TDS –TCS RATE CHART DUE DATES OF TDS INTEREST PENALTY BY WWW.SIMPLETAXINDIA.

NET

TDS RATE CHART FY 17-18 AY 18-19

BY WWW.SIMPLETAXINDIA.NET

VERSION: 1 UPDATED: 10/04/2017

REPORT ERROR: RANIRAJ1950@GMAIL.COM

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1. TDS RATE CHART FY 2017-18 AY 2018-19

TDS RATE CHART FY 2017-18 AY 2018-19

Sec Nature of Payment Cut off (Rs.) Indi/HUF Others
192 Salaries - Avg rates NA
192A Premature withdrawal from EPF 50000 10 NA
193 Interest on securities 10000 10
194 Dividends 2500 10
194A Interest Banks/Other 10000/5000 10
194B Winning from Lotteries 10000 30
194BB Winnings from Horse Race 10000 30
Contractor-Single/Yearly 30K/1LAKh 1 2
194C Transporter(44AE) Declaration with PAN As above - -
194D Insurance Comm (15G-15H allowed) 15000 5%
194DA Life insurance policy 100000 1%
194EE NSS 2500 10 NA
194G Commission /Lottery 15000 5
194H Commission / Brokerage 15000 5
194I Rent Land and Building F&F 180000 10
194IB Rent (by Indvl/HUF)(01.06.17) 50000/Month 5% NA
194I Rent-Plant/Machinery/equipment 180000 2
194IA Immovable property 50 Lakh 1
194J Professional/technical Fees 30000 10
194J Payment to Call Center(01.06.17) 30000 2
194LA Immovable Property(compensation) 2.5 LAKH 10
194LA Immovable Property-TDS exempted under RFCTLARR Act'(01.04.17)

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TDS RATE CHART FY 2017-18 AY 2018-19

Nature of Payment Made To Indivi/ HUF Other

Section – Description Cut off Rate (%)

(Rs.)
192 – Salaries - Avg rates NA
192A-Premature withdrawal from EPF 50000 10 NA
193 - Interest on securities 10000 10
194 – Dividends 2500 10
194A - Interest Banks 10000 10
194A - Interest other 5000 10
194B - Winning from Lotteries 10000 30
194BB - Winnings from Horse Race 10000 30
194C- Contractor - Single Transaction 30000 1 2
194C- Contractor-During the F.Y. 1 LAKH 1 2
194C- Transporter (44AE) declaration with PAN - - -
194D - Insurance Commission(15G-15H allowed) 15000 5
194DA Life insurance Policy 100000 1 NA
194E -Non-Resident Sportsmen or Sports - 20
Association
194EE - NSS 2500 10 NA
194F - Repurchase Units by MFs - 20
194G - Commission - Lottery 15000 5
194H - Commission / Brokerage 15000 5
194I - Rent Land and Building - F&F 180000 10
194I Rent Plant/Machinery/equipment 2
194I- Rent by Individual/HUF(01.06.2017) 50000/PM 5 NA
194IA -Transfer of certain immovable property 50 Lakh 1
other than agriculture land
194J - Professional Fees 30000 10
194LA - Immovable Property(compensation) 2.5 Lakh 10

194LA - Immovable Property(TDS exempted under RFCTLARR Act'(01.04.2017)

194LB - Income by way of interest from - 5

infrastructure debt fund (non- resident)
194LB - Income by way of interest from - 5
infrastructure debt fund (non- resident)

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TDS RATE CHART FY 2017-18 AY 2018-19

Nature of Payment Made To Indivi/ HUF Other
Section – Description Cut off Rate (%)
(Rs.)
194LB - Income by way of interest from - 5
infrastructure debt fund (non- resident)
194LB - Income by way of interest from - 5
infrastructure debt fund (non- resident)
Sec 194 LC - Income by way of interest - 5
by an Indian specified company to a non-
resident / foreign company on foreign currency
approved loan / long-term infrastructure bonds
from outside India (applicable from July 1,
2012)

194LD - Interest on certain bonds and govt. - 5

Securities(from 01-06-2013)
196B - Income from units - 10
196C-Income from foreign currency bonds or - 10
GDR (including long-term capital gains on
transfer of such bonds) (not being dividend)

196D - Income of FIIs from securities - 20

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Section 192
Nature of Payment Salary
Deductor Any person (employer)
Deductee Any person (employee) individual
TDS rate As per Slab rate applicable to individual
Threshold Limit If Tax payable is nil on Salary Income
Time of deduction At the time of Payment
Other points Negative Income of House property may be Considered for TDS
calculation

192A
Nature of Payment Premature withdrawal from EPF
Deductor EPFO
Deductee Resident
TDS rate 10%
Threshold Limit 50000 wef 01.06.2016)
Time of deduction At the time of Payment
Other points TDS is applicable only if withdrawn before 5 year of contribution

Section 193
Nature of Payment Interest on securities
Deductor any person
Deductee Resident
TDS rate 10%
Threshold Limit Govt securities -10000 Debenture-5000
Time of deduction credit or payment whichever is earlier
Other points

Section 194
Nature of Payment Deemed dividend
Deductor Indian company /company making payment in India
Deductee Resident
TDS rate 10%
Threshold Limit 2500 to Individuals paid a/c payee cheque
Time of deduction Distribution or payment which ever is earlier
Other points No tds on exempted dividend u/s 10(34)

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Section 194A
Nature of Payment Interest other than securities
Deductor (1)Any person other than Individual /HUF (2) Individual Huf having
sales turnover /receipts exceeding the limit provided under
section 44AB in immediately preceding year
Deductee Resident
TDS rate 10%
Threshold Limit 10000 from banks 5000 from others
Time of deduction credit or payment which ever is earlier
Other points Adjustment in deduction increase/decrease can be made same as
under section 192(salary)

Section 194B
Nature of Payment winning from lottery/crossword puzzle etc
Deductor any person
Deductee any person
TDS rate 30%
Threshold Limit 10000
Time of deduction At the time of Payment
Other points Tax is deductible even for prize in Kind

Section 194BB
Nature of Payment Winning of Horse race
Deductor any person
Deductee any person
TDS rate 30%
Threshold Limit 10000 form 01.06.2016
Time of deduction At the time of Payment
Other points

Section 194C
Nature of Payment TDS from payment to contractor sub contractor
Deductor As per details
Deductee Resident
TDS rate if payee is individual/huf:1% other :2%
Threshold Limit Single :30000 Total f.Y 100000 wef 01.06.2016
Time of deduction credit or payment which ever is earlier
Other points Material value excluded if shown in bill separately

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194D
Nature of Payment Insurance Commission
Deductor Insurance company
Deductee Resident
TDS rate 5% wef 01.06.2016
Threshold Limit 15000 from 01.06.2016
Time of deduction credit or payment which ever is earlier
Other points Form 15G-15H allowed wef 01.06.2017

Section 194DA
Nature of Payment Payment of Life insurance not exempted u/s 10(10D)
Deductor any person
Deductee Resident
TDS rate 1% wef 01.06.2016
Threshold Limit 100000
Time of deduction At the time of Payment
Other points No deduction on payment on death of deductee

Section 194EE
Nature of Payment payment of National saving scheme(deduction claimed 80CCA)
Deductor any person
Deductee Individual or HUF
TDS rate 10% wef 01.06.2016
Threshold Limit Rs 2500
Time of deduction At the time of Payment
Other points No deduction on payment to heirs

194F
Nature of Payment Units of Mutual Funds/UTI(deduction claimed 80CCB)
Deductor any person
Deductee Individual or HUF
TDS rate 20%
Threshold Limit 2500
Time of deduction At the time of Payment
Other points no deduction on payment to heirs
Section 194H
Nature of Payment Commission / Brokerage
Deductor any person
Deductee Resident
TDS rate 5 % wef 01.06.2016
Threshold Limit 15000 wef 01.06.2016
Time of deduction credit or payment which ever is earlier

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Section 194G
Nature of Payment Commission on Lottery
Deductor any person
Deductee Resident
TDS rate 5% wef 01.06.2016
Threshold Limit 15000 wef 01.06.2016
Time of deduction credit or payment whichever is earlier
Other points

Section 194I
Nature of Payment Payment of Rent
Deductor Any person other than HUF/Individual
HUF-Individual :sales /gross receipt exceeds one crore/50 lakhs
Deductee Resident
TDS rate Plant and Machinery/equipment :2% Land /building/furniture -
10%
Threshold Limit 180000
Time of deduction credit or payment which ever is earlier
Other points TDS is deductible even if deductor is not owner

Section 194IB(wef 01.06.2017)

Nature of Payment Payment of Rent
Deductor Individual or HUF(not covered under audit 44AB)
HUF-Individual :sales /gross receipt less than one crore/50 lakhs
Deductee Resident
TDS rate Rent 5 %
Threshold Limit 50000 per month
Time of deduction Only Once in year -Last month of agreement/Previous year
TDS rate without As per 206AA but maximum up to last month Rent
PAN
Other points TDS to be deposited under PAN no TAN required

Section 194 IA(effective from 01.06.2013)

Nature of Payment Payment of immovable property
Deductor Any person other than HUF/Individual
HUF-Individual :sales /gross receipt exceeds one crore/50 lakhs
Deductor any person
Deductee Resident
TDS rate 1%
Threshold Limit sale consideration up to 50 lakh
Time of deduction At the time of Payment
Other points Agriculture land not covered/TAN is not required to be obtained

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Section 194J
Nature of Payment Fees for professional services /Technical services/ royalty
/remuneration or fees or commission payable to director (not
covered under 192)
Deductor Any person other than HUF/Individual
HUF-Individual :sales /gross receipt exceeds one crore/50 lakhs
Deductee Resident
TDS rate 10% (2% on Call centers wef 01.06.2017)
Threshold Limit 30000(no Limit for Payment to director)
Time of deduction credit or payment whichever is earlier
Other points No tds on profession services for personal purpose

Payment of compensation on acquisition of certain immovable property(194LA)

Nature of Payment Payment of compulsory compensation on acquisition of certain
immovable property(other than agriculture land)
Deductor Any person
Deductee Resident
TDS rate 10%
Threshold Limit sale consideration up to Rs 2.50 lakh
Time of deduction At the time of Payment(cash/cheque/draft or any other mode)
Other points Any payemnt made under RFCTLARR Act is exempted from TDS

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CHANGES IN TDS AND TCS RATES IN FINANCE ACT-2017

CHANGES IN TDS BUDGET-2017

Section Description Change Wef
194-IB TDS ON RENT TDS By Individual/HUF @ 5 % on Rent 01.06.17
more than Rs 50000 Per month
194J PROF. SERVICES Rate on Call center Reduced to 2 % 01.06.17

194D INSURANCE COMM. Form 15G-15H allowed 01.06.17

194LA COMPENSATION No TDS on Compensation under Right to 01.04.17

IMMOVABLE PROP. Fair Compensation and Transparency in
Land Acquisition
194LC/D FOREIGN LOANS 5% TDS on Int.Ext.comm borrowings FY16-17

40a(ia) DIS-ALLOWANCE Also applicable on Income from Other AY 17-18

ON NON-DED OF Source
TDS
244A INTEREST ON Payable from Apply Date to Refund Date 01.04.17
REFUND @ half % per month
Read More [CHANGES IN TDS RATES BUDGET-2017]

Changes in TCS in Budget-2017

Section Description Change Wef
206CC TCS All Clauses TCS without PAN-Twice the Rate or 01.04.17
5 % whichever higher
206CC TCS All Clauses Mandatory quoting of PAN of the 01.04.17
collectee by both the collector and
the collectee in all correspondence

206C(1F) TCS on Motar Not aaplicable on Cent/ State Govt, 01.04.17

Vehicle more than 10 Embassy-High Comm etc, Local
Lakh Auth, PSU Transport Company.

206C(1D) TCS on Jewellery and Deleted as 100 % penalty applicable 01.04.17

cash transaction on Cash Transaction exceeding 2
more than 2 lakh Lakh

Read [CHANGES IN TCS RATES IN FINANCE ACT-2017]

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Notes to TDS RATE CHART FY 2017-18 AY 2018-19:

1. No TDS on service Tax: As per circular 01/2014 dated 13.01.2014 TDS is not applicable
on service tax part if service tax is shown separately.
2. TDS at higher rate i.e., 20% has to be deducted if the deductee does not provide PAN to
the deductor.(read detail u/s 206AA)
3. TDS on Good Transport wef 01.06.2015: TDS shall be applicable on payment to
transporter wef 01.06.2015 .However tds exemption will be available only to those
transporters who own ten or less goods carriages at any time during the previous year.
Such a transporter would also need to furnish a declaration to that effect to the payer
along with the PAN.
4. Surcharge on TDS on salary is applicable if taxable salary is more than 50
lakh @ 10% and if salary is more than one crore @ 15 %
5. Surcharge on tax other than salary is not on payment made to resident.
6. Surcharge on TDS applicable on payment made to non-resident (See chart below)
details )
7. TDS is deductible on full amount if threshold limit is crossed during the year including
the amount paid earlier during the year along with interest, if applicable.
8. No Cess on payment made to resident: Education Cess is not applicable in case of
resident Individual /HUF/ Firm/ AOP/ BOI/ Domestic Company in respect of
payment of income other than salary. Education Cess @ 2% plus secondary & Higher
Education Cess @ 1% is deductible at source in case of non-residents and foreign
company.
9. Section 206AA in the Act makes furnishing of PAN by the employee compulsory in case
of receipt of any sum or income or amount, on which tax is deductible. If employee
(deductee) fails to furnish his/her PAN to the deductor , the deductor has been made
responsible to make TDS at higher of the following rates:

• i) at the rate specified in the relevant provision of this Act; or

• ii) at the rate or rates in force; or
• iii) at the rate of twenty per cent. The deductor has to determine the tax amount
in all the three conditions and apply the higher rate of TDS.
• However, where the income of the employee computed for TDS u/s 192 is below
taxable limit, no tax will be deducted. Education cess @ 2% and Secondary and
Higher Education Cess @ 1% is not to be deducted, in case the tax is deducted at
20% u/s 206AA of the Act.
• In Case of TCS without pan rate shall be 5 % or double of the prescribed
rate ,whichever is higher.

10. TDS by Individual and HUF (Non Audit) case not deductible :An Individual or a
Hindu Undivided Family whose total sales, gross receipts or turnover from business or
profession carried on by him does not exceeds the monetary limits (Rs.100,00,000 in case
of business & Rs.50,00,000 in case of profession) under Clause (a) or (b) of Sec.44AB
during the immediately preceding financial year shall not be liable to deduct tax
u/s.194A,194C, 194H, 194I & 194J.So no tax is deductible by HUF/Individual in first
year of operations of business even sales/receipt is more than 100/50 Lakh.

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5.Surcharge /Cess applicable on TDS/TCS

1.Surcharge on payment made to resident other than salary is not deductible

2.In case of nonresident shall be increased by a surcharge in the case of—
(i) every non-resident being an individual or Hindu undivided family or association of
persons or body of individuals, whether incorporated or not, or every artificial juridical
person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act,—
(a) at the rate of ten per cent. of such tax, where the income or the aggregate of
income paid or likely to be paid and subject to deduction exceeds fifty lakh
rupees but does not exceed one crore rupees;
(b) at the rate of fifteen per cent. of such tax, where the income or the aggregate
of income paid or likely to be paid and subject to deduction exceeds one crore
rupees;
(ii) every non-resident being a co-operative society or firm or local authority at the rate
of twelve per cent. Where the income or the aggregate of income paid or likely to be
paid and subject to deduction exceeds one crore rupees;
(iii) every company other than a domestic company at the rate of two per cent. where
the income or the aggregate of income paid or likely to be paid and subject to deduction
exceeds one crore rupees but does not exceed ten crore rupees;
(iv)every company other than a domestic company at the rate of five per cent. where
the income or the aggregate of income paid or likely to be paid and subject to deduction
exceeds ten crore rupees.

Surcharge /Cess applicable on TDS/TCS

Particulars Payment Surcharge Cess

Individual Salary (up to 50 lakh) No Yes(3%)
Individual Salary (50 lakh - 1 crore) Yes (10%) Yes(3%)
Resident

Individual Salary (> I crore) Yes (15%) Yes (3%)

Non- Any No No
corporate
Corporate Any No No
Individual or Any payment up to 50 No Yes (3%)
HUF or AOP lakh
or BOI or Any Payt (50 lakh-1crore) Yes(10%) Yes (3%)
every artificial
Non- Resident

juridical Any Payments> 1 Crore Yes(15%) Yes (3%)

person

cooperative Any payment > 1 Crore Yes (12%) Yes (3%)

society-Firm
Non Domestic Any payment Yes (2%) Yes (3%)
Company (> 1 Crore to 10 crore)
Any payment > 10 Crore Yes (5%) Yes (3%)

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6. TCS (Tax Collection at Source Rates Fy 2017-18 AY 2018-19

TCS rate chart is given below for your ready reference.

TCS RATES FOR FY 2017-18 AY 2018-19

Nature of Payment TCS Rate %
Scrap 1.00
Tendu Leaves 5.00
Timber obtained under a forest lease or other mode 2.50
Any other forest produce not being a timber or tendu leave 2.50

Alcoholic Liquor for human consumption 1.00

Parking Lot, toll plaza, mining and quarrying 2.00
Minerals, being coal or lignite or iron ore (applicable from 1.00
July 1,2012)
Sale of motor vehicle of the value exceeding Rs. 10 1.00
Lacs;(wef 01.06.2016)

Motor vehicle clause Not applicable on Central Government, a State

Government, an embassy, a High Commission, legation, commission, consulate
and the trade representation of a foreign State; local authority ; a public
sector company which is engaged in the business of carrying passengers (wef
01.04.2017)

Bullion if consideration (excluding any coin / article Not applicable

weighting 10 grams or less) exceeds Rs. 2 Lakhs or as cash
jewellery if consideration exceeds Rs. 5 Lakhs (and any transaction
amount is received in cash) more than 2
Lakh not
Sale in cash of any goods (other than bullion and jewellery) allowed wef
or providing of any services (other than payments on which 01.04.2017
TDS is made) exceeding Rs. 2 Lacs

TCS Rate without PAN

Double of TCS rate as above or 5% ,which ever is higher

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TCS RATES FY 2017-18 AY 2018-19 (Detailed)

Category-1
Every person, being a seller, shall at the time of debiting the amount payable by the
buyer to the account of the buyer or at the time of receipt of such amount from the said
buyer, whichever is earlier, collect from the buyer of any goods of the nature specified
in column (1) of the Table below, a sum equal to the percentage, specified in the
corresponding entry in column (2) of the said Table, of such amount as income-tax:

Nature of Goods RATE (in %)

Alcoholic liquor for human consumption 1
Tendu leaves 5
Timber obtained under a forest lease 2.5
Timber obtained by any mode other than a forest lease 2.5
Any other forest produce (not being timber/tendu leaves) 2.5
Scrap 1
Minerals, being coal or lignite or iron ore 1

Category-2
Every person, who grants a lease or a licence or enters into a contract or otherwise
transfers any right or interest either in whole or in part in any parking lot or toll plaza
or mine or quarry, to another person, other than a public sector company (hereafter in
this section referred to as "licensee or lessee" ) for the use of such parking lot or toll
plaza or mine or quarry for the purpose of business shall, at the time of debiting the
amount payable by the licensee or lessee to the account of the licensee or lessee or at the
time of receipt of such amount from the licensee or lessee, whichever is earlier, collect
from the licensee or lessee of any such licence, contract or lease of the nature specified
in column (2) of the Table below, a sum equal to the percentage, specified in the
corresponding entry in column (3) of the said Table, of such amount as income-tax:

Nature of contract or licence or lease, etc. Rate (in %)

Parking lot 2
Toll plaza 2
Mining and Quarrying 2

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Category-3
Every person, being a seller, who receives any amount in cash as consideration for sale
of bullion or jewellery or any other goods (other than bullion or jewellery) or providing
any service, shall at the time of receipt of such amount in cash, collect from the buyer, a
sum equal to 1 % of sale consideration as income-tax, if such consideration,—

(i) for bullion, exceeds Rs. 2,00,000; or

(ii) for jewellery, exceeds Rs. 5,00,000; or
(iii) for any goods, other than those referred to above, or any service, exceeds Rs.
2,00,000.

The above category has been abolished wef 01.04.2017 as cash receipt of Rs 2 lakh or
more attracts penalty of 100 % so no need to collect TCS on above category.

Category-4
Every person, being a seller, who receives any amount as consideration for sale of a
motor vehicle of the value exceeding Rs. 10,00,000, shall, at the time of receipt of such
amount, collect from the buyer, a sum equal to 1% of the sale consideration as income-
tax.

In order to reduce compliance burden in certain cases, it is proposed to amend section

206C, to exempt the following class of buyers such as the Central Government, a State
Government, an embassy, a High Commission, legation, commission, consulate and the
trade representation of a foreign State; local authority as defined in explanation to
clause (20) of Section 10; a public sector company which is engaged in the business of
carrying passengers, from the applicability of the provision of subsection (1F) of section
206C of the Act. This amendment will take effect from 1st April, 2017.

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7. Due date to Deposit TDS and TCS & Mode FY 2017-18

To Know the full concept of Due date to deposit TDS ,we must have to read it in two Parts

1. When Tax is to be deducted/collected?

2. When tax deducted at source (TDS/TCS) is to be deposited (TDS due date of deposit)?

When tax is to be deducted?

1. At the time of credit or payment, whichever is earlier

o 193- Interest on securities
o 194A- Interest Other than “Interest on securities”
o 194C- Payment to contractors / sub contractors
o 194D – Insurance commission
o 194H – Commission or Brokerage
o 194G- Commission on sale of lottery tickets
o 194I- Rent
o 194J- Professional or technical fees
2. Before making payment or distribution
o 194- Dividend
3. At the time of payment
o 192- Salaries
o 194B- Winning from lotteries / crossword puzzles
o 194BB Winnings from horse races
o 194EE – Payment from National Saving Scheme
o 194F Payment for repurchase of units by UTI / mutual funds
o 194 -IA : payment of transfer of immovable property >50 Lakh
o 194LA: Payment of compensation on acquisition of certain immovable property

When Tax is to be collected

1. At the time of Debit of Account or Receipt ,whichever is earlier

o Scrap
o Tendu Leaves
o Timber obtained under a forest lease or other mode
o Any other forest produce not being a timber or tendu leave
o Alcoholic Liquor for human consumption
o Parking Lot, toll plaza, mining and quarrying Minerals, being coal or lignite or
iron ore (applicable from July 1,2012)
2. At the time of receipt/collection
o Sale of motor vehicle > 10 lakh

When date of deduction/Collection is decided then according to point of

deduction/collection then due date to deposit is to be decided as under.

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Due Date to Deposit TDS /TCS

Tax to be deducted by Govt Office
1 Tax deposited without challan Same day

2 Tax deposited with challan 7th of next month

Tax deducted by Non-govt deductors

1 Tax deductible in March 30th April of next F.Y

2 other months & tax on perquisites 7th of next month

opted to be deposited by employer

TDS on transfer of Immovable property 194IA

1 Tax deductible in a particular Month 7th of next month
(up to 31.05.2016)
2 Tax deductible in a particular Month 30th of next month
( wef 01.06.2016)
Tax Collected at Source (TCS)
1 Tax collectable in a particular Month 7th of next month

Challan to deposit TDS and TCS & mode of deposit

1. For all sections under TDS and TCS one challan is to be deposited ie ITNS-281 and to
deposit TDS/TCS -TAN(tax deduction & collection account number is to be obtained
and used.
2. Deductor can adjust excess tds deposited in one section /assessment year with another
section /assessment year so no need to deposit section wise challan.
3. However for TDS collected under section 194IA (TDS on immovable property over 50
Lakh) tax is to be deposited on challan cum return 26QB.Further to deposit this challan
TAN number is not required though deductor will FILL his PAN
4. TAX must be deposited through online mode only or through designated bank
branches.

Refund of Excess TDS deposited:

As pointed out above in point number 2, you may adjust excess TDS in other section
/assessment year/quarter. However if you want refund then you may apply on form 26B
online for excess TDS.

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“Time and mode of payment to Government account of tax deducted at source or tax paid
under sub section (1A) of section 192. Rule: 30.
(1) All sums deducted in accordance with the provisions of Chapter XVII‐B by an office of the
Government shall be paid to the credit of the Central Government ‐

• (a) on the same day where the tax is paid without production of an income‐tax challan;
and
• (b) on or before seven days from the end of the month in which the deduction is made or
income‐tax is due under sub‐section (1A) of section 192, where tax is paid accompanied
by an income‐tax challan.

Tax to be deducted/collected by Govt Office

1 Tax deposited without challan Same day
2 Tax deposited with challan 7th of next month
3 Tax on perquisites opt to be deposited by the 7th of next month
employer
(2) All sums deducted in accordance with the provisions of Chapter XVII‐B by deductors other
than an office of the Government shall be paid to the credit of the Central Government ‐

• (a) on or before 30th day of April where the income or amount is credited or paid in the
month of March; and
• (b) in any other case, on or before seven days from the end of the month in which‐ the
deduction is made; or income‐tax is due under sub‐section (1A) of section 192.

Tax deducted/collected by other

1 tax deductible in March 30th April of next year

2 other months & tax on perquisites opted to 7th of next month

be deposited by employer

(2A) Notwithstanding anything contained in sub‐rule (2) ,any sum deducted under section 194-
IA shall be paid to the credit of the Central Government within a period of seven days 30 days
(wef 01.06.2016) from the end of the month in which the deduction is made and shall be
accompanied by a challan-cum-statement in Form No. 26QB
(3) Notwithstanding anything contained in sub‐rule (2), in special cases, the Assessing Officer
may, with the prior approval of the Joint Commissioner, permit quarterly payment of the tax
deducted under section 192 or section 194A or section 194D or section 194H for the quarters of
the financial year specified to in column (2) of the Table below by the date referred to in column
(3) of the said Table:‐
SrNo Quarter ended On Date of payment
1 30th June 7th July
2 30the September 7th October
3 31st December 7th January
4 31st March 30th April

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8.Person required to file E TDS Return & Duties of Deductor

For quick and efficient collection of taxes, the Income-tax Act has incorporated a system
of deduction of tax at the point of generation of income. This system is called “Tax
Deducted at Source” commonly known as TDS. Under this system, tax is deducted at
the point of origination of income. Tax is deducted by the payer and the same is directly
remitted to the Government by the payer on behalf of the payee.

The provisions of tax deducted at source presently apply to several payments like
salary, interest, commission, brokerage, professional fees, royalty, etc.
Meaning of TAN
Tax Deduction Account Number is a 10-digit alphanumeric number issued by the
Income-tax Department (herein after referred to as ‘TAN’). TAN is required to be
obtained by all persons who are responsible to deduct tax at source (‘TDS’) except in
case of a person who is responsible to deduct tax at source under Section 194-IA.

Given below is an illustrative TAN:

DELM12345L
First 3 alphabets of TAN represent the jurisdiction code, 4th alphabet is the initial of the
name of the TAN holder. The next 5 digits of the TAN are system generated numbers
between 00001 to 99999 and last character, i.e., the tenth character is an alphabetic check
digit.
Persons liable to apply for TAN
Every person who is liable to deduct tax at source is required to obtain TAN. However,
a person who is required to deduct tax under Section 194-IA and 194IB can use PAN in
place of TAN as he is not required to obtain TAN.
Relevance of TAN
It is mandatory to quote TAN in following documents:

(a) TDS statements i.e. return

(b) Challans for payment of TDS

(c) TDS certificates

(d) Other documents as may be prescribed

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Penalty
If a person fails to apply for TAN or failed to quote or quotes incorrect TAN in the
above specified documents, a penalty of Rs. 10,000 shall be levied.
Procedure to obtain TAN
An application for allotment of TAN shall be made in duplicate in Form No. 49B at any
TIN Facilitation Centers (TIN-FC). Addresses of TIN-FCs are available at NSDL-TIN
website. Alternatively, one can apply for TAN online at the NSDL-TIN website.
Charges for obtaining a TAN
A fee of Rs. 55 + service tax (as applicable) should be paid as processing fee while
submitting application for TAN.
Person liable to furnish TDS statement
Every person responsible for deduction of tax shall furnish quarterly statements in
respect thereof.
DUTIES OF TAX DEDUCTOR/COLLECTOR

1. To apply for Tax Deduction Account Number (TAN) in form 49B, in duplicate at
the designated TIN facilitation centers of NSDL(please see
www.incometaxindia.gov.in), within one month from the end of the month in
which tax was deducted. However for tax deduction u/s 194IA (tds on transfer
of immovable property) the deductor may use PAN instead of TAN
2. If a deductor has many offices then deductor may take one TAN for all branches
or take separate TAN for each TAN. If separate TAN is taken then deductor can
check TDS compliance report of all TAN at TDSCPC website
3. To quote TAN (10 digit reformatted TAN) in all TDS/TCS challans, certificates,
statements and other correspondence.
4. To deduct/collect tax at the prescribed rates at the time of every credit or
payment, whichever is earlier, in respect of all liable transactions.
5. To remit the tax deducted/collected within the prescribed due dates by using
challan no. ITNS 281 by quoting the TAN and relevant section of the Income-tax
Act.
6. To issue TDS/TCS certificate, complete in all respects, within the prescribed time
in Form No.16(TDS on salaries), 16A(other TDS) 27D( TCS).
7. To file TDS/TCS quarterly statements within the due date and revise the same
,wherever necessary.
8. To mention PAN of all deductees in the TDS/TCS quarterly statements.

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TRACES online portal for deductors and deductees :

TRACES is a web-based application of the Income Tax Department that provides an

interface to all stakeholders associated with TDS administration. It enables viewing of
challan status, downloading of Consolidated File, Justification Report and Form 16 /
16A as well as viewing of annual tax credit statements (Form 26AS). The deductor has
to register at TRACES website to avail facility available at the website

Facility available at Traces for deductors

1. Download Consolidated File /

2. Download Form 16 / 16A / 16B / 27D.
3. Online correction of TDS returns
4. Refund of Excess TDS
5. Justification report: After filing of the return, Department shall process the
return and issue intimation of return processed without default or with defaults.
The defaults are mainly on account of deduction of tax at less rate , late filing of
return ,interest due to late deposit of Tax ,mismatching overbooking of challan ,
incorrect pan details etc. In intimation only summary of default is sent to check
the details deductor is supposed to download Justification report from TDSCPC
website.

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9. Due date TDS-TCS return 24Q, 26Q ,27Q,27EQ and Form 16 , Form 16A for
Financial year 2017-18 for Govt as well as non Govt deductor (notification 30/2012 dt
29/04/2016)

Quarterly return Form

Deductor is required to file TDS/TCS return quarterly, however nil return is not
mandatory. These returns may be filed at any TIN-FC by paying a small fee.
However you may upload original return directly at e filing site free.

1. 24Q : For TDS deducted from Salary Income

2. 26Q : For TDS deducted from all other section except salary & 194IA from
resident
3. 27Q : For TDS deducted from Non-resident except salary
4. 27EQ : For Tax collected at source
5. 26QB : For section 194IA separate return is not required ,challan cum return is to
be filled on form 26QB (Tax to be deposited within 30 days(wef
01.06.2016)(earlier it was 7 days) from the end of the month in which tax is to be
deducted )

Due date TDS Return 24Q, 26Q ,27Q TCS Return 27EQ
Form 16 Form 16A for Financial year 2017-18 for Govt as well
as non Govt deductor (notification 30/2012 dt 29/04/2016)
Sl. QTR RETURN TDS-TCS Certificate
No. ENDING FORM FORM FORM
TDS TCS
16A 16 27D
1 30th June 31st 15th 15th 30th
July July Aug July
2 30th Sep 31st Oct 15th 15th 30th
31st May

Oct Nov Oct

3 31st Dec 31st Jan 15th 15th 30th Jan
Jan Feb
4 31st Mar 31st 15th 15th 30th
May May June May

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Nil TDS return is not mandatory

As per income tax rules/act Nil tds return is not mandatory, however to facilitate the
deductors and to update data Govt has provided a facility on Traces website for
declaring NIL tds return.

Correction statement of E TDS return

You may file correction return any number of times, No time limit has been defined yet.
This return can be filed with TIN-FC .To file the revised TDS return you have to
download consolidated FVU file from TDSCPS website The correction return filing
facility has not been provided at Income tax India e filing site but we expect that soon it
will be made available. However you may correct challan details/tag replace
challan/allocation of interest and fees online/move deductee rows from unmatched
challan without digital signature at www.tdscpc.gov.in and pan details with digital
signature. If short payment of TDS is not settled by Deductor then he cannot download
form 16A/16 of that quarter/year.

TDS Certificate

1. Form 16 : For tds deducted from salary

2. Form 16A : For other Tax deductions except salary & 194IA
3. Form 16B : TDS from section 194IA (to be issued within 45 days wef
01.06.2016)(earlier it was 22 days) from the end of the month in which tax is to be
deducted )
4. All above form must be downloaded from TDSCPC (TRACES) website .However
in case of Form 16 only PART-A is to be downloaded from TRACES website.
Earlier this was mandatory for only companies ,Banks and co-operative
societies engaged in Banking services with effect from 01.04.2011
through circular number 3/2011.
5. Form 16A downloaded from TDSCPC can be signed manually or can be
authenticated through digital signature only.

Read more from links given below

1. Procedure How to register at TRACES (www.tdscpc.gov.in) and

2. How to download Form 16A form TRACES (www.tdscpc.gov.in)
3. HOW TO DOWNLOAD FORM 16 FROM TDSCPC WEBSITE
4. How to download Form 16B from TDSCPC website

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10. Interest on Late deposit of TDS/TCS & Penalty & Prosecution & other
consequences on Non deposit of TDS/TCS

As per income-tax act/rules, interest on late deposit of TDS is payable under the
following two circumstances

1. Tax is not deducted , when it was deductible

2. Tax once deducted, is not paid on or before due date

INTEREST ON LATE DEDUCTION/DEPOSIT OF TDS-TCS

Section Nature of default Interest Period
Interest Non-deduction of tax at source, 1.00% From the date on which tax
under either in whole or part per was deductible to the date
section month on which tax is actually
201(1A) deducted

After deduction, nonpayment 1.50% From the date on which tax

of tax, either in whole or part. Per was deducted to the date on
Non- payment of tax u/s 192(1A) Month which tax is actually paid

Simple Interest shall be calculated and part of month will be treated full Month
Consequences if default is made in payment of TDS
A deductor would face the following consequences if he fails to deduct TDS or after
deducting the same fails to deposit it to the credit of Central Government’s account:

• a) Disallowance of expenditure: As per section 40(a)(i) of the Income-tax Act, any

sum (other than salary) payable outside India or to a non-resident, which is
chargeable to tax in India in the hands of the recipient, shall not be allowed to be
deducted if it is paid without deduction of tax at source or if tax is deducted but is
not deposited with the Central Government till the due date of filing of return.

However, if tax is deducted or deposited in the subsequent year, as the case may be,
the expenditure shall be allowed as deduction in that year.

Similarly, as per section 40(a)(ia), any sum payable to a resident, which is subject to
deduction of tax at source, would attract 30% disallowance if it is paid without
deduction of tax at source or if tax is deducted but is not deposited with the Central
Government till the due date of filing of return.

However, where in respect of any such sum, tax is deducted or deposited in

subsequent year, as the case may be, the expenditure so disallowed shall be allowed
as deduction in that year.
The same rule is also applicable on Income from other sources.

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• b) Levy of interest: As per section 201 of the Income-tax Act, if a deductor fails to
deduct tax at source or after the deducting the same fails to deposit it to the account
of Central Government then he shall be deemed to be an assessee-in-default and
liable to pay simple interest as follows:

(i) at one per cent for every month or part of a month on the amount of such
tax from the date on which such tax was deductible to the date on which such
tax is deducted; and

(ii) at one and one-half per cent for every month or part of a month on the
amount of such tax from the date on which such tax was deducted to the date
on which such tax is actually paid.

• c) Levy of Penalty: Penalty of an amount equal to tax not deducted could be

imposed under section 271C. Penalty shall be charged under section 221 if deductor
fails to deduct and pay tax to the credit of Central Government. The penalty shall be
levied to the extent the Assessing Officer directs, however, the total amount of
penalty shall not exceed the amount of tax in arrears.
• d) Prosecution: If a person fails to pay to the credit of the Central Government the
tax deducted at source by him he shall be punishable with rigorous imprisonment
for a term which shall not be less than three months but which may extend to seven
years and with fine.

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11 : Late Fees -Penalty on Late filing of TDS return

1. Failure to apply for TAN in time or Failure to quote allotted TAN or Wrong quoting of
TAN : Penalty of Rs.10,000 is leviable u/s.272BB

2. Late Filing of TDS-TCS statement: Deductor will be liable to pay by way of fee of Rs 200 per
day till the failure to file TDS statement continues. However, the total fee cannot exceed the
amount of TDS deductible from which statement was required to be filed.(section 234E)
.Further as per section 234E ,Late fees is required to be paid before the filing of TDS/TCS return.
Read How to avoid Late fees u/s 234E (read more post related to section 234E)

3. Failure to File TDS return on Time and filling of incorrect statement: New Section for
Penalty for non submission of ETDS /ETDS return (section 271H)(applicable from 01.07.2012)

Failure to deliver statement within time prescribed u/s 200 (3) or to the proviso to sub-section
(3) of section 206C may liable to penalty which shall not be less than Rs. 10,000/- but which may
extend to Rs. 1,00,000/-. No penalty if payment of tax deducted or collected along with fee or
interest and delivering the statement aforesaid before the expiry of 1 year from the time
prescribed for delivering the such statement. However No penalty shall be imposed u/s 271H if
the person proves that there was reasonable cause for the failure.(section 273B)

4. Penalty on Late issue of TDS certificate form 16/Form 16A/form 27D/Form 16B :

If TDS certificate is not issued within due date as prescribed then penalty @ 200 per day may be
imposed till the default continues for each default. However, the maximum penalty cannot
exceed the amount of TDS deducted for which TDS certificate was required to be issued.

5. Assessee In default (amendment in section 201)

The Deductor will not to be treated as assessee in Default provided the resident payee has
furnished his return u/s 139 and has taken into account such amount for computing income in
such Return of Income and has paid the Tax Due on the income declared by him in such return
of income and furnishes a certificate to this effect, duly certified by a CA, in the prescribed form.
This form is yet to be notified.

However, the interest for non deduction of tax would be payable from the date on which such
tax was collectible till the date of furnishing of return of income by the resident payee.

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12 .Various Passwords required to Use Traces Website

Functionality Password Example

Password Formats for Tax Deductors
Registration It should contain a minimum of Password123
8 alphanumeric characters with
at least one capital letter.
Consolidated TAN_Request Number of DELA11111D_23456
File request submitted
Form 16/ 16A TAN in capital letters DELA11111D
Justification JR_TAN_FormType_Quarter_FY JR_DELA11111D_24Q_Q3_2010-
Report 11
Intimation TAN_Date of filing original DELA_13102013
through statement (in DDMMYYYY
email format)
Password Formats for Tax Payers
Registration It should contain a minimum of Password123
8 alpha numeric characters with
at least one letter in upper case
Form 26 AS Date of Birth (in DDMMYYYY If your date of birth is 01-Feb-
format) 1980, password will be 01021980

Form 16B Date of Birth (in DDMMYYYY If your date of birth is 01-Feb-
format) 1980, password will be 01021980

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13. Other Point to be noted

1. One Challan Can be deposited for all Sections?

2. How to File Nil TDS return Online
3. How to download Consolidated FVU
4. TDS on Job work(194C) Tds on Job work has been relaxed read new definition
u/s 194C.
5. TDS on Cold Storage (194C clarification)
6. No TDS on service tax on all section (circular -01/2014 dated 13.01.2014)
7. TDS on Rent (various circulars by department on tds on rent )
8. E-payment of TDS mandatory from 01.04.2008
9. E-Payment From Other Banks Account Allowed
10. TDS challan ITNS 281 In excel &
11. How To pay Income Tax/Tds Online FAQ
12. Nil TDS on Transporter and others to be reported in ETDS quarterly returns
13. 1% TDS on transfer of property u/s 194IA wef 01.06.2013
14. TDS on rent section 194-1 brief notes, circular, notification and case laws
15. 42 Important points related to TDS/TCS deduction and etds return filing

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14. Changes in TDS Rates in Budget-2017

TDS On Rent

In order to widen the scope of tax deduction at source, new section 194-IB, proposed
to be inserted to provide for tax deduction at source @ 5% by an Individuals or a HUF
(other than those covered under 44AB), while making payment of rent to a resident
of an amount exceeding Rs 50,000 per month or part of month. To reduce
compliance burden, the deductor shall not be required to obtain TAN or file any
separate TDS return for this purpose

This amendment will take effect from the 1st day of June, 2017.
Read More details about [TDS on Rent by Individual/HUF]

2 TDS on Call Centers

In order to promote ease of doing business, section 194J proposed to be amended to

provide for lower the rate of deduction of tax from 10 % to 2% in case of payments
made or credited to a person engaged only in the business of operation of call centre.

As per existing provisions, Fee for professional services or Fee for Technical services
paid to call centers subject to TDS at the rate of 10% under Section 194J. To reduce
the compliance burden and to promote the ease of doing business, such TDS rate has
been proposed to be reduced from 10% to 2%.

Simplification of the provisions of tax deduction at source in case Fees for

professional or technical services under section 194J

The existing provisions of sub-section (1) of section 194J of the Act, inter-alia
provides that a specified person is required to deduct an amount equal to ten per cent.
of any sum payable or paid ( whichever is earlier) to a resident by way of fees for
professional services or fees for technical services provided such sum paid/payable or
aggregate of sum paid/payable exceeds thirty thousand rupees to a person in a
financial year.

In order to promote ease of doing business, it is proposed to amend section 194J to

reduce the rate of deduction of tax at source to two per cent. from ten per cent. in case
of payments received or credited to a payee, being a person engaged only in the
business of operation of call center.

This amendment will take effect from the 1st day of June, 2017.

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3.Exemption from TDS on insurance commission

As per current provision, any payment of insurance commission above Rs 15,000

shall be subject to TDS at the rate of 5% under Section 194D. Further, no option is
allowed to the agent to avoid the deduction of TDS by submitting the Form 15G/H
under section 197A.

Therefore, in order to reduce compliance burden in the case of Individuals and HUFs,
it is proposed to amend Section 197A so as to allow the agent to file Form. No.
15G/15H to receive the insurance commission without deduction of tax at source.

The existing provision of sub-section 194D of the Act, inter-alia, provides for tax
deduction at source (TDS) at the rate of 5% for payments in the nature of insurance
commission beyond a threshold limit of Rs. 15,000 per financial year. Further, the
existing provisions of section 197A of the Act , inter-alia provide that tax shall not be
deducted, if the recipient of certain payments on which tax is deductible furnishes to
the payer a self- declaration in prescribed Form.No.15G/15H declaring that the tax on
his estimated total income of the relevant previous year would be nil. Presently, the
payment in the nature of income referred to in section 194D is not covered by
provisions of section 197A.

In order to reduce compliance burden in the case of Individuals and HUFs, it is

proposed to amend section 197A so as to make them eligible for filing self-declaration
in Form.No.15G/15H for non-deduction of tax at source in respect insurance
commission referred to in section 194D.

This amendment will take effect from 1st June, 2017.

4 Non-deduction of tax on Compensation under RFCTLAAR Act, 2013

The existing provision of section 194LA of the Act, inter-alia, provides that any
person paying compensation shall deduct tax at source at the rate of ten per cent. on
the compensation or enhanced compensation or consideration on account of
compulsory acquisition of any immovable property (other than agricultural land)
under any law for the time being in force subject to certain conditions specified
therein.

The Central Government has enacted a new law namely Right to Fair Compensation
and Transparency in Land Acquisition,

Rehabilitation and Resettlement Act, 2013, ('RFCTLARR Act') on 26th September,

2013 which came into force on 1 January, 2014. Section 96 of the RFCTLARR Act

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inter-alia, provides that income-tax shall not be levied on award or agreement made
subject to limitations mentioned in section 46 of the said Act. Therefore,
compensation received for compulsory acquisition of land under the RFCTLARR Act
(except those made under section 46 of RFTCLARR Act), is exempted from the levy
of income-tax.

The Board has issued Circular number 36/2016 dated 25 October, 2016 clarifying that
compensation received in respect of any award or agreement which has been
exempted from the levy of income-tax vide section 96 of the RFCTLARR Act shall
not be taxable under the provisions of the Act, even if there is no specific provision of
exemption for such compensation under the Act.

However, the circular addressed only the matter pertaining to taxability of

compensation received on compulsory acquisition of land and not tax deduction at
source under section 194LA of the Act.

Thus in order to rationalise the provisions of the Act, it is proposed to amend the
section 194LA to provide that no deduction shall be made under this section where
such payment is made in respect of any award or agreement which has been exempted
from levy of income-tax under section 96 (except those made under section 46) of
RFCTLARR Act.

This amendment will take effect from 1st April, 2017.

5.Disallowance for Non-deduction of tax from payment to Resident / Non-resident

Disallowance for non-deduction of tax from payment to resident

Existing provisions of section 58 of the Act, specify the amounts which are not
deductible in computing the income under the head "Income from other sources"
which include certain disallowances made in computation of income under the head
"Profits and gains of business or profession". These disallowances include
disallowances such as disallowance of cash expenditure, disallowance for non-
deduction of tax from payment to non-resident, etc.

For computing income under the head "Profits and gains of business or profession", a
disallowance is made for non-deduction of tax from payment to resident also. With a
view to improve compliance of provision relating to tax deduction at source (TDS),

it is proposed to amend the said section so as to provide that provisions of section

40(a)(ia) shall, so far as they may be, apply in computing income chargeable under the
head "income from other sources" as they apply in computing income chargeable
under the head "Profit and gains of business or Profession".

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Disallowance for non-deduction of tax from payment to Non-resident, etc.

For computing income under the head "Profits and gains of business or profession", a
disallowance is made for non-deduction of tax from payment to resident also. With a
view to improve compliance of provision relating to tax deduction at source (TDS),

it is proposed to amend the said section so as to provide that provisions of section

40(a)(ia) shall, so far as they may be, apply in computing income chargeable under the
head "income from other sources" as they apply in computing income chargeable
under the head "Profit and gains of business or Profession".

This amendment will take effect from 1 April, 2018 and will, accordingly, apply
in relation to the assessment year 2018-19 and subsequent years.

6.Concession rate on Interest on external commercial borrowings

A concessional with-holding rate of 5% is being charged on interest earned by foreign

entities in external commercial borrowings or in bonds and Government securities.
This concession is available on borrowings made, under a loan agreement at any time
on or after 1st July, 2012, but before 1st July, 2017; or by way of any long-term bond
including long-term infrastructure bond on or after 1st October, 2014 but before 1st
July, 2017, respectively. The Concessional rate of 5% proposed to be extended in
respect of borrowings made before 1st July, 2020. This benefit is also proposed to be
extended to Rupee Denominated (Masala) Bonds.

Concessional TDS rate under Section 194LC

Section 194LC - Applicable from Assessment Year 2018-19/Applicable

Retrospectively from Assessment Year 2016-17]

If borrowings in foreign currency is made under a loan agreement entered into

between 01-07-2012 and 01-07-2017 or by way of long-term bonds issued between
01-10-2014 and 01-07-2017, tax is deducted at the rate of 5% in respect of interest
payable to non-residents.

It is proposed that the concessional rate of 5% TDS on interest payment under this
section will be available in respect of borrowings made before the 01-07-2020.

The benefit of concessional TDS rate is also proposed to be extended to rupee

denominated bonds issued outside India before 01-07-2020. This amendment will take
effect retrospectively from 01-04-2016.

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Extension of eligible period of concessional tax rate under section 194LD

The existing provisions of section 194LD of the Act, provides for lower TDS at the
rate of five per cent. in the case of interest payable at any time on or after 1st June,
2013 bue before the 1 July, 2017 to FIIs and QFIs on their investments in Government
securities and rupee denominated corporate bonds provided that the rate of interest
does not exceed the rate notified by the Central Government in this behalf.

Considering the representations received from stakeholders, it is proposed to amend

section 194LD to provide that the concessional rate of five per cent. TDS on interest
will now be available on interest payable before the 1July, 2020.

This amendment will take effect from 1 April, 2018 and will, accordingly, apply
in relation to the assessment year 2018-19 and subsequent years.

7. Interest on Refund to Deductor

The existing section 244A of the Act provides that an assessee is entitled to receive
interest on refund arising out of excess payment of advance tax, tax deducted or
collected at source, etc.

It is proposed to insert a new sub-section (1B) in the said section to provide that where
refund of any amount becomes due to the deductor, such person shall be entitled to
receive, in addition to the refund, simple interest on such refund, calculated at the rate
of one-half per cent. for every month or part of a month comprised in the period, from
the date on which claim for refund is made in the prescribed form or in case of an
order passed in appeal, from the date on which the tax is paid, to the date on which
refund is granted.

It is also proposed to provide that the interest shall not be allowed for the period for
which the delay in the proceedings resulting in the refund is attributable to the
deductor.

This amendment will take effect from 1st April, 2017.

8. Empowering Board to issue directions in respect of penalty for failure to deduct

or collect tax at source

Existing provision of clause (a) of sub-section (2) of section 119 empowers the Board
to issue orders setting forth directions or instructions (not being prejudicial to

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assessees) to be followed by subordinate authorities in the work relating to assessment

or collection of revenue or the initiation of proceedings for the imposition of penalties.

In order to reduce the genuine hardship which may be faced by a person responsible
for deduction and collection of tax at source due to levy of penalty under section 271C
or 271CA, it is proposed to insert reference of sections 271C and 271CA in the said
clause, so as to empower the Board to issue directions or instructions in respect of the
said sections also.

The amendment will take effect from 1st April, 2017.

9. Definition of ‘person responsible for paying’ for section 195(6)

A clarification is proposed to be inserted in Section 204 that for the purpose of

furnishing of information under Section 195(6) in Form 15CA or 15CB in respect of
payment to a non-resident, ‘person responsible for paying’ shall be the payer himself,
or, if the payer is a company, the company itself including the Principal Officer
thereof.

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[Text of Amendment in Finance Act-2017]

‘194-IB. (1) Any person, being an individual or a Hindu undivided family (other than
those referred to in the second proviso to section 194-I), responsible for paying to a
resident any income by way of rent exceeding fifty thousand rupees for a month or
part of a month during the previous year, shall deduct an amount equal to five per
cent. of such income as income-tax thereon.

(2) The income-tax referred to in sub-section (1) shall be deducted on such income at
the time of credit of rent, for the last month of the previous year or the last month of
tenancy, if the property is vacated during the year, as the case may be, to the account
of the payee or at the time of payment thereof in cash or by issue of a cheque or draft
or by any other mode, whichever is earlier.

(3) The provisions of section 203A shall not apply to a person required to deduct tax
in accordance with the provisions of this section.

(4) In a case where the tax is required to be deducted as per the provisions of section
206AA, such deduction shall not exceed the amount of rent payable for the last month
of the previous year or the last month of the tenancy, as the case may be.

Explanation.—For the purposes of this section, “rent” means any payment, by

whatever name called, under any lease, sub-lease, tenancy or any other agreement or
arrangement for the use of any land or building or both.’.

Clause 63 of the Bill seeks to insert a new section 194-IB of the Income-tax Act
relating to payment of rent by certain individuals or Hindu undivided family.
The proposed new section provides that any person, being an individual or a Hindu
undivided family (other than those referred to in second proviso of section 194-I),
responsible for paying to a resident any income by way of rent exceeding fifty
thousand rupees for a month or part of a month during the previous year, shall deduct
an amount equal to five per cent. of such income as income-tax thereon.

It is further proposed to provide that income-tax referred to in sub-section (1) shall be

deducted on such income at the time of credit of rent, for the last month of the
previous year or the last month of tenancy, if the property is vacated during the year,
as the case may be, to the account of the payee or at the time of payment thereof in
cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

It is also proposed to provide that the provisions of section 203A shall not apply to a
person required to deduct tax in accordance with the provisions of this section.

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It is also proposed to provide that where the tax is required to be deducted as per the
provisions of section 206AA, such deduction shall not exceed the amount of rent
payable for the last month of the previous year or the last month of the tenancy, as the
case may be.

It is also proposed to define the term "rent" for the purposes of this section to mean
any payment, by whatever name called, under any lease, sub-lease, tenancy or any
other agreement or arrangement for the use of any land or building or both.

This amendment will take effect from 1st June, 2017.

64. After section 194-IB of the Income-tax Act as so inserted, the following section
shall be inserted,namely:—

“194-IC. Notwithstanding anything contained in section 194-IA, any person

responsible for paying to a resident any sum by way of consideration, not being
consideration in kind, under the agreement referred to in sub-section (5A) of section
45, shall at the time of credit of such sum to the account of the payee or at the time of
payment thereof in cash or by issue of a cheque or draft or by any other mode,
whichever is earlier, deduct an amount equal to ten per cent. of such sum as income-
tax thereon.”.

Clause 64 of the Bill seeks to insert a new section 194-IC in the Income-tax Act
relating to deductions in respect of payment under specified agreement.

The proposed new section seeks to provide that notwithstanding anything contained in
section 194-IA, any person responsible for paying to resident any sum by way of
consideration, not being consideration in kind, under the agreement referred to in sub-
section (5A) of section 45, shall, at the time of credit of such sum to the account of the
payee or at the time of payment thereof in cash or by issue of a cheque or draft or by
any other mode, whichever is earlier, deduct an amount equal to ten per cent. of such
sum as income-tax thereon.

This amendment will take effect from 1st April, 2017.

65. In section 194J of the Income-tax Act, after the third proviso and before the
Explanation, the following proviso shall be inserted with effect from the 1st day of
June, 2017, namely:—

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“Provided also that the provisions of this section shall have effect, as if for the words
“ten per cent.”, the words “two per cent.” had been substituted in the case of a payee,
engaged only In the business of operation of call centre.”.

Clause 65 of the Bill seeks to amend section 194J of the Income-tax Act which
provides for deduction of tax at source on fees for professional or technical services.

The said section provides that a person, not being an individual or a Hindu undivided
family, who is responsible for paying to a resident any sum by way of fees for
professional or technical services or other services mentioned therein shall deduct an
amount equal to ten per cent. of such sum as income-tax on income comprised therein.

It is proposed to insert a proviso in the said section so as to reduce the rate of tax
deduction at source to two per cent. from ten per cent. in case of payments received
or credited to a payee, who is engaged only in the business of operation of call centre.

This amendment will take effect from 1st June, 2017.

66. In section 194LA of the Income-tax Act, after the proviso and before the
Explanation, the following proviso shall be inserted, namely:—

“Provided further that no deduction shall be made under this section where such
payment is made in respect of any award or agreement which has been exempted from
levy of income-tax under section 96 of the Right to Fair Compensation and
Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.”.

Clause 66 of the Bill seeks to amend section 194LA of the Income-tax Act relating to
payment of compensation on acquisition of certain immovable property.

The said section, inter alia, provides that any person responsible for paying
compensation to a resident shall deduct tax at source at the rate of ten per cent. on the
compensation or enhanced compensation or consideration on account of compulsory
acquisition of any immovable property (other than agricultural land) under any law for
the time being in force subject to certain conditions specified therein.

It is proposed to amend the said section so as to insert a new proviso to provide that
no deduction of tax at source shall be made under this section, where such payment is
made in respect of any award or agreement which has been exempted from the levy of
income-tax under section 96 of the Right to Fair Compensation and Transparency in
Land Acquisition, Rehabilitation and Resettlement Act, 2013.

This amendment will take effect from 1st April, 2017.

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67. In section 194LC of the Income-tax Act, in sub-section (2),—

(a) in clause (i), with effect from the 1st day of April, 2018,—

• (A) in sub-clauses (a) and (c), for the figures, letters and words “1st day of July,
2017”, the figures, letters and words “1st day of July, 2020” shall be
substituted;
• (B) in the long line, for the word “and”, the word “or” shall be substituted;

(b) after clause (i), the following clause shall be inserted and shall be deemed to have
been inserted with effect from the 1st day of April, 2016, namely:—

“(ia) in respect of monies borrowed by it from a source outside India by way of issue
of rupee denominated bond before the 1st day of July, 2020, and”.

Clause 67 of the Bill seeks to amend section 194LC of the Income-tax Act relating to
income by way of interest from Indian company.

The existing provisions contained in sub-section (2) of the said section, specify the
interest eligible for lower withholding tax at the rate of five per cent. It shall be the
interest income payable by the specified company on borrowings made by it in
foreign currency from sources outside India under a loan agreement or by way of
issue of any long-term bonds including long-term infrastructure bonds subject to the
approval by the Central Government.

Sub-clauses (a) and (c) of clause (i) of the said sub-section further provides that the
borrowing shall be made, under a loan agreement at any time on or after the 1st day of
July, 2012, but before the 1st day of July, 2017; and by way of any long-term bond
including long-term infrastructure bond on or after the 1st day of October, 2014, but
before the 1st day of July, 2017, respectively.

These amendments will take effect from 1st April, 2018 and will, accordingly,
apply in relation to the assessment year 2018-2019 and subsequent years.

It is also proposed to insert a new clause (ia) in sub-section (2) of the said section to
extend the benefit of the said section to the rupee denominated bond issued outside
India before 1st July, 2020 also.This amendment will take effect retrospectively from
1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-
2017 and subsequent years.

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68. In section 194LD of the Income-tax Act, in sub-section (2), for the figures, letters
and words “1st day of July, 2017”, the figures, letters and words “1st day of July,
2020” shall be substituted with effect from the 1st day of April, 2018.

Clause 68 of the Bill seeks to amend section 194LD of the Income-tax Act relating to
income by way of interest on certain bonds and Government securities.

Under the existing provisions contained in sub-section (2) of the said section, the
interest income eligible for lower withholding tax rate of five per cent. as provided in
sub-section (1) has been specified to be the interest payable on or after the 1st day of
June, 2013 but before 1st day of July, 2017.

It is proposed to amend the aforesaid sub-section so as to provide concessional rate of

five per cent. withholding tax on interest payment in respect of investments in
Government securities and rupee denominated corporate bonds to be made available
on interest payable before 1st day of July, 2020.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply
in relation to the assessment year 2018-2019 and subsequent years.

69. In section 197A of the Income-tax Act, with effect from the 1st day of June,
2017,—

(a) in sub-section (1A), after the word, figures and letter “section 194A” at both the
places where they occur, the words, figures and letter “or section 194D” shall be
inserted;

(b) in sub-section (1C), after the word, figures and letter “section 194A” at both the
places where they occur, the words, figures and letter “or section 194D” shall be
inserted.

Clause 69 of the Bill seeks to amend section 197A of the Income-tax Act relating to
no deduction to be made in certain cases.

The existing provisions contained in sub-sections (1A) and (1C) of the aforesaid
section provide that no deduction of tax shall be made under the various sections
referred to in the said sub-sections (1A) and ( 1C) of section 197A, if the persons
referred to in the said sub-sections furnish to the persons responsible for paying any
income of the nature referred to in specified sections, a declaration in writing in
duplicate in the prescribed form and verified in the prescribed manner to the effect
that the tax on his estimated total income of the previous year in which such income is
to be included in computing his total income will be nil.

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It is proposed to amend the said sub-sections (1A) and (1C) of the said section so as to
cover deduction at source under section 194D also.

This amendment will take effect from 1st June, 2017.

70. In section 204 of the Income-tax Act, after clause (iia), the following clause shall
be inserted, namely:—

“(iib) in the case of furnishing of information relating to payment to a non-resident,

not being a company, or to a foreign company, of any sum, whether or not chargeable
under the provisions of this Act, the payer himself, or, if the payer is a company, the
company itself including the principal officer thereof;”.

Clause 70 of the Bill seeks to amend section 204 of the Income-tax Act relating to
meaning of “person responsible for paying”.

It is proposed to insert a new clause (iib) in the said section so as to provide that in the
case of furnishing of information relating to payment to a non-resident, not being a
company, or to a foreign company, of any sum, whether or not chargeable under the
provisions of this Act, the payer himself, or, if the payer is a company, the company
itself including the principal officer thereof shall also be the person responsible for
paying, within the meaning of definition under this section.

This amendment will take effect from 1st April, 2017.

Clause 77 of the Bill seeks to amend section 244A of the Income-tax Act relating to
interest on refunds. The said section provides that an assessee is entitled to receive
interest on refund arising out of excess payment of advance tax, tax deducted or
collected at source, etc.

It is proposed to insert a new sub-section (1B) in the said section so as to provide that
where refund of any amount becomes due to the deductor, then such person shall be
entitled to receive, in addition to the refund, simple interest on such refund, calculated
at the rate of one-half per cent.for every month or part of a month comprised in the
period, from the date on which claim for refund is made in the prescribed form or for
giving effect to an order under section 250 or 254 or 260 or 262 from the date on
which the tax is paid up to the date on which refund is granted.

It is also proposed to amend sub-section (2) of the said section to give reference of the
deductor in addition to the assessee and to provide that the interest shall not be

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allowed for the period for which the delay in the proceedings resulting in the refund is
attributable to the deductor.

These amendments will take effect from 1st April, 2017.

Clause 30 of the Bill seeks to amend section 58 of the Income-tax Act relating to
amounts not deductible.

The provisions of the said section specify the amounts which are not deductible in
computing the income from other sources.

It is proposed to amend sub-section (1A) of the said section so as to provide that the
provisions of sub-clause (ia) of clause (a) of section 40 shall also apply in computing
the income chargeable under the head "Income from other sources" as they apply in
computing the income chargeable under the head "Profit and gains of business or
profession".

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in
relation to the assessment year 2018-2019 and subsequent years.

Extension of eligible period of concessional tax rate on interest in case of

External Commercial Borrowing and Extension of benefit to Rupee
Denominated Bonds

The existing provisions of section 194LC of the Act provide that the interest payable
to a non-resident by a specified company on borrowings made by it in foreign
currency from sources outside India under a loan agreement or by way of issue of any
long-term bond including long-term infrastructure bond shall be eligible for
concessional TDS of five per cent.

It further provides that the borrowings shall be made, under a loan agreement at any
time on or after the 1 July, 2012, but before the 1 st July, 2017; or by way of any long-
term bond including long-term infrastructure bond on or after the 1 October, 2014 But
before the 1July, 2017, respectively. Representations have been received requesting
for extension of concessional rate of TDS under sections 194LC of the Act to boost
the economy by way of introduction of foreign capital.

Therefore, it is proposed to amend section 194LC to provide that the concessional rate
of five per cent. TDS on interest payment under this section will now be available in
respect of borrowings made before the 1April, 2018 and will, accordingly, apply in
relation to the assessment year 2018-19 and subsequent years.

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Further, consequent upon demand from various stakeholders for granting benefit of
lower rate of TDS to rupee denominated bonds, a Press Release dated 29th October,
2015 was issued clarifying that TDS at the rate of 5 per cent would be applicable to
these bonds in the same way as it is applicable for off-shore dollar denominated
bonds.

In order to give effect to the above, it is further proposed to extend the benefit of
section 194LC to rupee denominated bond issued outside India before the 1st July,
2020.

This amendment will take effect retrospectively from 1 April, 2016 and will,
accordingly, apply in relation to the assessment year 2016-17 and subsequent years.

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14B: CHANGES IN TCS RATES IN FINANCE ACT-2017

15. CHANGES IN TDS-TCS RATES WEF 01.06.2016

Changes in TDS Threshold limits (Budget-2016) wef 01.06.2016

Section Particulars of payment OLD LIMIT NEW LIMIT
192A Payment of EPF due to an employee 30000 50000
194BB Winnings from Horse Race 5000 10000
194C Payments to Contractor(yearly) 75000 100000
194D (Insurance Commission) 20000 15000
194G Lottery Commission 1000 15000
194H Commission or brokerage 5000 15000
194LA Compensation on immovable property 200000 250000
Changes in TDS rates (Budget-2016) wef 01.06.2016
Section Particulars of payment OLD RATE NEW RATE
194D (Insurance Commission) 10% 5%
194DA Life Insurance Policy 2% 1%
194EE NSS Deposits) 20% 10%
194G Commission on lottery tickets 10% 5%
194H Commission or brokerage 10% 5%
194K Income in respect of Units Proposed to be omitted wef. 1st
194L Payment of Compensation on acquisition June 2016.
of Capital Asset
194LBB Units of Investment Funds 10% or Rates in
Read details force,
194LBC investment in a securitisation trust Read details 25% & 30 %
Changes in TCS Rates(budget-2016) wef 01.06.2016
206C Sale of motor vehicle >Rs. 10 Lacs -- 1%
206C sale in goods /services in cash >2 Lakh (other
than bullion and jewellery) (other than
payments on which TDS applicable)
-- 1%

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In order to rationalise the rates and base for TDS provisions, the existing threshold limit
for deduction of tax at source and the rates of deduction of tax at source are proposed to
be revised as under.

1. Section 192A (Payment of accumulated balance of PF due to an employee)-

Proposed to increase the threshold limit from Rs. 30,000/- to Rs. 50,000/- for the
purpose of deducting of TDS w.e.f. 1st June 2016.
2. Section 194BB (Winnings from Horse Race)- Proposed to increase threshold limit
from Rs. 5,000/- to Rs 10,000/- for the purpose of deducting of TDS w.e.f. 1st
June 2016.
3. Section 194C (Payments to Contractors) - Proposed to increase the aggregate
threshold limit from Rs. 75,000/- to Rs.1,00,000/- w.e.f. 1st June, 2016.
4. Section 194D (Insurance Commission) Proposed to decrease threshold limit from
Rs. 20000/- to Rs. 15000/- and rate of TDS also decreased from 10% to 5% w.e.f.
1st June 2016
5. Section 194DA (Payment in respect of Life Insurance Policy)- Proposed to
decrease the rate of TDS from 2% to 1%. w.e.f. 1st June 2016.
6. Section 194EE (Payments in respect of NSS Deposits)- Proposed to decrease the
rate of TDS from 20% to 10% w.e.f. 1st June 2016.
7. Section 194G (Commission on sale of lottery tickets)- Proposed to increase
threshold limit from Rs. 1,000/- to Rs. 15,000/- and Rate of TDS is decrease from
10% to 5% w.e.f 1st June 2016.
8. Section 194H (Commission or brokerage) - Proposed to increase threshold limit
from Rs. 5,000/- to Rs. 15,000/- and rate of TDS decreased from 10% to 5% w.e.f
1st June 2016
9. Section 194K (Income in respect of Units) and Section 194L (Payment of
Compensation on acquisition of Capital Asset)- Proposed to be omitted w.e.f. 1st
June 2016.
10. Section 194LA (Payment of compensation on acquisition of certain immovable
property) - Proposed to increase the threshold limit from Rs.2,00,000/- to
Rs.250000/- w.e.f. 1st June, 2016.
11. Section 194LBB (Units of Investment Funds) to deducted TDS – (a) at the rate of
10% where the payee is a resident; (b) at the rates in force, where the payee is a
non-resident (not being a company) or a foreign company w.e.f 1st June 2016
12. Section 194LBC is proposed to be inserted where any income is payable to an
investor, being a resident, in respect of an investment in a securitisation trust
TDS is to be made @: (i) 25% if the payee is an individual or a Hindu undivided
family; (ii) 30% if the payee is any other person.
13. It is proposed to amend section 197 to include section 194LBB, 194LBC in the list
of sections for which a certificate for deduction of tax at lower rate or no
deduction of tax can be obtained w.e.f 1st June 2016
14. It is proposed to amend the provisions of section 197A for making the recipients
of payments referred to in section 194-I (Rent) also eligible for filing self-

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declaration in Form no 15G/15H for non-deduction of tax at source in

accordance with the provisions of section 197A w.e.f 1st June 2016
15. It is proposed to amend section 206AA so as to provide that the said section shall
not apply to a nonresident, not being a company, or to a foreign company, in
respect of- (a) Payment of interest on long term bond referred in section 194 LC;
(b) Any other payment subject to condition as may be prescribed on w.e.f 1st
June 2016.
16. It is proposed to amend the section 206C (TCS) to provide that the seller shall
collect the tax at the rate of 1%: (a) from the purchaser on sale of motor vehicle of
the value exceeding Rs. 10 Lacs; and (b) sale in cash of any goods (other than
bullion and jewellery) or providing of any services (other than payments on
which TDS is made) exceeding Rs. 2 Lacs w.e.f 1st June 2016.

Tax Collection at Source (TCS) on sale of vehicles; goods or services

The existing provision of section 206C of the Act, inter alia, provides that the seller shall
collect tax at source at specified rate from the buyer at the time of sale of specified items
such as alcoholic liquor for human consumption, tendu leaves, scrap, mineral being coal
or lignite or iron ore, bullion etc. in cash exceeding two lakh rupees.

In order to reduce the quantum of cash transaction in sale of any goods and services
and for curbing the flow of unaccounted money in the trading system and to bring high
value transactions within the tax net, it is proposed to amend the aforesaid section to
provide that the seller shall collect the tax at the rate of one per cent from the purchaser
on sale of motor vehicle of the value exceeding ten lakh rupees and sale in cash of any
goods (other than bullion and jewellery), or providing of any services (other than
payments on which tax is deducted at source under Chapter XVII-B) exceeding two
lakh rupees.

It is also proposed to provide that the sub-section (1D) relating to TCS in relation to sale
of any goods (other than bullion and jewellery) or services shall not apply to certain
class of buyers who fulfill such conditions as may be prescribed.

This amendment will take effect from 1st June, 2016

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Exemptions from requirement of furnishing PAN under section 206AA to certain

non-resident.

The existing provision of section 206AA, inter alia, provides that any person who is
entitled to receive any sum or income or amount on which tax is deductible under
Chapter XVIIB of the Act shall furnish his Permanent Account Number to the person
responsible for deducting such tax, failing which tax shall be deducted at the rate
mentioned in the relevant provisions of the Act or at the rate in force or at the rate of
twenty per cent., whichever is higher. The provisions of section 206AA also apply to
non-residents with an exception in respect of payment of interest on long-term bonds as
referred to in section 194LC.

In order to reduce compliance burden, it is proposed to amend the said section 206AA
so as to provide that the provisions of this section shall also not apply to a non-resident,
not being a company, or to a foreign company, in respect of any other payment, other
than interest on bonds, subject to such conditions as may be prescribed.

This amendment will take effect from 1st June, 2016.

Rationalization of tax deduction at source provisions relating to payments by

Category-I and Category-II Alternate Investment Funds to its investors.

The Finance Act, 2015 had inserted a special taxation regime in respect of Category-I
and II Alternative Investment Funds (investment fund) registered with SEBI. The
special taxation regime is intended to ensure tax pass through status in respect of these
investment funds which are collective investment vehicles. The special regime is
contained in sections 10(23FBA), 10 (23FBB), 115UB and 194LBB of the Act. Under this
regime, the income of the investment fund (not being in the nature of business income)
is exempt in the hands of investment fund but income received by the investor from the
investment fund (other than income which is taxed at the level of investment fund) is
taxable in the hands of investor. The taxation in the hands of investors is in the same
manner and in the same proportion as it would have been, had the investor received
such income directly and not through the investment fund. The existing provisions of
section 194LBB provides that in respect of any income credited or paid by the
investment fund to its investor, a tax deduction at source (TDS) shall be made by the
investment fund @ 10% of the income. Under section 197 of the Act, facility for
certificate for deduction of tax at lower rate or no deduction is available in respect of
sections enumerated therein, if the Assessing Officer is satisfied that total income of the
recipient justifies issue of such certificate, section 194LBB is currently not included in
this provision.

It has been represented that the existing TDS regime has created certain difficulties. The
non-resident investor is not able to claim benefit of lower or NIL rate of taxation which
is available to him under the relevant Double Taxation Avoidance Agreement (DTAA),

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and deduction of tax @10% is to be undertaken mandatorily even if under DTAA, the
income is not taxable in India. There is no facility for any investor to approach the
Assessing Officer for seeking certificate for TDS at a lower or NIL rate in respect of
deductions made under section 194LBB.

In order to rationalise the TDS regime in respect of payments made by the investment
funds to its investors, it is proposed to amend section 194LBB to provide that the person
responsible for making the payment to the investor shall deduct income-tax under
section 194LBB at the rate of ten per cent where the payee is a resident and at the rates
in force where the payee is a non-resident (not being a company) or a foreign company.
Further, it is proposed to amend section 197 to include section 194LBB in the list of
sections for which a certificate for deduction of tax at lower rate or no deduction of tax
can be obtained. Consequential changes are also proposed to be made to the definition
of "rates in force" so as to include section 194LBB in it.

These amendments will take effect from 1st June, 2016.

[Clause 3, 81 & 83]

Enabling of Filing of Form 15G/15H for rental payments

The provision of sub-section 194 -I of the Act, inter alia, provides for tax deduction at
source (TDS) for payments in the nature of rent beyond a threshold limit. The existing
provisions provide threshold of Rs. 1,80,000 per financial year for deduction of tax
under this section. In spite of providing higher threshold for deduction tax under this
section, there may be cases where the tax payable on recipient's total income, including
rental payments, will be nil. The existing provisions of section 197A of the Income-tax
Act, inter alia provide that tax shall not be deducted, if the recipient of certain payments
on which tax is deductible furnishes to the payer a self- declaration in prescribed Form
No 15G/15H declaring that the tax on his estimated total income of the relevant
previous year would be nil. In order to reduce compliance burden in such cases, it is
proposed to amend the provisions of section 197A for making the recipients of
payments referred to in section 194-I also eligible for filing self-declaration in Form no
15G/15H for non-deduction of tax at source in accordance with the provisions of
section 197A.

This amendment will take effect from 1st June, 2016.

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