Section 192 relating to TDS on Salary –

Section 192 says that every person who is responsible for paying any income chargeable under the head
‘Salary’ is required to deduct TDS.

The Rate of TDS to be deducted –

In case of TDS on salary, there is no fixed rate of TDS, however, the Deductor / employer is required to
deduct tax at source at the average rate of income tax.

‘The Average rate of Income Tax’ is computed based on the rates in force during the relevant Financial Year.

Time of deduction of TDS on Salary –

The liability to deduct TDS arises at the time of actual payment of Salary. It is important to note that the
liability arises at the time of payment of Salary and not at the time of accrual.

The Time limit for deposit of TDS on Salary –

Type of Deductor Time limit Remarks

Other than Government Within 7 days of the subsequent Applicable for the months of April
Office (i.e. normal month in which TDS is deducted. to February
Deductor)
On or before 30th April in case of Applicable for the month of March
income credited /paid in the month of
March

Government Office Same day Where the sum deducted has been
paid without the production of a
challan
Within 7 days of the subsequent Where the tax is paid month in which
TDS is deducted. accompanied by an income tax challan.

Please note that TDS is to be deposited vide challan no. ITNS 281.

Issuance of TDS certificate – Form 16 within 31 st May

Filing of TDS return – a quarterly return in Form 24Q

Period Due dates

April to June On or before 31st July

 July to September On or before 31st October

October to December On or before 31st January

January to March On or before 31st May

Specific Cases –

Applicability of TDS in case the employee is simultaneously working under more than one employer –

In case the employee is working with more than one employer, simultaneously, then, the employee is
required to provide details of salary earned by him from other employers in Form 12B to any one of the
employer. The employer to whom the details is provided in Form 12B would be responsible for deducting the
TDS after considering the details so provided.

Applicability of TDS in case of change in employment during the year –

In case of change in employment, the employee is required to intimate his current employer details about
previous salary and TDS deduction in Form 12B.

Based on the details provided by the employee, the current employer will have to deduct tax at source after
taking into account TDS deducted by the earlier employer, salary received from the earlier employer etc.

TDS applicability on non-monitory perquisites –

As per provisions of section 192 (1A), the employer has the option to make payment of the whole of the tax
or part of the tax due on the non-monitory perquisites. The tax, if any, paid by the employer shall be deemed
to be the TDS made from the salary of the employee, however, in terms of section 198, the said tax will not
be deemed to be the income of the employee.

FAQs on Section 192- TDS on Salary

1. Is TDS applicable on advance salary?

in case of advance salary, the TDS is to be deducted at the time of payment of advance salary.

2. What if TDS is not deducted on salary?

If TDS is not deducted on salary, the employer is liable to pay interest for non-deduction of TDS @ 1% per
month from the date on which tax was deductible till the date tax actually deducted.

3. What happens if TDS is deducted by the employer but not deposited?

If TDS deducted by the employer is not deposited, the employer is liable to pay interest for late deposit @
1.5% per month from the date on which tax was deducted till the date on which TDS was credited to the
Government. Further, the Deductor would also be penalize with fine and rigorous imprisonment for a term
not less than 3 months but may extend to 7 years.
Section 192A – TDS on Premature withdrawal from EPF

The Employees Provident Fund (EPF) is a saving scheme introduced, under the Employees Provident Fund and
Miscellaneous Act, 1952, with an aim to promote savings which can be used postretirement of an employee.
Section 192A was inserted vide the Finance Act 2015 applying the tax deduction at source (TDS) provisions in
case of the premature withdrawal from Employees Provident Fund.

The current article highlights the provisions of section 192A covering basic provisions, time of deduction of
TDS, the rate of deduction of TDS, the due date of deposit and filing of return and the circumstance under
which TDS is not deductible under section 192A.

In a nutshell, the TDS is deductible, if the following conditions are satisfied –

1. The amount from EPF has been withdrawn before completion of continuous 5 years of service, and

2. The amount withdrawn is more than INR 50,000

3. Time of deduction of TDS under Section 192A

The Deductor is required to deduct TDS at the time of payment of the accumulated balance due to the
employee.

3. Rate at which TDS is to be deducted under Section 192A

In case the provisions of section 192A are applicable, the Deductor is required to deduct TDS @ 10%.
However, if the employee fails to furnish his Permanent Account Number (PAN), then, the Deductor would
deduct TDS at the maximum marginal rate.

4. Due date of TDS deposit and filing of requisite return

The Deductor is liable to deposit TDS with the Government within 7 days of the next month in which TDS is
deducted. However, in case of TDS deducted for the month of March, the same is to be deposited on or
before 30th April.

The Deductor is required to file Quarterly return in Form 26Q within following due dates –

QuarterDue date

April – June 31st July

July – September 31st October

October – December 31st January

January – March 31st May

5. Circumstances under which TDS not deductible under Section 192A

TDS is not deductible under the following circumstances –

The aggregate amount of EPF withdrawal is less than INR 50,000.

The withdrawal has been done after continuous service of 5 years.

In case of a job change, the PF amount is transferred from one account PF account to another. If there is a
termination of employment due to employee’s ill health, completion of the project for which employee was
employer, discontinuation of the employer’s business or any other reason which is beyond the control of the
employee.

If the employee has submitted Form 15G/ Form 15H along with the PAN.

Section 194 – TDS on dividend

CA Sandeep Kanoi

The provisions relating to TDS on dividend is covered under Section 194 of the Income Tax Act, and the same
has been explained briefly in the current article.

Going through the basic provisions of section 194 of the Income Tax Act –

As per the provisions of section 194 of the Income Tax Act, the Principal officer of an Indian Company or a
Company making prescribed arrangements for declaration and payment of the dividend within India is
required to deduct TDS on dividend, if the following conditions are satisfied –

1. The dividend is paid to the shareholder who is resident in India; and

2. The dividend covered within the meaning of Clause (a) to (e) section 2(22).

It is important to note that the dividend referred above covers the dividends on preference shares also i.e.,
TDS is to be deducted on dividends on preference shares if provisions of section 194 gets attracted. Further,
payment of TDS on dividend to non-resident is not covered within the provisions of section 194.

Time of deduction of TDS on dividend –

As per provisions of section 194 of the Income Tax Act, the Deductor is required to deduct the TDS earlier of
the following dates –

Before making payment in cash; or Before issuing any cheque or warrant; or

Before making any distribution or payment.

Rate of TDS on dividend –

The Company liable to deduct TDS as per provisions of section 194 is required to deduct TDS @10%.
However, in case the shareholder fails to furnish the Permanent Account Number (PAN), then, the Company
would be liable to deduct TDS at the maximum marginal rate.

Exemption from deduction of TDS on dividends–

Following is a list of dividends on which TDS is not required to be deducted as per section 194 –

1. Dividend paid to an individual where the aggregate amount of dividend, paid by the company to
theindividual, during the financial year does not exceed INR 2,500 and such dividend is paid by an account
payee cheque.

2. Dividend paid to the Life Insurance Corporation of India in respect of shares owned by it or have afull
beneficial interest.

3. Dividend paid to the General Insurance Corporation of India in respect of shares owned by it orhave a
full beneficial interest.

4. Dividend paid to any other insurer in respect of shares owned by it or have a full beneficial interest.

5. Dividend covered by provisions of section 115-o.

6. Declaration has been filed either in Form 15G or Form 15H.

Frequently Asked Questions (FAQ) – Q.1 Is TDS deducted on dividend income?

Ans. Yes, if the provisions of section 194 of the Income Tax Act gets attracted, TDS is required to be deducted
on such dividend income.

Q.2 What percentage of TDS is deducted?

Ans. The Company liable to deduct TDS on dividend as per provisions of section 194 of the Income Tax Act is
required to deduct TDS @ 10%.

Q.3 What if TDS is not deducted?

Ans. If the Company, required to deduct TDS as per section 194, fails to deduct TDS, in that case, the
company would be liable to pay Interest @ 1% per month from the date on which the tax was liable to be
deducted till the date of actual deduction.
Section 194A: TDS on interest other than interest on securities

Section 194A of the Income Tax Act deals with the provisions relating to deduction of TDS on interest (other
than interest on securities). Interest like interest paid on an unsecured loan, interest paid by banks on fixed
deposits, interest paid on loans and advances, etc. are covered under the provisions of section 194A.

The present article helps to understand the provisions attached with Section 194A of the Income Tax Act,
1961.

Basic Provisions of Section 194A

Essential features of section 194A are summarized hereunder –

Any person, other than individual or HUF, who is paying interest (other than interest on securities) to a
resident is required to deduct TDS. If the individual or HUF are liable to get their accounts audited as per
section 44AB [clause (a) or (b)], then, such individual or HUF would be required to deduct TDS on payment of
interest (other than interest on securities) to a resident as per provisions of section 194A.

Section 194A is applicable only in case of payment of interest to a resident i.e., the provisions of section 194A
doesn’t apply to the payment of interest to a non-resident. The same is covered within the purview of section
195.o

Point of time when TDS is to be deducted –

The Deductor liable to deduct TDS as per provisions of section 194A is required to deduct TDS within earlier
of the following dates –

At the time of credit of income to the payee’s account; or

At the time of payment in cash, cheque, draft or any other mode.

Rate of TDS on interest other than interest on securities –

If the provisions of section 194A of the Income Tax Act gets attracted, the Deductor is liable to deduct TDS on
interest other than interest on securities @10%.

However, if the Permanent Account Number (https://taxguru.in/income-tax/permanent-account-number-

pan.html/) is not furnished, in that case, the Deductor would be liable to deduct TDS @20% i.e., maximum
marginal rate.

The Time limit of depositing the deducted TDS –

The Deductor who has deducted TDS as per provisions of section 194A are required to deposit the same
within the following due dates –

Months Due date

April to February 7th of the next month

March On or before 30th April

Threshold Exemption limit under section 194A – TDS is not to be deducted under the following case –

Amount Category of Payer

An aggregate amount of interest doesn’t exceed INR 40,000 [INR 50,000 in case of a senior citizen] Bank

An aggregate amount of interest doesn’t exceed INR 40,000 [INR 50,000 in case of a senior citizen] Co-
operative Society

An aggregate amount of interest doesn’t exceed INR 40,000 [INR 50,000 in case of a senior citizen] Post
office

An aggregate amount of interest doesn’t exceed INR 5,000 In any other case

List of interest exempted under Section 194A –

Some of the important lists of interest which is exempted under section 194A are –

Interest paid to any bank, financial corporation, Life Insurance Corporation Unit Trust of India, any company
or a co-operative society engaged in the insurance business.

Interest paid by a partnership firm to the partners.

Interest paid by co-operative society to its members.

Question –

What is Section 194A?

Section 194A covers provisions relating to deduction of TDS on interest other than interest on securities. If
the provisions gets attracted, the TDS @10% is to be deducted by the Deductor.

What is 194A payment?

Section 194A payment is in the form of interest (other than interest on securities). Interest payment like
interest on fixed deposit, interest on any loan or interest on recurring deposits are covered within the same.

Is TDS deducted on interest paid to bank?

No, when interest is paid to bank against the loan taken, TDS provisions are not applicable, and hence TDS is
not deducted on interest paid to the bank.

Who is liable to deduct TDS under 194A?

The person who is paying interest (other than interest on securities) is liable to deduct TDS if the provisions of
section 194A get attracted.
Is TDS deducted on interest to partners?

No interest paid by the partnership firm to partners are not covered within the purview of section 194A, and
hence TDS is not required to be deducted.

Section 194B and Section 194BB – TDS

Section 194B and 194BB – TDS on winnings from lottery or crossword puzzle and TDS on winning from a
horse race.

Continuing the series of TDS articles, in the present article, both the Section 194B and Section 194BB relating
to TDS on winnings from lottery or crossword puzzle and TDS on winning from horse race, respectively, are
covered.

Understanding the scope of Section 194B –

The Scope of Section 194B is summarized hereunder –

Any person making payment of winning amount to any person is responsible for deducting TDS thereon.

Winnings from a lottery, crossword puzzle, card game, and any other game is covered within the scope of
section 194B.

TDS is to be deducted if the aggregate amount exceeds INR 10,000.

When the winning amount is payable in kind or is partly payable in cash and partly in kind. Then, in that case,
it is the Deductor’s responsibility to ensure that the TDS has been paid before releasing the winning amount.

Understanding the scope of Section 194BB –

Any bookmaker or the person to whom Government has granted a licence for horse racing in any
race course or for arranging for gambling or betting in any race course is liable to deduct TDS while making
payment of the winning amount.

TDS is to be deducted if the aggregate amount exceeds INR 10,000.

Time of TDS deduction –

The Deductor liable to deduction TDS under section 194B and / or Section 194BB is required to deduct TDS at
the time of payment.

Basic Threshold Limit –

The basic threshold limit applicable to both the section 194B and 194BB is INR 10,000 i.e. if the aggregate
amount exceeds INR 10,000 only than TDS is to be deducted.
Rate of TDS under Section 194B and Section 194BB

Section 194B TDS rate and Section 194BB TDS rate is same. The Deductor would be liable to deduct TDS @
30% under both the sections. Frequently Asked Questions (FAQ) –

What is Section 194B?

Section 194B contains provisions relating to deduction of TDS on winnings from lottery or crossword puzzle or
any other game. The Deductor is required to deduct TDS @ 30% if the winning amount exceeds INR 10,000.

What percentage of TDS is deducted?

TDS is deducted @ 30% in case the provisions of section 194B and / or section 194BB relating to winning from
lottery or crossword puzzle or any other game and / or winning from horse race are attracted.

Is income from horse racing taxable?

Yes, the income from horse racing is taxable, and if the winning amount from horse racing exceeds INR
10,000, the winner will receive the winning amount after TDS deduction.

Section 194C – TDS on Contractors

Basic provisions of section 194C of the Income Tax Act

Section 194C of the Income Tax Act states that any person making payment to a resident person, who is
carrying out any ‘work’ in terms of the contract between the ‘specified person’ and the resident contractor, is
required to deduct TDS.

The ‘specified person’ mentioned above means the following –

The Central or State Government;

The local authority;

The Corporation established by the Central, State or Provincial Act;

The Company;

The Trust;

The Co-operative Society;

The registered Society;

The authority engaged either for the purpose of dealing with and satisfying the need for the housing
accommodation or for planning, improvement or development of cities, town and village;

The university established / incorporated by Central, State or Provincial Act; The firm;

The Government of a foreign state / a foreign enterprise or any association / body established outside India;

The individual or HUF liable to audit under section 44AB [Clause (a) or Clause (b)] during the financial year
immediately preceding the financial year in which the sum is credited or paid to the account of the
contractor.

Further, it is mention here that the term ‘contract’ includes ‘sub-contract’.

Explaining the meaning of the term ‘work’ –

The term ‘work’ includes the following –

Advertising;

Carriage of goods / passengers by any mode of transport except railway;

Broadcasting and telecasting (which also includes the production of programmes for such broadcasting or
telecasting);

Catering;

Manufacturing / supplying a product based on the requirement and specification of customers by

using material purchased from the customer. However, it doesn’t include when the material is purchased
from any person other than the customer.

Rate of TDS u/s 194C

When provisions of section 194C of the Income Tax Act gets attracted, the Deductor is required to deduct TDS
at the following rates –

Particulars Rate of TDS

Payment made / credited to a person other than an individual or HUF 2%

However, in case the PAN is not furnished, the Deductor would be liable to deduct TDS @ 20% i.e. at the
maximum marginal rate.

List of exception i.e., cases wherein TDS not to be deducted u/s 194C
Under the following circumstances, TDS is not required to be deducted –

1. The amount paid or credited to the contractor in a single contract doesn’t exceed INR 30,000.

2. The aggregate amount paid or credited during the financial year doesn’t exceed INR 1,00,000.

3. The amount paid / credited to the account of the contractor engaged in the business of hiring,plying
or leasing goods carriage, where the contractor doesn’t own more than 10 goods carriage at any time during
the previous year. The Contractor is required to furnish the declaration along with the PAN to the Deductor.

4. The amount is paid or credited to the contractor by an individual / HUF for carrying out work in
thenature of personal use.

Time of deduction of TDS u/s 194C

If the Deductor is required to deduct TDS as per provisions of section 194C of the Income Tax Act, then, the
Deductor is required to deduct TDS within earlier of the following dates –

At the time of credit of sum to the account of the Contractor; or

At the time of payment in cash or cheque or draft or any other mode.

Due date of deposit of TDS u/s 194C

The Deductor is required to duly deposit the deducted TDS within following due dates –

Particulars Due dates

TDS payment for the months from April to February Within 7 days from the end of the month in which
TDS is deducted

TDS payment for the month of March On or before 30th April

TDS payment to be done by Government Deductor

(without production of challan)

Issuance of TDS certificate u/s 194C On the same day

The Deductor is required to issue TDS certificate in Form 16A within following due dates –

Months Due date

April to June 15th August

July to September 15th November

October to December 15th February

January to March 15th June

Return filing requirements u/s 194C

Every Deductor deducting TDS in terms of section 194C is required to file a quarterly return in Form

26Q within following due dates –

Months Due date

April to June 31st July

July to September 31st October

October to December 31st January

January to March 31st May

Important points –

Value to be considered for TDS deduction in the case where work includes manufacturing / supply of product
as per the specification of the customer by using the material purchased from the customer.

In such case, the TDS would be deducted on –

Particulars Value for TDS deduction

Price of the material indicated separately in the invoice Invoice value excluding the value of material

Price of the material not indicated separately in the Total invoice value invoice

Certain important clarification done by CBDT –

FD Commission and brokerage are not covered under section 194C.

Payment made to an electrician or payment made to a contractor for providing electrician service is covered
under section 194C. Payment made to courier covered under section 194C.

Payment made to travel agent or an airline for purchase of a ticket is not subjected to TDS under section
194C. However, if the plane, bus or any other mode is chartered, then TDS is liable to be deducted under
section 194C.
 Payment made to clearing and forwarding agents for the carriage of goods is liable to TDS under
section 194C.

Questions

What is Section 194c?

Section 194c requires any person making payment to person, carrying out any work in accordance with a
contract between a specified person and the resident contractor, to deduct TDS at the specified rates.

What is the limit to deduct TDS US 194c?

The Deductor is required to deduct TDS @1% in case the payment is made to individual or HUF and @2% in
case of payment done to any other person.

What is TDS exemption limit for contractor and sub-contractor?

TDS exemption limit is INR 30,000 in case of a single contract and INR 1,00,000 in case of aggregate amount
during the financial year.

What is TDS rate for contractor?

TDS rate for contractor is 1% in case payment is done to individual or HUF and 2% in any other case.

Section 194D – TDS on insurance commission

The present article covers the provisions of TDS applicability on insurance commission contained under
section 194D of the Income Tax Act, 1961.

Provisions of section 194D of the Income Tax Act, 1961

As per provisions of section 194D, the person who is responsible for making payment to a resident person for
the below mentioned income is required to deduct TDS –

Income by way of remuneration / reward, whether by way of commission or otherwise –

For Soliciting / procuring insurance business; or

For the continuance, renewal, or revival of an insurance policy.

Thus, provisions of section 194D applies only to the payment made to a resident person. Payment made to a
non-resident person is not covered under section 194D, the same is governed by section 195.

Rate of TDS on insurance commission –

If the provisions of section 194D of the Income Tax Act, 1961 is applicable, the Deductor is required to deduct
TDS at the following rates –

Particulars Rate of TDS

A Resident person other than a domestic company 5%

No surcharge, education cess or SHE cess shall be added to the above rates. However, if the PAN is not
furnished, the Deductor is required to deduct TDS @ 20% i.e., maximum marginal rate.

Time of deduction of TDS on insurance commission –

The Deductor who is liable to deduct TDS under provisions of section 194D of the Income Tax Act,

1961 is required to deduct TDS within earlier of the following dates –

At the time of credit of income to the account of the payee; or

At the time of payment in cash, cheque, draft, or by any other mode.

Cases when TDS is not to be deducted under section 194D of the Income Tax Act, 1961 –

Under the following cases, the TDS is not to be deducted –

The aggregate amount of income credited / paid during the financial year to the payee’s account doesn’t
exceed INR 15,000.

The payee has furnished self declaration under Form 15G / Form 15H. Frequently Asked Questions (FAQ) on
TDS Provision under Section 194D Q.1 What is section 194D?

Ans: Section 194D covers the provisions relating to deduction of TDS on insurance commission. As per section
194D, any person making payment to a resident as the insurance commission or any other remuneration /
reward is required to deduct TDS. Q.2 What percentage of TDS is deducted?

Ans: If provisions of section 194D get attracted, the Deductor is required to deduct TDS @ 10% in case of
Domestic company and @ 5% in any other case. Q.3 What if TDS is not deducted?
Ans: The Deductor liable to deduct TDS as per provisions of section 194D fails to deduct the same, then, in
such case the Deductor is liable to pay interest @ 1% per month from the date on which tax was deductible
till the date TDS actually deducted.

Section 194DA – TDS in respect of Life Insurance Policy

Section 194DA relates to the deduction of TDS in respect of life insurance policy, and the provisions of the
same are covered under the present article.

Basic provisions of section 19DA

Section 194DA of the Income Tax Act, 1961 covers the person making payment to a resident person any sum
under the life insurance policy. It is important to note that section 194DA includes the sum allocated by way
of bonus.

Rate of TDS under section 194DA of the Income Tax Act, 1961

The Deductor, liable to deduct TDS as per provisions of section 194DA of the Income Tax Act, 1961, is
required to deduct TDS @ 1%.

However, in the Union Budget, 2019, it has been proposed to increase the rate of TDS deduction from 1% to
5% and the same would be effective from 1st September 2019.

In case the PAN is not furnished, the Deductor is liable to deduct TDS at maximum marginal rate i.e. 20%.

Time of deduction of TDS –

As per provisions of section 194DA, the Deductor is required to deduct TDS at the time of payment.

Cases wherein TDS is not deductible –

TDS is not deductible in case life insurance policy qualifies under section 10 (10D). No TDS deductible if the
aggregate amount of payment during the financial year is less than INR 1,00,000.

Various due dates –

1. Due date of deposit of TDS with the Government –

The Deductor is required to deposit the deducted TDS within a period of 7 days from the end of the month in
which the TDS is deducted.

However, in the case of TDS deducted in the month of March, the same is to be deposited on or before 30th
April.

2. Return filing due dates

The Deductor is required to file quarterly TDS return in Form 26Q within following dates –

Quarter April to June – 31st July

Quarter July to September – 31st October

Quarter October to December – 31st January

Quarter January to March – 31st May

3. Issuance of TDS certificate

The Deductor is required to issue TDS certificate in Form 16A within a period of 15 days of the filing of the
quarterly TDS return. The respective due dates would be –

Quarter April to June – 15th August

Quarter July to September – 15th November

Quarter October to December – 15th February

Quarter January to March – 15th June

Section 194E – TDS on payment to Non-resident Sportsmen or

Sports Association

Heading towards the next section, in the series of TDS articles, the present article covers the rarely touched
section 194E of the Income Tax Act, 1961. Section 194E deals with the provisions of TDS deduction on
payment to a non-resident sportsmen / sports association. Let us have a look into the provisions governing
the same.

Understanding the basic provisions of section 194E

As per section 194E of the Income Tax Act, 1961, any person making payment of income referred to in section
115BBA of the Income Tax Act, 1961 to the following persons shall be liable to deduct TDS

A non-resident sportsman (including an athlete); or An entertainer who is not a citizen of India; or A non-
resident sports association / institution.

Time of deduction of TDS under section 194E

If the provisions of section 194E of the Income Tax Act, 1961 gets attracted in a given transaction, then, the
Deductor is required to deduct TDS within earlier of the following dates –

At the time of payment in cheque, draft, cash or any other mode; or At the time of credit of the income to the
account of the recipient.

The Rate at which TDS under section 194E is to be deducted

The Deductor liable to deduct TDS under section 194E is required to deduct TDS @ 20%.

TDS return filing –

The Deductor, under section 194E of the Income Tax Act, 1961, is required to furnish TDS return in Form 27Q.
The TDS return in form 27Q is to be filed on a quarterly basis within the following prescribed due dates – 1.
April to June – 31st July

2. July to September – 31st October

3. October to December – 31st January

4. January to March – 31st May

Issuance of TDS certificate –

Provisions of section 203 of the Income Tax Act, 1961 makes it mandatory for the Deductor to issue the TDS
certificate to the payee. The Deductor deducting TDS under section 194E is required to furnish TDS certificate
in Form 16A within the following prescribed dates –

1. April to June – 15th August

2. July to September – 15th November

3. October to December – 15th February

4. January to March – 15th June

Section 194G TDS on Commission on Sale of Lottery Tickets

The present article tries to explain the readers the provisions covered under section 194G of the Income Tax
Act, 1961 relating to TDS on commission on purchase / distribution / sale and other activities of lottery
tickets.

Basic provisions governing section 194G

Section 194G requires the person, who is paying any income by way of commission / remuneration / prize on
lottery tickets to the person who has been stocking / distributing / purchasing / selling the lottery tickets, to
deduct TDS.

Time of deduction of TDS

In case the Deductor is liable to deduct TDS as per provisions of section 194G of the Income Tax Act,

1961, then, the Deductor is required to deduct TDS within earlier of the following prescribed dates –

At the time of payment in cash / cheque / draft / any other mode; or At the time of credit of income to the
account of the payee.

Applicable TDS rates

The provision of section 194G requires the Deductor to deduct TDS @ 5%. It should be noted that no
surcharge, education cess or SHE cess shall be levied on the said rate of 5%.

However, in case the PAN is not furnished, the Deductor is liable to deduct TDS @ 20% (maximum marginal
rate).

Exemption limit under section 194G

The Deductor would be liable to deduct TDS under section 194G only if the income amount exceeds INR
15,000. In other words, the exemption limit specified under section 194G is INR 15,000 and TDS would be
deductible only above that.

Provision of lower / NIL TDS deduction

The payee can, by filing an application in Form no. 13, request the assessing officer for lower TDS deduction
or NIL / no TDS deduction. If the payee receives the appropriate certificate from the Assessing Officer, the
Deductor would deduct TDS at a lower rate or NIL rate, as directed.

However, section 206AA(4) states that no certificate for lower / NIL deduction shall be granted unless the
application contains the Permanent Account Number (PAN) of the applicant.

Section 194H – TDS on Commission or Brokerage

The provisions of section 194H of the Income Tax Act, 1961 governs the TDS deductible on commission or
brokerage income.

The present article briefs the basic provisions of section 194H of the Income Tax Act; explains the meaning of
commission / brokerage; provides TDS deduction rate and time of deduction of TDS and also provides the list
of cases wherein TDS is not deductible under section 194H.

Basic provisions of section 194H

As per the provisions of section 194H of the Income Tax Act, 1961, any person making payment of any
income in respect of commission / brokerage is required to deduct TDS.

In case of Individual / Hindu Undivided Family (HUF) provisions of section 194H applies only if the total sales /
gross receipts or turnover exceeds the monetary limit specified under section 44AB (a) or (b).

Meaning of commission / brokerage –

At the time of understanding the provisions of TDS on commission / brokerage, firstly, it is essential to
understand what is commission / brokerage?

Explanation (i) to Section 194H of the Income Tax Act, 1961 contains the meaning of the term ‘Commission or
Brokerage’. As per the said Explanation, Commission or Brokerage includes any payment received /
receivable (directly or indirectly) by a person acting on behalf of another person for –

Services rendered (except the professional services); or

Any service in the course of buying / selling of goods; or

In relation to any transaction to any asset, thing or valuable article (except securities).

TDS deduction rate –

The person liable to deduct TDS under section 194H of the Income Tax Act is required to deduct TDS @ 5%.
No additional surcharge, Education Cess or SHE Cess is to be added to the TDS rate of 5%.

However, in the absence of PAN, the Deductor would be liable to deduct TDS at the maximum marginal rate
i.e. 20%.

Time of TDS deduction –

Section 194H of the Income Tax Act, 1961 requires the Deductor to deduct TDS within earlier of the following
dates –

At the time of credit of commission or brokerage to the account of the payee; or

At the time of payment of commission or brokerage in cash or cheque or draft or any other mode.

Cases wherein TDS not to be deducted under section 194H

TDS is not liable to be deduction under Section 194H of the Income Tax Act in the following cases –

1. The aggregate amount of commission or brokerage credited / paid to the account of the
payeedoesn’t exceed INR 15,000.

2. The Commission or brokerage payable by the Bharat Sanchar Nigam Limited (BSNL) or
MahanagarTelephone Nigam Limited (MTNL) to their public call office franchisees.

3. The Bank guarantee commission.

4. The cash management service charges.

5. TDS on insurance commission is not deductible under section 194H, the same is specificallycovered
under section 194D.

6. The payee has applied for and obtained a certificate from the Assessing Officer under section 197 for
NIL or lower deduction of TDS.

7. TDS on commission paid by the employer to its employee is deductible as per provisions ofsection
192 and not under section 194H.

Certain important points –

In case of levy of GST on the commission / brokerage, the Deductor would be required to deduct TDS
on the basic value of the commission / brokerage paid and not on the GST component.

If the commission / brokerage exceeds the exemption limit of INR 15,000, the TDS is to be deducted
on the whole amount paid / payable during that Financial Year and not only on the amount exceeding the
exemption limit.

If the agent retains the commission amount while remitting the sale consideration, TDS on such
amount of commission is to be deposited by the principal.

Frequently Asked Questions with reference to Section 194H of the Income Tax Act, 1961 –

1. What is section 194H?

Section 194h underlines the provisions regarding deduction of TDS on commission / brokerage.

2. What is limit of TDS deduction on commission?

Section 194H provides the exemption limit of INR 15,000 on TDS on commission i.e. TDS is deductible only if
the aggregate amount of commission exceeds INR 15,000 during the Financial Year.

3. What happens if TDS is not deducted?

If TDS is not deducted, then as per provisions of section 201(1A), the Deductor is liable to pay interest @ 1%
per month from the date on which TDS was to be deducted till the date of actual deduction of TDS.

Section 194I of Income Tax Act, 1961 – TDS on Rent

Section 194I was inserted vide the Finance Act, 1994. The present article covers the important section 194-I
of the Income Tax Act, 1961, which deals with the provisions of ‘TDS on Rent’.

Meaning of the term ‘Rent’ –

Before going into the nitty-gritty of the provisions of section 194-I of the Income Tax Act, 1961, first of all, let
us understand the term ‘Rent’ which has been explained under Explanation (i) to Section 194-I –

Rent means any payment under any lease / sub-lease / tenancy or any other agreement or arrangement for
the use of any of the following –

Land; or

A building which includes factory building; or

Land appurtenant to a building which also includes factory building; or

Plant; or

Machinery; or

Furniture; or

Equipment; or Furniture; or Fittings.

It should be noted that it makes no difference even if the payee does not own any or all of the above listed
items.

Category of a person liable to deduct TDS on Rent under section 194-Iof the Income Tax Act, 1961 –

Section 194-I requires any person making payment of ‘Rent’ to a resident person to deduct tax at source
(TDS).

Following table explains the basic coverage of section 194-I –

Coverage under section 194-I Not covered under section 194-I

Category of Any person paying Rent. –

Payer / tenant

When payer The Individual / HUF whose sales, gross Any other individual / HUF

(tenant) is receipts or turnover exceeds the limit

individual / specified under section 44AB (a) or section

HUF 44AB (b).

Payment of Rent is paid to a resident person Rent payable to a non-resident

rent person not covered under section

194-I (the same is covered under section 195).

If the payer is liable to deduct TDS under section 194-I, then, TDS is to be deducted within earlier of the
following dates –

At the time of credit of Rent to the account of the payee; or

At the time of payment of Rent through Cash / cheque / draft or any other payment mode.

Rate of TDS deductible on Rent under section 194I

Particulars Rate of

TDS

Renting of machinery / plant / equipment 2%

Renting of land or building (including factory building) or land appurtenant to a building 10% (including
factory building) or furniture or fittings

However, in case the PAN is not furnished, the payer / tenant would be liable to deduct TDS on Rent at
maximum marginal rate i.e. 20%

Threshold Exemption Limit for TDS on Rent under Section 194I

Section 194-I of the Income Tax Act, 1961 provides that no TDS would be deducted if the income credited /
paid during the Financial Year does not exceed INR 2,40,000.

Please note that earlier the threshold exemption limit was INR 1,80,000, however, from Financial Year 2019-
2020 the threshold exemption limit for TDS on Rent has been increased to INR 2,40,000.

Circumstances, wherein, TDS is not deductible under section 194-I

1. The aggregate amount paid / payable during the Financial Year doesn’t exceed the
thresholdexemption limit i.e. doesn’t exceed INR 2,40,000.

2. The payer / tenant is an individual or HUF who is not liable to tax audit as per section 44 (AB) clause
(a) or (b).
3. Rent is paid / payable to a Government agency.

4. Sharing of proceeds between a Film Distributor and Exhibitor owing the cinema theatre –

The proceeds shared between the film distributor, and the owner of the cinema theatre (Exhibitor) will not
attract TDS under Section 194-I since the share of film exhibitor is on account of composite service and the
share / payment is not in the nature of rent.

Important clarifications –

1. Applicability of TDS on security deposit –

The landlord generally collects security deposit at the time of letting out of the property. TDS is not to be
deduct on such security deposit only if the security deposit is refunded back to the tenant at the time of
vacating the property.

However, if the security deposit is adjusted against the rent, then, TDS is deductible on the same under
section 194-I of the Income Tax Act, 1961.

2. Service Charges –

TDS is deductible on the service charges payable to business centers since service charges are covered within
the ambit of term ‘Rent’.

3. Separate letting of furniture and building –

There can be a situation wherein, the building is let out by one person and the furniture, fixture etc.

are let out by another person. In this case, TDS would be deductible under section 194-I of the Income Tax
Act, 1961 only from the rent payable for letting out of the building.

4. Rent payment to the hotel for the conduct of seminar including meal –

When the hotel is rented out for the conduct of a seminar which includes a meal, then, in such case hotel
charges for catering / meal and hence TDS is not deductible under section 194-I. However, the same can get
covered under section 194-C.

Frequently Asked Questions (FAQ) –

1. What is section 194I?

Any person (not being an individual or HUF) paying rent to a resident person is liable to deduction TDS on
Rent as per the provisions of section 194-I of the Income Tax Act, 1961.

2. What is the exemption limit for TDS on rent?

The TDS on Rent is not required to be deducted if the aggregate amount during the Financial Year doesn’t
exceed INR 2,40,000.
3. Is TDS deducted on security deposit of rent?

No TDS is to be deducted on security deposit of rent, if the deposit is refunded back by the landlord.
However, if the security deposit is adjusted against rent, then, TDS is deductible on the same.

4. What happens if TDS is not deducted on rent?

If the payer / tenant is liable to deduct TDS on rent, however, the same has not been deducted, then, the
payer / tenant would be liable to pay the penalty @ 1% per month from the date the tax was to be deducted
till the date tax actually deducted.

Section 194IA TDS on transfer of immovable property

taxguru.in/income-tax/section-194ia-tds-transfer-immovable-property.html CA Sandeep Kanoi

Prior to the introduction of section 194-IA, the transaction of immovable property was usually undervalued
and under-reported. With a view to improve reporting of such transaction and to curb the black money
transactions to some extent, section 194-IA of the Income Tax Act was inserted. Provisions of section 194-IA
of the Income Tax Act, 1961 were made effective from 1st June 2013.

Section 194-I prescribes the provisions for tax deduction at source i.e., TDS on the transfer of immovable
property and the same has been explained in the present article.

Applicability of section 194-IA of the Income Tax Act

Provisions of section 194-IA of the Income Tax Act, 1961 applies only if the following conditions are satisfied –

The transferee is making payment to a resident transfer or;

The payment is made on account of transfer of immovable property (other than agricultural land); and

Consideration for the transfer of immovable property is more than INR 50 Lakhs.

If all the above conditions are satisfied the transferee (purchaser) is liable to deduct TDS at the prescribed
rates within earlier of the following dates –

At the time of credit of the amount to the account of the transferor; or

At the time of payment of the amount in cash or cheque or draft or any other mode.

The rate at which TDS is to be deducted under section 194-IA

If the provisions of section 194-IA of the Income Tax Act, 1961 gets applicable, the transferee is liable to
deduct TDS @ 1%. However, if the transferor (seller) fails to furnish the PAN, then, the transferee is required
to deduct TDS at maximum marginal rate of 20%.

Exemption list –
TDS under section 194-IA not deductible if the transferor is a non-resident person.

TDS is not deductible under section 194-IA for cases of transfer covered under section 194LA i.e., TDS on
payment of compensation on compulsory acquisition of certain immovable property.

Deposit of TDS with the Government

When we talk about TDS, it is a general presumption that the Deductor of tax is liable to obtain TAN (Tax
Deduction and Collection Account Number), but section 194-IA is an exception to the same. In other words,
under section 194-IA the Deductor (transferee) doesn’t need to obtain TAN.

The Deductor is required to deposit TDS by filing Challan-cum-Statement in Form 26QB. The Deductor is liable
to make payment of TDS within a period of 30 days from the end of the month in which TDS is deducted.

Filling of Form 26QB –

Following steps should be followed by the Deductor in order to file Form 26QB –

1. Visit site https://www.tin-nsdl.com

2. Navigate the path Services > TDS on Sale of Property.

3. Click on ‘Online form for furnishing TDS on property (Form 26QB)’.

4. Under e-payment of Taxes, go to ‘TDS on Property (Form 26QB)’ and click on ‘Proceed’.

5. Step by step, fill up the Form 26QB and submit.

List of Information needed for filing Form 26QB –

PAN of seller.

PAN of the buyer.

Communication details of both seller and buyer.

Details of property.

Amount paid / credited and details of tax deposited.

Issuance of TDS certificate –

The Deductor (purchaser) shall furnish the TDS Certificate in Form 16B to the Deductee (seller) within 15 days
from the due date of furnishing of the Challan-cum-statement in Form 26QB.

Steps to be followed by the Deductor for downloading Form 16B –

1. Visit site https://contents.tdscpc.gov.in/.

2. Click on ‘Login’ and select ‘Taxpayer/PAO’.

3. Provide UserId and Password and PAN of the Tax Payer.

4. Navigate the following path –Downloads > Form 16B (For Buyer).

5. Provide following details –

Assessment Year.

Acknowledgment No. of the Form 26QB.

PAN of the seller.

Changes anticipated through Budget, 2019 –

At present, the section doesn’t provide the definition of the term ‘Consideration of Immovable Property’.
However, through Budget, 2019, the same has been provided, and it is made effective from 1st September
2019.

As per the said definition ‘Consideration of immovable property would include the following charges

Club membership fee;

Electricity and water facility fee;

Maintenance fee;

Car parking fee;

Advance fee; or

Any other charges of similar nature which are incidental to the transfer of the immovable property.

Frequently Asked Questions (FAQ) –

1. What is section 194IA?

As per section 194-IA, the purchaser of the immovable property (other than agricultural land) is liable to
deduct TDS @ 1% only if a transferor is a resident person and the consideration is INR 50 Lakhs or more.

2. Is TDS applicable on purchase of land?

Yes, with effect from 1st June 2013, the purchaser of the land is liable to deduct TDS in case the provisions of
section 194-IA gets applicable.

3. What happens if TDS is not deducted on a property?

If the purchaser liable to deduct TDS, as per section 194-IA, fails to deduct the same, then, he would be
required to pay late fee / interest @ 1% per month from the date the TDS was to be deducted till the date
the TDS actually deducted.

4. What is TDS for purchase of property?

The purchaser is required to deduct TDS @ 1% on the purchase of the property if the provisions of section
194-IA gets attracted.

Section 194IB – TDS on Rent paid by Individual / HUF

taxguru.in/income-tax/section-194ib-tds-rent-paid-individual-huf.html CA Sandeep Kanoi

In spite of already existing similar provisions under section 194-I of the Income Tax Act, 1961, with a view to
widen the tax base, the new section 194-IB of the Income Tax Act, 1961 was introduced vide the Finance Act,
2017. The provisions of section 194-IB were made effective from 1st June 2017.

Section 194-IB deals with the provisions relating to TDS deduction on Rent paid by individual / HUF, and the
same is explained in brief in the current article.

Basic provisions of section 194-IB

As per Section 194-IB of the Income Tax Act, 1961, the tenant is required to deduct TDS, if the following
conditions are satisfied –

The tenant is either an Individual or HUF whose aggregate turnover / total sales / gross receipts from the
business or profession doesn’t exceed the monetary limit specified under section 44AB clause (a) or (b).

In other words, the tenant, being an individual or HUF, is not liable to get its accounts audited.

The tenant is paying to a ‘resident’ any income by way of rent. Payment to non-resident is not covered under
section 194-IB.

The payment of rent exceeds INR 50,000 per month or part of a month during the previous year.

Meaning of the term ‘Rent’

Explanation to section 194-IB of the Income Tax Act, 1961 provides explicitly the meaning of term ‘Rent’. As
per the said explanation, Rent means any payment done under any tenancy or lease or sublease or any
agreement or any arrangement for the use of any land or building or both.

Rate of TDS under section 194IB

The Individual or HUF who is liable to deduct TDS in terms of provisions of section 194-IB of the Income Tax
Act, 1961 is required to deduct TDS @ 5%.
It is important to mention here that in the absence of the PAN of the landlord, the tenant is liable to deduct
TDS at the maximum marginal rate of 20%. However, clause (4) to section 194-IB specifically states that such
deduction should not exceed the amount of rent payable for the last month of the previous year or the last
month of the tenancy.

Time of TDS deduction under Section 194IB

If the provisions of section 194-IB of the Income Tax Act, 1961 gets attracted, the individual / HUF is required
to deduct TDS within earlier of the following dates –

At the time of credit of rent for the last month of the previous year or last month of a tenancy

(if in case during the year the property gets vacated); or

At the time of payment in cash or cheque or draft or by any other mode.

TDS Deposit with the Government –

Section 194-IB (3) specifically states that the provision of section 203A shall not apply to the tenant who is
required to deduct TDS. Meaning thereby that the tenant is not required to obtain ‘Tax Deduction and
Collection Account Number’ i.e. TAN.

The tenant is required to deposit TDS by filing Challan-cum-Statement in Form 26QC. The tenant is liable to
make a deposit of the deducted TDS within a period of 30 days from the end of the month in which TDS is
deducted [Rule 30 (2B)].

Following are the steps which the tenant should follow in order to file Form 26QC –

1. Visit site https://www.tin-nsdl.com/.

2. Navigate the path Services > TDS on Rent of Property.

3. Click on ‘Online form for furnishing TDS on Rent of Property (Form 26QC)’.

4. Under e-payment of Taxes, go to ‘TDS on Rent of Property (Form 26QC)’ and click on ‘Proceed’.

5. Step by step, fill up the Form 26QC and submit.

Issuance of TDS certificate –

Rule 31 (3B) of the Income Tax Rules mandates the tenant to issue TDS certificate within a period of 15 days
from the due date of furnishing of Challan-Cum-Statement in Form 26QC.

Figuring out both the Section 194-I and Section 194-IB –

The following table would help the reader to understand the difference between both the section 194I and
section 194-IB –

Particulars Section 194-I Section 194-IB

Applicability Applicable to All the person other than individual / HUF who are not required to get their
account audited. Applicable only to the individual / HUF who are not required to get their account
audited

Rate of TDS 10% 5%

Minimum exemption

limit INR 2,40,000 per annum INR 50,000 per month

Period of TDS deduction Monthly Only once in a year.

The requirement of TAN for Deductor Yes No

Form of TDS Form 16A Form 16C

Example for better understanding –

Mr. A (Tenant) entered into a tenancy agreement with Mr. B (Landlord) for a period of 11 months, starting
from 1st October 2017 to 31st August 2018. The rent fixed is INR 70,000 per month.

Particulars Requirement for Financial Year 2017-2018 Requirement for the

Financial Year 2018-2019

Period of tenancy 6 Months 5 Months

Rent 4,20,000

(70,000 * 6 months) 3,50,000

(70,000 * 5 months)

TDS deductible 21,000 17,500

TDS deducted on 31st March 2018 31st August 2018

The due date for filing of Form 26QC On or before 30th April 2018 On or before 30th September 2018

The due date for issuing of the TDS On or before 15th May On or before 15th October

certificate in Form 16C 2018 2018

Frequently Asked Questions (FAQ) – Q. 1 What is TDS under section 194IB?

Ans: Section 194IB of the Income Tax Act, 1961 requires the individual / HUF, who are not required to gets
their account audited, to deduct TDS in case the rent amount exceeds INR 50,000 per month or part thereof.

Q.2 What is exemption limit for TDS on rent?

Ans: Exemption limit for TDS on rent under section 194-IB of the Income Tax Act, 1961 is INR 50,000 per
month.

Q.3 What is period of tenancy in Form 26QC?

Ans: Form 26QC needs to be filed within a period of 30 days from the end of the month in which TDS is
deducted.

Q.4 What happens if TDS is not deducted on rent?

Ans: If the tenant required to deduct TDS under section 194-IB fails to deduct the same, then, the tenant
would be liable to pay late fee @ 1% per month from the date the TDS was required to be deducted till the
date the TDS actually deducted.

Q.5 How is TDS calculated on rent with example?

Ans: Suppose Mr. X pays rent of INR 80,000 per month for 12 months to Mr. Y then TDS as per provisions of
section 194-IB would be deducted as under –

Total rent paid in a year – INR 80,000 * 12 months = INR 9,60,000

TDS deductible – INR 9,60,000 * 5% = INR 48,000

Rent payable in last month after TDS deduction = INR 80,000 – INR 48,000 = INR 32,000

Section 194J TDS on Fees for Professional or Technical

Services

taxguru.in/income-tax/section-194j-tds-fees-professional-technical-services.html CA Sandeep Kanoi

The present article features the TDS provisions contained under section 194J of the Income Tax Act, 1961
relating to the TDS deduction on fees for professional or technical services.

Coverage of Section 194J of the Income Tax Act

Categories of the person covered under section 194J

Every person, except an individual or a HUF, making payment to a resident for notified services is covered
under section 194J of the Income Tax Act.

However, it should be noted that, if the gross receipts or sales or turnover of the Individual or a HUF exceeds
the monetary limit specified under section 44AB (a) or section 44AB (b), then, they would get covered under
section 194J. In short, in case of an individual or a HUF, if they are liable to get their accounts audited, they
are required to deduct TDS as per provisions of section 194J.
List of notified services

Every person making payment of the following notified services is required to deduct TDS under section 194J
of the Income Tax Act, 1961 –

Fees for professional services;

Fees for technical services;

Royalty;

Remuneration / fees / commission paid to director of the company (excluding salary);

Fees paid for not carrying out any activity in relation to any business or profession;

Fees paid for not sharing any technical know-how, copyright, trade mark, patent or any other business or
commercial rights of the same nature.

Understanding the meaning of important terms –

1. Professional Services –

The term ‘Professional Services’ means services rendered by a person carrying on –

Legal;

Medical;

Engineering or architectural profession or accountancy profession; Technical consultancy or interior

decoration or advertising; or such other profession as notified by Board for the purpose of section 44AA.

2. Fees for technical services –

The meaning of the term ‘Fees for technical services’ is the same as that provided in Explanation 2 to section
9 (1) (vii).

‘Fees for technical services’ means any consideration for the rendering of any managerial, consultancy, or
technical services. It includes the provision of services of technical or other personnel. The term ‘Fees for
technical services’ doesn’t include consideration for any construction, mining, assembly or like project
undertaken by the recipient or consideration chargeable under the head ‘salary’.
3. Royalty –

The meaning of the term ‘Fees for technical services’ is the same as that provided in Explanation 2 to section
9 (1) (vi).

Time of TDS deduction –

The person who is required to deduct TDS under section 194J shall deduct TDS either at the time of credit of
sum to the account of the payee or at the time of payment in cash / cheque / draft or any other mode,
whichever is earlier.

Rate of TDS deduction –

The Deductor is required to deduct TDS at the following prescribed rates under section 194J of the

Income Tax Act, 1961 –

Particulars Rate of

TDS

Cases, wherein, the payee is engaged in the business of the operation of Call Centre only (effective from 1st
June 2017) 2%

In case of fees for technical services (not being a professional royalty where such royalty is in the nature of
consideration for sale, distribution or exhibition of cinematographic film) (effective from 1st April 2020) 2%

Professional royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of
cinematographic film 10%

In case of fees for any other professional services 10%

In case the payee fails to furnish PAN

Threshold Exemption Limit – 20%

TDS is not deductible in case the payment doesn’t exceed the prescribed threshold exemption limit. No TDS is
to be deducted if the aggregate amount credited / paid during the financial year doesn’t exceed –

1. INR 30,000 in case of fees for professional services.

2. INR 30,000 in case of fees for technical services.

3. INR 30,000 in case of royalty.

4. INR 30,000 in case of fees paid for not carrying out any activity in relation to any business
orprofession.

5. INR 30,000 in case of fees paid for not sharing any technical know-how, copyright, trade mark,patent
or any other business or commercial rights of alike nature

It should be noted that the threshold exemption limit is not available only in the case of remuneration / fees /
commission paid to director of the company (excluding salary).

Frequently Asked Questions (FAQ) on Section 194J

Q.1 What is section 194J?

Ans: As per provisions of section 194J of the Income Tax Act, 1961 requires every person to deduct TDS @
10% or 2% depending on case to case basis on the following payment made to a resident person –

Fees for professional services;

Fees for technical services;

Royalty;

Remuneration / fees / commission paid to director of the company (excluding salary);

Fees paid for not carrying out any activity in relation to any business or profession; Fees paid for not sharing
any technical know-how, copyright, trade mark, patent or any other business or commercial rights of alike
nature.

Q.2 How can I claim TDS under section 194J?

Ans: If the TDS is deducted under section 194J and total net income of the year is below the taxable income,
then the payee can claim for refund of TDS so deducted under section 194J by the filing of an income tax
return.

Q.3 Is TDS applicable on legal charges?

Ans: Yes, TDS is applicable on legal charges if the aggregate amount exceeds INR 30,000 during the financial
year.

Q.4 What is the TDS rates for consultancy?

Ans: TDS rates of 10% for consultancy are prescribed under section 194J of the Income Tax Act, 1961.

Section 194LA: Payment of Compensation on acquisition of certain immovable property

taxguru.in/income-tax/section-194la-payment-compensation-acquisition-immovable-property.html CA
Sandeep Kanoi

Section 194LA: Payment of Compensation on acquisition of certain immovable property

With effect from 1st October 2004, new section 194LA was inserted into the Income Tax Act, 1961. Section
194LA relates to the TDS provisions applicable on the payment of compensation at the time of acquisition of
certain type of immovable property.

The present article emphasizes the provisions of section 194LA of the Income Tax Act in brief.

Important definitions –

Before understanding the provisions of section 194LA, it is vital to understand the definitions of ‘immovable
property’ and ‘agricultural land’ which are explained here under –

The definition of the term ‘immovable property’ has been provided under Explanation (ii) to section 194LA.
Accordingly, immovable property means any land (except agricultural land) or any building or part of a
building. It should be noted that the TDS provisions prescribed under section 194LA applies to compulsory
acquisition of any immovable property except agricultural land.

Now, since agricultural land is exempted under section 194LA understanding the definition of the same is
very important. The definition of the term ‘agricultural land’ has been provided under Explanation (i) to
section 194LA. Accordingly, agricultural land means agricultural land in India including land situated in areas
referred to in section 2 (14) (iii) (a) and section 2 (14) (iii) (b). Circumstances when provisions of section 194LA
of the Income Tax Act, 1961 attracts –

The payer is liable to deduct TDS under section 194LA if the following conditions are satisfied –

Any person is paying any sum to a resident person;

The sum is paid in the nature of compensation / enhanced compensation / consideration / enhanced
consideration on account of compulsory acquisition of the immovable property (other than agricultural land);

The compulsory acquisition is made under any law for the time being in force; and The aggregate amount of
payment during the financial year exceeds INR 2,50,000.

Time of Tax Deduction under section 194LA

If the above-mentioned circumstances are satisfied and the person is liable to deduct TDS under section
194LA, then, the person is required to deduct TDS within earlier of the below mentioned dates

At the time of payment of the amount in cash; or

At the time of payment of the amount in cheque or draft or any other mode.

Rate of Tax Deduction under section 194LA

The Deductor is liable to deduct TDS @ 10% under section 194LA of the Income Tax Act, 1961. No additional
Surcharge, Education Cess or SHE Cess is to be added over and above the TDS rate of 10%.

However, in case the Deductee doesn’t furnish PAN, then, the Deductor would be liable to deduct TDS at the
Maximum Marginal Rate of 20%.

Cases, wherein, TDS is not to be deducted under section 194LA

TDS is not deductible under section 194LA in following cases –

When the person is paying an amount to a ‘non-resident’ person.

When the aggregate consideration during the Financial Year is less than INR 2,50,000. When the payment is
made in respect of any award / agreement which is exempted from income tax under section 96 of the Right
to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013.

When the payee has filed an application in Form No. 13 to the Assessing Officer and has obtained a
certificate for No / lower deduct of tax.

Section 194LC: TDS on income by way of interest from an

Indian Company or a business trust

With effect from 1st July 2012, section 194LC was incorporated into the Income Tax Act, 1961. The section
deals with TDS deduction on income by way of interest from an Indian Company or a business trust and the
provisions relating to the same has been explained in the current article.

Basic applicability of Section 194LC –

The basic provisions of section 194LC are narrated hereunder –

The Indian Company or a business trust paying interest income to a non-resident, not being a

company, or to a foreign company is liable to deduct TDS.

Interest income payable by the Indian Company or the business trust on the following is covered under
section 194LC –

Interest in respect of money borrowed by the Indian Company or the business trust in foreign
currency from a source outside India –

Under a loan agreement between 1stJuly 2012 to 1st July 2020.

By issuing long term infrastructure bonds between 1stJuly 2012 to 1st October 2014.

By issuing long term bond including long term infrastructure bonds between 1stOctober 2014 to 1st July
2020.

Interest in respect of money borrowed by the Indian Company or the business trust in foreign
currency from a source outside India by way of issue of rupee denominated bond before 1stJuly 2020.

To the extent, the interest income does not exceed the amount of interest calculated at the rate
approved by the Central Government.

Time of TDS deduction –

The Deductor is liable to deduct TDS within earlier of the below mentioned dates –

At the time of payment thereof in cheque or cash or draft or any other mode of payment; or At the time of
credit of interest income to the account of the payee.

Rate of deduction of TDS –

The Deductor is liable to deduct TDS @ 5%. In addition to the same, the Education Cess and SHE Cess is to be
added to the base rate. Further, if the Surcharge gets applicable the same is also to be added

Section 194LD TDS on income by way of interest on certain bonds and Government Securities

In order to boost the foreign investment, the Government inserted Section 194LD of the Income Tax Act,
1961 and made effective from 1st June 2013. Section 194LD provided tax deduction at lower rate for interest
income earned by a Foreign Institutional Investor or a Qualified Foreign Investor from the government
securities or specified bonds.

The present article provides short note on provisions of section 194LD of the Income Tax Act, 1961.

Provisions of Section 194LD

Section 194LD states that –

Any person paying income by way of interest to a Foreign Institutional Investor or a Qualified Foreign Investor
is required to deduct TDS.

Interest income on which TDS is deductible under section 194LD means –Interest payable on or after 1st June
2013 to 1st July 2020 in respect of investment made, by a Foreign Institutional Investor or a Qualified Foreign
Investor, in a rupee denominated bond of an Indian Company or a Government Security.

However, the proviso states that the rate of interest in respect of a rupee denominated bond of an
Indian Company shall not exceed the rate as notified by the Central Government.

Time of tax deduction at source

The Deductor liable to deduct TDS under this section, shall deduct TDS either at the time of payment in
cheque or draft or cash or any other mode or at the time of payment of credit of income to the account of
the payee, whichever earlier.

Rate of tax deduction at source under section 194LD

The Deductor is liable to deduct TDS at the rate of 5%.

TDS under Section 194LB, 194LBA, 194LBB and 194LBC

taxguru.in/income-tax/tds-section-194lb-194lba-194lbb-194lbc.html CA Sandeep Kanoi

Article covers TDS provisions under Section under Section 194LB – Income by way of interest from

Infrastructure Debt Fund,Section 194LBA – Certain Income from units of business trust, Section 194LBB –
Income in respect of units of the investment fund and Section 194LBC – Income in respect of investment in
securitization trust.

Section 194LB – Income by way of interest from Infrastructure Debt Fund

1. Conditions under which the provisions of section 194LB of the Income Tax Act, 1961 attracts – If the
following conditions are satisfied, then, the payer would be liable to deduct TDS –

The interest income is paid by an infrastructure debt fund referred to in section 10 (47); and

The interest income is paid to a non-resident (not being a company) or to a foreign company.

2. Time of deduction of TDS –

When the above listed conditions are satisfied, and the person is liable to deduct TDS under section 194LB, in
that case, the TDS is to be deducted either at the time of credit of income to the account of the recipient or
at the time of payment in cash or draft or cheque or any other mode, whichever is earlier.
3. Rate of TDS deduction –

TDS is deductible at the rate of 5%. Education cess and SHE cess is to be added to the base rate of 5%.
Further, if the surcharge gets applicable, then, the same should also be added.

Section 194LBA – Certain Income from units of business trust –

Section 194LBA of the Income Tax Act, 1961 has been inserted with effect from 1st October, 2014.

The provisions of the same are explained hereunder –

The Income covered under section 194LBA Time of TDS deduction Rate of

TDS deduction

A business trust is liable to deduct TDS, where any distributed income referred to in section 115UA, being of a
nature referred to in section 10 (23FC)(a) or section 10 (23FCA) is payable by the business trust to its unit
holders being a resident.

Earlier of the 10%

following – Time of credit of payment

to the account of the payee; or Time of payment in cash or draft or cheque or any other mode.

A business trust is liable to deduct TDS, where any distributed income referred to in section 115UA, being of a
nature referred to in section 10 (23FC)(a) is payable by the business trust to its unit holders being a non-
resident (not being a company) or the foreign company.

Earlier of the 5%

following – Time of credit of payment

to the account of the payee; or Time of payment in cash or draft or cheque or any other mode.

A business trust is liable to deduct TDS, where any distributed income referred to in section 115UA, being of a
nature referred to in section 10 (23FCA) is payable by the business trust to its unit holders being a
nonresident (not being a company) or the foreign company.

Section 10 (23FC)(a) –

Earlier of the 30%

following – Time of credit of payment

to the account of the payee; or Time of payment in cash or draft or cheque or any other mode.

Above section refers to any income of a business trust by way of interest received or receivable from a special
purpose vehicle.

Section 10 (23FCA) –

Above section refers to any income of a business trust (being a real estate investment trust) by way of renting
/ leasing / letting out any real estate asset owned directly by such business trust.

Section 194LBB – Income in respect of units of the investment fund –

Section 194LBB of the Income Tax Act, 1961 has been inserted with effect from 1st June 2015. The provisions
of the same are explained hereunder –

Coverage of Section 194LBB –

A person making payment to a unit holder in respect of units of an investment fund specified in Explanation 1
clause (a) to section 115UB shall be liable to deduct TDS.

However, the proportion of income, which is of the same nature as income referred to in section 10 (23FBB)
shall be excluded from TDS deduction.

Please note that Explanation 1 clause (a) to section 115UB states that ‘investment fund’ means any fund
established / incorporated in India in the form of trust / a company / a limited liability partnership / a body
corporate which has been granted a registration certificate as Category I / Category II Alternative Investment
Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Fund)
Regulations, 2012.

Time of deduction of TDS –

The Deductor is liable to deduct TDS either at the time of credit of income to the account of the payee or at
the time of payment in cash or draft or cheque or any other mode, whichever is earlier.

Rate of TDS deduction –

TDS shall be deducted at following rates –

Rate of TDS Residential status of the Payee

30% Non-resident (not being a company) or a foreign company

Section 194LBC – Income in respect of investment in securitization trust –

Section 194LBC of the Income Tax Act, 1961 has been inserted with effect from 1st June 2016. The provisions
of the same are explained hereunder –

Coverage of Section 194LBC –

A person making payment to an investor in respect of an investment in a securitization trust specified in

Explanation (d) to section 115TCA is liable to deduct TDS.

Explanation (d) to section 115TCA provides a definition of ‘securitization trust’ which means trust, being a –

‘Special purpose distinct entity’ as defined in regulation 2 (1) clause (ii) of the Securities and

Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations 2008; or

‘Special Purpose Vehicle’ as defined in and regulated by the guidelines on the securitization of standard
assets issued by the Reserve Bank of India; or

Trust set up by a securitization company or a reconstruction company formed for the purpose of the
Securitization and Reconstruction of the Financial Asset and Enforcement of Security Interest Act, 2002 or in
pursuance of any guidelines / directions issued for the said purposes by the Reserve Bank of India.

Time of deduction of TDS –

The Deductor is liable to deduct TDS either at the time of credit of income to the account of the payee or at
the time of payment in cash or cheque or draft or any other mode, whichever is earlier.

Rate of TDS deduction –

TDS shall be deducted at following rates –

Particulars Rate of TDS

Where the payee is an individual or a HUF 25%

Any other person 30%

Section 194M: TDS on Payment of certain sum by certain Individual / HUF

CA Sandeep Kanoi
The Finance Minister presented the Union Budget for the Financial Year 2019-2020 on 5th July 2019 and on
1st August 2019 said the Finance Bill, 2019 got assent from the President Shri Ram Nath Kovind. The Budget
introduced new section 194M covering TDS applicability on payment done to resident contractors,
commission / brokerage and professionals. Let us analyze what the newly introduced section 194M has to
say, in the present article.

Basic applicability of section 194M

Individual or HUF [whose total sales / gross receipt / turnover from business or profession doesn’t exceed the
monetary limit specified under section 44AB (a) or (b)] making payment to a resident in respect of the
following, is liable to deduct TDS –

For carrying out any work (which includes supplying of labor for carrying out any work) in pursuance of any
contract,

Brokerage or Commission (however insurance commission referred in section 194D is not included),

Fees for professional services.

Important points related to Section 194M

^ It should be noted here that the section 194M covers within its ambit the individual / HUF who are not
liable to get their accounts audited. However, the individual / HUF requiring to get their account audited are
already covered under respective section 194C, section 194H and section 194J and hence they are not
included here. Explaining the situation in tabular format –

Type of payment Section under which TDS is deductible

Individual / HUF liable to get their accounts audited Individual / HUF not liable to get their accounts
audited

Carrying out any work (which includes supplying of labor for carrying out any work) in pursuance of any
contract Section 194C Section 194M

Commissioner or brokerage Section 194H Section 194M

Fees for professional service Section 194J Section 194M

^ TDS under section 194M is not to be deducted if the aggregate of sum credited or paid to a resident during
the Financial Year doesn’t exceed INR 50 Lakhs.

^ Further section 194M (2) states that the provisions of section 203A of the Income Tax Act, 1961 doesn’t
apply to the Deductor. Meaning thereby that the Deductor liable to deduct TDS under 194M is not
mandatorily required to obtain TAN (Tax Deduction and Collection Account Number).

Understanding the meaning of various important terms

1. Contract – As per explanation (a) to section 194M, the contract has the same meaning ascontained in
Explanation (iii) to section 194C which says –Contract includes sub-contract.

2. Commission or brokerage – As per explanation (b) to section 194M, the commission or brokeragehas
the same meaning as contained in Explanation (i) to section 194H which includes –

Payment received / receivable (directly or indirectly) by a person acting on behalf of another person for –

Services rendered (not professional services), or

Services in the course of buying / selling of goods, or any transaction in relation to asset / valuable article /
thing (not being securities).

3. Professional Services – As per explanation (c) the professional services has the same meaning
ascontained in Explanation (a) to section 194J which means – Services rendered by a person carrying on –

Legal, or

Engineering, or

Medical, or

Architectural profession, or

Accountancy profession, or

Interior decoration, or

Technical consultancy, or

Advertising, or

Any other profession notified by the Board for the purpose of section 44AA.

4. Work – As per explanation (d) the work has the same meaning as contained in Explanation (iv)
tosection 194C which includes –

Advertising;

Carriage of passengers / goods by any mode of transport (except railways);

Catering;

Broadcasting and telecasting (including the production of programmes for broadcasting and telecasting);

Manufacturing / supplying a product according to specification / requirement of a customer by using material

purchased from the customer.
The time when TDS is to be deducted under Section 194M

The Individual / HUF covered under section 194M are required to deduct TDS within earlier of the following
dates –

At the time of credit of the sum; or

At the time of payment of the sum in cash / draft / cheque or any other payment mode.

The rate at which TDS is to be deducted under Section 194M

As per section 194M, the Deductor is liable to deduct TDS at the rate of 5%. However, in case, the Deductee
fails to submit the Permanent Account Number (PAN), then, the Deductor is required to deduct TDS at
Maximum Marginal Rate of 20%.

Effective Date of Applicability of TDS provisions under Section 194M

The provisions of newly inserted section 194M of the Income Tax Act, 1961 shall be effective from 1st
September 2019.

Section 195 TDS on payment of any other sum to a nonresident

The tax treatment is always special when it relates to a non-resident person. In the present article, we would
look into the provisions with regard to the tax deduction at source on payment of any other sum to a non-
resident. Provisions of tax deduction at source (TDS) with regard to payment of any other sum to a non-
resident is covered under section 195 of the Income Tax Act, 1961 which are explained hereunder.

Section 195 states –

As per section 195 of the Income Tax Act, 1961, any person making payment to a non-resident (not being a
company) or to the foreign company for the following payments is liable to deduct TDS –

Any interest (except interest referred in section 194LB or section 194LC or section 194LD), Any other sum
chargeable under any head of incomes (except income chargeable under the head ‘salary’).

Time of TDS deduction –

The Deductor is liable to deduct TDS within earlier of the following dates –
At the time of payment in cash / draft / cheque or any other mode; or At the time of credit of income to the
account of the Deductee.

Rate of the tax deduction –

Sr.

No. Particulars Rate of

TDS

1 Income with respect of investment made by the non-resident 20%

2 Income by way of Long Term Capital Gain (LTCG) referred in section 115E 10%

3 Income by way of Long Term Capital Gain (LTCG) referred in section 112 (1) (c) (iii) 10%

4 Income by way of Long Term Capital Gain (LTCG) referred in section 112A 10%

5 Income by way of Short Term Capital Gain (STCG) referred in section 111A 15%

6 Any other Long Term Capital Gain income [except Long Term Capital Gain referred in clause 10 (33),
section 10 (36) and 112A] 20%

7 Interest income payable by the Government / an Indian concern against money borrowed / debt
incurred by Government / an Indian concern in foreign currency [except interest income referred in section
194LB or section 194LC]20%

8 Royalty income payable by the Government / an Indian concern in pursuance of an agreement where
the royalty is in consideration for the transfer of all or any rights with regard to copyright in any book on the
subject referred in section 115A (1A) of the Income Tax Act, to an Indian concern, or in respect of any
computer software referred in second proviso to section 115A (1A), to a person resident in India. 10%

9 Royalty income payable by the Government / an Indian concern in pursuance of an agreement with
the Government / an Indian concern (agreement with an Indian concern should be approved by the Central
Government) 10%

10 Fees for technical services payable by the Government / an Indian concern in pursuance of an
agreement made by it with the Government / an Indian concern. 10%

11 Any other income 30%

It is vital to note here that the provisions of section 206AA relating to the requirement of furnishing of
Permanent Account Number (PAN), and in case of failure the Deductor is required to deduct TDS at a
maximum marginal rate of 20% are not applicable in case of non-resident.

However, the relaxation of non-applicability of provisions of section 206AA to the non-resident i.e. the
Deductee is available only if the following conditions are satisfied –
The Deductee is required to furnish details like the Name, E-mail ID and contact number. The Deductee is
required to provide the address of the country / specified territory outside India in which he is a resident.

The Deductee is also required to submit a certificate of a resident of the country / specified territory outside
India from the Government of that country / specified territory. Such certificate is to be submitted only if the
law of that country / specified territory provides for the issuance of such certificate.

TDS return filing and issuance of TDS certificate –

The Deductor is liable to file TDS return in Form 27Q within the following prescribed due dates – 1. April to
June – 31st July

2. July to September – 31st October

3. October to December – 31st January

4. January to March – 31st May

Likewise, the Deductor is required to provide the TDS certificate to the Deductee in Form 16A within a period
of 15 days from the due date of filing of the TDS return. The due date for issuance of the TDS certificate is
summarized here under – 1. April to June – 15thAugust

2. July to September – 15thNovember

3. October to December – 15thFebruary

4. January to March – 15thJune

TDS under Section 194EE and Section 194F

Section 194EE and Section 194F – TDS from payment in respect of deposit under NSS and TDS from payment
on account of Repurchase of units by Mutual Funds or UTI

Continuing the TDS article services, the present article tries to cover the two rarely touched topics TDS in
respect of deposit under NSS (Section 194EE) and TDS on account of repurchase of units by Mutual Funds or
UTI (Section 194F).

Understanding the basics of both Section 194EE and Section 194F –

Section 194EE –
This section states that the person making payment of amount referred to in section 80CCA(2)(a) is required
to deduct TDS. Section 80CCA (2) (a) refers to the withdrawal of amount deposited under the National Saving
Scheme etc

Section 194F –

This section contains provisions relating to the repurchase of units of Mutual Fund / Unit Trust of India. As per
section 194F, the person making payment of any amount referred to in section 80CCB (2) is required to
deduct TDS.

Section 80CCB (2) of the Income Tax Act refers to the amount which is invested by the assessee in the units
being issued under a plan formulated under the Equity Linked Savings Scheme. The amount so invested has
been allowed as a deduction, however, the amount invested (whole or part) is returned back to the assessee
by the Fund / Trust either by way of repurchase of the units or on the termination of the plan.

Time of deduction of TDS –

The Deductor liable to deduct TDS as per provisions of section 194EE and section 194F is required to deduct
TDS at the time of making payment of the requisite amount.

Rate of TDS –

The rate at which TDS is to be deducted under both the section 194EE and 194F are –

Section Rate of TDS

Section 194F 20%

Exemption limit –

1. Section 194EE– As per the said section, no TDS is to be deducted if the aggregate amount paid to the
payee, during the financial year, is less than INR 2500.

2. Section 194F– There is no exemption limit provided under section 194F.

Time of deposit of TDS with the Government –

TDS deducted under Section 194EE and / or Section 194F is required to be deposited within a period of 7 days
from the end of the month in which TDS is deducted. However, the TDS deducted in the month of March is to
be deposited on or before 30th April.

Further, in the case of Government Deductor, TDS deducted is to be deposited on the same day in case of
payment without production of a challan.