Tax Deduction at Source

Present By:Jagminder & Naveen

Roll no. 48 &49

TDS means that the person responsible for making payment of certain incomes to the income earners deduct tax at the prescribed rate on such income before payment is made to them.

Meaning

Section 192 TDS on salaries

Section 192 – TDS on salaries Payment should be in the nature of salary The employer has to deduct tax from the salary that

he pays At what rate to deduct? - TDS at average rate of

tax on the estimated income of the employee under the head “Salaries”

When to deduct? - TDS is attracted on payment basis. Thus, for example, if salary for March 2009 is paid on 7th April, 2009 then tax has to be deducted in April and not March even if the expense is booked in March

When to pay the TDS to the Govt.? – Within 7 days from the end of the month in which tax is deducted

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Section 193 TDS on Interest on securities

Any person responsible for paying interest on securities shall deduct interest at the prescribed rates. Tax is to be deducted at the time of:- Payment of interest or Making interest due; which ever is earlierNo TDS on following: - (a) 4 ½ % National Defence bonds (b) National development bonds (c) 7 yrs. National Saving Certificates (d) 6 ½ % or 7% Gold Bonds (e) National Development Bonds (f) Debentures of Co-operative society

Interest on securities

Section 194 TDS on Dividends

Section 194 - Dividends Effectively, TDS is applicable only for deemed

dividend u/s. 2(22)(e) for an amount exceeding Rs. 2,500

At what rate to deduct? – 10% (Rate applicable to any other income)

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Section 194A TDS on Interest other than

interest on securities

Applicable to all payers, except Individuals and HUF Section applies to an Individual and HUF only if they are

liable for tax audit during the preceding financial year When to deduct? - TDS at the time of payment or

credit whichever is earlier Credit to Suspense account or Interest Payable account

is deemed to be credit to the account of the payee At what rate to deduct?

10% - whether corporate assessee or otherwise 20% - In case on non resident and foreign company

Section 194A – Interest other than interest on securities

Section 194B Winnings from lottery or crossword puzzle.

(i) If prize is given partly in cash and partly in kind - Tax will

be deducted from cash prize with reference to the aggregate amount of the cash prize and the value of prize in kind. And where in the part of cash is not sufficient to meet the liability for tax deduction in respect of whole of the winnings then payer has to collect the balance from the payee.

(ii) Where the prize is wholly in kind - The payer has to collect the liability for tax deduction from payee.Example – Mr.” X “wins a Maruti-Zen value of Rs.3,70,000/- on August 20, 2008, in a draw of lot organized by Maruti Udyog. Tax liability on prize in kind comes to Rs.1,14,330/- (i.e., 30.9% of Rs.3,70,000/-) which may be recovered by the Maruti Udyog from Mr. “X” and the same can be deposited with the government on account of tax deduction.

194 B – Gift (prize by way of winnings from lottery) given in kind

Section 194H TDS on Commission and Brokerage

Section 194H – Commission or Brokerage

Applicable to all payers other than Individuals and HUF.

Applicable to Individuals and HUF liable to tax audit during the preceding financial year

What is covered? - TDS on payment of income by way of commission or brokerage

Insurance commission, brokerage for securities are not covered

At what rate to deduct? - 10%

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Section 194-I TDS on Rent

Section 194-I - Rent Applicable to all payers, except Individuals and HUF Applicable to Individuals and HUF only if they are liable to

tax audit during the preceding financial year What is covered? – Income by way of rent When to deduct? – At the time of payment or credit

whichever is earlier Credit to suspense account is deemed to be credit to the

account of the payee At what rate to deduct? –

Machinery, Plant or Equipment - 2% Furniture, Land or Building - In All cases: 10%

No TDS if the amount paid or likely to be paid during the financial year does not exceed Rs. 1,20,000 in aggregate

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Section 194J TDS from Fees for

Professional and Technical Services

Section 194J – Fees for professional or technical services

Applicable to all payers except Individuals and HUF Applicable to Individuals and HUF only if they are liable

to tax audit during the preceding financial year What is covered?

Fees for professional services Fees for technical services Royalty

When to deduct? - TDS at the time of payment or credit, whichever is earlier

Credit to suspense account is deemed to be credit to the account of the payee

At what rate to deduct? - 10%

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Section 195 TDS on payment to non-residents

Section 195 Section applies to all payers, including individuals

and HUF Section covers payment made to a non-resident not

being a company or a foreign company What is covered? – Payment in the nature of

interest When to deduct? – TDS at the time of payment or

credit, whichever is earlier At what rate to deduct? – Rates in force for the

section under which the payment falls (for e.g. Section 115A, 111A etc.) or treaty rate whichever is beneficial

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THanK YoU