Taxmann's Deduction of Tax at Source with Advance Tax and Refunds by Taxmann

BOOK ONE : DEDUCTION OF

1.2-1

1.6

1.7

1.7-1

1.8-4

2.1-4

2.1-5

2.1-6

2.2

2.3

2.4

2.3-2

2.3-4

2.3-7

2.3-8

2.3-9

2.3-10

2.3-11

2.3-12

2.3-13

2.3-14

2.3-15

2.3-16

2.3-17

2.3-18

2.3-19

2.3-20

2.3-21

2.4-1

2.4-2

2.4-3

2.4-4

2.4-5

2.4-6

2.4-7

2.4-8

2.4-9

2.4-10

2.4-11

2.4-12

2.4-13 Compensatory allowance under article 222(2) of the

2.4-14

2.4-15

2.5 Perquisites, amenability

2.5-1

2.5-2

2.5-3

2.5-4

2.6 Sums

2.6-1

2.6-2

2.6-3

2.6-4

2.6-6

2.7

2.8

2.9 Computation of

2.9-1

2.9-2

2.9-3

2.10

2.11

2.11-1

2.11-2

2.11-3

2.11-4

2.12

2.13 Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. 157

2.13-1 Salient features of section 80C 157

2.13-2 Computation of deduction under section 80C 158 Illustrations164

2.14 Deduction in respect of pension fund 166

2.15 Deduction in respect of contribution to National Pension System of Central Government (NPS) 167

2.15-1 Conditions 167

2.15-2 Consequences if the above conditions are satisfied 167 Illustration169

2.16 Deduction in respect of subscription to long-term infrastructure bonds 170

2.17 Deduction in respect of investment made under an equity saving scheme 170

2.17A Deduction in respect of contribution to Agnipath Scheme 171

2.18 Deduction under section 80D in respect of medical insurance premia 171

2.18-1 Conditions

2.18-2 Maximum deductible amount

2.19 Deduction under section 80DD in respect of medical treatment of handicapped dependents

2.19-1 Conditions

2.19-2 Amount of deduction

2.19-3 If dependent predeceases the taxpayer

2.20 Deduction in respect of medical treatment under section 80DDB - To what extent available 175

2.20-1 Conditions 175

2.20-2 Amount of deduction 176

2.20-3 Prescribed diseases and certificate from a doctor 176

2.21 Deduction in respect of interest on loan taken for higher education

2.21-1 Conditions

2.21-2 Amount deductible

2.22 Deduction in respect of interest on loan taken for residential house property

2.23 Deduction in respect of interest on loan taken for certain house property 179

2.24 Deduction in respect of interest on loan taken for purchase of electric vehicle 180

2.25 Deduction under section 80G in respect of donation to national funds 180

2.25-1 Maximum limit

2.25-2 Other points

2.26 Deduction under section 80GG in respect of rent paid 183

2.26-1 Amount of deduction 184

2.26-2 Meaning of total income for the purpose of section 80GG 184

2.27 Deductions in respect of certain donations for scientific research or rural development 185

2.28 Deduction in respect of interest on deposits in savings accounts 186

2.28-1 Post office savings bank interest exemption under section 10(15)(i) 187

2.29 Deduction under section 80TTB in respect of interest on deposits in case of senior citizens 188

2.29-1 Post office savings bank interest exemption under section 10(15)(i) 188

2.30 Deduction under section 80U in case of a person with disability 189

2.30-1 Conditions

2.30-2 Amount of

2.30-3 Other points

2.31 When income other than salary income is considered for tax deduction under section 192 191

2.32 When salary received from other employer is considered 191

2.33 Rate of exchange for deduction of tax at source on income payable in foreign currency 192

2.34 Rates of tax deduction at source during the financial year 2024-25 192

2.34-1 Rate of income-tax under the alternative tax regime 193

2.34-2 If PAN is not given by employer 199

2.35 Tax rebate under section 87A 199

2.36 Relief under section 89 203

2.36-1 Computation of relief when salary has been paid in arrears or in advance 203

2.36-2 Computation of relief in respect of gratuity

2.36-3 Computation of relief in respect of compensation on termination of employment

2.36-4 Computation of relief in respect of payment in commutation of pension 206

2.36-5 Computation of relief in respect of payment of arrears of family pension

2.37 How to claim relief from taxation in income from retirement benefit account maintained in a notified country

2.37-1 Mode of computation of relief

2.38 When can employee reduce the incidence of tax deductionCertificate for deduction of tax at lower rates

2.38-1 How lower rate is determined

2.38-2 Validity of certificate

2.38-3 Issued to the payer

2.38-4 Retrospective certificate not possible

2.38-5 Instruction issued by Board

2.38-6 Concession by the Government due to outbreak of COVID-19 pandemic 210

2.38-7 Other points

2.39 Rounding off of income

2.40 Employee gets credit of tax deducted at source

2.40-1 Rules framed by Board

2.41 Going through the real exercise - Examples on computation of estimated salary and tax to be deducted therefrom under section 192 211

TAX DEDUCTION FROM ACCUMULATED BALANCE OF PROVIDENT FUND DUE TO AN EMPLOYEE

3.1 Person responsible for tax deduction from accumulated balance of provident fund 223

3.2 When tax has to be deducted 223

3.2-1 No tax is deductible if payment is less than Rs. 50,000 223

3.2-2 Private arrangement of paying accumulated balance of provident fund tax-free is not relevant 223

3.3 Tax deduction account number 223

3.4 Deposit of tax to the credit of Central Government 223

3.4-1 Where to deposit 223 I-19

3.4-2

3.4-3

3.4-4

3.5 Issue of certificate of

3.5-1 Issue of duplicate

3.6 Quarterly return to the Government

3.7 Consequences of failure to deduct or pay tax or furnish return

3.7-1 Failure to deduct and/or pay tax

3.7-2 Failure to comply with the provisions of section 203A regarding tax-Deduction account number

3.7-3 Failure to issue certificate or submit return

HOW TO COMPUTE TAXABLE PREMATURE WITHDRAWAL OF PROVIDENT FUND AND TAX TO BE DEDUCTED THEREFROM

4.1 When withdrawal from provident fund is subject to the tax deduction under section 192A

4.2 Rates of tax

4.3 Payment without tax deduction or with deduction at lower rates

4.4

4.4-1

5 DEDUCTION

OF TAX AT SOURCE FROM INTEREST ON SECURITIES

5.1 Who is responsible to deduct tax at source in the case of interest on securities 233

5.2 When tax has to be deducted at source 233

5.2-1 Relevance of identity of deductee under TDS provisions 233

5.2-2 Private arrangement of paying interest on securities as tax-free cannot discharge obligation under section 193 235

5.3 How to compute tax deduction at source 235

5.4 Tax deduction account number

5.5 Deposit of tax to the credit of the Central Government

5.5-1 Where to deposit

5.5-2 Time of deposit of TDS/TCS

5.5-3 Challans for payment

5.5-4 Claim for refund

5.6 Issue of certificate for tax deduction from interest on securities

5.6-1 TDS certificate in Form No. 16A

5.6-2 Time limit within which the certificate shall be issued

5.6-3 Issue of duplicate certificate

5.7 Return of tax deduction at source from interest on securities

5.7-1 Annual return

5.7-2 Quarterly statement TDS deposited

5.8 Consequences of failure to deduct or pay tax, furnish returns, etc.

5.8-1 Failure to deduct and/or pay tax

5.8-2 Failure to comply with the provision of section 203A regarding tax deduction account number 239

5.8-3 Failure to issue certificates, or submit returns 239

5.8-4 Forfeiture of deduction in respect of interest on securities

HOW TO COMPUTE INTEREST ON SECURITIES AND TAX DEDUCTIBLE THEREFROM AT SOURCE

6.1 Interest on securities - How defined

6.2 Interest on securities not liable for tax deduction

6.2-1 Notified securities

6.2-2 TDS on 8 per cent Savings (Taxable) Bonds, 2003 or 7.75 per cent Savings (Taxable) Bonds, 2018 258

6.3 What happens when recipient is Government - Interest on securities payable to the Government and certain Corporations 259

6.4 TDS on interest on securities - A few typical cases 260

6.4-1 When interest is paid to oneself - Interest on own debentures 261

6.4-2 Interest payable to funds established for the benefits of armed forces 261

6.4-3 Interest to provident funds 261

6.4-4 Deep discount bond 261 I-21

6.5 Rates for tax deduction at source

6.5-1 PAN of recipient is not available

6.5-2 When recipient is non-filer of Income-tax return

6.6 When can a security holder reduce the incidence of tax deduction 262

6.6-1 Certificate for tax deduction at lower rate or no deduction

6.6-2 Declaration under section 197A

6.6-3 Payment to certain institution whose income is exempt under section 10(23C)

6.7 Tax credit to one who pays

6.7-1 Rules to be framed by Board

6.7-2 Joint owners

6.7-3

DEDUCTION OF TAX AT SOURCE FROM DIVIDEND

7.1 Who is responsible for tax deduction in the case of dividend 271

7.1-1 Who is “principal officer”

7.1-2 What makes one an Indian company

7.1-3 What amounts to prescribed arrangements for declaration and payment of dividends in India

7.2 What is “dividend” for the purpose of tax deduction

7.3 When tax is to be deducted

7.3-1 Private arrangement of paying dividend tax-free cannot discharge obligation under section 194

7.4 Tax deduction account number

7.5 Deposit of tax to the credit of Central Government 273

7.5-1 Where to deposit

7.5-2 Time within which tax is to be deposited

7.5-3 Filing challan for payment

7.5-4 Claim for refund

7.6 Issue a certificate for tax deducted at source to shareholders

7.6-1 TDS certificate in Form No. 16A

7.6-2 Time-limit within which the certificate should be given

7.6-3 Issue of duplicate certificate

7.7 Statement/returns to the Government

7.7-1 Annual return

7.7-2 Quarterly return of TDS deposited

7.8 Consequences of failure to deduct or pay tax, furnish returns, etc.

7.8-1 Failure to deduct and/or pay tax

7.8-2 Failure to comply with the provisions of section 203A regarding tax deduction account number

7.8-3 Failure to issue certificate, or submit return/ statement

8 HOW TO COMPUTE DIVIDENDS AND TAX DEDUCTIBLE THEREFROM

8.1 Defining dividends

8.2 Deemed dividend under the Income-tax Act

8.2-1 Definition under section 2(22)(e)

8.2-2 Accumulated profits

8.2-3 Distribution of accumulated profits by way of advance or loan

8.3 Rates for tax deduction at source during the financial year 2024-25

8.3-1 PAN of recipient is not available

8.3-2 When recipient is a non-filer of Income-tax return

8.4 Dividends payable to Government or certain corporation

8.5 Deduction of tax at lower rates or at nil rate

8.5-1 Certificate for receiving dividend without tax deduction

8.5-2 Declaration under section 197A

8.5-3 No TDS if dividend is not more than Rs. 5,000

8.5-4 No TDS if dividend is paid or credited to an insurance company

8.6 Who gets credit for tax deducted

8.6-1 Rules framed by Board

9 DEDUCTION OF TAX AT SOURCE FROM INTEREST OTHER THAN INTEREST ON SECURITIES

9.1 Who is to discharge the responsibility to make tax deduction at source

9.2 Which interest qualifies for tax deduction at source under section 194A

9.3 When tax has to be deducted at source

9.3-1 When interest is credited to “Interest payable account” or “Suspense account” 286 I-23

9.3-2 Private arrangement of paying interest tax-free cannot discharge obligation under section 194A

9.4 How to compute tax deduction at source

9.5 Tax deduction account number

9.6 Deposit of tax to the credit of Central Government

9.6-1 Where to deposit

9.6-2 Time of deposit

9.6-3 Payment through challan

9.6-4 Claim for refund

9.7 Issue certificate of tax deduction from interest other than interest on securities

9.7-1 Certificates are issued by downloading from TIN website

9.7-2 Time limit within which certificate shall be issued

9.7-3 Issue of duplicate certificate

9.8 Return of tax deduction at source

9.8-1 Annual return

9.8-2 Quarterly return of TDS deposited

9.8-3 Quarterly return for payment without tax deduction

9.9 Consequences of failure to deduct or pay tax, furnish return, etc. 291

9.9-1 Failure to deduct and/or pay tax

9.9-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number

9.9-3 Failure to issue certificate or submit return

9.9-4 Forfeiture of deduction in respect of interest other than interest on securities 291

10 HOW TO COMPUTE INTEREST (OTHER THAN INTEREST ON SECURITIES) AND TAX

DEDUCTIBLE THEREFROM

10.1 When a payment can be regarded as “interest”

Conditions

10.1-2 When a payment is deemed to be payment of interest for the purpose of tax deduction

10.2 Rates for tax deduction at source during the financial year 2024-25 293

10.2-1 PAN of recipient is not available

10.2-2 When recipient is a non-filer of Income-tax return

10.2-3 When adjustments are called for 293

10.3 Treatment of interest other than interest on securities payable to Government or certain corporation 294

10.4 Interest other than interest on securities not liable to tax deduction under section 194A(3)/197A

10.4-1 If interest does not exceed a specified amount

10.4-2 Paid/credited to banks/financial institutions

10.4-3 Interest by firm

10.4-4 Co-operative society

10.4-5 Interest under notified schemes

10.4-6 Interest by bank

10.4-7 Interest by co-operative society/bank

10.4-8 Interest by Government

10.4-9

10.4-10

10.4-11 Zero coupon bonds

10.4-12 Interest referred to in section 10(23FC)

10.4-13 Interest by offshore banking unit

10.4-14 Interest to Tirumala Tirupati Devasthanams

10.4-15 Interest to securitisation trust

10.5 Interest without tax deduction or with deduction at lower rates 301

10.5-1 Certificate for tax deduction at lower rate under section 197(1)

10.5-2 Declaration under section 197A

10.5-3 Payment to certain institutions whose income is exempt under section 10(23C)

10.6 To deduct or not - Treatment of some typical cases 303

10.6-1 Interest on deposits in joint names - Manner of tax deduction

10.6-2 Interest payment under Land Acquisition Act

10.6-3 Interest payable on hundi by buyer to supplier in case of outstation sale of goods - Whether tax to be deducted by the buyer

10.6-4 Interest payable by consignors to their commission agent

10.6-5 Payment under a hire purchase agreement

10.6-6 Who is an individual

10.6-7 Interest payable by retail finance service company

10.6-8 Cheque discounting charges

10.6-9 Payment under a hire purchase agreement

10.6-10 Interest on delayed payment of insurance compensation

10.6-11 Personal loan of directors routed through company

10.6-12 Discounting charges

10.7

10.6-13 Chit

10.6-14 Judgment

10.6-15 Interest on overdue purchase bills is not ‘interest’

10.6-16 Loan processing fees

10.6-17 Tax deduction on the deposits in banks in the name of the registrar to the Supreme Court/High Court during pendency of litigation

10.6-18 Tax deductible even in the case of loss

10.6-19 TDS on interest on deposits made under Capital Gains Accounts Scheme where depositor has deceased

TAX DEDUCTION FROM WINNINGS FROM LOTTERY, CROSSWORD PUZZLE, CARD GAMES OR OTHER GAMES OR WINNINGS FROM ONLINE GAMES

11.1 Who is responsible for tax deduction in the case of winnings from lottery, crossword puzzle, card game or other game or winnings from online games

11.2 Payments from which deduction is to be made

11.3 When tax has to be deducted

11.3-1 Private arrangement of paying income tax-free cannot discharge obligation under section 194B/194BA

11.5 Deposit of tax in the credit of Central Government

Where to deposit

11.5-3 Payment through challan

11.5-4 Claim for refund

11.6 Issue a certificate for tax deducted at source

11.6-1 Certificate is issued by downloading from TIN

11.6-2

11.6-3 Issue of duplicate certificate

11.8 Consequences of failure to deduct or pay tax or furnish return, etc.

11.8-1 Failure to deduct and/or pay tax

11.8-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number

11.8-3 Failure to issue certificate, or submit return

Disallowance of expenditure

12 WINNINGS

FROM LOTTERY, CROSSWORD PUZZLE, CARD GAME OR ANY OTHER GAME/WINNINGS FROM ONLINE GAMES AND TAX TO BE DEDUCTED THEREFROM

12.1 What can be termed as winnings from lottery/online games

Lottery, crossword puzzles

12.2 Rates for deduction of tax at source during the financial year 2024-25

12.3 No deduction at source from payments to Government or certain corporation

12.4 Giving credit for tax deducted

12.4-1

13

TAX DEDUCTION FROM WINNINGS FROM HORSE RACE

13.1

13.2 When winnings from horse racing are subject to tax deduction at source

13.3 When tax has to be deducted

Private arrangement of making payment tax-free cannot discharge the obligation

13.4 Tax deduction account number

13.5 Deposit of tax to the credit of Central Government

13.5-1 Where to deposit

13.5-2

13.5-3 Payment through challan

13.5-4 Claim for refund

13.6 Issue of certificate for deduction from winning from horse races

13.6-1 Certificates are issued by downloading from TIN website

13.6-2 Time limit within which the certificate shall be issued

13.6-3 Issue of duplicate certificate

13.7 Annual/quarterly return of winning from horse race to the Government

13.7-1 Annual return

13.7-2 Quarterly return

13.8 Consequences of failure to deduct or pay tax, furnish return, etc.

13.8-1 Failure to deduct and/or pay tax

13.8-2 Failure to comply with the provisions of section 203A regarding tax deduction account number

13.8-3 Failure to issue certificate or submit return

WINNINGS FROM HORSE RACE AND TAX TO BE DEDUCTED THEREON

14.1 Meaning of horse race

14.1-1 When winnings from horse race are subject to tax deduction

14.2 Rates at which deduction of tax is to be made at source during the financial year 2024-25

14.3 No deduction of tax from winnings payable to the Government/certain corporation

14.4

TAX DEDUCTION FROM PAYMENT TO CONTRACTORS

15.1 Person responsible for making deduction at source under section 194C

15.1-1 Payment to a resident contractor

15.2 When tax has to be deducted at source

15.2-1 When amount is transferred to “Suspense account”

15.2-2 Private arrangement of making payment to contractor/sub-contractor without tax deduction cannot discharge the obligation under section 194C

15.3 How

15.4

15.5 Deposit of tax to the credit of Central Government

15.5-3

15.5-4

15.6

15.7

15.6-1 Certificates are issued by downloading from TIN

15.6-2

15.6-3

15.7-1

15.8 Consequences of failure to deduct or pay tax, furnish return, etc.

15.8-1

15.8-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number

15.8-3

15.8-4

16 WHAT CONSTITUTES A PAYMENT TO CONTRACTOR/

SUB-CONTRACTOR AND HOW MUCH TAX IS TO BE DEDUCTED THEREFROM

16.1 Payment to contractors/sub-contractors

16.1-1 When such payments are subject to tax deduction

16.1-2 When such payments to contractors are not subject to tax deduction at source

16.2 “Work contract” and “contract for supply of labour for works contract” - Meaning of

16.2-1 “Work” as defined in section 194C

16.2-2 Work contract or sale of goods

16.2-3 Tests to determine whether a contract is work contract

16.2-4 Emerging conclusion

16.2-5 Examples of “work contracts” and “contracts for sale of goods”

16.3

16.5-4

16.5-5

16.5-6

16.5-15

16.5-16

16.7

17.3

17.4

TAX DEDUCTION FROM INSURANCE

17.4-2

17.5-1 Certificates are issued by downloading from TIN

17.6

17.7 Consequences of failure to deduct or pay tax, furnish return, etc.

to comply with the provisions of section 203A regarding tax-deduction account number

18 HOW TO COMPUTE INSURANCE COMMISSION AND TAX TO BE DEDUCTED THEREFROM

18.1

18.2 Rates at which tax is to be deducted at source during the financial year 2024-25

18.2-1 No tax deduction when payments are to Government and certain corporation

18.3 Circumstances in which no deduction or deduction at lower rate is possible

18.3-1 Certificate for tax deduction at lower rate under section 197(1)

18.3-2 Declaration under section 197A

18.4 Credit given to person on whose behalf tax is deducted

19 TAX DEDUCTION FROM PAYMENT IN RESPECT OF LIFE INSURANCE POLICY

19.1 Person responsible for

19.2 When tax has to be deducted

19.2-1 No tax is deductible if payment during a financial year is less than Rs. 1,00,000

19.2-2 Private arrangement of paying commission tax-free is not relevant

19.3 Tax deduction account number

19.4 Deposit of tax to the credit of Central Government

19.4-1 Where to deposit

19.4-3

19.4-4

19.5 Issue of certificate of tax deduction

19.5-1 Certificates are issued by downloading from TIN website

Time-limit within which certificate shall be issued

Issue of duplicate certificate

19.6 Annual and quarterly returns of tax deducted at source

19.7 Consequences of failure to deduct or pay tax, furnish return, etc.

19.7-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number

HOW TO COMPUTE TAX TO BE DEDUCTED FROM PAYMENT IN RESPECT OF LIFE INSURANCE POLICY

20.1 What qualifies as payment in respect of life insurance policy for the purpose of tax deduction at source under section 194DA 382

20.1-1 When exemption is available under section 10(10D) 382

20.2 Rates at which tax is to be deducted at source during the financial year 2024-25

20.3 Circumstances in which no deduction or deduction at lower rate is possible

20.4 Credit given to person on whose behalf tax is deducted

20.4-1 Rules framed by Board

DEDUCTION

TAX AT SOURCE FROM NATIONAL SAVINGS SCHEME

21.1 Who is responsible to deduct tax

21.2 When tax is to be deducted

21.3 How to compute amount of tax deducted at source

21.4 Tax deduction account number

21.5 Deposit of tax to the credit of Central Government

21.5-1 Where to deposit

21.5-2 Time of deposit

21.5-3 Payment through challan

21.5-4 Claim for refund

21.6 Issue of certificate for tax deduction

21.6-1 Certificates are issued by downloading from TIN website

21.6-2 Time limit within which the certificate shall be issued

21.6-3 Issue of duplicate certificate

21.7 Annual and quarterly return to the Government

21.7-1 Annual returns

21.7-2 Quarterly return

21.8 Consequences of failure to deduct or pay tax or furnish return

21.8-1 Failure to deduct and/or pay tax

21.8-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number

21.8-3 Failure to issue certificate or submit return

Disallowance of expenditure

HOW TO COMPUTE AMOUNT REFERRED TO IN SECTION 80CCA(2)(a) AND TAX TO BE DEDUCTED THEREFROM

22.1 Payments referred to in section 80CCA(2)(a)

22.1-1 What is the scheme of section 80CCA

22.1-2 Payments subject to tax deduction under section 194EE

22.2 Rate of tax in force during the financial year 2024-25

22.3 Payment without tax deduction under section 197A

23.1

23.2

23.3

23.4

23.5

22.3-1

23.6

DEDUCTION

23.2-1

23

OF TAX AT SOURCE ON ACCOUNT OF REPURCHASE OF UNITS BY MUTUAL FUNDS OR UNIT TRUST OF INDIA

23.5-2

23.5-3

23.5-4

23.6-1

23.6-2

23.6-3

23.7

23.8

23.8-1

23.8-2

23.8-3

23.8-4

24

HOW TO COMPUTE AMOUNT REFERRED TO IN SECTION 80CCB(2) AND

24.1-1 What is the scheme of section 80CCB

24.1-2 Payments subject to tax deduction under section 194F

24.1-3 Illustration

24.2 Rate of tax in force during the financial year 2024-25

24.3 Deduction of tax at lower rate

24.4 Tax credit

24.4-1

DEDUCTION OF TAX AT SOURCE FROM COMMISSION ON SALE OF LOTTERY TICKETS

25.1 Who is responsible to deduct tax at source

25.2 When tax is deducted at source

25.2-1 When amount is credited to “suspense account”

Private arrangement to pay commission free of tax

25.3 How to compute tax deduction at source under section 194G

25.4 Tax deduction account number

25.5 Deposit of tax to the credit of Central Government

25.5-1

25.5-2

25.5-3

25.5-4

25.6

25.6-1 Certificates are issued by downloading from TIN

25.6-2

25.7

25.7-1

25.7-2

25.8 Consequences of failure to deduct or pay tax or furnish return

25.8-1

25.8-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number

25.8-3

or submit return

25.8-4 Disallowance of expenditure

26.1

26.2

26.3

26.4

26.4-1

TO COMPUTE COMMISSION ON SALE OF LOTTERY TICKETS AND

27.1

27.2

TAX DEDUCTION FROM COMMISSION OR BROKERAGE

27.2-1

27.4

27.5

27.4-1

27.4-2

27.4-3

27.4-4

27.5-1

27.5-2

27.6

27.7

27.6-2

27.7-1

27.7-2

27.7-3 Failure to issue certificate or submit return

27.7-4 Forfeiture of deduction in respect of commission/ brokerage 412

HOW TO COMPUTE COMMISSION OR

BROKERAGE

AND TAX TO BE DEDUCTED THEREFROM

28.1 When commission/brokerage is subject to the tax deduction under section 194H

28.2 Brokerage/commission covered by section 194H

28.2-1

28.2-2 “Commission” judicially defined

28.2-3 Brokerage judicially defined

28.2-4 Commission and service are two essential elements

28.2-5 Commission retained by consignee - Is it subject to tax deduction

28.2-6 Turnover commission by RBI

28.2-7 Trade discount is different

28.2-8 Discount on SIM offered by cellular telephone network provider to distributors

28.2-9

28.2-10

28.3 Rates

28.4 No tax deduction when recipient is Government and certain corporations

28.5 Payment without tax deduction or with deduction at lower rates

28.5-1 Certificate for tax deduction at lower rate under section 197(1)

28.5-2 Turnover commission payable by Central Government

28.6 Tax credit

28.6-1 Rules framed by Board

TAX DEDUCTION FROM RENT

29.1 Person responsible for tax deduction from rent

29.2 When tax has to be deducted

29.2-1 No tax is deductible if payment during a financial year does not exceed Rs. 2,40,000

29.2-2 Private arrangement of paying rent tax-free is not relevant

29.3 Tax deduction account number

29.4 Deposit of tax to the credit of Central Government

29.4-1

29.4-2

29.4-3

29.4-4

29.5

29.5-1 Certificates are issued by downloading from TIN

29.5-2 Time limit within which the certificate shall be issued

29.5-3

29.6

29.7

30.1

29.7-1

29.7-2

29.7-3

29.7-4

HOW TO COMPUTE RENT AND TAX TO BE DEDUCTED THEREFROM

30.2-2

30.3

30.4 No tax deduction when recipient is Government and certain corporations

30.4-1 No tax deduction if recipient is exempt under section 10(23C)

30.4-2 No tax deduction if recipient is real estate investment trust

30.5

31.1

31.2

DEDUCTION OF TAX AT SOURCE FROM CONSIDERATION PAYABLE FOR ACQUISITION OF IMMOVABLE PROPERTY OTHER THAN AGRICULTURAL LAND IN RURAL AREA

31.4-4

31.5

31.5-1

31.5-2

31.6

31.7

31.7-2

HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF CONSIDERATION FOR ACQUISITION OF ANY

PROPERTY

32.1

32.1-2

32.2 Rate for tax deduction at source during the financial year 2024-25

32.3 Consideration payable to Government or certain corporation

32.4 Certificate of tax deduction at lower rate

32.5 Who gets credit for tax deducted

TAX DEDUCTION FROM PAYMENT OF RENT BY CERTAIN INDIVIDUALS AND HUFs

33.1 Person responsible for tax deduction under section 194-IB

33.2 When tax has to be deducted

33.2-1 No tax is deductible if rent does not exceed Rs. 50,000 per month

33.2-2 Private arrangement of paying tax-free rent is not relevant

33.3 Tax deduction account number

33.4 Deposit of tax to the credit of Central Government

33.4-1

33.4-2

33.4-3

33.4-4

33.5 Issue of certificate of

33.6 Return to the Government

33.7 Consequences of failure to deduct or pay tax or furnish return

33.7-1 Failure to deduct and/or pay tax

33.7-2 Failure to issue certificate or submit return

33.7-3 Forfeiture of deduction

HOW TO COMPUTE TAX DEDUCTIBLE FROM RENT UNDER SECTION 194-IB

34.1 Rent subject to tax deduction under section 194-IB

34.2 Rates of tax deduction during the financial year 2024-25

34.3 Payment without tax deduction or with deduction at lower rates

34.4 Consideration payable to Government or certain corporation

34.5 Tax credit

34.5-1 Rules framed by Board

TAX DEDUCTION FROM PAYMENT UNDER SPECIFIED AGREEMENT

35.1 Person responsible for tax deduction from payment under specified agreement

35.2 When tax has to be deducted

35.2-1 Private arrangement to pay consideration free of

35.3

35.4 Deposit of

35.4-1

35.4-3

35.4-4

35.5 Issue of certificate of

35.5-1

35.6 Quarterly return to the Government

35.7 Consequences of failure to deduct or pay tax or furnish return

35.7-1

35.7-2

HOW TO COMPUTE CONSIDERATION WHICH IS SUBJECT TO TAX DEDUCTION UNDER SECTION 194-IC

36.1 When payment under specified agreement is subject to tax deduction under section 194-IC 459

36.1-1 Specified agreement under section 45(5A) 459

36.2 Rates of tax

36.3 Payment without tax deduction or with deduction at lower rates

36.4 Tax credit

DEDUCTION OF TAX AT SOURCE FROM FEES FOR TECHNICAL OR PROFESSIONAL SERVICES OR ROYALTY

37.1 Who is responsible for tax deduction in the case of fees for technical or professional services or royalty 463

37.1-1 Director’s fees subject to TDS under section 194J from July 1, 2012 463

37.1-2 When payment/credit by an individual/HUF is subject to TDS under section 194J 463

37.2 When tax has to be deducted at source 464

37.2-1 When fees is credited to “suspense account” 464

37.2-2 Private arrangement of paying fees for technical or professional services or royalty tax-free cannot discharge obligation under section 194J 465

37.3 Tax deduction account number

37.4 Deposit of tax to the credit of Central Government

37.4-1 Where to deposit

37.4-2

37.4-3

37.4-4

37.5 Issue a certificate for

37.5-1 Certificates are issued by downloading from TIN website

37.5-2 Time limit within which the certificate should be given

37.5-3 Issue of duplicate certificate

37.6 Annual and quarterly return to the Government 466

37.6-1 Annual return 466

37.6-2 Quarterly return 467

37.7 Consequences of failure to deduct or pay tax, furnish returns, etc. 468

37.7-1 Failure to deduct and/or pay tax 468

37.7-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number 468

37.7-3 Failure to issue certificate, or submit return/ statement 468

37.7-4 Forfeiture of deduction in respect of technical/ professional fees/royalty 468 I-42

HOW TO COMPUTE FEES FOR PROFESSIONAL AND TECHNICAL SERVICES AND ROYALTY AND TAX DEDUCTIBLE THEREFROM

38.1 Professional/technical services

38.1-1 What is professional services

38.1-2 Technical services

38.1-3 “Royalty” as defined in Explanation 2 to section 9(1)(vi) 471

38.2 When payments for professional/technical fees, royalty, director’s fees are covered by section 194J 474

38.2-1 Other points

38.3 Rates for tax deduction at source during the financial year 2024-25 478

38.3-1 Reimbursement of expenditure - Whether subject to TDS 479

38.4 Fees for professional services/technical services or royalty payable to Government or certain corporation 479

38.5 Certificate of tax deduction at lower rate 480

38.5-1 Time limit for soliciting the favour 480

38.5-2 Concession by the Government due to outbreak of COVID-19 pandemic

38.6 Who gets credit for tax deducted

38.6-1 Rules framed by Board

DEDUCTION OF TAX AT SOURCE FROM INCOME IN RESPECT OF UNITS

39.1 Who is responsible for tax deduction at source under section 194K 482

39.2 When tax has to be deducted at source 482

39.2-1 Credit of income to “suspense account” 482

39.3 Tax deduction account number 482

39.4 Deposit of tax to the credit of Central Government 482

39.4-1 Where to deposit 482

39.4-2 Time within which tax has to be deposited 482

39.5 Issue a certificate for tax deducted at source to unitholders 482

39.5-1 Certificates are issued by downloading from TRACES Portal 482

39.5-2 Time limit within which the certificate should be given 483

39.5-3 Issue of duplicate certificate 483

39.6 Statement/returns to the Government 483

39.7 Consequences of failure to deduct or pay tax, furnish returns, etc. 483

39.7-1 Failure to deduct and/or pay tax 483

39.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 483

39.7-3 Failure to issue certificates or submit return/ statement 483

HOW TO COMPUTE INCOME IN RESPECT OF UNITS AND TAX DEDUCTIBLE THEREFROM

40.1 Income subject to tax deduction under section 194K 484

40.2 Rates for tax deduction at source during the financial year 2024-25 484

40.3 Income in respect of units payable to Government or certain corporation 485

40.4 Deduction of tax at lower rates 485

40.4-1 Certificate for receiving such sum without tax deduction or with deduction at lower rate 485

40.4-2 Declaration under section 197A 485

40.5 Who get credit for tax deducted 486

DEDUCTION OF TAX AT SOURCE FROM PAYMENT OF COMPENSATION ON ACQUISITION OF IMMOVABLE PROPERTY

41.1 Who is responsible for tax deduction at source under section 194LA 488

41.2 When tax has to be deducted at source 488

41.3 Tax deduction account number 488

41.4 Deposit of tax to the credit of Central Government 488

41.4-1 Where to deposit 488

41.4-2 Time within which tax has to be deposited 488

41.4-3 Claim for refund 488

41.5 Issue a certificate for tax deducted at source 488

41.5-1 Certificates are issued by downloading from TIN website 488

41.5-2 Time-limit 488

41.7 Consequences of failure to deduct or pay tax, etc.

41.7-1 Failure to deduct and/or pay tax

41.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number

HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF COMPENSATION ON ACQUISITION OF IMMOVABLE PROPERTY

42.1 Income subject to tax deduction under section 194LA

42.2 Rates for tax deduction at source during the financial year 2024-25

42.3 Income is payable to Government or certain corporation

42.4 Deduction of tax at lower rates

42.4-1 Certificate for receiving such without tax deduction or with deduction at lower rate

42.5 Who get credit for tax deducted

DEDUCTION OF TAX AT SOURCE FROM INCOME BY WAY OF INTEREST FROM INFRASTRUCTURE DEBT FUND

43.1 Who is responsible for tax deduction at source under section 194LB

43.2 When tax has to be deducted at source

43.3 Tax deduction account number 495

43.4 Deposit of tax to the credit of Central Government 495

43.4-1 Where to deposit 495

43.4-2 Time within which tax has to be deposited 495

43.4-3 Claim for refund 495

43.5 Issue a certificate for tax deducted at source 495

43.5-1 Certificates are issued by downloading from TIN website 495

43.5-2 Time-limit 495

43.7 Consequences of failure to deduct or pay tax, etc.

43.7-1 Failure to deduct and/or pay tax

43.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number

HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF INTEREST ON INFRASTRUCTURE DEBT FUND

44.1 Income subject to tax deduction under section 194LB

44.2 Rates for tax deduction at source during the financial year 2024-25

44.3 Deduction of tax at lower rate

44.4 Who get credit for tax deducted

44.4-1 Rules framed by Board

45 DEDUCTION OF TAX AT SOURCE FROM INTEREST ON UNITS OF BUSINESS TRUST

45.1 Who is responsible for tax deduction at source under section 194LBA

45.2 When tax has to be deducted at

45.3 Tax deduction account number

45.4 Deposit of tax to the credit of Central Government

45.4-1 Where to deposit

45.4-2 Time within which tax has to be deposited

45.4-3 Claim for refund

45.5 Issue a certificate for tax deducted at source

45.5-1 Certificates are issued by downloading from TIN website

45.5-2 Time-limit

45.5-3 Issue of duplicate certificate

45.6 Statement/return to the Government

45.6-1

45.6-2

45.7 Consequences of failure to deduct or pay tax, etc. 503

45.7-1 Failure to deduct and/or pay tax 503

45.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 503

45.7-3 Forfeiture of deduction in respect of payment of interest 503

46 HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF INTEREST ON UNITS OF BUSINESS TRUST

46.1 Income subject to tax deduction under section 194LBA 504

46.2 Rates for tax deduction at source during the financial year 2024-25 504

46.3 Deduction of tax at lower rates 505

46.3-1 Certificate for receiving such without tax deduction or with deduction at lower rate 505

46.4 Who get credit for tax deducted 505

46.4-1 Rules framed by Board 506

47 DEDUCTION OF TAX AT SOURCE FROM INCOME IN RESPECT OF UNITS OF INVESTMENT FUND/SECURITISATION TRUST

47.1 Who is responsible for tax deduction at source under section 194LBB/194LBC 508

47.2 When tax has to be deducted at source 508

47.3 Tax deduction account number 508

47.4 Deposit of tax to the credit of Central Government 508

47.4-1 Where to deposit 508

47.4-2 Time within which tax has to be deposited 508

47.4-3 Claim for refund 508

47.5 Issue a certificate for tax deducted at source 508

47.5-1 Certificates are issued by downloading from TIN website 508

47.5-2 Time-limit 508

47.5-3 Issue of duplicate certificate 509

47.6 Statement/return to the Government 509

47.6-1 Annual return 509

47.6-2 Quarterly return 509

47.7 Consequences of failure to deduct or pay tax, etc. 510

47.7-1 Failure to deduct and/or pay tax 510

47.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 510

47.7-3 Forfeiture of deduction in respect of payment of interest 510

HOW TO COMPUTE TAX DEDUCTIBLE FROM INCOME IN RESPECT OF UNITS OF INVESTMENT TRUST/SECURITISATION TRUST

48.1 Income subject to tax deduction under section 194LBB/ 194LBC 511

48.2 Rates for tax deduction at source during the financial year 2024-25 511

48.3 Certificate for tax deduction at lower rate (applicable with effect from June 1, 2016) 512

48.3-1 Time-limit for soliciting the favour 512

48.3-2 How lower rate is determined 512

48.3-3 Concession by the Government due to outbreak of COVID-19 pandemic 512

48.3-4 Other points 512

48.4 Who get credit for tax deducted 513

48.4-1 Rules framed by Board 513

DEDUCTION OF TAX AT SOURCE FROM INCOME BY WAY OF INTEREST FROM INDIAN COMPANY UNDER SECTION 194LC

49.1 Who is responsible for tax deduction at source under section 194LC 515

49.2 When tax has to be deducted at source 515

49.3 Tax deduction account number 516

49.4 Deposit of tax to the credit of Central Government 516

49.4-1 Where to deposit 516

49.4-2 Time within which tax has to be deposited 516

49.4-3 Claim for refund 516

49.5 Issue a certificate for tax deducted at source 516

49.5-1 Certificates are issued by downloading from TIN website 516

49.5-2 Time-limit 516

49.5-3 Issue of duplicate certificate 516

49.6 Statement/return to the Government 516

49.6-1 Annual return 516

49.6-2 Quarterly return 516

49.7 Consequences of failure to deduct or pay tax, etc. 518

49.7-1 Failure to deduct and/or pay tax 518

49.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 518

HOW

TO COMPUTE TAX DEDUCTIBLE FROM INTEREST PAYABLE TO NON-RESIDENT/ FOREIGN COMPANY

50.1 Income subject to tax deduction under section 194LC 519

50.1-1 Approval by Central Government 519

50.2 Time of tax deduction 520

50.3 Rates for tax deduction at source during the financial year 2024-25 521

50.4 Deduction of tax at lower rate 522

50.5 Who get credit for tax deducted 522

50.5-1 Rules framed by Board 522

DEDUCTION OF TAX AT SOURCE FROM INTEREST ON CERTAIN BONDS AND GOVERNMENT SECURITIES UNDER SECTION 194LD

51.1 Who is responsible for tax deduction at source under section 194LD 524

51.2 When tax has to be deducted at source 524

51.3 Tax deduction account number 524

51.4 Deposit of tax to the credit of Central Government 524

51.4-1 Where to deposit 524

51.4-2 Time within which tax has to be deposited 524

51.4-3 Claim for refund 524

51.5 Issue a certificate for tax deducted at source 525

51.5-1 Certificates are issued by downloading from TRACES Portal 525

51.5-2 Time-limit 525

51.5-3 Issue of duplicate certificate 525 I-49

51.6 Statement/return to the Government

51.6-1 Annual return

51.6-2 Quarterly return

51.7 Consequences of failure to deduct or pay tax, etc. 527

51.7-1 Failure to deduct and/or pay tax 527

51.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 527

52 HOW TO COMPUTE TAX DEDUCTIBLE FROM INTEREST PAYABLE UNDER SECTION 194LD

52.1 Income subject to tax deduction under section 194LD 528

52.2 Time of tax deduction 528

52.3 Rates for tax deduction at source during the financial year 2024-25 528

52.4 Deduction of tax at lower rate 529

52.5 Who get credit for tax deducted 529 52.5-1 Rules framed by Board 529

53 TAX DEDUCTION FROM PAYMENT TO RESIDENT CONTRACTOR, BROKER OR PROFESSIONAL BY CERTAIN INDIVIDUALS AND HUFs

53.1 Person responsible for tax deduction under section 194M 531

53.2 When tax has to be deducted 531

53.2-1 No tax is deductible if payment/credit does not exceed Rs. 50 lakh in a financial year 531

53.2-2 Private arrangement of paying tax-free rent is not relevant 531

53.3 Tax deduction account number 531

53.4 Deposit of tax to the credit of Central Government 531

53.4-1 Where to deposit 532

53.4-2 Time of deposit 532

53.4-3 Payment through challan 532

53.4-4 Claim for refund 532

53.5 Issue of certificate of tax deduction 532

53.5-1 Issue of duplicate certificate 532

53.6 Return to the Government 532

53.7 Consequences of failure to deduct or pay tax or furnish return 532

53.7-1 Failure to deduct and/or pay tax 532

53.7-2 Failure to issue certificate or submit return 532

53.7-3 Forfeiture of deduction 532

HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT/CREDIT TO CONTRACTOR, PROFESSIONAL OR BROKER UNDER SECTION 194M

54.1 Payment/credit subject to tax deduction under section 194M 533

54.2 Work contract, commission or brokerage and professionalMeaning of 533

54.3 Rates of tax deduction during the financial year 2024-25 533 Illustration534

54.4 Payment without tax deduction or with deduction at lower rates 534

54.5 Consideration payable to Government or certain corporation 535

54.6 Tax credit 535

54.6-1 Rules framed by Board 535

55

DEDUCTION OF TAX AT SOURCE FROM CASH PAYMENT TO ACCOUNTHOLDERS UNDER SECTION 194N

55.1 Person responsible for tax deduction under section 194N 537

55.2 When tax has to be deducted 537

55.2-1 No tax is deductible if cash payment does not exceed Rs. 1 crore in a financial year 537

55.2-2 Private arrangement of paying tax-free rent is not relevant 537

55.3 Tax deduction account number 537

55.4 Deposit of tax to the credit of Central Government 537

55.4-1 Where to deposit 537

55.4-2 Time of deposit 538

55.4-3 Payment through challan 538

55.4-4 Claim for refund 538

55.5 Issue of certificate of tax deduction 538

55.5-1 Issue of duplicate certificate 538

55.6 Return to the Government 538

55.7 Consequences of failure to deduct or pay tax or furnish return 538

55.7-1 Failure to deduct and/or pay tax 538

55.7-2 Failure to issue certificate or submit return 538

56 HOW TO COMPUTE TAX DEDUCTIBLE FROM CASH PAYMENT TO ACCOUNTHOLDERS UNDER SECTION 194N

56.1 Cash payment subject to tax deduction under section 194N 539

56.2 Rates of tax deduction during the financial year 2024-25 539

56.3 Payment without tax deduction or with deduction at lower rates 540

56.4 Consideration payable to Government or certain corporation 541

56.5 Tax credit 541

56.5-1 Rules framed by Board 541

57 DEDUCTION OF TAX AT SOURCE FROM PAYMENTS TO E-COMMERCE PARTICIPANTS

57.1 Who is responsible for tax deduction at source under section 194-O 543

57.2 When tax has to be deducted at source 543

57.3 Tax deduction account number 543

57.4 Deposit of tax to the credit of Central Government 543

57.4-1 Where to deposit 543

57.4-2 Time within which tax has to be deposited 543

57.5 Issue a certificate for tax deducted at source to unitholders 543

57.5-1 Certificates are issued by downloading from TRACES Portal 543

57.5-2 Time limit within which the certificate should be given 544

57.5-3 Issue of duplicate certificate 544

57.6 Statement/returns to the Government 544

57.7 Consequences of failure to deduct or pay tax, furnish returns, etc. 544

57.7-1 Failure to deduct and/or pay tax 544

57.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 544

57.7-3 Failure to issue certificates or submit return/ statement 544

HOW TO COMPUTE

INCOME

AND TAX DEDUCTIBLE THEREFROM

58.1 Income subject to tax deduction under section 194-O 545

58.1-1 When tax is not deductible 545

58.1-2 TDS under other sections 545

58.1-3 Removing any difficulty 545

58.2 Rates for tax deduction at source during the financial year 2024-25 546

58.3 Income in respect of units payable to Government or certain corporation 548

58.4 Deduction of tax at lower rates 548

58.4-1 Time-limit for soliciting the favour 548

58.4-2 How lower rate is determined 548

58.4-3 Validity of the certificate 548

58.4-4 Other points 548

58.5 Who get credit for tax deducted 549

DEDUCTION OF TAX AT SOURCE FROM INCOME OF SPECIFIED SENIOR CITIZEN

59.1 Who is responsible for tax deduction at source under section 194P 551

59.2 When tax has to be deducted at source 551

59.3 Tax deduction account number 551

59.4 Deposit of tax to the credit of Central Government 551

59.4-1 Where to deposit 551

59.4-2 Time within which tax has to be deposited 551

59.5 Statement/returns to the Government 551

59.6 Consequences of failure to deduct or pay tax, furnish returns, etc. 551

59.6-1 Failure to deduct and/or pay tax 551

59.6-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 551

59.6-3 Failure to issue certificates or submit return/ statement 551

HOW TO COMPUTE INCOME OF SPECIFIED SENIOR CITIZEN AND TAX DEDUCTIBLE THEREFROM

60.1 Income subject to tax deduction under section 194P 552

60.2 Rates for tax deduction at source during the financial year 2024-25 552

60.3 Deduction of tax at lower rates 552

60.4 Who get credit for tax deducted 552

60.5 Return under section 139(1) not required 553 61

DEDUCTION OF TAX AT SOURCE ON PAYMENT FOR PURCHASE OF GOODS

61.1 Who is responsible for tax deduction at source under section 194Q 555

61.2 When tax has to be deducted at source 555

61.3 Tax deduction account number 555

61.4 Deposit of tax to the credit of Central Government 555

61.4-1 Where to deposit 555

61.4-2 Time within which tax has to be deposited 555

61.5 Issue a certificate for tax deducted at source to unitholders 556

61.5-1 Certificates are issued by downloading from TRACES Portal 556

61.5-2 Time-limit within which the certificate should be given 556

61.5-3 Issue of duplicate certificate 556

61.6 Statement/returns to the Government 556

61.7 Consequences of failure to deduct or pay tax, furnish returns, etc. 556

61.7-1 Failure to deduct and/or pay tax 556

61.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 556

61.7-3 Failure to issue certificates or submit return/statement 556

HOW TO COMPUTE TAX TO BE DEDUCTED UNDER SECTION 194Q

62.1 Income subject to tax deduction under section 194Q 557

62.1-1 When tax is not deductible 557

62.1-2 Removing any difficulty 557

62.2 Rates for tax deduction at source during the financial year 2024-25 558

62.2-1 Clarifications by CBDT 558

62.3 Income in respect of amount payable to Government or certain corporation 562

62.4 Deduction of tax at lower rates 562

62.5 Who get credit for tax deducted 562

63 DEDUCTION OF TAX AT SOURCE ON BENEFIT OR PERQUISITE IN RESPECT OF BUSINESS OR PROFESSION

63.1 Who is responsible for tax deduction at source under section 194R 564

63.2 When tax has to be deducted at source 564

63.3 Tax deduction account number 564

63.4 Deposit of tax to the credit of Central Government 564

63.4-1 Where to deposit 564

63.4-2 Time within which tax has to be deposited 564

63.5 Statement/returns to the Government 564

63.6 Consequences of failure to deduct or pay tax, furnish returns, etc. 564

63.6-1 Failure to deduct and/or pay tax 565

63.6-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 565

63.6-3 Failure to issue certificates or submit return/ statement 565

64 HOW TO COMPUTE VALUE OF BENEFIT OR PERQUISITE AND TAX DEDUCTIBLE THEREFROM

64.1 Amount subject to tax deduction under section 194R 566

64.1-1 Benefit or perquisite covered by section 194R 566

64.1-2 Removing any difficulty 567

64.2 Rates for tax deduction at source during the financial year 2024-25 571

64.3 Deduction of tax at lower rates 571

64.4 Who get credit for tax deducted 571

65 DEDUCTION OF TAX AT SOURCE FROM PAYMENT ON TRANSFER OF VIRTUAL DIGITAL ASSET

65.1 Who is responsible for tax deduction at source under section 194S 573

65.2 When tax has to be deducted at source 573

65.3 Tax deduction account number 573

65.4 Deposit of tax to the credit of Central Government 573

65.4-1 Where to deposit 573

65.4-2 Time within which tax has to be deposited 573

65.5 Issue a certificate for tax deducted at source to unitholders 573

65.5-1 Certificates are issued by downloading from TRACES Portal 573

65.5-2 Time limit within which the certificate should be given 573

65.5-3 Issue of duplicate certificate 573

65.6 Statement/returns to the Government 574

65.7 Consequences of failure to deduct or pay tax, furnish returns, etc. 574

65.7-1 Failure to deduct and/or pay tax 574

65.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 574

65.7-3 Failure to issue certificates or submit return/ statement 574

66 HOW TO COMPUTE TAX TO BE DEDUCTED UNDER SECTION 194S

66.1 Income subject to tax deduction under section 194S 575

66.1-1 Virtual digital asset 575

66.1-2 Threshold limit 575

66.1-3 Overlapping between sections 194-O and 194S 576

66.1-4 Removing difficulty 576

66.2 Rates for tax deduction at source during the financial year 2024-25 581

66.3 Income in respect of amount payable to Government or certain corporation 582

66.4 Deduction of tax at lower rates 582

66.5 Who get credit for tax deducted 582

DEDUCTION OF TAX AT SOURCE ON REMUNERATION/ INTEREST TO PARTNERS

67.1 Who is responsible for tax deduction at source under section 194T 584

67.2 When tax has to be deducted at source 584

67.3 Tax deduction account number 584

67.4 Deposit of tax to the credit of Central Government 584

67.4-1 Where to deposit 584

67.4-2 Time within which tax has to be deposited 584

67.5 Statement/returns to the Government 584

67.6 Consequences of failure to deduct or pay tax, furnish returns, etc. 584

67.6-1 Failure to deduct and/or pay tax 584

67.6-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 584

67.6-3 Failure to issue certificates or submit return/ statement 584 68

HOW TO COMPUTE SALARY, REMUNERATION, INTEREST, ETC., AND TAX DEDUCTIBLE THEREFROM

68.1 Amount subject to tax deduction under section 194T 585

68.1-1 Salary/interest covered by section 194T 585

68.2 Rates for tax deduction at source during the financial year 2024-25 585

Illustration586

68.3 Deduction of tax at lower rates 587

68.4 Who get credit for tax deducted 587

69 TAX DEDUCTION FROM PAYMENTS TO NON-RESIDENTS

69.1 Who is required to deduct tax under sections 194E, 195 and 196A 589

69.1-1 Payer/Principal officer is person responsible for tax deduction 589

69.1-2 In case of consideration for transfer of foreign exchange amount 589

69.2 Payment from which deduction has to be made 590

69.3 When tax has to be deducted 590

69.3-1 Payments referred to section 115BBA 590

69.3-2 Interest of mutual fund payable to non-resident 590

69.3-3 Any other payments 590

69.3-4 Private arrangement of paying income tax-free cannot discharge obligation under sections 194E, 195 and 196A 591

69.4 Tax deduction account number 591

69.5 Deposit of tax to the credit of Central Government 591

69.5-1 Where to deposit 591

69.5-2 Time of deposit 591

69.5-3 Payment through challan 592

69.5-4 Claim for refund 592

69.6 Issue of certificate for tax deducted at source 592

69.6-1 Certificates are issued by downloading from TIN website 592

69.6-2 Time limit 592

69.6-3 Issue of duplicate certificate 592

69.7 Quarterly return to the Government 592

69.7-1 Quarterly return 592

69.8 Consequences of failure to deduct or pay tax or furnish return 594

69.8-1 Failure to deduct and/or pay tax 594

69.8-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 594

69.8-3 Failure to issue certificate, or submit return 594

69.8-4 Forfeiture of deduction in respect of payment of annual charge, interest, royalty, fees, etc. 594

70 HOW TO COMPUTE AMOUNT PAYABLE TO NON-RESIDENT AND TAX TO BE DEDUCTED THEREFROM

70.1 Payments subject to tax deduction under section 194E 598

70.1-1 Payments covered by section 115BBA 598

70.1-2 Other points pertaining to section 194E 599

70.2 Payment subject to tax deduction under section 196A 599

70.2-1 No tax deduction if UTI’s units are purchased in foreign currency 599

70.3 “Other sum” subject to tax deduction under section 195 600

70.3-1 Meaning of non-resident 600

70.3-2 Withdrawal of Circular Nos. 23, 163 and 786 and its impact on taxability of export commission in India 600

70.3-3 Payment made to resident agent of a non-resident 602

70.3-4 Advances to ship hirer adjustable against hire charges 602

70.3-5 Constructive payment of commission to nonresident through another non-resident 602

70.3-6 Money paid into Court under decree obtained by non-resident 603

70.3-7 Payment to non-resident for goods resold by it to resident seller 603

70.3-8 Interest on purchase price paid to non-resident in instalments 603

70.3-9 Customary, non-contractual payment to officers of ship by stevedores 603

70.3-10 Payment to foreign firm whose one of the partners is managing firm’s affairs from India 603

70.3-11 Section 195 is applicable even in the case of regular trading operation 604

70.3-12 Payment to foreign shipping companies 604

70.3-13 Payments to non-resident at UAE 605

70.3-14 Payments of interest by a branch office to head office outside India 605

70.3-15 Any other sum chargeable to tax 606

70.3-16 Travelling expenses 606

70.3-17 Payment for data transmission 606

70.3-18 When payee is non-resident at the time of tax deduction but becomes resident at the time of payment 606

70.3-19 Mere accrual of income is not sufficient 607

70.3-20 Reimbursement of salary or other expenses 607

70.3-21 When income is exempt under DTAA 607

70.3-22 Lead manager of GDR 607

70.3-23 Transfer of controlling interest in a foreign company having assets in India 607

70.3-24 Lease rent, roaming charges, telephone services, uplinking charges, bandwidth network charges, interconnection/port access charges 609

70.3-25 Export contract 609

70.3-26 Remittance from India 609

70.3-27 Subscription charges 609

70.4 Tax deduction only on recipient’s chargeable incomeProvisions for ascertaining recipient’s chargeable income 610

70.4-1 Appropriation is not possible in the case of interest, fees and royalty 612

70.5 Grossing up of amount payable to non-resident stipulated to be paid net of taxes 614

70.5-1 Cases when grossing up is not required 615

70.6 Rates of tax deduction at source for the financial year 2024-25 616

70.6-1 TDS when payment/credit is given to a person in notified jurisdictional area 616

70.6-2 TDS when PAN of deductee is not available 617

70.7 Payments to non-resident without tax deduction in certain cases 619

70.7-1 Qualifying persons and qualifying incomes 619

70.7-2 Conditions to be satisfied 619

70.7-3 Procedure for issue of certificate 620

70.8 Certificate for deduction of tax at lower rate in the case of recipient other than a company

70.8-1 Time-limit for soliciting the favour

70.8-2 How lower rate is determined

70.8-3 Validity of the certificate 621

70.8-4 Other points 621

70.9 Furnishing information regarding remittance 621

70.9-1 Other points 621

70.10 Credit for tax deducted 622

70.10-1 Rules framed by Board 622

70.11 Refund for denying liability to deduct tax in certain cases 622 71

DEDUCTION OF TAX AT SOURCE FROM INCOME OF UNITS OF OFFSHORE FUND

71.1 Who is responsible to deduct tax

71.2 When tax is to be deducted

71.3 How to compute amount of tax deducted

71.4 Tax-deduction account number

71.5 Deposit of tax to the credit of Central Government 625 I-60

71.5-1 Where to deposit

71.5-2 Time of deposit

71.5-3 Payment through challan 626

71.5-4 Claim for refund 626

71.6 Issue of certificate for tax deduction 626

71.6-1 Certificates are issued by downloading from TIN website 626

71.6-2 Time limit 626

71.7 Quarterly returns to the Government 627

71.8 Consequences of failure to deduct or pay tax or furnish return 627

71.8-1 Failure to deduct and/or pay tax 627

71.8-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number 627

71.8-3 Failure to issue certificate or submit return 627

HOW TO COMPUTE AMOUNT OF TAX DEDUCTION UNDER SECTION 196B

72.1 Amount covered by section 196B 628

72.1-1 Units referred to in section 115AB 628

72.1-2 Overseas financial organisation 628

72.2

72.3

72.4

72.4-1

DEDUCTION OF TAX AT SOURCE FROM INCOME FROM FOREIGN CURRENCY BOND OR SHARES OF INDIAN COMPANY

73.1 Who is responsible to deduct tax 631

73.2 When tax is to be deducted 631

73.3 How to compute amount of tax deducted 631

73.4 Tax deduction account number 631

73.5 Deposit of tax to the credit of Central Government 631

73.5-1 Where to deposit 631

73.5-2 Time of deposit 631

73.5-3 Payment through challan 632

73.5-4 Claim for refund 632

73.6 Issue of certificate for tax deduction 632

73.6-1 Certificates are issued by downloading from TIN website 632

73.6-2 Time limit 632

73.7 Quarterly returns to the Government 633

73.8 Consequences of failure to deduct or pay tax or furnish return 633

73.8-1 Failure to deduct and/or pay tax 633

73.8-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 633

73.8-3 Failure to issue certificate or submit return 633

HOW TO COMPUTE AMOUNT OF TAX DEDUCTION UNDER SECTION 196C

74.1 Amount covered by section 196C 634

74.1-1 Bonds/shares referred to in section 115AC 634

74.2 Rate for tax deduction 634

74.3 When tax is deductible at lower rate 635

74.4 Tax credit 635

74.4-1 Rules framed by Board 635

DEDUCTION OF TAX AT SOURCE FROM INCOME OF FOREIGN INSTITUTIONAL INVESTORS FROM SECURITIES

75.1 Who is responsible to deduct tax 637

75.2 When tax is to be deducted 637

75.3 How to compute amount of tax deducted 637

75.4 Tax deduction account number 637

75.5 Deposit of tax to the credit of Central Government 637

75.5-1 Where to deposit 637

75.5-2 Time of deposit 637

75.5-3 Payment through challan 638

75.5-4 Claim for refund 638

75.6 Issue of certificate for tax deduction 638

75.6-1 Certificates are issued by downloading from TIN website 638

75.6-2 Time-limit 638

75.7 Quarterly returns to the Government 639

75.8 Consequences of failure to deduct or pay tax or furnish return 639

75.8-1 Failure to deduct and/or pay tax 639

75.8-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number 639

75.8-3 Failure to issue certificate or submit return 639

76 HOW TO COMPUTE AMOUNT OF TAX DEDUCTION UNDER SECTION 196D

76.1 Amount covered by section 196D

76.1-1 Securities referred to in section 115AD

76.1-2 Who is a Foreign Institutional Investor

76.2 Rate for tax deduction

76.3 When tax is deductible at lower rate

76.4 Tax credit

76.4-1 Rules framed by Board 661

BOOK TWO : ADVANCE TAX

77 INCOME LIABLE TO ADVANCE TAX

77.1 Provisions applicable up to the assessment year 1988-89 666

77.2 All incomes are subject to advance tax from the assessment year 1989-90 666

78 LIABILITY TO ADVANCE TAX - WHEN ARISES

78.1 Who is liable to pay advance tax 667

DUE DATES OF PAYMENT

79.1 Instalments of advance tax 669

79.2 Due dates 669 Illustration669

79.3 Tax paid after the due dates but within the financial year 670

79.4 Due dates when advance tax is payable on notice issued by Assessing Officer 670

80 COMPUTATION OF ADVANCE TAX LIABILITY

80.1 Payment of advance tax by the assessee on his own account 672

80.1-1 No need to submit any estimate/statement 672

80.1-2 Revision of second and subsequent instalment 672

80.1-3 Computation of tax 672

80.1-4 Tax rates 672 Illustration672

80.2 Payment of advance tax in pursuance of order of Assessing Officer 675

80.2-1 Lower/higher estimate by assessee 675

80.2-2 Computation of tax by Assessing Officer 675 Illustration676

80.3 Payment of advance tax in pursuance of revised order of Assessing Officer 677

80.3-1 Lower/higher estimate by assessee 677

80.3-2 Computation of tax 677 Illustration677

81 INTEREST PAYABLE BY THE ASSESSEE/GOVERNMENT

81.1 Interest for default in payment of advance tax 679

81.1-1 Assessed tax - Meaning of 679

81.1-2 Adjustment when tax is paid before regular assessment under section 140A 680

81.1-3 Adjustment in the case of reassessment/ recomputation under section 147 or 153A 680

81.1-4 Adjustment in the case of rectification/revision/ modification under sections 154, 155, 250, 254, 260, 262, 263, 264, 245D(4) 681

81.1-5 Where an application for settlement is made under section 245C(1) 681

81.1-6 Interest under section 234B or 234C in case of MAT 682

81.1-7 Shipping business of non-residents 682

81.1-8 Payment by cheque 682

81.1-9 Specific order 682

81.1-10 If returned income and assessed income of latest year is nil 683

81.1-11 Collection of interest under sections 234A, 234B and 234C is mandatory 683

81.1-12 Cash seized during search 683

81.1-13 Shortfall because of interpretation of law 684

81.1-14 When advance tax liability arises because of a subsequent court ruling 684

81.1-15 Application of section 234B in the case of settlement of cases 684

81.1-16 Other points 685

81.2 Interest for deferment of advance tax 685

81.2-1 Category A 685

81.2-2 Category B 686

81.2-3 Category C 687

81.2-4 Short payment of advance tax in case of capital gains/casual income 688

81.2-5 What is returned income 688

81.3 Waiver or reduction of interest under sections 234A, 234B and 234C 688

81.3-1 Conditions 688

81.3-2 Period 688

81.3-3 Extent of interest to be reduced or waived 689

81.3-4 Discretion should be exercised in judicial manner 689

81.4 Chief Commissioner/Director General (Investigation) to reduce penal interest in certain cases 689

81.5 Power of CBDT and Settlement Commission to reduce/ waive interest 690

81.6 Interest payable to assessee 690

81.6-1 Provisions applicable after amendments by the Finance Act, 2016 and Finance Act, 2017 691

81.6-2 Other points 692

81.7 Procedure to be followed in calculation of interest 694 Illustrations694

BOOK THREE : TAX COLLECTION AT SOURCE 82

TAX COLLECTION AT SOURCE

82.1 In which case tax has to be collected at source 706

82.2 Tax collection in Category A 707

82.2-1 Who is seller in Category A 707

82.2-2 Who is buyer in Category A 708

82.2-3 Meaning of “scrap” 709

82.2-4 When tax has to be collected in Category A 710

82.2-5 Goods utilised for manufacturing/processing or generation power of in Category A is not subject to tax collection 711

82.2-6 Other judicial rulings 712

82.3 Tax collection in Category B 712

82.4 Tax collection in Category C 713

82.5 Tax collection in Category D 713

82.6 Tax collection in Category E 713

82.6-1 Removing difficulty 714

82.7 Tax collection in Category F 716

82.7-1 Clarification given by the Board in Circular No. 17/2020 718

82.8 Requirement to furnish PAN by collectee 719

82.9 Special provision for TCS for non-filers of income-tax return 719

82.10 Tax collection at lower rate 720

82.11 Tax collection account number 721

82.12 Deposit of tax 721

82.12-1 e-Payment of tax 721

82.13 Issue of certificate 721

82.13-1 Due date of issuing certificate in Form No. 27D 721

82.13-2 Duplicate certificate 722

82.14 Return to the Government 722

82.14-1 Annual return 722

82.14-2 Quarterly return 722

82.14-3 Mode of furnishing quarterly returns 722

82.14-4 Quarterly return not possible before payment of tax and interest 723

82.14-5 PAN data of collectee 723

82.15 Consequences of failure to collect or pay tax, furnish return, etc. 723

82.16 Tax credit to one who pays 723

82.16-1 Rules framed by Board 724

82.17 Consequences if tax is not collected or paid 724

82.18 There is no ambiguity in the provisions of section 206C 724

BOOK FOUR : REFUND

REFUND FOR EXCESS PAYMENT

83.1 Right to claim refund - When arises 732

83.2 Who can claim refund 732

83.3 How to claim refund 732

83.3-1 Claim after the statutory time-limit 732

83.4 Refund on appeal 733

83.4-1 In case assessment is set aside or cancelled 733

83.4-2 In case assessment is annulled 734

83.5 Correctness of assessment not to be questioned 734

83.6 Set off of refunds against the tax remaining payable 734

INTEREST ON REFUND

84.1 Interest on refund on excess payment of advance tax and tax deduction at source 736

84.2 Interest on refund of tax other than advance tax/tax deducted at source 736

84.3 Refund which arises out of appeal effect 736

84.4 Interest along with refund is a must 737

84.5 Delay attributable to the assessee is not considered 738

84.6 Automatic revision of interest in case of appeal, reassessment, etc. 738

84.7 Interest on excess refund 738

84.7-1 Interest under section 234D(1) 739

84.7-2 Computation of interest 739 Illustration740

REFERENCER

Referencer 1 : Tax rates743

Tax deduction at source 743

Referencer 2 :Withholding tax rates754

Referencer 3 :Rates for tax collection at source760

Referencer 4 :Advance tax rates765

Referencer 5 :Calendar for tax deduction/Collection at source and advance payment of tax775

Tax deduction from payments to non-residents

Who is required to deduct tax under sections 194E, 195 and 196A

69.1 Any person responsible for paying any income referred to in section 115BBA is required to deduct tax at source [Sec. 194E].

Any person responsible for paying to non-resident (not being a company), or to a foreign company any interest (not being interest on securities), or any other sum (not being salary) is required to deduct tax at source, if the amount payable is chargeable under the Act.

69.1-1 Payer/Principal officer is person responsible for tax deductionFor this purpose, the payer himself is treated as “person responsible for paying” such amount. If, however, the payer is a company, the company itself, including the principal officer thereof, is the person responsible for paying such amount.

69.1-2 In case of consideration for transfer of foreign exchange amount -Where the sum payable to a non-resident Indian represents consideration for the transfer of any foreign exchange asset (other than a shortterm capital asset), the “authorised dealer” responsible for remitting such sum or crediting such sum to Non-resident (External) Account of the payee shall be the “person responsible for the paying”.

69.1-2a Non-resident Indian - For this purpose, “non-resident Indian” means an individual, being a citizen of India or a person of Indian origin who is not resident. A person shall be deemed to be of Indian origin if he, or either of his parents or any of his grandparents was born in undivided India.

69.1-2b Foreign exchange asset - Foreign exchange asset means any of the following asset which the transferor has acquired/purchased with, or subscribed to in, convertible foreign exchange :

a. shares in Indian company;

b. debentures issued by an Indian company which is not a private company as defined in the Companies Act, 1956 ;

c. deposits with an Indian company which is not a private company as defined in the Companies Act, 1956 ;

d. any security of the Central Government as defined in clause (2) of section 2 of the Public Debt Act, 1944;

e. such other assets as the Central Government may specify in this behalf by notification in the Official Gazette.

Para 69.3 TAX DEDUCTION FROM PAYMENTS TO NON-RESIDENTS Book One

Payment from which deduction has to be made

69.2 Any payment to a non-resident/foreign company of interest (not being on securities) or amount referred to in section 115BBA or any other sum (not being salary) chargeable under the Act is subject to tax deduction [for detailed discussion, see paras 70.1 to 70.3].

➢ Foreign or non-resident companies are also covered by sections 195 but where payments are to be made by head office of non-resident company, and not by its permanent establishment in India, to non-resident suppliers of technologies to be used by the company in India, no deduction of tax is to be made by company’s head office while making such payments as payments in question cannot be deemed to accrue or arise in India—Advance Ruling P. No. 13 of 1995, In re [1997] 94 Taxman 171/228

ITR 487 (AAR - New Delhi).

When tax has to be deducted

69.3 Tax shall be deducted as follows :

69.3-1 Payments referred to section 115BBA - In the case of payments referred to in section 115BBA, tax shall be deducted :

a. at the time of credit* of such income to the account of the payee, or

b. at the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier.

69.3-2 Interest of mutual fund payable to non-resident - Tax on interest of mutual fund under section 10(23D) or of specified company payable to a foreign company or a non-resident (other than a foreign company) shall be deducted at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by any mode, whichever is earlier. Where the aforesaid income is credited to any account (whether called “suspense account” or by any other name) in the books of account of the payer, such crediting shall be deemed to be credit of such income to the account of the payee.

69.3-3 Any other payments - In cases not covered by paras 69.3-1 and 69.3-2 tax shall be deducted as follows :

a. at the time of credit* of income to the account of the payee; or

b. at the time of payment thereof in cash; or

c. at the time of payment thereof by issue of cheque or draft by any other mode, whichever is earlier.

*Only at the time of payment thereof in cash or by issue of cheque/draft or by any other mode in the case of interest of Mutual Fund payable by the Government/public sector bank/or financial institution.

➢ If deposit is made by a non-resident after March 31, 2005, tax is not deductible by an offshore banking unit [Sec. 197A(1D)].

69.3-4 Private arrangement of paying income tax-free cannot discharge obligation under sections 194E, 195 and 196A - The liability to deduct tax at source under sections 194E, 195 and 196A cannot be discharged merely because under a private contract the payee has undertaken to pay any interest (not being on securities) and any other sum (not being salary) tax-free [see also para 47.3].

Tax deduction account number

69.4 See para 1.4.

Deposit of tax to the credit of Central Government

69.5 Tax has to be deposited to the credit of the Central Government as follows :

69.5-1 Where to deposit - See para 1.5-1.

69.5-1a e-Payment of tax - After March 31, 2008, all corporate assessees and other assessees (who are subject to compulsory audit under section 44AB) will have to make electronic payment of tax through internet banking facility offered by authorized banks (irrespective of the assessment year or the financial year for which the payment of tax has to be made). Alternatively, these taxpayers can make electronic payment of tax through internet by way of credit or debit cards. For detailed discussion, see para 1.5-1a.

69.5-2 Time of deposit† - Rule 30 prescribes the following time-limit applicable in respect of tax deducted on or after April 1, 2010 –

69.5-2a When tax is deducted by Government - Where tax is deducted by or on behalf of the Government tax should be deposited within the timelimit given below–

If tax is to be deposited without productionTax should be deposited on the same day of any income-tax challanon which tax is deducted

If tax deposit is accompanied by an income-Tax should be deposited on or before 7 tax challandays from the end of the month in which tax is deducted

69.5-2b When tax is deducted by any other person - In any other case, tax should be deposited within one week from the last date of month in which tax is deducted. However, tax deducted in the month of March can be deposited on or before April 30 after the end of the financial year.

† Where the due date of deposit of TDS falls during March 20, 2020 and June 29, 2020 and such amount is paid on or before June 30, 2020, then for the period of delay interest will be chargeable at the rate of 0.75 per cent per month (or part thereof). However, no penalty shall be levied (or no prosecution shall be sanctioned) in respect of such payment for the period of delay.

Ch. 69

Para 69.7 TAX DEDUCTION FROM PAYMENTS TO NON-RESIDENTS Book One

69.5-3 Payment through challan - The tax deducted at source is required to be deposited in Challan Form No. ITNS 281.

69.5-3a When tax is deducted/collected by a Government office and paid without production of a challan - See para 1.5-3a.

69.5-4 Claim for refund - A claim for refund for TDS paid to the credit of the Central Government under Chapter XVII-B shall be furnished by the deductor in Form No. 26B electronically under digital signature.

Issue of certificate for tax deducted at source

69.6 Every person deducting tax at source is required to issue a quarterly certificate in Form No. 16A.

➢ It may be noted that the recipient of income must be given a certificate in Form No. 16A within the stipulated time even if tax is borne by the payer of the income—Circular No. 785, dated November 24, 1999.

69.6-1 Certificates are issued by downloading from TIN website† - See para 7.6-1.

69.6-2 Time-limit - TDS certificate in Form No. 16A shall be issued on quarterly basis as given below –

Different quartersTDS certificate should be given on or before the dates given below

For the quarter ending June 30 of theAugust 15 of the financial year financial year

For the quarter ending September 30 ofNovember 15 of the financial year the financial year

For the quarter ending December 31 ofFebruary 15 of the financial year the financial year

For the quarter ending March 31 of theJune 15 of the financial year immediately financial yearfollowing the financial year in which tax is deducted

69.6-3 Issue of duplicate certificate - See para 1.6-4. Quarterly return to the Government

69.7 These returns are given below—

69.7-1 Quarterly return - The person deducting tax at source under sections 194E, 195, 196A, 196B, 196C and 196D is required to send a statement of tax deduction in Form No. 27Q. This statement is to be submitted only if the amount is paid to the following :

†Now, TRACES Portal.

a. a person, not being a company, who is either non-resident or a resident but not ordinarily resident in India;

b. a non-Indian company which has not made the prescribed arrangement for the declaration and payments of dividend within India.

➢ Due date of submission of quarterly return - Quarterly returns shall be submitted within the time-limit given below –

Due date of submission of quarterly TDS return

For the quarter ending June 30 of theJuly 31 of the financial year financial year

For the quarter ending September 30 ofOctober 31 of the financial year the financial year

For the quarter ending December 31 ofJanuary 31 of the financial year the financial year

For the quarter ending March 31 of theMay 31 of the financial year immediately financial yearfollowing the financial year in which tax is deducted

➢ Mode of furnishing quarterly returns - The following persons shall submit quarterly TDS/TCS returns electronically (along with the verification of the statement in Form No. 27A) –

1. When deductor or collector is an office of the Government.

2. When deductor/collector is the principal officer of a company.

3. When deductor/collector is a person who is required to get his account audited under section 44AB in the immediately preceding financial year.

4. When the number of deductee’s/collectee’s records in a statement for any quarter of the financial year are 20 or more.

Barring the cases given above, any other deductor/collector can submit quarterly TDS/TCS returns either in paper format or electronically.

➢ Mode of uploading return - With effect from February 19, 2013, the aforesaid electronic return can be submitted/uploaded under any one of the following options –

Option 1 - Uploading quarterly returns with digital signature.

Option 2 - Furnishing quarterly return electronically along with the verification of the statement in Form No. 27A.

Option 3 - Furnishing quarterly return electronically along with electronic verification of the statement in Form No. 27A.

➢ Other requirements - The deductor or collector at the time of preparation of quarterly statement of TDS/TCS shall –593

a. quote his/its TAN;

b. quote his/its PAN (except in the case where deductor/collector is an office of the Government);

c.quote PAN of all deductees/collectees;

d.furnish particulars of tax paid to the Central Government including book identification number or challan identification number;

e.furnish particulars of amount paid or credited on which tax is not deducted in view of the issue of certificate of no deduction by the Assessing Officer under section 197; and

f.furnish particulars of amount paid or credited to the transport contractors (when PAN is submitted to the deductor and tax is not deducted under section 194C).

Consequences of failure to deduct or pay tax or furnish return

69.8 The following are consequences of different default :

69.8-1 Failure to deduct and/or pay tax - See para 1.8-1.

69.8-2 Failure to comply with the provisions of section 203A regarding tax deduction account number - See para 1.8-2.

69.8-3 Failure to issue certificate, or submit return - See para 1.8-3.

69.8-4 Forfeiture of deduction in respect of payment of annual charge, interest, royalty, fees, etc. - If tax is not deducted/paid under section 195, the following deductions are not permissible while computing taxable income of taxpayer.

69.8-4a Annual charge or interest deductible under section 24 [Sec. 25]Any annual charge or interest chargeable under the Act, payable out of India, on which tax has not been paid or deducted at source and in respect of which there is no person who may be treated as an agent, is not deductible, by virtue of section 25, in computing income chargeable under the head “Income from house property”. No deduction is available even if tax is deducted/paid in a subsequent year.

69.8-4b Interest, royalty, fees for technical services or any other sum payable outside India [Sec. 40(a)(i)] - Disallowance under section 40(a)(i) is attracted if the following conditions are satisfied :

a. the amount paid is interest (not being interest on any loan issued for public subscription before April 1, 1938), royalty, fees for technical services or other sum ;

b. the aforesaid amount is chargeable to tax under the Act in the hands of the recipient ;

Para 69.8 TAX DEDUCTION FROM PAYMENTS TO NON-RESIDENTS Book One

Ch. 69

69.8

c. the aforesaid amount is payable outside India (to a resident or nonresident) or such amount is paid in India to a non-resident (not being a company) or to a foreign company; and

d. on the aforesaid amount, tax is deductible at source but such tax has not been deducted or after deduction such tax has not been paid to the Government till the due date of submission of return of income under section 139(1).

➢ Consequences if the above conditions are satisfied - If all the above conditions are satisfied, the aforesaid expenditure is not deductible.

➢ Consequences if tax is deducted subsequently - If the above expenditure is not allowed in the current year, deduction will be available while computing the business income of a subsequent previous year in which such tax will be paid (i.e., in the year in which tax deducted by the assessee will be paid to the Government).

ILLUSTRATION

Consider the following cases pertaining to interest, royalty, technical fees or any other sum payable by X Ltd. (due date of submission of return of income for the assessment year 2025-26 : November 30, 2025) to a nonresident which is subject to the provisions of tax deduction at source under section 195 (in all cases liability is incurred during the previous year 2024-25)—

Date onActual dateWhen taxDate of deposit of TDSPrevious year which taxof taxshould bein which it is is supposeddeductiondeposited underdeductible to besection deducted200(1)

June 26, 2024June 26, 2024July 7, 2024December 1, 20242024-25

July 27, 2024July 27, 2024August 7, 2024November 30, 2025 2024-25

March 10,March 10,April 30, 2025April 30, 20252024-25 20252025

March 12,March 12,April 30, 2025December 20, 2025Not deductible 20252025in the previous year 2024-25. It will be deducted in the year in which TDS is deposited by X Ltd.

May 16, 2024May 16, 2024June 7, 2024Not deposited Not deductible

➢ Amendment made by the Finance (No. 2) Act, 2019 - The above provisions have been amended by the Finance (No. 2) Act, 2019 with effect from the assessment year 2020-21. Under the amended provisions, a relief is given if tax is deductible in case of payment/credit to a non-resident/ foreign company, but it is not deducted. In such a case, relief is available if

595

Para 69.8 TAX DEDUCTION FROM PAYMENTS TO NON-RESIDENTS Book One

the payer is not deemed to be an assessee-in-default under the first proviso to section 201(1), as the following conditions are satisfied –

a. the recipient has furnished his return of income under section 139;

b. the recipient has taken into account the above income in such return of income;

c. the recipient has paid the tax due on the income declared in such return of income, and

d. the payer furnishes a certificate to this effect from a chartered accountant in a prescribed form.

If the above conditions are satisfied, then for the purpose of section 40(a)(i) it shall be deemed that the payer has deducted and paid the tax on such amount on the date of the furnishing of return of income by the recipient. Amendment applicable with retrospective effect or prospective effect - The aforesaid amendments are applicable with effect from the assessment year 2020-21. However, courts have been unanimous in holding that amendments, which are intended to remove unintended hardships, are declaratory in nature and, therefore, operate retrospectively – CIT v. Calcutta Export Company [2018] 255 Taxman 293 (SC), CIT v. Alom Extrusions Ltd. [2009] 185 Taxman 416 (SC), CIT v. Amrit Banaspati Co. Ltd. [2002] 123 Taxman 74 (SC), Allied Motors (P.) Ltd. v. CIT [1997] 91 Taxman 205 (SC).

ILLUSTRATIONS

Illustration 1 - X Ltd. pays a sum of Rs. 9,00,000 as commission to Y Inc. (a US company) on October 15, 2024. Tax is deductible under section 195 (read with Indo-US tax treaty) but it is not deducted by X Ltd. Y Inc. pays advance tax on the due dates on its income (including Rs. 9,00,000). Entire tax liability is paid by Y Inc. during the financial year 2024-25 by way of advance tax. Return of income of Y Inc. for the assessment year 2025-26 is submitted on December 20, 2025. X Ltd. has a certificate to this effect from a chartered accountant in the prescribed form. In this case, tax is not deducted by X Ltd. in the financial year 2024-25. By virtue of section 40(a)(i), the payment of Rs. 9,00,000 will be disallowed in computing the income for the assessment year 2025-26. However, X Ltd. cannot be treated as an assessee-in-default under the amended provisions of first proviso to section 201(1), as the following conditions are satisfied –

a. Y Inc. has furnished its return of income under section 139;

b. Y Inc. has taken into account the above income in such return of income;

c. Y Inc. has paid the tax due on the income declared in such return of income, and

d. X Ltd. has a certificate to this effect from a chartered accountant in a prescribed form.

Under the amended provisions, it will be assumed that X Ltd. has deducted and paid tax on December 20, 2025. As a consequence, Rs. 45,000 will be allowed as

deduction in the hands of X Ltd. for the financial year 2025-26 (i.e., assessment year 2026-27).

Illustration 2 - On December 8, 2024, Z Ltd. pays Rs. 4,00,000 as royalty to C (a non-resident individual) after deducting tax at the rate of 10 per cent under section 195, read with section 115A. The tax so deducted by Z Ltd. is not deposited till November 30, 2025. However, C submits his return of income on July 31, 2025 after including Rs. 4,00,000 in his income. As per his return of income, a refund of Rs. 82,000 is due to him.

In this case, the amended provisions are not applicable (the amended provisions are applicable only when the payer fails to deduct the whole or any part of tax). If tax is deducted but not paid, the amended provisions [as well as the first proviso to section 201(1)] are not applicable. Z Ltd. cannot claim any deduction for the previous year 2024-25 or 2025-26 in respect of royalty payment of Rs. 40,00,000.

69.8-4c Interest deductible under section 57 [Sec. 58] - By virtue of section 58, interest payable outside India (not being interest on loan issued for public subscription before April 1, 1938) on capital borrowed, which is deductible under section 57, is not allowed as deduction if tax is not deducted/paid under section 195.

No deduction is admissible if tax is deducted/paid in a subsequent year.

Ch. 69

Taxmann's Deduction of Tax at Source with Advance Tax and Refunds

BOOK ONE : DEDUCTION OF

CONTENTS

CONTENTS

TAX DEDUCTION FROM ACCUMULATED BALANCE OF PROVIDENT FUND DUE TO AN EMPLOYEE

5

DEDUCTION

CONTENTS

DEDUCTION OF TAX AT SOURCE FROM DIVIDEND

CONTENTS

8

HOW TO COMPUTE DIVIDENDS AND TAX DEDUCTIBLE THEREFROM

9

DEDUCTION OF TAX AT SOURCE FROM INTEREST OTHER THAN INTEREST ON SECURITIES

CONTENTS

10

HOW TO COMPUTE INTEREST (OTHER THAN INTEREST ON SECURITIES) AND TAX

CONTENTS

CONTENTS

12

WINNINGS

13

CONTENTS

TAX DEDUCTION FROM PAYMENT TO CONTRACTORS

16

WHAT CONSTITUTES A PAYMENT TO CONTRACTOR/

TAX DEDUCTION FROM INSURANCE

18

HOW TO COMPUTE INSURANCE COMMISSION AND TAX TO BE DEDUCTED THEREFROM

19

TAX DEDUCTION FROM PAYMENT IN RESPECT OF LIFE INSURANCE POLICY

HOW TO COMPUTE TAX TO BE DEDUCTED FROM PAYMENT IN RESPECT OF LIFE INSURANCE POLICY

CONTENTS

DEDUCTION

TAX AT SOURCE FROM NATIONAL SAVINGS SCHEME

DEDUCTION

23

24

DEDUCTION OF TAX AT SOURCE FROM COMMISSION ON SALE OF LOTTERY TICKETS

TO COMPUTE COMMISSION ON SALE OF LOTTERY TICKETS AND

TAX DEDUCTION FROM COMMISSION OR BROKERAGE

HOW TO COMPUTE COMMISSION OR

AND TAX TO BE DEDUCTED THEREFROM

TAX DEDUCTION FROM RENT

CONTENTS

HOW TO COMPUTE RENT AND TAX TO BE DEDUCTED THEREFROM

TAX DEDUCTION FROM PAYMENT OF RENT BY CERTAIN INDIVIDUALS AND HUFs

HOW TO COMPUTE TAX DEDUCTIBLE FROM RENT UNDER SECTION 194-IB

TAX DEDUCTION FROM PAYMENT UNDER SPECIFIED AGREEMENT

HOW TO COMPUTE CONSIDERATION WHICH IS SUBJECT TO TAX DEDUCTION UNDER SECTION 194-IC

DEDUCTION OF TAX AT SOURCE FROM FEES FOR TECHNICAL OR PROFESSIONAL SERVICES OR ROYALTY

HOW TO COMPUTE FEES FOR PROFESSIONAL AND TECHNICAL SERVICES AND ROYALTY AND TAX DEDUCTIBLE THEREFROM

DEDUCTION OF TAX AT SOURCE FROM INCOME IN RESPECT OF UNITS

CONTENTS

HOW TO COMPUTE INCOME IN RESPECT OF UNITS AND TAX DEDUCTIBLE THEREFROM

HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF COMPENSATION ON ACQUISITION OF IMMOVABLE PROPERTY

HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF INTEREST ON INFRASTRUCTURE DEBT FUND

45

DEDUCTION OF TAX AT SOURCE FROM INTEREST ON UNITS OF BUSINESS TRUST

CONTENTS

46

HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF INTEREST ON UNITS OF BUSINESS TRUST

47

DEDUCTION OF TAX AT SOURCE FROM INCOME IN RESPECT OF UNITS OF INVESTMENT FUND/SECURITISATION TRUST

CONTENTS

CONTENTS

HOW

CONTENTS

52

HOW TO COMPUTE TAX DEDUCTIBLE FROM INTEREST PAYABLE UNDER SECTION 194LD

53

TAX DEDUCTION FROM PAYMENT TO RESIDENT CONTRACTOR, BROKER OR PROFESSIONAL BY CERTAIN INDIVIDUALS AND HUFs

CONTENTS

55

CONTENTS

56

HOW TO COMPUTE TAX DEDUCTIBLE FROM CASH PAYMENT TO ACCOUNTHOLDERS UNDER SECTION 194N

57

DEDUCTION OF TAX AT SOURCE FROM PAYMENTS TO E-COMMERCE PARTICIPANTS

INCOME