TDS HOW TO MEET YOUR OBLIGATIONS
CONTENTS
PAGE
Chapter-heads I-5
1
DEDUCTION OF TAX AT SOURCE
FROM SALARY
1.1
1.2
1.3
1.4
1.5
1.6
1.7
1.8
1.9
1.10
1.11
1.12
1.13
1.14
1.15
1.16
1.17
1.18
Annex
Annex
Annex
Annex
Annex
Annex
Annex
Annex
Scope and application of section 192
1
Who is to deduct tax at source in case of ‘salary’ income
3
How to compute tax deductible at source in certain cases
5
When tax is to be deducted
9
When tax is not to be deducted at source or to be deducted at source at lower
rate
10
Effect of non-furnishing of PAN on rate of tax
13
Issues pertaining to computation of salary income
13
Option to employer to pay tax on perquisites provided to employee
19
Tax Deduction and Collection Account Number (TDCAN)
23
Deposit of tax to the credit of the Central Government
24
Issue of certificate/statement to employee
26
Furnishing of statements by employer to department
29
Credit for tax deducted at source
33
Returns
38
Consequences of failure to deduct or pay tax
39
Bar against direct demand on assessee [Section 205]
54
Payment of advance tax in case of receipt of income without deduction or
collection of tax
55
Criminal complaint against employer for deducting tax at source
55
1.1 Specimen application to Assessing Officer for allowing the employer to
deduct tax at source quarterly
56
1.2 Procedure for Regulating Refund of Amounts Paid in excess of tax Deducted
and/or Deductible - Position upto 31-3-2010
57
1.3 Gist of some relevant CBDT’s Circulars
59
1.4 Circular No. 5/2011, dated 16-8-2011
61
1.5 Circular No. 2/2007, dated 21-5-2007
72
1.6 Press Release dated 1-4-2008
73
1.7 Certificate of lower deduction or non-deduction of tax at source - Where
approval of Commissioner (TDS) is required before issuing certificate 75
1.8 Issue of certificate of lower deduction or non-deduction of tax at source
under section 197 and certificate for lower collection of income-tax under
section 206C(9) in electronic format
76
2
DEDUCTION OF TAX AT SOURCE FROM
INTEREST ON SECURITIES
2.1
2.2
2.3
2.4
2.5
2.6
2.7
2.8
2.9
2.10
2.11
2.12
2.13
2.14
Scope and application of section 193
77
Who is responsible to deduct tax at source
80
When payment is made to Government, etc.
80
Effect of non-furnishing of PAN on rate of tax
80
When tax to be deducted
81
When no tax need to be deducted or tax may be deducted at lower rate
Special provisions for certain entities
86
Tax Deduction and Collection Account Number (TDCAN)
88
Deposit of tax to the credit of the Central Government
88
Certificate/statement for tax deducted at source
90
Furnishing of statements by tax deductor to department
92
Credit for tax deducted at source
97
Returns
99
Consequences of failure to deduct or pay tax, etc.
100
82
Annex 2.1 Circular No. DGBA. CDD. No. H-1311/13.01.299/2008-09, dated 5-8-2008 102
Annex 2.2 Circular No. 7/2008, dated 1-8-2008
105
Annex 2.3 Issuance of TDS Certificates in Form No. 16A downloaded from TIN Website
106
3
DEDUCTION OF TAX AT SOURCE
FROM DIVIDENDS
3.1
3.2
3.3
3.4
3.5
3.6
3.7
3.8
3.9
3.10
3.11
3.12
3.13
Scope and application of section 194
110
When payment is made to Central Government, etc.
116
Who is to deduct tax at source
116
Effect of non-furnishing of PAN on rate of tax
116
When tax to be deducted at source
117
When no tax to be deducted or tax to be deducted at lower rate
Tax Deduction and Collection Account Number (TDCAN)
120
Deposit of tax to the credit of the Central Government
120
Certificate/statement of tax deducted at source to shareholder
Furnishing of statements by tax deductor to department
124
Credit for tax deducted at source
128
Returns to be submitted
131
Consequence of failure to deduct or pay tax, etc.
131
4
DEDUCTION OF TAX AT SOURCE
FROM INTEREST OTHER THAN
INTEREST ON SECURITIES
4.1
4.2
4.3
Scope and effect of section 194A
What is interest
Payees which are covered by section 194A
132
135
145
118
122
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
4.15
4.16
4.17
Annex
Annex
Annex
Annex
Conditions to be satisfied for application of section 194A 146
Who is to deduct tax at source
146
When payment is made to Government
150
Effect of non-furnishing of PAN or rate of tax
150
When tax is to be deducted
151
When no tax to be deducted or tax to be deducted at lower rate
152
Adjustments under section 194A(4)
157
Tax Deduction and Collection Account Number (TDCAN)
158
Deposit of tax to credit of Central Government
158
Certificate/statement for tax deducted at source
161
Furnishing of statements by tax deductor to department
163
Credit for tax deducted at source
167
Returns to be submitted
167
Consequences of failure to deduct or pay tax, etc.
169
4.1 Notified institutions under section 194A(3)(iii)(f)
171
4.2 Circular Ref. No. DGBA.CDD.H-10566/15/5/001/2008-09, dated 5-6-2009
4.3 Circular No. 3/2010, dated 2-3-2010
175
4.4 Tax deduction at source on the deposits in banks in the name of
the Registrar/Prothonotary and Senior Master attached to the
Supreme Court/High Court etc. during
the pendency of litigation of claim/compensation
176
5
DEDUCTION OF TAX AT SOURCE FROM WINNINGS
FROM LOTTERY OR CROSSWORD PUZZLE
5.1
5.2
5.3
5.4
5.5
5.6
5.7
5.8
5.9
5.10
5.11
5.12
Scope and application of section 194B
Who is responsible for making deduction of tax at source
When payment is made to Government
Effect of non-furnishing of PAN on rate of tax
When tax is to be deducted
Tax Deduction and Collection Account Number (TDCAN)
Deposit of tax to the credit of the Central Government
Certificate/statement for tax deducted at source
Furnishing of statements by tax deductor to department
Credit for tax deducted at source
Returns to be submitted
Consequences of failure to deduct or pay tax, etc.
179
184
185
185
185
186
186
188
190
194
194
195
6
DEDUCTION OF TAX AT SOURCE FROM
WINNINGS FROM HORSE RACES
6.1
6.2
6.3
6.4
6.5
6.6
6.7
6.8
Scope and application of section 194BB
Who is to deduct tax at source
When payment is made to Government, etc.
Effect of non-furnishing of PAN on rate of tax
When tax to be deducted at source
Tax Deduction and Collection Account Number (TDCAN)
Deposit of tax to the credit of the Central Government
Certificate/statement for tax deducted at source
196
197
197
198
198
198
198
201
174
6.9
6.10
6.11
6.12
Furnishing of statements by tax deductor to department
Credit for tax deducted at source
Returns to be submitted
Consequences of failure to deduct or pay tax, etc.
203
207
207
208
7
DEDUCTION OF TAX AT SOURCE FROM PAYMENTS
TO CONTRACTORS/SUB-CONTRACTORS
7.1
7.2
7.3
7.4
7.5
7.6
7.7
7.8
7.9
7.10
7.11
7.12
7.13
7.14
7.15
7.16
7.17
7.18
7.19
7.20
Annex
Annex
Annex
Annex
Scope and application of section 194C
209
What payments are covered by section 194C
215
Meaning of ‘any work’
216
Departmental clarifications on various issues
222
Judicially decided issues
228
General exemptions
237
When payment is made to Government
238
Who is responsible to deduct tax ?
238
Effect of non-furnishing of PAN on rate of tax
238
When tax to be deducted ?
239
When no tax need to be deducted or tax may be deducted at lower rate
239
Special provisions for certain entities
241
Whether in case of composite work deduction of tax at source is to be made on net
payment (after excluding cost of materials supplied by Government) 243
Tax Deduction and Collection Account Number (TDCAN)
245
Deposit of tax to the credit of the Central Government
246
Certificate/statement for tax deducted at source
248
Furnishing of statements by tax deductor to department
250
Credit for tax deducted at source
255
Returns to be submitted
255
Consequences of failure to deduct or pay tax, etc.
255
7.1 Circular No. 681, dated 8-3-1994
257
7.2 Circular No. 715, dated 8-8-1995
262
7.3 Circular No. 13/2006, dated 13-12-2006
268
7.4 Circular No. 6/2006, dated 23-6-2006
269
8
DEDUCTION OF TAX AT SOURCE FROM
INSURANCE COMMISSION
8.1
8.2
8.3
8.4
8.5
8.6
8.7
8.8
8.9
8.10
8.11
Scope and application of section 194D
Who is responsible to deduct tax at source
When payment is made to Government, etc.
Effect of non-furnishing of PAN on rate of tax
When tax to be deducted
When tax not to be deducted or deducted at lower rate
Special provisions for certain entities
Tax Deduction and Collection Account Number (TDCAN)
Deposit of tax to the credit of the Central Government
Certificate/statement for tax deducted at source
Furnishing of statements by tax deductor to department
270
274
274
274
275
275
277
277
277
280
282
8.12 Credit for tax deducted at source
8.13 Returns to be submitted
8.14 Consequences of failure to deduct or pay tax, etc.
286
286
287
9
DEDUCTION OF TAX AT SOURCE FROM PAYMENTS
QUA DEPOSITS UNDER NSS
9.1
9.2
9.3
9.4
9.5
9.6
9.7
9.8
9.9
9.10
9.11
9.12
What payments are covered by section 194EE
Who is responsible to deduct tax
Effect of non-furnishing of PAN on rate of tax
When tax to be deducted
When no tax to be deducted at source
Tax Deduction and Collection Account Number (TDCAN)
Deposit of tax to the credit of the Central Government
Certificate/statement for tax deducted at source
Furnishing of statements by tax deductor to department
Credit for tax deducted at source
Returns to be submitted
Consequences of failure to deduct or pay tax, etc.
288
288
288
289
289
291
291
293
296
300
300
300
10
DEDUCTION OF TAX AT SOURCE FROM PAYMENTS
ON ACCOUNT OF REPURCHASE OF UNITS
BY MUTUAL FUNDS OR UNITS BY UTI
10.1
10.2
10.3
10.4
10.5
10.6
10.7
10.8
10.9
10.10
10.11
Scope and application of section 194F
What payments are covered
Who is to deduct tax at source
When tax to be deducted
Deposit of tax to credit of Central Government
Tax Deduction and Collection Account Number (TDCAN)
Certificate/statement for tax deducted at source
Furnishing of statements to department
Credit for tax deducted at source
Returns to be submitted
Consequences of failure to deduct or pay tax, etc.
301
301
303
303
303
303
303
303
303
303
304
11
DEDUCTION OF TAX AT SOURCE FROM COMMISSION
ON SALE OF LOTTERY TICKETS
11.1
11.2
11.3
11.4
11.5
11.6
11.7
11.8
11.9
Scope and application of section 194G
305
Who is responsible to deduct tax
306
Effect of non-furnishing of PAN on rate of tax
306
When tax to be deducted
307
When no tax need to be deducted or tax may be deducted at lower rate
Special provisions for certain entities
309
Tax Deduction and Collection Account Number (TDCAN)
309
Deposit of tax to the credit of the Central Government
310
Certificate/statement for tax deducted at source
312
307
11.10
11.11
11.12
11.13
Furnishing of statements by tax deductor to department
Credit for tax deducted at source
Returns to be submitted
Consequences of failure to deduct or pay tax, etc.
314
318
318
319
12
DEDUCTION OF TAX AT SOURCE FROM COMMISSION
OR BROKERAGE PAYMENTS
12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
12.10
12.11
12.12
12.13
12.14
12.15
12.16
12.17
12.18
12.19
Annex
Annex
Scope and effect of section 194H
320
Meaning of ‘commission or brokerage’
321
Monetary limit on payment
331
Payers who are covered by section 194H
332
Payees who are covered by section 194H
333
Conditions to be satisfied for the applicability of section 194H
Who is to deduct tax at source
334
When payment is made to Government, etc.
334
Effect of non-furnishing of PAN on rate of tax
334
When tax is to be deducted at source
334
When no tax need be deducted or tax be deducted at lower rate335
Special provisions for certain entities
337
Tax Deduction and Collection Account Number (TDCAN)
338
Deposit of tax to the credit of the Central Government
338
Certificate/statement for tax deducted at source
341
Furnishing of statements by tax deductor to department
343
Credit for tax deducted at source
348
Returns to be submitted
348
Consequences of non-deduction/short deduction of tax at source
12.1
Instruction No. 3/2009, dated 8-5-2009
12.2
Letter F. No. 275/70/2009-IT(B), dated 22-12-2009
13
DEDUCTION OF TAX AT SOURCE
FROM RENT PAYMENTS
13.1
13.2
13.3
13.4
13.5
13.6
13.7
13.8
13.9
13.10
13.11
13.12
13.13
13.14
13.15
Scope and effect of section 194-I
352
Rent, meaning of
353
Monetary limit on rent
355
Departmental clarifications
356
Judicial rulings
358
Payers who are covered by section 194-I
363
Payees who are covered by section 194-I
365
Conditions to be satisfied for applicability of section 194-I365
Who is to deduct tax at source
365
When payment is made to Government, etc.
365
When tax to be deducted at source
366
When no tax need be deducted or tax be deducted at lower rate366
Special provisions for certain entities
368
Rate of tax
370
Effect of non-furnishing of PAN on rate of tax
371
333
348
350
351
13.16
13.17
13.18
13.19
13.20
13.21
13.22
Annex
Annex
Annex
Tax Deduction and Collection Account Number (TDCAN)
371
Deposit of tax to the credit of the Central Government
371
Certificate/statement for tax deducted at source
373
Furnishing of statements by tax deductor to department
376
Credit for tax deducted at source
380
Returns to be submitted
381
Consequences for non-deduction/short deduction of tax at source
13.1
Circular No. 5/2002, dated 30-7-2002
13.2
Circular No. 1/2008, dated 10-1-2008
13.3
Circular No. 4/2008, dated 28-4-2008
381
383
385
386
14
DEDUCTION OF TAX AT SOURCE FROM FEES FOR
PROFESSIONAL OR TECHNICAL SERVICES
14.1
14.2
14.3
14.4
14.5
14.6
14.7
14.7A
14.8
14.9
14.10
14.11
14.12
14.13
14.14
14.15
14.16
14.17
14.18
14.19
14.20
14.21
14.22
Annex
Annex
Scope and effect of section 194J
387
Payments covered by section 194J
388
Meaning of ‘professional services’
389
Meaning of Technical Services
394
Meaning of Royalty
403
Meaning of ‘Non-compete Fees’
404
Monetary limit upto which tax is not deductible
404
Remuneration/fees/commission paid to company directors
405
Payers who are covered by section 194J
405
Payees who are covered by section 194J
407
Conditions to be satisfied for application of section 194J 407
Who is to deduct tax at source
407
Effect of non-furnishing of PAN on rate of tax
408
When tax is to be deducted at source
408
When no tax need be deducted or deducted at lower rate
408
Special provisions for certain entities
410
Tax Deduction and Collection Account Number (TDCAN)
412
Deposit of tax to the credit of Central Government
412
Certificate/statement for tax deducted at source
414
Furnishing of statements by tax deductor to department
417
Credit for tax deducted at source
421
Returns to be submitted
421
Consequences of non-deduction/short deduction of tax at source
421
14.1
Circular F. No. 275/73/2007-IT(B), dated 30-6-2008
423
14.2Circular No. 8/2009 [F. No. 385/08/2009-IT(B)], dated 24-11-2009
15
DEDUCTION OF TAX AT SOURCE FROM INCOME
FROM MUTUAL FUNDS/UTI
15.1 Scope and effect of section 194K
426
16
DEDUCTION OF TAX AT SOURCE ON PAYMENT OF
COMPENSATION ON ACQUISITION OF CERTAIN
424
IMMOVABLE PROPERTY
16.1
16.2
16.3
16.4
16.5
16.6
16.7
16.8
16.9
16.10
16.11
16.12
16.13
16.14
16.15
16.16
Scope of the provision
427
Payers covered
430
Payees covered
430
Effect of non-furnishing of PAN on rate of tax
431
Threshold limit upto which no deduction shall be made
431
Who is to deduct tax at source
432
When to deduct tax at source
432
When no tax deducted at source or tax to be deducted at lower rate 433
Special provisions for certain entities
434
Tax Deduction and Collection Account Number (TDCAN)
436
Deposit of tax to the credit of the Central Government
436
Certificate/statement for deduction of tax at source
438
Furnishing of statements by tax deductor to department
440
Credit for tax deducted at source
445
Returns to be submitted
445
Consequences of non-deduction/short deduction/non-payment of tax at source 445
17/18
DEDUCTION OF TAX AT SOURCE FROM
INCOME BY WAY OF INTEREST FROM
INFRASTRUCTURE DEBT FUND
17/18.1 Scope and application of section 194LB
446
17/18.2 What is the payment covered by section 194LB
446
17/18.3 Who is the payer
446
17/18.4 Who is the payee
447
17/18.5 When tax is to be deducted at source
447
17/18.6 Tax Deduction and Collection Account Number (TDCAN)
447
17/18.7 Deposit of tax to credit of Central Government
447
17/18.8 Certificate for tax deducted at source
447
17/18.9 Furnishing of statements by the deductor to the department447
17/18.10
Credit for tax deducted at source
17/18.11
Consequences of failure to deduct or pay tax etc.
447
447
19
DEDUCTION OF TAX AT SOURCE FROM
PAYMENTS TO NON-RESIDENTS
19.1
19.2
19.3
19.4
19.5
19.6
19.7
19.8
19.9
19.10
19.11
Scope of this Chapter
448
Scope of section 195
448
Conditions to be satisfied to apply section 195
449
Payers who are covered by section 195
449
Payees who are covered by section 195
450
What kind of payments are covered
452
Sum chargeable under the Act
454
Who is to deduct tax at source
456
Effect of non-furnishing of PAN on rate of tax
456
When tax to be deducted at source
456
When no tax need to be deducted or tax may be deducted at lower rate
457
19.12
19.13
19.14
19.15
19.16
19.17
19.18
19.19
19.20
19.21
19.22
19.23
19.24
19.25
19.26
19.27
19.28
19.29
19.30
19.31
19.32
19.33
19.34
19.35
19.36
Annex
Annex
Annex
Annex
Special provisions for certain entities
460
Tax Deduction and Collection Account Number (TDCAN)
462
Deposit of tax to the credit of the Central Government
462
Certificate/statement for tax deducted at source
464
Furnishing of statements by tax deductor to department
466
Credit for tax deducted at source
472
Consequences of failure to deduct or pay tax, etc.
472
Procedure for refund to tax deductor
473
Scope and application of section 194E
473
Who is to deduct tax at source
477
When tax is to be deducted at source
477
Effect of private arrangement whereunder tax liability of payee will be borne
by payer
477
Tax to be deducted at lower rate or not to be deducted at all
477
Tax Deduction and Collection Account Number (TDCAN)
477
Deposit of tax to credit of Central Government
477
Certificate for tax deducted at source
477
Furnishing of quarterly statements by the deductor to department
477
Credit for tax deducted at source
477
Consequences of failure to deduct or pay tax, etc.
477
Scope and application of section 194LC
478
Deposit of tax to credit of Central Government
479
Certificate for tax deducted at source
479
Furnishing of quarterly statements by the deductor to the department
479
Credit for tax deducted at source
479
Consequences of failure to deduct or pay tax etc.
479
19.1Procedure for refund of tax deducted at source under section 195 to the
person deducting the tax
480
19.2
Circular No. 4/2009, dated 29-6-2009
484
19.3Procedure for furnishing information under sub- section (6) of section 195
(new Form 15CA)
486
19.4Circular No. 9/2009 [F. No. 142/19/2007-TPL], dated 30-11-2009 489
20
DEDUCTION OF TAX AT SOURCE FROM INCOME
IN RESPECT OF UNITS OF NON-RESIDENTS
20.1 Scope and effect of section 196A
490
21
DEDUCTION OF TAX AT SOURCE FROM INCOME
FROM UNITS OF OFF-SHORE FUNDS
21.1
21.2
21.3
21.4
21.5
21.6
21.7
21.8
Scope and application of section 196B
491
Who is to deduct tax at source
492
When tax is to be deducted at source
492
When no tax can be deducted or tax be deducted at lower rate492
Tax Deduction and Collection Account Number (TDCAN)
492
Deposit of tax to credit of Central Government
492
Certificate for tax deducted at source
492
Furnishing of quarterly statements by the deductor
492
21.9 Credit for tax deducted at source
21.10 Consequences of failure to deduct or pay tax, etc.
493
493
22
DEDUCTION OF TAX AT SOURCE ON INCOME FROM
FOREIGN CURRENCY BOND OR GLOBAL DEPOSITORY
RECEIPTS OF INDIAN COMPANY
22.1
22.2
22.3
22.4
22.5
22.6
22.7
22.8
General
When tax is to be deducted
Tax Deduction and Collection Account Number (TDCAN)
Deposit of tax to the credit of Central Government
Issue of certificate for tax deduction
Furnishing of quarterly statements by the deductor
Credit for tax deducted at source
Consequences of failure to deduct or pay tax, etc.
494
495
495
495
495
495
495
495
23
DEDUCTION OF TAX AT SOURCE FROM
INCOME OF FOREIGN INSTITUTIONAL
INVESTORS FROM SECURITIES
23.1
23.2
23.3
23.4
23.5
23.6
23.7
23.8
Scope of provisions
When tax is to be deducted
Tax Deduction and Collection Account Number (TDCAN)
Deposit of tax to the credit of Central Government
Issue of certificate for tax deduction
Furnishing of quarterly statements by the tax deductor
Credit for tax deducted at source
Consequences of failure to deduct or pay tax, etc.
496
496
496
497
497
497
497
497
24
TAX COLLECTION AT SOURCE
24.1
24.2
24.3
24.4
24.5
24.6
24.7
24.7A
24.8
24.9
24.10
24.11
24.12
24.13
24.14
24.15
Who is responsible to collect tax at source under section 206C
498
Specified goods
498
Who is a ‘seller’
499
Who is a ‘buyer’
500
Certain lessors/licensors are also covered
504
Cash sale of jewellery
505
General exemption
505
When tax has to be collected at source
505
Rate at which tax is to be collected
506
Goods utilised for manufacturing/processing is not subject to tax collection
508
Tax Deduction and Collection Account Number (TDCAN)
509
Deposit of tax
511
Issue of certificate/statement to buyer/licensee/lessee
512
Furnishing of statements by tax collector to department
513
Credit for tax collected at source
516
Returns
518
24.16 Consequence of failure to collect tax
518
24.17 Payment of advance tax in case of receipt of income without deduction or
collection of tax
520
Annex 24.1Instruction No. 4/2010 [F. No. 275/23/2007-IT(B)], dated 21-7-2010
521
25
QUOTING OF PAN IN TDS/TCS TRANSACTIONS
25.1
25.2
25.3
25.4
25.5
Intimating PAN to tax deductor/tax collector
522
Quoting of PAN by tax deductor
522
Quoting of PAN by tax collector
523
Penalty for failure to comply with the provisions of section 139A
Effect of non-furnishing of PAN
523
APPENDIX
TDS TAX RATES & TAX TABLES

TDS RATES FOR FINANCIAL YEAR 2012-13
527

RATES FOR TAX COLLECTION AT SOURCE FOR FINANCIAL YEAR 2012-13
532

TAX RATES FOR ASSESSMENT YEAR 2013-14
533

TDS TAX TABLES
534
523