Transcript Document

Presentation by : CA Jaikumar Tejwani
Partner : JKT & Co., Chartered Accountants
E-Mail : [email protected]
New Delhi
20 July 2015
1
Chapter XVII
Collection & Recovery of Taxes
A. Chapter XVII contains Machinery provisions in the aid of the
substantive provisions of sections 4, 5, 28, 145 laying down
the charge of income tax.
B.
4(1) Income Tax shall be charged in respect of the total
income of the previous year.
4(2) In respect of Income chargeable u/s 4(1), income tax
shall be deducted at source.
C. Credit for tax deducted u/s 199
TDS shall be treated as payment of tax on behalf of the
person from whose income the deduction was made.
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D. Credit shall be given to him for the Assessment Year for which
such income is assessable
E. Section 191 - Where no provision for TDS or where TDS has not
been deducted. Obligation to pay directly by the assessee.
Section 205 – Where TDS applicable and deducted, then
assessee can not be called upon to pay tax himself.
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Introduction
What is Tax Deducted at source ?
Income – Tax is Collected/recovered at two stages, namely preassessment stage and post assessment stage. The method by
which pre-assessment tax are collected is in the following
manner at different stages namely,



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Advance Tax.
Tax Deducted at source.
Tax Collected at Source.
4
Objectives of introduction of Tax Deducted
at Source.





It helps in reporting the correct Incomes.
It helps in checking Tax evasion.
Early collection of revenue by the Government.
It is the cheapest mode of collection of tax.
It helps to widen the tax base as more and more people are
covered.
TDS is only on the payments which are specified under Chapter
XVII B, hence it is exhaustive in nature. Therefore only those
payments which are covered in the above chapter are liable for
deduction of tax at source.
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Need for Tax Deducted at Source

To comply with the mandatory provisions of the Act

To avoid disallowance of certain expenditure under the Income
tax act 1961.

To avoid penalty and mandatory Interest for not deducting/short
deduction/non payment/delay in payment of Tax Deducted at
Source.

To avoid Prosecution under Sec.278B of the Income Tax Act
1961.
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Important Provisions of TDS
Section
192
Type of Payment
Payment of Salaries.
193
194
194A
194B
Interest on Securities
Dividends
Payment of Interest ( other than interest on securities).
Winning from Lottery or Crossword puzzles
194C
194D
194E
194EE
Payment to any contractor or Sub-Contractor.
Insurance commission
Payment to Resident Sportsman or Sports Association
Payment in respect of deposits under N.S.S
194F
Payment on Account of repurchase of Units by
National Funds or U.T.I
Commission etc. on Sale of Lottery
7
194G
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194H
194I
Payment of Commission or Brokerage.
Payment of Rent.
194J
Payment of any Professional fees.
195
Payment to Non Residents.
196
Non – Deduction of TDS in certain cases.
197
Obtaining a certificate of Lower rate from the
Assessing Officer
Requirement to furnish PAN for TDS eligible
payments.
Consequences of Default
Offences by Companies
Due date for payment of TDS.
206AA
201 & 276B
278B
Rule 30
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203 & Rule 31
203A Read with
Rule 114A
Sec. 206 & Rule
31A
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Certificate of Tax Deducted at source to the
payee
Tax Deduction Account Number – (TAN)
Filing of Returns of tax deducted at Source
9
TDS RATES CHART
Section
194
194A
194A
194B
194BB
Nature of payments
Deemed Dividend
Interest From Bank
Other Interest
Winning from Lotteries
winning from Horse
races
194C
Payment to Contractors,
Pay to Sub Contractor ,
Payment to Transporter
194D
Insurance Commission
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up to
w.e.f
30.06.10 01.07.10
2500
2500
10000
10000
5000
5000
5000
10000
2500
5000
20000
30000
(50000 in (75000 in
a year)
year)
5000
20000
Rate in %
Individuals
& HUF
Others
10
10
10
10
10
10
30
30
30
30
1
2
10
10
10
Section
Nature of payments
194H
Commission/Brokerage
194I
up to
w.e.f
30.06.10 01.07.10
Rate in %
Individua
ls& HUF
Others
2500
5000
10
10
Rent-property
120000
180000
10
10
194I
Rent-Plant/ Machinery
120000
180000
2
2
194J
Professional Fees
20000
30000
10
10
NOTE 1. Payment made to transporter *, TDS is not required if PAN is
provided by the Transporter.
NOTE 2. Surcharge and Cess is not applicable on TDS from 1.04.09
on any payment made to resident.
NOTE 3. If PAN is not provided by the deductee then rate as per
above table or 20% whichever is higher is to be charged (effective
from 1.04.10 section 2006AA)
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* Engaged in the business of plying ,hiring or leasing goods carriages11
TIME OF TAX DEDUCTION
TAX DEDUCTED
SECTIONS
AT THE TIME OF PAYMENT
192,194,194B,194BB,194EE,
194F
AT THE TIME OF PAYMENT
OR CREDIT
193,194A,194C,194D,194E,194G,
194H, 194I,194J,195
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Sec. – 192 – Payment of Salaries

Tax is to be deducted on income chargeable under Salaries and paid
by the employer

The liability to deduct the tax arises only at the time of payment of
salary. It means if provision for salary has been made and the same
has not been paid then deduction of tax does not arise*.

Any person responsible for payment of salary, is liable to deduct the
tax. The status of the employer is not relevant for deduction of tax.
The liability to deduct the tax arises even if the person carries on
business or not.

Where an employee is in employment of more than one employer, tax
will be deducted at source by the employer, which the employee
chooses
or the present employer.
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July 2015
 The employee may furnish to the employer details of income chargeable
to tax under other heads of income (not being loss except loss under the
head Income from House Property and tax deducted on the same). In
such a case employer shall deduct tax due on total income. However,
total amount of tax deducted should not be less than the amount of tax
deductible from salary except where the loss under the head Income
from House Property has been taken into account.
* No deduction on mere accrual of salary(CIT v. Tej Quebecor Printing Ltd[2006]151 Taxman 210) (Del)
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Rates of Taxes for Individual

Rates
Women
Senior Citizen
Others
Nil
10%
Rs. 1,90,000
Rs.1,90,000 to
5,00,000
Rs.5,00,000 to
8,00,000
More than Rs
8,00,000
Rs.2,40,000
Rs.2,40,000 to
5,00,000
Rs.5,00,000 to
8,00,000
More than Rs
8,00,000
Rs.1,60,000
Rs. 1,60,000 to
5,00,000
Rs.5,00,000 to
8,00,000
More than Rs
8,00,000
20%
30%
 The above amount has to be increased by education cess at 2%
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Section 193 – Interest on Securities
(A.) Any person responsible for paying an interest on securities to a
resident is required to deduct tax at source at the rates in force on
amount of interest payable.
(B.) The Tax is required to be deducted at the time of credit of such
income to the payees account or at the time of payment of interest
on securities whichever is earlier.
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Section 194 – Dividends
 The Principal Officer of the Indian Company or a company, which has
made prescribed arrangements for declaration and payment of dividend
in India is responsible for deducting tax at source from dividend payable
to a shareholder, who is resident in India.
 No tax is to be deducted at source u/s 194 from Dividend payable to
any individual shareholder if the dividend is paid by the company by an
account payee cheque and the aggregate amount of dividend
distributed/paid or likely to be distributed/paid during the financial year
does not exceed Rs.2,500/.
 Dividend paid by domestic companies u/s 115O are exempt from tax in
the hands of the recipients’ w.e.f. April 1, 2003.
 Deemed dividend under section 2(22)(e) is taxable at the rate of 10% in
the hands of shareholders.
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Sec 194A – Interest other than Interest on
Securities
 Any person (except on individual or a HUF) responsible for paying
interest other than interest on securities to a resident is required to
deduct tax at Source at the rate of 10% for the Financial year 2010-11.
 However, w.e.f. 1st June, 2002, an Indian or a HUF whose total sales,
gross receipts or turnover from business or profession exceeds Rs. 40
lakhs (Rs. 60 lakhs w.e.f. 01.04.2011) or Rs.10 lakhs (Rs. 15 Lakhs
w.e.f. 01.04.2011) respectively, during the financial year immediately
preceding the financial year in which such interest is credited or paid
shall be liable to deduct tax at source.
 TDS is required to be deducted either at the time of credit of such
income to the payees account or at the time of payment, whichever is
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earlier.
 No tax is deducted in case where the aggregate amount of interest
does not exceed Rs.5,000/-. In case of term deposits with banks or
Cooperative Society and Housing Finance Companies, no tax is
required to be deducted upto an aggregate interest of Rs.10,000/-.
 No tax is required to be deducted in case of interest paid/credited to
any banking company/financial corporation, LIC, UTI, etc
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Section 194B – Winning from Lottery or
Crossword Puzzles
 Any person responsible for paying income by way of winning from
Lottery/crossword puzzle or card game or any other game is required
to deduct tax at source at the rate of 30%.
 No tax is deductible if the amount of payment is Rs.5,000/- (Rs.
10,000 from July 1,2010) or less.
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SECTION 194BB – WINNING FROM
HORSE RACES
 Any person responsible for paying income by way of winning from
Horse Races is required to deduct tax at source at the rate of 30%.
 No tax is deductible if the amount of payment is Rs.2,500/- (Rs. 5,000
from July 1,2010) or less.
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Sec. 194C – Payment to Contractors

Any person (other than individual and HUF) paying any sum to any
resident contractors for carrying out any work (including supply of
labour for carrying out any work) in pursuance of a contract between
the resident contractor and specified person is required to deduct tax
at source.

TDS rate is 1% if recipient is individual/ HUF or 2% for any other
person.

No Tax is deducted on credit or payment on account of contractor
during the course of business of plying, hiring or leasing goods
carriages on furnishing PAN to the person paying or crediting such
sum.
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 However, an individual or a HUF whose total sales or gross receipts or
turnover from business exceeds Rs. 40 lakhs (60 Lakhs w.e.f.
1.04.2011) or whose gross receipts from profession exceeds Rs.10
lakhs (15 Lakhs w.e.f. 1.04.2011) during the financial year immediately
preceding the financial year which such sum is credited or paid to the
account of contractor shall be liable to deduct tax at source.
 Tax is required to be deducted either the time of credit of the sum paid
to the account of the payee or at the time of payment in cash or by
cheque or by any other mode, whichever is earlier.
 With effect from 1st October, 2004, Section 194C has been amended to
provide that tax will be required to be deducted at source where the
amount credited or paid to the contractor or a sub-contractor exceeds
Rs.20,000 (Rs. 30,000 from July 1, 2010) in a single payment or
Rs.50,000 (Rs. 75,000 from July 1, 2010) in the aggregate during the
financial year.
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“Work” shall include –
(a) Advertising
(b) Broadcasting and telecasting including the production of
programmes for such broadcasting or telecasting including production
of programmes for such broadcasting or telecasting;
(c) Carriage of goods or passengers by any mode of transport other than
by railways;
(d) Catering
(e) Manufacturing or supplying a product according to the requirement or
specification of a customer by using material purchased from such
customers,
but does not include manufacturing or supplying a product according
to the requirement or specification of a customer by using material
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purchase
from a person, other than such customer.
Section 194D – Insurance Commission
 Any person responsible for paying insurance commission to a resident
is required to deduct tax at source at the rate of 10%.
 No tax is deductible if the amount of insurance commission or
aggregate of the amount of such income credited/paid during the
financial year does not exceed Rs.5,000/-(Rs.20,000 from
July,1,2010).
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Section 194E – Payment to Non-Resident
Sportsman/Sports Association

Any person responsible for paying any income to a non-resident
sportsman including an athlete who is not a Citizen of India or a nonresident Sports Association or Institution is required to deduct tax at
source at the rate of 10%.

The tax is required to be deducted at the time of credit of such
income to the account of payee or at the time of payment in cash or
by issue of cheque or draft or by any other mode whichever is
earlier.
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Section 194EE – Payment in respect of
deposits under National
Savings Scheme

Any person responsible for paying to any person any amount referred
to in Section 80CCA(2) is required to deduct Income Tax at the rate of
20% at the time of payment.

No deduction is required to be made where the amount of such
payment or the aggregate amount of such payments during the
financial year is less than Rs.2,500/-.
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Section 194F – Payment on account of
Repurchase of Units by Mutual
Funds or UTI
Any person responsible for paying to any person any amount referred
to in Section 80CCB(2) is required to deduct tax at source at the time
of payment without any exemption at the rate of 20%.
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Section 194G – Commission etc. on the sale
of Lottery Tickets
Any person who is responsible for paying commission, remuneration
or prize to any person who is or has been stocking, distributing,
purchasing or selling lottery tickets is required to deduct tax at source
at the rate of 10% on such tickets on an amount exceeding Rs.1,000/.
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Section 194H – Commission or Brokerage
 Any person other than an individual or Hindu Undivided Family who is
responsible for paying on or after 1st June, 2001, to a resident, any
income by way of commission (other than insurance commission
referred to in section 194D), or brokerage, is required to deduct tax at
the rate of 10%.
 No deduction is required to be made where the amount of such
income or the aggregate of the amounts of such income credited/paid
during the financial year does not exceed Rs.2,500/-(Rs. 5,000 from
July 1,2010)
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Section 194 I – Rent
 Any person (other than an individual or Hindu Undivided Family)
responsible for paying rent to resident any income by way of rent is
required to deduct tax.
 ‘Rent’ means any payment by whatever nature called, under any lease,
sublease, tenancy or any other agreement or arrangement for the use of
(either separately or together) any:
(i) land, or
(ii) building (including factory building), or
(iii) land appurtenant to a building (including a factory building), or
(iv) machinery, or
(v) plant, or
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(vi) equipment, or
(vii) furniture, or
(viii) fittings
 From 1st June, 2002 an individual or a Hindu Undivided Family whose
total sales or gross receipts or turnover from business exceeds Rs.40 lacs
(60 Lakhs w.e.f. 1.04.2011) or whose gross receipts from profession exceeds Rs.10
lacs (15 Lakhs w.e.f. 1.04.2011) during the financial year immediately preceding the
financial year in which such sum is credited or paid shall be liable to
deduct tax at source.
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Rate of deduction of tax – Sec 194I
Asset on which payment
is made
Payee being – Individual.
Payee being –other than
Individual.
Land or building or
furniture or fixtures.
10% if Payment or Credit
exceeds or likely to exceed
Rs.1,20,000/- (Rs.1,80,000
from July1,2010) in
aggregate in the previous
year.
10% if Payment or Credit
exceeds or likely to
exceed Rs.1,20,000/(Rs.1,80,000 from
July1,2010) in aggregate
in the previous year.
Machinery or plant or
equipment
2% if Payment or Credit
exceeds or likely to exceed
Rs.1,20,000/- (Rs.1,80,000
from July1,2010) in
aggregate in the previous
year.
2% if Payment or Credit
exceeds or likely to
exceed Rs.1,20,000/(Rs.1,80,000 from
July1,2010) i n
aggregate in the
previous year.
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33

Circular No. 4/2008 dated 28/04/2008.
Service tax charged by the Landlord shall not be included for
calculating the amount of tax to be deducted from the rent.
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Sec-194J – Fees for Professional or
Technical Services.

Any person (other than individual or HUF) responsible for
paying to a resident fee for professional services or fee for
technical services is required to deduct tax on the income
comprised therein at the rate of 10% for financial year 2010-11.

“Professional services” means services rendered by a person in
the course of carrying on legal, medical, engineering or
architectural profession or the profession of accountancy or
technical consultancy or interior decoration or advertising or
such other profession as is notified by the Board for the
purpose of section 44AA or of this section.
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 “Fees for technical services” shall have the same meaning as in
Explanation 2 to clause (vii) of sub-section (1) of section 9 –
For the
purpose of this clause “Fees for technical services” means: any
consideration (including any lump sum consideration) for the
rendering of any
managerial, technical or consultancy services
(including the provisions of services of technical or other
personnel), but does not include consideration for any
construction, assembly, mining or like product undertaken by the
recipient or consideration which would be income of the recipient
chargeable under the head ‘salaries’.
 The tax is required to be deducted at the time of credit of such income
to the account of the payee or at the time of payment in cash or by issue
of cheques or drafts or by any other mode whichever is earlier. No tax is
required to be deducted in case amount of such sum or aggregate of
amount of such sums credited or paid during the financial year does not
exceed Rs.20,000/-(Rs. 30,000 from July 1, 2010).
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 With effect from 1st June, 2003 no individual or HUF shall be liable to
deduct tax on fees for professional services in case such sum is
credited or paid exclusively for personal purposes of such individual or
any member of HUF.
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Sec 195 – Payment to Non Residents
 Any sum paid to Non Resident is subject to deduction of Tax at
source
 Rate of tax is prescribed in the Finance Act. However if the rates
indicated in relevant DTAA is lower such lower rates are applicable.
 Application can be made by payee to the Assessing Officer for Nil or
lower rate deduction of tax at source
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Exemption from deduction of tax at source
in respect of payments made to certain
persons (Section 196)




Government
Reserve Bank of India
Corporation established by or under a Central Act whose
income is exempt from Income Tax
Mutual Fund u/s 10(23D)
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Section 197 – Obtaining a Certificate of Lower
Rate from
the Assessing Office
 For tax-deductible u/s 192, 193, 194, 194A, 194C, 194D, 194G, 194H,
194-I, 194J, 194K, 194LA or 195.
 The recipient can apply in Form No.13 to the Assessing Officer to get a
certificate authorizing the payer to deduct tax at lower or deduct no tax
as may be appropriate.
 The certificate of lower rate shall be issued through the ITD application
i.e. computer system of the department. Issue of manual certificates is
not permitted.
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 Certificate has to be issued individually to each deductor. Only a copy of
the certificate is to be given to the applicant/assessee for information.
 Only the original certificate addressed to the deductor and signed by
AO can be acted upon by deductor and photocopy is not valid.
 As per CBDT circular no 774 dated 17/03/99 certificate u/s 197 is valid
for the payments made after the date of issue of certificate.
 However in the case of entities covered by Rule 28AB, the Assessing
Officer may issue a certificate to the recipient authoring payment of
income without deduction of tax at source. The recipient may furnish
copies of such certificate to the person responsible for paying the
income for the purpose of no deduction of tax at source.
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No deduction of tax at source in certain
cases – Section 197A
Payment u/s 193, 194A and 194K
– Form No: 15G by everybody (not being a company or a firm) and
Form No: 15H by Senior Citizens. This benefit is not applicable if
the total amount paid/payable is in excess of the maximum amount
not chargeable to tax.
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SECTION 206(AA)
 Furnishing PAN is compulsory for all TDS eligible payments covered
under Chapter XVII-B , failing to which, Deductor will be deducting TDS
at a higher rate.
 For such case, the rate of TDS should be determined at higher of
below conditions:
1.TDS rate prescribed in the Act ;
2.Rate of Tax in force ;
3.At 20%
 The section is applicable for all payments made on or after April 1,
2010.
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 Declaration under Section sub-section (1) or sub-section (1A) or subsection (1C) of section 197A shall be valid only if PAN is furnished.
 No certificate under section 197 shall be granted unless the
application made under that section contains the PAN of the applicant.
TAN of the deductor is mandatory without which certificate cannot be
generated from the system.
 The deductee shall furnish his PAN to the deductor and both shall
indicate the same in all the correspondence, bills, vouchers and other
documents which are sent to each other.
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Consequences of Default
Liability u/s 201

Interest & Penalty –
Assessee in default u/s 221 equal to the amount of tax in arrears.
 Interest @ 1% per month (1.5% w.e.f. 01.07.2010, in case tax
deducted but deposited late).
Both the above are consequences of Not deducting or Deducted and
not paying to the Central Government.
After deducting not paying also leads to a charge being credited on
the assets of the payer.
Section 271C
Penalty for failure to deduct tax at source as required or under the
provisions of Chapter XVII-B. Penalty Equal to Tax.
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Section 276B
 If a person fails to pay to the credit of Central Government, tax
deducted at source by him as required by or under the provisions of
Chapter XVII-B.
 Imprisonment Period 3 months to 7 years and with fine.
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Section 278B – Prosecution - Offences by
Companies
 Every person who at the time of offence was in charge of and was
responsible to the company for the conduct of business of the
company as well as the company shall be liable to be proceeded
against.
 If it is established that the offence was committed with the
connivance of director, manager, secretary or other officer – such
persons shall also be liable to be punished
 In the case of imprisonment and the offence being committed by
company, apart from fine on the company, officers responsible shall be
liable to be proceeded against.
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Due dates for Payment of Tax deducted at
Source – Rule30.
Sl.No. Nature of Payment
Due Date
1
All Payments or Credits
during the year
Within one week from
the end of the month in
which payment is
made
2
Provision by way of credit to
the account of person on
31st March of the Previous
year.
Within 2 months from
the end of the month in
which such amount is
credited.
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Certificate of Tax Deducted at source to the
payee – Sec203 and rule 31.






In respect of cases where Salaries exceeds Minimum threshold limit
in Form No. 16 and in other cases Form No. 16AA
Other than Salaries - Form No. 16A
The certificates issued in Form No. 16 can be issued under Digital
Signature by virtue of Circular No. 2/2007 dated 21/05/2007
Due Dates by which certificate is to be submitted to the payee:
Salaries - Form No. 16 /16AA - within one month from the close of
the financial year
Other Payments – Form No. 16A – within one month from the end
of the month in which payment is made or where more than one
payment is made in a year at the request of the payee with in one
month from the end of the financial year.
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Exceptions to the time limit specified for
issuance of TDS certificates.
In respect of cases where deduction is by virtue of credit – within
one week from the expiry of two months after the month of credit

Duplicate certificates can be issued on receipt of a letter on a plain
paper from the payee

Non Issuance of TDS certificates with in the due dates will attract a
penalty of Rs.100/- per delay under Sec.272A.
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Tax Deduction Account Number – (TAN)
Sec.203A Read with Rule 114A.

Every person who is liable to deduct tax at source shall obtain a
TAN number within one month from the end of the month in which
tax has been deducted. Penalty for failure to obtain TAN is Rs.
10,000 (Sec 272BB)

An application for the allotment of a TAN shall be made in
duplicate in Form No. 49B.
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E-TDS RETURNS
 MeaningE-TDS return is a TDS return prepared in form No.24Q,26Q or 27Q in
electronic media as per prescribed data structure in either a floppy or a CD
ROM. The floppy or CD ROM prepared should be accompanied by a
signed verification in Form No.27A.
 Need for filing e-TDS Return –
As per Section 206 of Income Tax Act all corporate and government
deductors are compulsorily required to file their TDS return on electronic
media (i.e. e-TDS returns). However, for other Deductors, filing of e-TDS
return is optional.
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FORM NO.
PARTICULARS
Form 24Q
Quarterly statement for tax deducted at
source from "Salaries"
Quarterly
Form 26Q
Quarterly statement of tax deducted at
source in respect of all payments other than
"Salaries
Quarterly
Form 27Q
Quarterly statement of deduction of tax from
interest, dividend or any other sum payable
to non-residents
Quarterly
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PERIODICITY
53
Form 27A is a summary of TDS return (Form 24Q, 26Q or 27Q),
which contains control totals of 'Amount Paid' and 'Income tax
deducted at source'.
Sec. 206 and Rule 31A
QUARTER
DUE DATE
April to June
July 15
DUE DATE FOR
27Q
14 July
July to September
October 15
14 October
October to December
January 15
14 January
January to March
June 15
14 June
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54
Thank You 
20 July 2015
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