Detail explanation of the Applicability of TDS

Applicability of TDS connection of TDS, when a person making certain specified payments, similar as hires, interest, rent, professional freights,etc., deducts duty at the prescribed rates from the payment and remits it to the government. The responsibility of abating and depositing the duty on behalf of the philanthropist lies in the hands of the person making the payment. The rates for TDS are also specified in the Income Tax Act, and they vary depending on the nature of payment.

Key factors related to connection of TDS under the Income Tax Act

Applicability: TDS is applicable to colorful types of payments, including hires, interest, rent, commission, professional freights etc. Multiple sections of the Income Tax Act define specific rates and threshold limits for each type of payment.
Tax Deduction and Remittance: The person responsible for making the payment (appertained to as the” deductor”) is needed to abate duty at the prescribed rates from the payment. The subtracted duty must be remitted to the government within the specified time frame.
(TAN) Tax Deduction and Collection Account Number : Deductors are needed to gain a TAN from the Income Tax Department and quote it in all TDS- related deals.
TDS Rates: The Income Tax Act specifies different TDS rates for different types of payments. The rates may be depending over the factors like nature of the payment, the philanthropist’s status, and the total income of the philanthropist.
Threshold Limits: Certain payments are pure from TDS if they don’t exceed the specified threshold limits. These limits may be depending on the type of payment and the philanthropist’s status.
TDS Certificates: After abating TDS & Form the applicable TDS return, the deductor is needed to issue a TDS instrument to the deductee( the person from whom duty is subtracted). The instrument must contain details similar as the quantum of TDS subtracted, the nature of payment, and other necessary & applicable information.
TDS Returns: Deductors are needed to file periodic TDS returns with the Income Tax Department. These returns give details of TDS deductions made during a specific period.

TDS Time Limits

TDS Deduction The person responsible for making specified payments( the deductor) is needed to abate TDS at the time of payment or credit to the payee, whichever is before. The TDS quantum should be subtracted at the prescribed rates grounded on the nature of payment.

TDS Payment The TDS quantum subtracted must be deposited to the government within the following time limits

For the month of March By 30th April of the coming fiscal time.
For any other month Within seven days from the end of the month in which the deduction is made.

TDS Return The deductor is needed to file TDS returns. The due dates for TDS return form are as follows

For the quarter ending 30th June By 31st July.
For the quarter ending 30th September By 31st October.
For the quarter ending 31st December By 31st January.
For the quarter ending 31st March By 31st May of the coming fiscal time.

TDS Applicable Rates for Financial Year 2023- 2024

S.No	Section	Particulars	Threshold Limit (Rs.)	TDS %
S.No	Section	Particulars	Threshold Limit (Rs.)	Others	Company
1	192	Salaries		Average Rate
2	192A	Payment of accumulated balance of provident fund which is taxable in the hands of an employee.	50000	10%
3	193	Interest on securities	2500	10	10
4	194	Deemed dividend	5000	10	10
5	194A	Interest other than Int. on securities Senior Citizen Other	50000 40000	10	10
6	194B	lotteries, crossword puzzles, card games and other games of any sort, or from gambling or betting of any form or nature	10000	30	30
7	194BA	Winnings from Online Gaming	10000	30	30
8	194BB	Winnings from Horse Race	10000	30	30
9	194C	Contractor/Sub-Contractor Individual/HUF Other	Single Transaction: 30,000 & Aggregate Transaction: 1,00,000	1 2	1 2
10	194D	Insurance Commission	15000	5	10
11	194DA	Payment in respect of life insurance policy w.e.f. 1/9/2019, the tax shall be deducted on the amount of income comprised in insurance pay-out	100000	5	5
12	194EE	Payment w.r.t deposit under National Savings scheme	2500	10	10
13	194F	Repurchase of units by MF/UTI		20	20
14	194G	Commission on sale of lottery tickets	15000	5	5
14	194H	Commission or Brokerage	15000	5	5
15	194I	Rent a) Land or building or furniture or fitting	240000	10	10
15	194I	a) Plant & Machinery	240000	2	2
16	194 IA	TDS on transfer of immovable property other than agriculture land	50 Lakhs	1	1
17	194IB	Payment of rent by individual or HUF not liable to tax audit	50,000 per month	5
18	194IC	Payment of monetary consideration under Joint Development Agreements		10	10
19	194J	Fees for professional or technical services: i) sum paid or payable towards fees for technical services ii) sum paid or payable towards royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films; iii) Any other sum	30000 30000 30000	2 2 10	2 2 10
20	194K	Income in respect of units payable to resident person		10	10
21	194LA	Compensation on acquisition of immovable property	250000	10	10
22	194LBA(1)	Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders.		10	10
23	194LBB	Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)]		10	10
24	194LBC	Income in respect of investment made in a securitisation trust (specified in Explanation of section 115TCA)		25	30
25	194M	Payment of commission (not being insurance commission), brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J.	50 Lakhs	5	5
26	194O	Payment or credit of amount by the e-commerce operator to e-commerce participant	5 Lakhs	1	1
27	194N	Cash withdrawal during the previous year from one or more account maintained by a person with a banking company, co-operative society engaged in business of banking or a post office: i) in excess of Rs. 1 crore# ii) in excess of Rs. 20 lakhs* * for those persons who have not filed return of income (ITR) for three previous years immediately preceding the previous year in which cash is withdrawn, and the due date for filing ITR under section 139(1) has expired. The deduction of tax under this situation shall be at the rate of: a) 2% from the amount withdrawn in cash if the aggregate of the amount of withdrawal exceeds Rs. 20 lakhs during the previous year; or b) 5% from the amount withdrawn in cash if the aggregate of the amount of withdrawal exceeds Rs. 1 crore during the previous year. # The threshold limit of Rs. 1 crore is increased to Rs. 3 crores if the withdrawal of cash is made by co-operative society.		2 2/5	2 2/5
28	194P	Deduction of tax by specified bank in case of senior citizen having age of 75 or more	Basic exemption available	as per Slab	as per Slab
29	194Q	Payment for purchase of goods of the aggregate value exceeding Rs. 50 lakhs	50 Lakhs	.1	.1
30	194R	Deduction of tax in case any benefit or perquisite is provided and aggregate value of such benefit/perquisite exceeds Rs. 20,000 Note: Benefit or perquisite should be arising from business or the exercise of a profession by such resident.	20000	10	10
31	194S	Payment on transfer of Virtual Digital Asset Note: In the following circumstance no tax shall be deducted under this provision: • If the consideration is payable by any person with its aggregate value does not exceed Rs. 10,000 during the financial year. • if the consideration is payable by a specified person and its aggregate value does not exceed Rs. 50,000 during the financial year. Specified person means: (a) An individual or a HUF, whose total sales, gross receipts or turnover does not exceed Rs. 1 crore in case of business or Rs. 50 lakhs in case of a profession, during the financial year immediately preceding the financial year in which virtual digital asset is transferred; (b) An individual or a HUF who does not have any income under the head profits and gains of business or profession.	Other Payer-10K Specified Person-50K	1	1

Frequently Asked Questions

What's TDS?

TDS stands for Tax subtracted at Source. It’s a medium for collecting income duty in India, where the person making the payment deducts a certain chance of duty before making the payment to the philanthropist.

What's the purpose of TDS?

The purpose of TDS is to insure the collection of duty at the time of generating income, rather than collecting it in a lump sum at the end of the fiscal time. It helps in the regular flux of levies to the government and ensures lesser compliance with the duty laws.

Who's liable to deduct TDS?

Various realities similar as employers, businesses, and individualities making specified payments are liable to abate TDS. This includes employers abating duty from workers’ hires, businesses abating duty on payments to contractors or professionals, and individualities abating duty on certain specified payments.

How is the rate of TDS determined?

The rate of TDS is determined by the Income Tax Act and is specified in the TDS vittles or rates notified by the government. Different rates apply to different types of payments and donors. The rates can vary grounded on factors similar as the nature of the payment, the philanthropist’s status, and the quantum of income.

What are the thresholds for TDS deduction?

Thresholds for TDS deduction vary depending on the type of payment and the philanthropist. For illustration, in the case of payment income, TDS is subtracted if the income exceeds the introductory impunity limit. For other payments, similar as rent, contractor payments, or professional freights, TDS is subtracted if the payment exceeds specified thresholds.

How is TDS deposited with the government?

The person abating TDS is needed to deposit the subtracted quantum with the government within the specified time frame. This can be done through online payment modes or by physically depositing the quantum at designated banks.

Is it possible to get a refund of TDS?

Yes, if the total duty liability of the philanthropist is lower than the TDS subtracted, they can claim a refund when filing their income duty return. The refund is reused by the income duty department after the return is filed and vindicated.

Is it obligatory to deduct TDS on all payments?

No, TDS isn’t obligatory on all payments. The Income Tax Act specifies certain payment thresholds and types of payments where TDS is needed to be subtracted. It’s important to relate to the applicable vittles of the act or seek professional advice to determine if TDS is applicable to a particular payment.

What are the consequences of non-compliance with TDS provisions?

Non-compliance with TDS vittles can attract penalties and interest.However, the deductor may face penalties and interest charges, If TDS isn’t subtracted or not deposited with the government. also, the deductee may face difficulties in claiming credit for the TDS not deposited by the deductor.

Is there any provision for impunity from TDS deduction?

Yes, certain individualities or realities may be eligible for impunity from TDS deduction under specific vittles of the Income Tax Act. For illustration, if the philanthropist has attained a instrument for non-deduction of TDS, they may be pure from TDS deduction on specified payments.

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