TDS in Accounting

Meaning of TDS in Accounting

The conception of TDS was introduced with the end to collecting duty from the veritable source of income. As per this conception, a person( deductor) who’s liable to make payment of specified nature to any other person( deductee) shall abate duty at source and remit the same into the account of the Central Government. The deductee whose income duty has been subtracted at source would be entitled to get a credit of the quantum so deducted on the base of Form 26AS or TDS instrument issued by the deductor.


Rates of TDS in Accounting

Taxes shall be subtracted at the rates specified in the applicable vittles of the Act or the First Schedule to the Finance Act. Still, in the case of payment to non-resident persons, the withholding duty rates specified under the Double Taxation Avoidance Agreements shall also be considered

Rates for tax deduction at source*

[For Assessment year 2023-24]

Particulars

TDS Rates (in %)

1. In the case of a person other than a company

1.1 where the person is resident in India-

Section 192: Payment of salary

TDS Normal Slab Rate

Section 192A: Payment of the accumulated balance of provident fund which is taxable in the hands of an employee. 10

Section 193: Interest on securities

a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;

10

b) any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;

10

c) any security of the Central or State Government;

[i.e. 8% Savings (Taxable) Bonds, 2003 and 7.75% Saving (Taxable) Bonds, 2018]

10

d) interest in any other security

10

Section 194: Income by way of dividend

10

Section 194A: Income by way of interest other than “Interest on securities”

10

Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort

30

Section 194BB: Income by way of winnings from horse races

30

Section 194C: Payment to contractor/sub-contractor

a) HUF/Individuals

1

b) Others

2

Section 194D: Insurance commission

5

Section 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

5

Section 194EE: Payment in respect of deposit under National Savings scheme

10

Section 194F: Payment on account of repurchase of the unit by Mutual Fund or Unit Trust of India

20

Section 194G: Commission, etc., on sale of lottery tickets

5

Section 194H: Commission or brokerage

5

Section 194-I: Rent

a) Plant & Machinery

2

b) Land or building or furniture or fitting

10

Section 194-IAPayment on transfer of certain immovable property other than agricultural land

1

Section 194-IB: Payment of rent by individual or HUF not liable to tax audit

5

Section 194-IC: Payment of monetary consideration under Joint Development Agreements

10

Section 194JFees 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

Note: With effect from June 1, 2017, the rate of TDS would be 2% in the case of the payee engaged in the business of operation of the call centre.

 

2

2

10

Section 194KIncome in respect of units payable to a resident person

10

Section 194LAPayment of compensation on acquisition of certain immovable property

10

Section 194LBA(1): Business trust shall deduct tax while distributing, any interest received or receivable by it from an SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unitholders.

10
Section 194LBB: Investment fund paying an income to a unitholder [other than income which is exempt under Section 10(23FBB)] 10
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section 115TCA) 25 in case of Individual or HUF
30 in case of another person

Section 194M: Payment of commission (not being insurance commission), brokerage, contractual fee, a professional fee to a resident person by an individual or a HUF who is not liable to deduct TDS under section 194C194H, or 194J.

The tax shall be deducted under Section 194M with effect from 1/09/2019 when the aggregate sum credited or paid during a financial year exceeds Rs. 50 lakh.

5

Section 194N: Cash withdrawal during the previous year from one or more accounts maintained by a person with a banking company, cooperative society engaged in the 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 a 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.

2

 

2/5

Section 194-O: Payment or credit of amount by the e-commerce operator to e-commerce participant

1

Section 194P: Deduction of tax by specified bank in case of a senior citizen having age of 75 or more

Tax on total income as per rate in force

Section 194Q: Payment for purchase of goods of the aggregate value exceeding Rs. 50 lakhs

Note: TDS is deductible on a sum exceeding Rs. 50 lakhs

0.1

Section 194R: Deduction of tax in case any benefit or perquisite is provided and the aggregate value of such benefit/perquisite exceeds Rs. 20,000

Note: Benefit or prerequisite should be arising from business or the exercise of a profession by such resident.

10

Section 194S: Payment on transfer of Virtual Digital Asset

Note: No tax shall be deducted under this provision in the following circumstance:

• If the consideration is payable by any person (other than a specified person) and 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.

0.1

Section 194R: Deduction of tax in case any benefit or perquisite is provided and the aggregate value of such benefit/perquisite exceeds Rs. 20,000

Note: Benefit or prerequisite should be arising from business or the exercise of a profession by such resident.

10

Any Other Income

10

1.2 where the person is not resident in India*-

Section 192: Payment of Salary

TDS Normal Slab Rate

Section 192A: Payment of the accumulated balance of provident fund which is taxable in the hands of an employee. 10

Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort

30

Section 194BB: Income by way of winnings from horse races

30

Section 194E: Payment to non-resident sportsmen/sports association

20

Section 194EE: Payment in respect of deposits under the National Savings Scheme

10

Section 194F: Payment on account of repurchase of the unit by Mutual Fund or Unit Trust of India

20

Section 194G: Commission, etc., on sale of lottery tickets

5

Section 194LB: Payment of interest on infrastructure debt fund

5

Sec. 194LBA(2): Payment of the nature referred to in Section 10(23FC)(a)

5

Section 194LBA(2): Payment of the nature referred to in Section 10(23FC)(b) 10
Section 194LBA(3): Payment of the nature referred to in section 10(23FCA) by business trust to unitholders 30
Section 194LBB: Investment fund paying an income to a unitholder [other than income which is exempt under Section 10(23FBB)]. 30
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA) 30

Section 194LC: Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bonds)

5 or 4*

* In the case where interest is payable in respect of a Long-term Bond or Rupee Denominated Bond listed on a recognised stock exchange located in IFSC

Section 194LD: Payment of interest on a rupee-denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor

5

Section 195: Payment of any other sum to a Non-resident

a) Income in respect of investment made by a Non-resident Indian Citizen

20

b) Income by way of long-term capital gains referred to in Section 115E in the case of a Non-resident Indian Citizen

10

c) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112

10

d) Income by way of long-term capital gains as referred to in Section 112A

10

e) Income by way of short-term capital gains referred to in Section 111A

15

f) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33)10(36) and 112A

20

g) Income by way of interest payable by the Government or an Indian concern on moneys borrowed or debt incurred by the Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)

20

h) Income by way of royalty payable by the Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of the copyright in any book on a subject referred to in the first proviso to sub-section (1A) of Section 115A of the Income-tax Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of Section 115A of the Income-tax Act, to a person resident in India

10

i) Income by way of royalty [not being royalty of the nature referred to point h) above] payable by the Government or an Indian concern in pursuance of an agreement made by it 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 a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy

10

j) Income by way of fees for technical services payable by the Government or an Indian concern in pursuance of an agreement made by it 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 a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy

10

k) Any other income

30

Section 196B: Income from units (including long-term capital gain on transfer of such units) to an offshore fund

10

Section 196C: Income from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transfer of such bonds or GDR)

10

Section 196D: Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities)

Note: Tax shall be deducted at the rate provided under DTAA if the same is lower than the existing TDS rate of 20%.

20

2. In the case of a company-

2.1 where the company is a domestic company-

Section 193: Interest on securities

a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;

10

b) any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;

10

c) any security of the Central or State Government;

[i.e. 8% Saving (Taxable) Bonds, 2003 and 7.75% Saving (Taxable) Bonds, 2018]

10

d) interest in any other security

10

Section 194: Dividend

10

Section 194AIncome by way of interest other than “Interest on securities”

10

Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort

30

Section 194BB: Income by way of winnings from horse races

30

Section 194C: Payment to contractor/sub-contractor

a) HUF/Individuals

1

b) Others

2

Section 194D: Insurance commission

10

Section 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

5

Section 194EE: Payment in respect of deposit under National Savings scheme

10

Section 194F: Payment on account of repurchase of the unit by Mutual Fund or Unit Trust of India

20

Section 194G: Commission, etc., on sale of lottery tickets

5

Section 194H: Commission or brokerage

5

Section 194-I: Rent

a) Plant & Machinery

2

b) Land or building or furniture or fitting

10

Section 194-IA: Payment on transfer of certain immovable property other than agricultural land

1

Section 194-IC: Payment of monetary consideration under Joint Development Agreements 10

Section 194JFees for professional or technical services:

iv)   sum paid or payable towards fees for technical services

v)   sum paid or payable towards royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films;

vi)   Any other sum

Note: With effect from June 1, 2017, the rate of TDS would be 2% in case of the payee engaged in the business of operation of the call centre.

2

2

10

Section 194K: Income in respect of units payable to a resident person

10

Section 194LAPayment of compensation on acquisition of certain immovable property

10
Section 194LBA(1): Business trust shall deduct tax while distributing, any interest received or receivable by it from an SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unitholders. 10
Section 194LBB: Investment fund paying an income to a unitholder [other than income which is exempt under Section 10(23FBB)]. 10
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA) 10

Section 194M: Payment of commission (not being insurance commission), brokerage, contractual fee, the professional fee to a resident person by an individual or a HUF who is not liable to deduct TDS under section 194C194H, or 194J.

The tax shall be deducted under Section 194M with effect from 1/09/2019 when the aggregate sum credited or paid during a financial year exceeds Rs. 50 lakh.

5%

Section 194N: Cash withdrawal during the previous year from one or more accounts maintained by a person with a banking company, cooperative society engaged in the business of banking or a post office:

iii)   in excess of Rs. 1 crore

iv)   in excess of Rs. 20 lakhs*

* for those persons who have not filed a 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 but not exceeding Rs. 1 crore 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.

2

2/5

Section 194-O: Payment or credit of amount by the e-commerce operator to e-commerce participant

1

Section 194P: Deduction of tax by specified bank in case of a senior citizen having age of 75 or more

Tax on total income as per rate in force

Section 194Q: Payment to the resident for purchase of goods of the aggregate value exceeding Rs. 50 lakhsNote: TDS is deductible on a sum exceeding Rs. 50 lakhs

0.1

Section 194R: Deduction of tax in case any benefit or perquisite is provided and the aggregate value of such benefit/perquisite exceeds Rs. 20,000

Note: Benefit or prerequisite should be arising from business or the exercise of a profession by such resident.

10

Section 194S: Payment on transfer of Virtual Digital Asset

Note: No tax shall be deducted under this provision in the following circumstance:

• If the consideration is payable by any person (other than a specified person) and 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.

0.1

Any Other Income

10

2.2 where the company is not a domestic company*-

Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort

30

Section 194BB: Income by way of winnings from horse races

30

Section 194E: Payment to the non-resident sports association

20

Section 194G: Commission, etc., on sale of lottery tickets

5

Section 194LB: Payment of interest on infrastructure debt fund

5

Section 194LBA(2): – Payment of the nature referred to in Section 10(23FC)(a)

5

Section 194LBA(2): Payment of the nature referred to in Section 10(23FC)(b) 10
Section 194LBA(3): Business trust shall deduct tax while distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unitholders. 40
Section 194LBB: Investment fund paying an income to a unitholder [other than income which is exempt under Section 10(23FBB)]. 40
Section 194LBC: Income in respect of investment made in a securitisation trust (specified in Explanation of section115TCA) 40

Section 194LC: Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bonds)

5 or 4*

* In the case where interest is payable in respect of a Long-term Bond or Rupee Denominated Bond listed on a recognised stock exchange located in IFSC

Section 194LD: Payment of interest on a rupee-denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign Investor

5

Section 195: Payment of any other sum

a) Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-section (1) of Section 112

10

b) Income by way of long-term capital gains as referred to in Section 112A

10

c) Income by way of short-term capital gains referred to in Section 111A

15

d) Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33)10(36) and 112A

20

e) Income by way of interest payable by the Government or an Indian concern on moneys borrowed or debt incurred by the Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC)

20

f) Income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern after the 31st day of March 1976 where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of the copyright in any book on a subject referred to in the first proviso to sub-section (1A) of Section 115A of the Income-tax Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of Section 115A of the Income-tax Act, to a person resident in India

10

g) Income by way of royalty [not being royalty of the nature referred to in point f) above] payable by the Government or an Indian concern in pursuance of an agreement made by it 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 a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy—

A. where the agreement is made after the 31st day of March 1961 but before the 1st day of April 1976

50

B. where the agreement is made after the 31st day of March 1976

10

h) Income by way of fees for technical services payable by the Government or an Indian concern in pursuance of an agreement made by it 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 a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy—

A. where the agreement is made after the 29th day of February 1964 but before the 1st day of April 1976

50

B. where the agreement is made after the 31st day of March 1976

10

i) Any other income

40

Section 196B: Income from units (including long-term capital gain on transfer of such units) to an offshore fund

10

Section 196C: Income from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transfer of such bonds or GDR)

10

Section 196D: Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities)

Note: Tax shall be deducted at the rate provided under DTAA if the same is lower than the existing TDS rate of 20%.

20

* The rate of TDS shall be increased by applicable surcharge and Health & Education cess.

[ TDS As amended by Finance Act, 2022]

Leave a Reply