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About TDS Services

TDS (or) Tax Deducted at Source is a scheme of tax collection in India under which a certain percentage of a person’s income is deducted at the source of payment and is remitted directly to the government by the person responsible for making such payment. Any person making payments in the nature of salary, interest, rent, commission, professional fees etc., is liable to deduct TDS and shall deposit such amount within the prescribed time limit to the Government.

In India, TDS is administered by the Income Tax Department and is governed by the Income Tax Act of 1961. Tax is deducted at source to ensure that every person pay their taxes in a timely and efficient manner. It is a way the Government collects the taxes in advance for the income earned by the assessee.

The rate of TDS depends on the nature of payment and type of payer/payee. Some of the frequently used TDS Sections are:

  • Section 192
    Deals with the tax deducted at source on payment of salaries by employer. The employer deducts TDS from the salary payable at the Income tax slab rate applicable to the employee on the estimated total income.
  • Section 194A
    Deals with the tax on interest other than interest on securities paid to a resident. The rate of TDS under this section is 10%.
  • Section 194B
    Under Section TDS will be deducted on money earned from winning lotteries, crossword puzzles, card games, quiz shows, online gaming or dance competitions provided that the amount of winnings exceed Rs. 10,000. The person paying the prize money should deduct tax at the rate of 30% before paying the payee.
  • Section 194C
    It deals with the deduction of tax at source on payments made to resident contractors and subcontractors for carrying out works contract. Tax has to be deducted at source where the amount credited or paid or likely to be credited or paid to a contractor or sub-contractor exceeds 30,000 in a single payment or 1,00,000 in aggregate during the financial year.
  • Section 194H
    It deals with the deduction of tax at source on payments of Commission and brokerage(not being insurance commission) to any resident. The rate of TDS under this section is 5% and is applicable if amount payable or paid exceeds Rs. 15,000 during the financial year.
  • Section 194I
    This section deals with the TDS on rent payable or paid if such amount exceeds Rs. 2,40,000 during the financial year. The person who pays the rent is liable to deduct TDS at a rate of 10% for rent on land/building/furniture/fitting while a rate of 2% applies on rental charges of plant and machinery.
  • Section 194J
    Covers the payments made to residents in the form of professional fees(paid to lawyer, doctor, engineer, architect, chartered accountant, interior decorators, advertisers etc.) or fees for technical services(paid for the rendering of managerial, technical or consultancy services). Tax rates vary on the type of service provided.
  • Section 194O
    Governs the TDS provisions on any sale of goods or providing services by an e-Commerce participant through any platform. The e-Commerce operator is required to deduct TDS at a rate of 1%.
  • Section 194Q
    This section states that the buyer of the goods whose turnover exceeds Rs. 10 Crore during the preceeding financial year is required to deduct the TDS while making the payment to the seller of the goods if the products purchased from such seller has an aggregate value of Rs.50,00,000/- or more. 0.10% tax rate is applicable.
  • Section 195
    The section specifies the TDS provision on payments made by way of interest or any other amount other than salary to a non resident or a foreign company. The tax rates vary based on the nature of income and DTAA.

BCL India provides services on these above major sections as well as other sub sections to keep you compliant and away from interest and penalties.

Tax deducted during the month of April to February should be paid to the credit of the Government on or before 7 days from the end of the month in which the deduction is made and tax deducted during the month of March should be paid to the credit of the Government on or before 30th day of April.

The TDS return should be filed on a quarterly basis within the last day of the month falling after the quarter, however for the last quarter Jan- March, the due date for filing the TDS return would be May 31st.

Basic Regulations:

  • The Tax Deduction / Collection Number is mentioned on all TDS / TCS Documents.
  • The amount is collected as per the applicable rate.
  • TDS return should be submitted within the specified due dates.
  • Certificates of TDS shall be issued to deductees in respect to the tax amount deducted / collected

Late filing fee and penalty on failure to file the TDS return:

  • Failure to file TDS return attracts Rs. 200 for every day during which the failure continues. However, it shall not exceed the amount of TDS.
  • Minimum penalty can be levied of Rs. 10,000 which can go up to Rs. 1,00,000.

Interest Rates:

  • Interest will be levied at 1% for every month or part of a month for delay in deduction.
  • Interest will be levied at 1.5% for every month or part of a month for delay in remittance after deduction.

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