TDS Rules and Regulations – All Details for Tax Deducted at Source. TDS is a mandatory requirement, which is a source of revenue for the government. This tax is deducted at the point of generation of income and TDS is hence spread for a wide variety of incomes like salary, interest, rent, etc. This article will explain rules and regulations of TDS. Now check more details about “TDS Rules and Regulations” from below…
TDS Rules and Regulations
Categories
| Section | Applicable to income from | Exempt up to |
| 192 | Salary | The threshold for various persons. For e.g. Rs.250000 for individual |
| 193 | Interest on securities | Rs.5000 |
| 194 | Dividend | Rs.2500 |
| 194C | On contractors or sub-contractors | – Single sum not more than Rs.30000
– Aggregate amount not more than Rs.100000 |
| 194H | Commission or brokerage | Rs.15000 |
Above is not the exhaustive list, however, it is just presented to get a general idea. For e.g. if any person receives income which is taxable under income from business or profession, which is taxed as professional fees or technical consultancy, such income is subject to TDS deduction under section 194J, which should be deducted by the payer.
Further, all these categories have exempt thresholds, so TDS deduction is applicable only if the income goes above such threshold. For e.g. if any senior citizen earns income taxable under the head salary then the income would be eligible for TDS only if his gross salary is above Rs.300000.
Compliances for tax deductor
- Obtain TAN number for enabling him to deduct TDS.
- Deduct TDS on every appropriate category of payment at prescribed rate within specified time limit.
- Pay such tax deducted to the government treasury within due date as prescribed under particular section.
- File TDS return periodically, issue TDS certificates,
TDS is not applicable where payment is made to
- Central or state or local government authorities
- Banks
- With respect to interest on Income Tax refund, interest on KVP or NSC,
- Any other institutes which are granted No TDS certificate by the income tax department
TDS at lower rates
Any person can approach income tax department for granting him the certificate for allowing a lower rate of tax deduction at source. The department will issue such certificate only after observation and inquiry of particular facts and information, which will lead them to determine that the person is not required to be subjected to existing rate of TDS.
What happens if TDS is not deducted or paid into the government treasury even if required as per law?
- Interest is levied @ 1% from the month in which TDS was required to be deducted till the date when TDS is actually deducted, where TDS was not deducted
- Interest is levied @ 1.5% for month or part of the month from the due date within which the TDS was required to be deposited till the date of actual deposit, where there is a delay in depositing TDS.
- The Penalty is leviable at the discretion of joint commissioner under section 271C, who may even impose fine along with imprisonment in most severe cases.
Time framework for TDS deposit
- TDS deducted should be deposited within 7 days from the end of the month on which TDS was so deducted.
- For TDS deducted in the month of March, TDS should be deposited on or before 30th April of the next financial year.
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