Tax Deducted at Source (TDS)
TDS is effected at the source when income arises. This type of tax is deducted by the employer or the payer of the income, and is deposited in the Central Government. TDS is calculated under 5 provisions:
1. TDS on salary
2. TDS on Rent
3. TDS on payments to contractors
4. TDS on commission & Brokerage
5. TDS on fees for professional & technical services
It also has various subsections explaining the procedure, applicability and collection of TDS. It is a very relevant tax in terms of its share in total tax revenue being collected in India.
It is complicated in nature and in calculation and hence, needs to be scrutinized ...view middle of the document...
TDS rates for Financial Year 2012-13
Male | Female | Senior Citizen | Tax (%) |
For Income Between 0 to 2,00,000 | For Income Between 0 to 2,00,000 | For Income Between 0 to 2,50,000 | 0 |
For Income Between 2,00,001 to 5,00,000 | For Income Between 2,00,001 to 5,00,000 | For Income Between 2,50,001 to 5,00,000 | 10 |
For Income Between 5,00,001 to 10,00,000 | For Income Between 5,00,001 to 10,00,000 | For Income Between 5,00,001 to 10,00,000 | 20 |
For Income above 10,00,001 | For Income above 10,00,001 | For Income above 10,00,001 | 30 |
Surcharge | | 0 |
Education Cess | | 3 |
Note: Age of senior citizen is 60 and above years. New category of assessee "Very Senior Citizen", aged above 80 years, is exempted till 5,00,000 of income. |
Certain Basic Issues:
Chapter XVII – Collection and Recovery of Tax
Deduction can be made only under one section – Circular 720 dated 30.08.1995
Place of Payment – Circular 306 dated 19.06.1981
TDS provisions covered
1. TDS on Salary - Section 1992
2. TDS on payment to Contractors – Section 194C
3. TDS on Commission and Brokerage – Section 194H
4. TDS on Rent – Section 194I
5. Fees for professional or technical services – Section 192J
TDS on salary – Section 192
Section | Nature | Rate of TDS | Exemption |
192 | Payment of any income chargeable under the head ‘Salaries’ | Tax is deducted at the average rate of income tax computed on the basis of rate in force for the financial year in which the payment is made | If chargeable ‘salaries’ is effectively Gross Total Income & the Total Income is within the exemption limit (consider factors such as other income declared by employee) |
1. Option with employer to pay tax on non-cash perks, as per section 192(1A), instead of TDS. It shall not be income of employee, as clarified in proviso to section 198.
2. S192(2) – Assessee employed simultaneously under more than one employer or has held employment under more than one employer during the year, may furnish Form 12B to one of such employers, the choice being left to the assessee, having regard to the circumstances.
3. S192 (2B) and rule 26B – Assessee may declare other income & loss from House Property.
4. No employer-employee relationship necessary for issue of TDS certificate.
Some Other Sections:-
* Debenture/listed Debentures in physical form/Govt. securities (if interest>Rs. 2500/-)
* Rate of TDS – 10%
* Listed securities of a company in demat form, exempt
* If payee is bank/post office-TDS only if amount>Rs. 10,000/- p.a. limit with reference to a branch of bank
* other payees – TDS only if amount>Rs. 5,000/- p.a.
TDS on Contractors – Section 194C
Section | Nature | Rate of TDS | Exemption amount w.e.f 01.07.2010 |
194C | Payment of any sum to resident contractor | In case of any individual or HUF – 1%Other than...