C Contracts to Transporte r, who has provided a valid PAN 0*

Contracts to Individuals/HUF 1

Contracts to others 2

194D Insurance Commission > 20,000 10

194EE Withdrawal from NSS > 2,500 20

194F Repurchase of Units by MF/UTI 20

194G Commission on Sale of Lottery Tickets > 1,000 10

194H Commission or Brokerage > 5,000 10

194I Rent > 1,80,000 p. a.

Rent of Plant & Machinery

2

Rent of Land, Building, Furniture, etc 10

194J Professional or Technical Fess > 30,000 10

194LA Compensation on Compulsory Acquis it ion of immovable

property >Rs.1,00,000 during the financial year

10

Surcharge 0

Education Cess 0

* If there is no PAN deta ils, then it is 20%. (or at actual, whichever is higher)

Form 27Q:

Section Nature of Payment Status Tax (%)

194E Payment to nonreside nt sportsmen or sports

association

10

195(a) Income from fo re ign exchange assets payable to an

Indian citizen

20

195(b) Income by way of long-term capital gain referred to in

sec. 115E

10

195(c) Income by way o f Short-term capita l gains u/s . 111A 15

195(d) Income from other long-term capital gains 20

195(e) Income by way of inte rest pa yable by

Government/Indian concern on money borrowed or

debt incurred by Government or Indian concern in

foreign currency

20

195(f) Roya lty payable by Government o r an Indian concernin pursuance of an agreement made by non-resident

with the Government or the Indian concern after

March 31, 1976, where such royalty is in

consideration for the transfer of all or any rights

(including the granting of a licence) in respect of

copyright in any book on a subject referred to in the

first proviso to section 115A(1A) to the Indian concern

or in respect of computer software referred to in the

second proviso to section 115(1A), to a person

resident in India -

1.Where the agreement is made before June 1, 1997 30

2.Where the agreement is made after May 31, 1997

but before June 1, 2005

20

3.Where the agreement is made on or after June 1,

2005

10

195(g) Royalty (not being royalty of the nature referred to in

(e) sub para) payable by Government or an Indian

concern in pursuance of an agreement made by non-

resident with the Government or the Indian concern

and whe re such agreement is w ith an Indian concern,

the agreement is approved by the Central

Government or where it relates to matter included in

the industrial policy, the agreement is in accordance

with that policy

1.Where the agreement is made after March 31, 1961

but be fore April 1, 1976

COMPANY 50

OTHERS 30



30



20

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2005

10

195(h) Fee for technical services payable by Government or

an Indian concern in pursuance of an agreement

made by non-resident with the Government or the

Indian concern and where such agreement is with an

Indian concern, the agreement is approved by the

Central Government or where it relates to matter

included in the industrial policy, the agreement is in

accordance w ith the policy -

1.Where the agreement is made after February 29,

1964 but before April 1, 1976

COMPANY 50

OTHERS 30



30



20


2005

10

195(i) Any other income COMPANY 40

OTHERS 30

196A Income in respect of Units of Non-residents 20

196B Income and Long-te rm Capita l ga in from units of an

Off shore fund

10

196C Income and Long-te rm Cap ita l Ga in from Fore ign

Currency Bonds or shares of indian companies

10

196D Income of Fore ign Ins titutiona l Investors forSecurities 20

Surcharge ( On

Tax)

Applicable for Foreign Companies if payment/credit exceeds 1

crore of such companies

2.5

Education Cess on Tax deducted Plus Surcharge 3

Form 27EQ:

Collection

Code

Nature of Purchase Tax

(%)

6CA Alcoholic liquor for human consumption 1

6CB Timber obtained under a forest lease 2.5

6CC Timber obta ined under any mode othe r than forest lease 2.5

6CD Any o ther fo rest product no t being timber o r tendu leave 2.5

6CE Scrap 1

6CF Parking Lot 2

6CG Toll plaza 2

6CH Mining and quarrying 2

6CI Tendu leaves 5

Surcharge

(On Tax)

Applicable for Foreign Companies if collections exceeds 1 crore of

such companies

2.5

Education

Cess

Applicable for Foreign Companies 3

Due Date Table for TDS and TCS quarterly returns:

Quarter Form 24Q Form 26Q Form 27Q Form 27EQ

First July 15th July 15th July 14th July 15th

Second October 15th October 15th October 14th October 15th

Third January 15th January 15th January 14th January 15th

Fourth May 15th* May 15th* May 15th* April 30th

*Correction by Moderator~DM


Download - Taxbase

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Resham

Carpe Diem !!!

[ Scorecard : 6397]

I have to write in most of your posts Book marked !!!

Great work !! Thanks !!!

CMA. CS. Sanjay

Gupta

"PROUD TO BE AN

INDIAN"


Very Nice Post.....Also see below link for some more details on

TDS...

All you want to know about

TDS


Rahul Sharma

Student + A.M.-

Finance

[ Scorecard : 2527]

Very Nice Work......Aap mujhe dusre Ankur sir najar aa rahe ho?

Really

Thank u, Thank u, Thank u,...............Sir Ji


Arniv Sharda

IPCC AND BCOM

[ Scorecard : 2963]

very nice post balu bhai

and gupta sir what a article

cheers

Khushboo Agrawal

CA FINAL

[ Scorecard : 1796]

very helpful balu sir thnx

ver nice ost balu sir

ss s s you n ng e ng an ncome ax compu a on managemenwww.sinewave.co.in

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Kashish Grover

CA-FINAL, CS-FINAL

[ Scorecard : 1518]

kinjal

CA Final

[ Scorecard : 1340]

very helpful....thanks for sharing

CA. Dashrath

Maheshwari

Manager Accounts &

Controls


Forum Moderator

Due date for furnishing TDS return for the last quarter of the financial year has been

modified to 15th May (from earlier 15th June).

for more info: http://www.tin-

nsdl.com/downloads/CBDT_Press_Release_No_04062010.pdf


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