tds provisions with latest amendments

6/6/2021

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By, CA. Cotha S Srinivas,

Pr. SSB & Associates,

Past Chairman SIRC of ICAI

TDS Provisions with Latest Amendments

SICASA BENGALURU 04th June, 2021

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Topics for Today’s Discussion

IntroductionStages

of TDS

General Aspects of TDS

Latest TDS Amendments

Procedure under TDS

TDS

Charts

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Introduction

: TDS – Tax Deduction at Source :

Tax as per sec. 2(43) Tax means income-tax chargeable under the provisions of this Act

Deduction the act of taking away something (an amount of money) from a total

at Source at the point of origin or issue

The concept of TDS was introduced with an aim to collect tax from the very source of income. As perthis concept, a person (deductor) who is liable to make payment of specified nature to any otherperson (deductee) shall deduct tax at source and remit the same into the account of the CentralGovernment {Surrogate Taxation} Shifting the Burden of paying the tax.

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Introduction

Section Description

4(1)

The Central Act enacts that income tax shall be charged for any Assessment Year {AY}with respect to every personin respect of the total income of the Previous Year {PY}

4(2)

In respect of income chargeable under sub-section (1),income-tax shall be deducted at source or paid in advanceas per provisions of this Act

Chapter XVII Collection and Recovery of Tax

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Introduction

Chapter XVIIHeading Description Sections Covered

A General 190 & 191

B Deduction at source 192 to 206AB

BB Collection at source 206C to 206CCA

C Advance payment of tax 207 to 219

D Collection and recovery 220 to 232

E Omitted 233 & 234

F Interest chargeable in certain cases 234A to 234D

G Levy of fee in certain cases 234E to 234H

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Introduction

190 Deduction at source and advance payment

The total income of an assessee for the previous year is taxable in the relevant

assessment year. Income-tax is recovered from the assessee in the previous year

itself through

Tax deduction at source (TDS),

Tax collection at source (TCS) &

Payment of advance tax

Another mode of recovery of tax is from the employer through tax paid by him

under section 192(1A) on the non-monetary perquisites provided to the

employee.

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Introduction

191 Direct Payment

In the following cases, tax is payable by the assesse directly :-

Income in respect of which tax is not required to be deducted at source;

and

Income in respect of which tax is liable to be deducted but is not actually

deducted.

In view of the provisions of section 191, the proceedings for recovery of tax

necessarily had to be taken against the assessee whose tax was liable to be

deducted, but not deducted.

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Stages of TDS

D

PAYMENT

DEDUCTION

P

R

C

RETURNS

CERTIFICATE

Date of DeductionFew sections only at the time of payment

Credit or payment whichever is earlier

Mode of Payment

Periodicity & Forms

Due Dates

Electronic Payment in challan no. 281

Quarterly in Form 24Q, 26Q, 27Q,

31st Jul, 31st Oct, 31st Jan, 31st May

15th Aug, 15th Nov, 15th Feb, 15th Jun

Due Dates

Due Dates 7th of every month and 30th April

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Stages of TDS

D

PAYMENT

DEDUCTION

P

R

C

RETURNS

CERTIFICATE

Not Deducted2. Penalty U/s. 271C

1. Disallowance of Expd. U/s. 40(a)(i) & (ia)

Deducted not Paid

Not Filed

Not Issued

Disallowance of Expd. U/s. 40(a) and Prosecution U/s. 276B

Penalty U/s. 271H

Fee U/s. 234F

Penalty U/s. 272A

Delay in Filing

Delayed Payment Interest U/s. 200A

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General Aspects of TDS {01 – 06}

Definitions

Sections

Rates

Limit

Covers section 192 to 196D – {38 Deductions}

Mentioned in the respective sections except u/s. 192, 194P, 195

Specified in the respective sections except u/s.195

Respective Sections, Act, Other Acts

Payer Status Nature of Payment is relevant rather than the status of payer

Payee Status Type of Person and Residential Status of Person

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Basis of Deduction

Deduction

Lower Deduction

Privileges

On Credit to account of payee OR Payment whichever is earlier

Payee can apply for NIL or Lower Deduction of TDS. Sec 197

Senior Citizens & Persons having less or exempt Income. Sec 197A

TDS is done on Gross Amount excluding GST & other taxes

Reduced Rates @ 75% of Actual Rate u/s. 197B period - {14.05.2020 to 31.03.2021}

TDS as Income TDS is treated as income received as per Sec. 198 except u/s.194N

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Exemptions

Exclusions

Exempted Persons

Advance Payment

Central Govt., RBI, Exempted Corporations, etc., Sec. 196

They need to deduct tax if they are making payment to others

If the end payment is subject to TDS, Then Yes

Specific exemption is provided in respective sections beyond limits

Capital Expd. TDS is applicable if the nature of payment is subject to TDS

Punishments Disallowance, Interest, Fee, Penalty, Prosecution

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Purchases

Sales

Personal Use

Cash Withdrawal

Expenses were under TDS, Now sales is also under TDS U/s. 194O

Amount spent on personal use was not under TDS, Now 194M

Withdrawing cash from our own account, TDS U/s. 194N

Certain purchases is also subject to TDS U/s. 194Q

Joint Payees If shares are determinate TDS to be done separately

Death of Payee On death of Payee, TDS can be obtained in the name of LR’s

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Forms

Rules

Operation

Sur-charge & Cess

Imp. Rules 28, 30, 31A, 31, 37BB

E-Payment, E-Filing, E-Certificate

For payment to Non-Residents tax to include sur-charge and cess

Forms 13, 16, 16A, 16B, 16C, 16D, 15CA, 15CB, 24Q, 26Q, 27Q

Foreign Payments Amount payable in Foreign Currency to be converted Rule 26, 115

Other Income U/s. 192, 194P Other income details have to be considered

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TAN

PAN / Aadhar

ITR

Jurisdiction

Compulsorily to be provided – Sec. 206AA

To be obtained for last 2 years from Specified Persons – Sec. 206AB

Jurisdiction of Deductor to be considered for TDS

Required to deduct tax except u/s. 194IA, 194IB, 194M

Rounding Off TDS amount to be rounded off to nearest Rs. 10/-. Sec. 288B

Decimal In returns tax rates can’t be given for more than 2 decimals

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Adjustment

Revised Returns

Intimation

Rectification

Returns can be revised any number of times, no due dates

Within 1 year from end of FY in which return is filed Sec. 200A

Intimation rec’d u/s. 200A can be rectified u/s. 154

Any excess TDS made can be adjusted with PY and Next Year

Appeal Order u/s. 201 is Appealable

Assessee Not in

DefaultRule 37BCA and Form 26A

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Certification

Time Limit

Winnings in Kind

Carry Forward

To pass order u/s. 201 – 7 or 2 years whichever is later

TDS amount to be paid and the winnings be released

TDS can be carry forward for next year if income is not offered

For Non-resident payment certification in Form 15CB

Month Period of 30 days to be considered not British Calendar

Cheque Pyt. If tax is paid through Cheque, Date of encashment is considered

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Doubts in Rates

Planning

Fixed Assets Pur.

Liabilities Repaid

Not Advisable

TDS on Fixed Assets Purchased

TDS for repayment of Liability

TDS to be done at the higher of the rates

Contribution Major Contributor to the Revenue along with Advance tax

Scope for Expansion Yes, 194R to 194Z – another 9 types can be introduced

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Section Description

194M Payment of certain sums by certain Individuals or HUF

194N Payment of certain amounts in cash

194O Payment of certain sums by e-commerce operator to e-commerce participant

194P Deduction of tax in case of specified senior citizen

194Q Payment of certain sum for purchase of goods

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194M Payment of certain sums by certain Individuals or HUF

Sl. No. Particulars Description

1. Payer Any Individual or HUF

2. Payee Any Resident in India

3.

Type of Payment Payment for contract work (194C) ORCommission or brokerage (194H) ORProfessional services (194J)

4. Time of Deduction Credit to A/c. OR Payment, whichever is earlier

5. TDS Rate 5 %

6. Limit > 50,00,000

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➢

Individuals and HUFs (other than those who are required to deduct income-tax

as per the provisions of section 194C or 194H or 194J) are required to deduct tax

in respect of the above sums payable during the financial year to a resident.

➢

The provisions of section 203A containing the requirement of obtaining Tax

deduction account number (TAN) shall not apply to the person required to

deduct tax in accordance with the provisions of section 194M.

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194N Payment of certain amounts in cash


1. Payer Banking Company, Co-op. Society {in Banking Bus.} or P.O.

2. Payee Any Person {includes Non-Resident also}

3. Type of Payment Cash withdrawn from one or more accounts maintained

4. Time of Deduction Payment of cash

5. TDS Rate 2 %

6. Limit > 1,00,00,000 {1 Crore}

7. Effective Date w.e.f. - 01.09.2019

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Recipient who has not filed R.O.I. for all of the 3 AY’s relevant to 3 PY’s, for which the time limit

to file R.O.I. u/s. 139(1) has expired, immediately preceding the PY in which cash is withdrawn.

The provisions will be modified as below -

Limit > 20,00,000 { 20 Lakhs}

TDS Rates

Aggregate Withdrawal Amount in PY TDS Rate

Upto 20,00,000 NIL

> 20,00,000 and < 1,00,00,000 2 %

> 1,00,00,000 5 %

Effective from On or after 01.07.2020

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The proviso to section 194N provides that no tax is, however, required to be deducted at source on any

payment made to -

1. The Government

2. Banking Co., Co-operative Society and Post Office

3. Any business correspondent of a banking company or co-operative society

4. Any White Label ATM operator of a banking company or co-operative society

5. Such other person or class of persons as notified by Central Government

The deductor has to give information about tax not deducted on the exempted payments made as above

as per Rule 37BA(3A)

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Such other person or class of persons as notified by Central Government

1. Cash Replenishment Agencies (CRA’s) and franchise agents of White Label Automated Teller

Machine Operators (WLATMO’s)

2. Commission agent or trader, operating under Agriculture Produce Market Committee

(APMC), and registered under any Law relating to Agriculture Produce Market

3. The authorized dealer and its franchise agent and sub-agent and Full-Fledged Money

Changer (FFMC) licensed by the RBI and its franchise agent.

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The CBDT has, vide Press Release dated 30.8.2019, clarified that

➢ Section 194N is to come into effect from 1st September 2019

➢

Hence, any cash withdrawal prior to 1st September 2019 will not be subjected to the TDS under

section 194N.

➢

However, since the threshold of Rs. 1 crore is with respect to the previous year 2019-20,

calculation of amount of cash withdrawal for triggering deduction under section 194N shall be

counted from 1st April 2019.

➢

Hence, if a person has already withdrawn Rs. 1 crore or more in cash up to 31st August 2019 from

one or more accounts maintained with a banking company or a cooperative society or a post

office, TDS @ 2% shall apply on all subsequent cash withdrawals.

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194O Payment of certain sums by e-commerce operator to e-commerce participant


1. Payer E-commerce Operator

2. Payee E-commerce Participant

3. Type of Payment Gross amount paid towards sale of goods or services or both


5. TDS Rate 1% of Gross Amount

6. Limit> 5,00,000/- in case of Indl. or HUF being an e-commerceparticipant and who has furnished his PAN or Aadhar.

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Explanationany amount paid by the end user of goods or services, shall be treated as amount

paid by an e-commerce operator to an e-commerce participant

Being an individual or HUF no deduction under this section shall be made unless,

the amount paid or credited exceeds Rs. 5,00,000/- and such Indl. or HUF has

furnished his PAN or Aadhar number to e-commerce operator.

No deduction of tax shall be made towards any amount received or receivable by an

e-commerce operator for hosting advertisements or providing any other services

which are not in connection with sale or services.

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Important TDS Provisions

Electronic

commerce

means the supply of goods or services or both including digital products, over

digital or electronic network;

E-Commerce

operator

means a person who owns, operates or manages digital or electronic facility or

platform for electronic commerce;

E-Commerce

participant

means a person resident in India selling goods or providing services or both,

including digital products, through digital or electronic facility or platform for

electronic commerce;

Servicesincludes “fees for technical services” and fees for “professional services”, as

defined in the explanation to section 194J.

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194P Deduction of tax in case of Resident Specified Senior Citizen


1. Payer Specified Bank

2. Payee Resident Senior Citizen aged 75 Years or more in PY

3. Type of Payment Pension and Interest Income

4. Time of Deduction To be Notified after receiving declaration from senior citizen

5. TDS Rate Rates in force (Slab Rates)

6. Limit Exemption Limit and Rebate u/s. 87A

7. Benefit No need to file ITR

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194Q Payment of certain sum for purchase of goods


1. Payer Buyer

2. Payee Resident Seller

3. Type of Payment Value or aggregate value for purchase of any goods in any PY


5. TDS Rate 0.1 %

6. Limit > 50,00,000

7. Definition Buyer means a person whose TO/GR/Sales is > 10 Crores

8. Condition If TDS or TCS is made on this transaction except 206C(1H)

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Procedures under TDS

Section Description

197 Certificate for deduction at lower rate

197A No deduction to be made in certain cases

197B Lower deduction in certain cases for a limited period

198 Tax deducted is income received

199 Credit for tax deducted

200 Duty of person deducting tax

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Section Description

200A Processing of statements of tax deducted at source

201 Consequence of failure to deduct or pay

202 Deduction only one mode of recovery

203 Certificate for tax deducted

203A Tax deduction and collection account number

204 Meaning of person responsible for paying

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Section Description

205 Bar against direct demand on assessee

206AFurnishing of statement in respect of payment of any income to residents without

deduction of tax

206AA Requirement to furnish Permanent Account Number

206AB Special provision for deduction of tax at source for non-filers of income-tax return

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Section Amendments

206AB Special provision for TDS for non-filers of income tax return -

with effect from the 1st day of July, 2021

(1) Tax is required to be deducted under the provisions of Chapter XVIIB,

(2) Sections 192, 192A, 194B, 194BB, 194LBC or 194N are not covered under

this section

(3) Deductee to pay any sum or income or amount to a specified person,

(4) the tax shall be deducted at the higher of the following rates, namely

(i) at twice the rate specified in the relevant provision of the Act; or

(ii) at twice the rate or rates in force; or

(ii) at the rate of five per cent

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Section Amendments

If both provisions of Sec. 206AA and 206AB is applicable, then TDS to be done at

the higher of the two rates provided in these sectionsSpecified

Person for 206AB

(a) A person who has not filed the return of income for past 2 PY’s

(b) Due date for filing return has expired

(c) Aggregate of TDS and TCS in his case is Rs. 50,000/- or more in each of

these two previous years

(d) Non-resident who doesn’t have a PE in India is excluded.

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T D S – C H A R T S

Sections Rate

194Q 0.1 %

194C, 194IA, 194O 1 %

194C, 194I, 194J, 194N 2 %

194D, 194DA, 194G, 194H, 194IB, 194M 5 %

192A, 193, 194, 194A, 194EE, 194I, 194IC, 194J, 194K, 194LA 10 %

194E, 194F 20 %

194B, 194BB 30 %

192, 194P Slab Rate

195 Applicable Rates

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Sections Rate Reduced

194C, 194IA, 194O 1 % 0.75 %

194C, 194I, 194J 2 % 1.50 %

194D, 194DA, 194G, 194H, 194IB, 194M 5 % 3.75 %

193, 194, 194A, 194EE, 194I, 194IC, 194J, 194K, 194LA 10 % 7.50 %

194F 20 % 15.00 %

Reduced Rate applicable for deductions made from 14.05.2020 to 31.03.2021

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Sections Form

192, 194P 16

192A, 193, 194A, 194B, 194BB, 194C, 194D, 194DA, 194E, 194EE,

194G, 194F, 194H, 194I, 194IC, 194J, 194LA, 194N, 194O, 194Q, 195

16A

194IA 16B

194IB 16C

194M 16D

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Thank You

by, CA. Cotha S Srinivas

tds provisions with latest amendments

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