What is TDS?
TDS means Tax deducted at source. Tax is deducted by the person while making the payment to any other person. TDS is an effective mechanism by which Government can reach a vast revenue bracket.
Income-tax Act has bifurcated the TDS provisions according to different kinds of payments such as Salary, Commission, Rent, Royalty etc.
Let us take a review of how much tax is required to be deducted against various payments.
| Nature of Payment | Section No. | Rate of TDS | Cut off Amount |
| Salary | 192 | Applicable Slab Rates | — |
| Withdrawal from Employees Provident Fund Scheme | 192A | 10% | Rs. 50,000/- |
| Interest on Securities | 193 | 10% | Rs. 5,000/- for interest on debentures |
| Dividends | 194 | 10% | Rs. 5,000/- |
| Interest other than interest on securities | 194A | 10% |
|
| Winnings from Lottery or crossword puzzles | 194B | 30% | Rs. 10,000/- |
| Winnings from horse races | 194BB | 30% | Rs. 10,000/- |
| Payment to contractors or sub-contractors | 194C | Where the receiver is – a) Individual/ HUF:- 1%
b) Other Persons:- 2% |
|
| Insurance commission | 194D |
Where deductee is - a) Other than a domestic company - 5% b) Domestic company - 10% |
Rs. 15,000/- |
| Payment of Life Insurance Policy | 194DA | 5% | Rs. 1,00,000/- |
| Payment to the non-resident sportsman or sports association or entertainer | 194E | 20% | — |
| Payment in respect of National Saving Scheme | 194EE | 10% | Rs. 2,500/- |
| Commission on lottery tickets | 194G | 5% | Rs. 15,000/- |
| Commission or brokerage (other than insurance commission or sale of lottery tickets) | 194H | 5% | Rs. 15,000/- |
| Payment of rent | 194-I |
|
Rs. 2,40,000/- |
| Purchase of Immovable property | 194-IA | 1% | Rs. 50,00,000/- |
| Royalty, fees for technical or professional services | 194J |
a) In case of fees for technical services - 2% b) In case of royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films -2% c) In other cases - 10% |
Rs. 30,000/- |
| Compensation for compulsory acquisition of immovable property | 194LA | 10% | Rs. 2,50,000/- |
Tax Audit in case of Freelance income-
- If the Gross receipts of a freelancer exceed Rs. 50 lakhs during the financial year, then TDS provisions shall become applicable to him for the next financial year.
- In this case, the Freelancer will be required to deduct the TDS while making certain payments as follows-
| Nature of payment | Section under which TDS to be deducted |
| Interest other than interest on securities (Eg. interest paid on unsecured loans etc.) | Sec. 194A |
| Payment to any contractor | Sec. 194C |
| Payment of Brokerage/ commission (other than Lottery commission and insurance commission) | Sec. 194H |
| Payment of rent against the use of plant & machinery or land & building etc. | Sec. 194I |
| Payment of professional or technical fees | Sec. 194J |
Comments
2 comments
A sum of Rs.27500/- was deducted by the purchaser of the Immovable property and deposited as TDS as appearing in the 26AS. In my IT return by mistake this amount was shown under the ADVANCE TAX..CPC Banglore therefore did not account for this amount and processed the refund and paid. I want to correct this mistake and show this amount under TDS and delete from ADVANCE TAX so that the refund can be reprocessed. Pl help the way out. I contacted the local Income tax officer who suggested that I should file a revised return for AY 2019-20. Please help in filing revised return.
While filing the revised return ,under TDS your format requires TAN no. For this case where TDS in by an individual . only PAN no is available. Your format does not allow PAN. Pl modify the format to allow PAN also.
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