What is TDS - Exemption from TDS, TDS certificate with Due Date

All about Tax Deduction at Source (TDS) : Meaning, Return and due dates, exemptions

Topic Covers:

1. Introduction
2. What is TDS?
3. Person liable to deduct TDS
4. Payments liable for TDS deduction
5. Due date of depositing TDS
6. Issue of TDS certificate
7. Interest for delay in payment of TDS
8. Exemption from TDS

1.Introduction:

The government aims to collect the tax at every source of income and introduce the concept of TDS on income. The government specified the payments on which TDS is required to be deducted. According to this concept, tax should be deducted at source by the person who is liable to make such specified payments.

2.What do you mean by TDS?

TDS meaning in tax is the reduction or deduction of the amount from the gross amount paid or payable in respect of specified payments like Interest, commission, brokerage, rent etc. The person liable to make such payments is required to deduct tax at source at the rate prescribed in the relevant provision.

3.Who is liable to deduct TDS and Who is the TDS Deductor and TDS Deductee?

The person making the specified payments is liable to deduct tax at source. As per Income Tax Act the term person includes: individual, HUF, AOP, BOI, company Firm etc.

TDS Deductor: The payer, who makes payment, is known as TDS deductor.

TDS Deductee: The payee, who receives the net payment, is called the TDS deductee.

4.Payments on which TDS is required to be deducted:

Almost all types of payments are covered by the different provisions of the Income Tax Act for the purpose of deducting tax at source. Here is an illustrative list:

• Salary (section 192)
• Commission, brokerage
• Payment for contracts
• Payment of rent
• Payment for technical services, professional fees
• Sale of immovable property
• Payment of Interest
• Income by way of winnings from lotteries, crossword puzzles, card games and other games
• Payments of Dividend

Tax should be deducted at the specified rate provided in the relevant section.

5.Due date of depositing the TDS amount with the government

Tax deducted at source must be deposited within the due date. The due date for depositing the tax with the government is given in the table below:

TDS Payments		Due date of Payment
TDS/TCS made during the month ( other than March)		On or before the 7th day of the following month
TDS/TCS made during the month of March		On or before 30th April.
TDS on purchase of immovable property (194IA)		On or before 30 days from the end of the month of deduction.
TDS on rent (194IB)		On or before 30 days from the end of the month of deduction.

6.Interest for delay in payment of TDS

According to section 201, the person is liable to pay interest if TDS is required to be deducted on payment but TDS not deducted or deducted but not deposited to the government. The person shall be liable to pay interest at the following rates:

• • 1% for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted.
  • 5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid to the Government

Note:  Amendment has been made to section 201 by The Finance Act, 2022 that if the Assessing Officer has passed an order treating the assessee in-default, then the interest shall be paid by the assessee in accordance with the said order. [Effective from Assessment Year 2023-24]

7.Issue of TDS certificate:

The deductor must issue the TDS certificate to the deductee (payee) of the deduction of tax. This is an acknowledgement that the payer has deducted tax and deposited it with the government. It contains the particulars of information of payer and payee, PAN and TAN, amount paid to payee, amount of tax deducted etc. The form and due date of th0065 certificate can be summarised in the following table:

TDS Certificate Form	Return From	Descriptions	Section	Return Filling	Issue Of Certificate
From 16	24Q	TDS On Salary	192B	Quarterly	Annual
From 16A	26Q	TDS Non Salary	192A, 193, 194, 194A, 194B, 194BA, 194BB, 194C, 194D, 194DA, 194EE, 194F, 194G, 194H, 194-I, 194J, 194K, 194LA, 194LBA, 194LBB, 194LBC, 194N, 194-O,194P, 194Q, 194R, 194S, 197A	Quarterly	Quarterly
From 16A	27Q	TDS on Non-Residents	194B, 194BA, 194BB, 194E, 194LB, 194LBA, 194LBB, 194LBC, 194LC, 194N, 195, 196A, 196B, 196C, 196D, 197A,	Quarterly	Quarterly
From 16B	26QB.	Payment on transfer of certain immovable property other than agricultural land	194IA	Monthly	Monthly
Form 16C	26QC	Payment of rent by individual or HUF not liable to tax audit	194IB	Monthly	Monthly
Form 16D	26QD	Payment of commission (not being insurance commission), brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J.	194M	Monthly	Monthly
Form 16E	26Q / 26QE	Payment on transfer of Virtual Digital Asset	194S	Monthly	Monthly

8.Exemption from TDS

Payees can apply for an exemption or lower TDS rates by submitting Form No. 13 to the Assessing Officer or furnishing a declaration in Form 15G.

In the case of a resident individual whose income is below exemption limit, such individual can furnish a declaration in writing in Form 15G/15H (as the case may be) to the payer, for non-deduction of tax under this section.

Form 15G: when the recipient is other than a senior citizen.

Form 15H: when the recipient is a senior citizen.

The payee can also file an online application in Form No. 13 to obtain a certificate of no deduction of tax or lower deduction of tax at source. The AO may issue an appropriate certificate on receiving such an application. Before issuing the certificate in this regard AO verified the document and information that the total income of the payee justifies the deduction of income-tax at any lower rate or nil deduction of income tax.

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