Tax Deduction at Source
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About Tax Deduction at Source
Tax deduction at source (TDS) is a means of collecting tax on income, dividends, or asset sales, by requiring the payer to deduct tax due before paying the balance to the payee and deposit the tax to the revenue authority.
Income tax must be deducted at source as per the provisions of the Income Tax Act, 1961. Any payment covered under these provisions shall be paid after deducting a prescribed percentage of income tax. It has great importance while conducting tax audits. Assessee is also required to file quarterly return to CBDT. Returns state the TDS deducted & paid to government during the quarter to which it relates.
TDS on immovable property
1.Section 194IA of Income Tax Act,1961.
- It seeks deduction of tax at source on transfer of certain immovable property other than agricultural land to a resident transferor.
- Any person being a Buyer who is liable to Pay to a resident seller by way of consideration for transfer of any immovable property exceeding 50 Lakhs shall at the time of credit of such sum to the account of the transferor or at the time of payment in whatever manner, has to deduct tax at source at 1% of the sale value.
This TDS on property is required to be deposited in 30 days from the end of the month in which deduction is made.
2.Section 194IB of Income Tax Act,1961.
- It seeks deduction of tax at source on payment of rent exceeding Rs. 50,000 in a month by an individual or HUF to a resident landlord.
- TDS shall be deducted @ 5% at the time of credit of rent for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be.
3.Section 194C of Income Tax Act,1961.
- It seeks deduction of tax at source on payment of contractual payment.
- Tax needs to be deducted 1% (for individual, HUF)/ 2% (for others) of payment where payment is made for carrying out any work (including supply of labor for carrying out any work and advertisements) by a contractor/sub-contractor.
- TDS is to be deducted at the time of credit to the account of contractor or at the time of payment in cash or by cheque or draft or by any other mode whichever is earlier.
- No TDS shall be deducted if the single time payment to contractor does not exceed RS. 35000 or Rs. 1,00,000 in aggregate during the year.
4.Section 194J of Income Tax Act,1961.
- It seeks deduction of tax at source on payment of fees for professional services, for technical services, Royalty, remuneration/fees/commission paid to director of the company (excluding salary); contractual payment.
- TDS is to be deducted at the time of credit to the account of the service provider or at the time of payment in cash or by cheque or draft or by any other mode whichever is earlier.
- No TDS shall be deducted if the single time payment to contractor does not exceed RS. 30,000 in aggregate during the year.
TDS Return Filing Due Dates
| Quarter | Period | Due Date |
|---|---|---|
| 1st Quarter | 1st April to 30th June | 31st August 2024 |
| 2nd Quarter | 1st July to 30th September | 31st October 2024 |
| 3rd Quarter | 1st October to 31st December | 31st January 2025 |
| 4th Quarter | 1st January to 31st March | 31st May 2025 |
TDS Return Forms
| Nature of Payment | Form |
|---|---|
| TDS on Salary | Form 24Q |
| TDS when the deductee is a non-resident or a foreign company | Form 27Q |
| TDS on payment for the transfer of immovable property | Form 26QB |
| TDS in any other case | Form 26Q |
TDS Certificates
A deductor is required to issue a TDS certificate called:
- Form 16 – for salaried employees
- Form 16A – for non-salaried employees within a specified time.
The deductor has to issue TDS Certificates within two months of the next financial year.
Impact of Non-Compliance to TDS
Income Tax Act, 1962
- Disallowance u/s. 40(a) (ia) of Income Tax Act, 1962 (Act)
- Raising of demand u/s. 201(1) of the Act
- Charging of Interest u/s (1A) of the Act
- Levying penalty u/s. 271C of the Act