Complete analysis-TDS Rates & Provisions for F.Y.2018-19

[Sandeep Rawat]

TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.

The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deductee. It is the deductor’s responsibility to deduct TDS before making the payment and deposit the same with the government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is linked to the PAN of the deductor and deductee.

TDS is deducted on the following types of payments:

• Salaries
• Interest payable by Assessee
• Rent payments
• Consultation fees
• Professional fees

The Assessee is mandatorily required to deduct tax at source (“TDS”) in applicable cases on various payments (by way of salaries, payment to vendors, rent, etc.) and deposit the same with the Government, within the stipulated time. A short deduction of TDS or non-deduction results in the Assessee being treated as an ‘assessee-in-default’ and consequently, the Assessee is liable for payment of interest on TDS, penalty, etc. Also, such payments are disallowed as a deduction under the Income-tax Act, 1961 where there is a default in deduction and/or deposit of TDS.

1. Finance Act, 2018 has brought some minor changes in the TDS provisions. For your ready reference, TDS rate chart for FY 2018-19 is provided below:

1. Commonly used TDS Provision for payments made to persons resident in India (Individuals, Firms, Companies, etc.):-

Section	Nature of Payment for Domestic Transactions	Threshold Limit	Individual / HUF	Others	15G-15H
		Rs.	TDS Rate (%)		Allowed
192	Salaries (Annexure-I)	-	As per income tax slabs	-	NO
193	Interest on Securities	10000	10	10	YES
194A	Interest to other than Resident Senior Citizen	10000	10	10	YES
194A	Interest to Resident Senior Citizen	50000	10	10	YES
194C	Contractor - Single Transaction	30000	1	2	NO
194C	Contractor – Aggregated Transaction during the F.Y.	100000	1	2	NO
194H	Commission / Brokerage	15000	5	5	NO
194I	Rent of Land and Building - F&F	180000	10	10	YES
194I	Rent of Plant / Machinery / Equipment	180000	2	2	YES
194IA	Transfer of certain immovable property other than agriculture land	5000000	1	1	NO
194J	Professional Fees / Technical Fees / etc.	30000	10	10	NO
194J	Payment to Call Centre Operator (w.e.f. 01.06.2017)	30000	2	2	NO

Conditions for being a resident senior citizen:

1. Individual of 60 years or more at any time during the year

2. An individual is said to be resident in any previous year if he satisfies any one of the following conditions:

a. He stays in India in the relevant previous year for a period of 182 days or,

b. He stays in India for at least 60 days during the relevant previous year and at least 365 days for 4 years preceding that previous year.

2. Other TDS Provision for payments made to persons resident in India (Individuals, Firms, Companies, etc.)

Section	Nature of Payment for Domestic Transactions	Threshold Limit	Individual / HUF	Others	15G-15H
		Rs.	TDS Rate (%)		Allowed
192A	Premature withdrawal from EPF	5000	10	-	YES
194	Dividends	2500	10	10	YES
194B	Winning from Lotteries	10000	30	30	NO
194BB	Winning from Horse Races	10000	30	30	NO
194D	Insurance Commission	15000	5	10	YES
194DA	Life insurance Policy	100000	1	1	YES
194E	Non-Resident Sportsmen or Sports Association		20	20	NO
194EE	NSS	2500	10	10	YES
194F	Repurchase Units by MFs		20	20	NO
194G	Commission - Lottery	15000	5	5	NO
194IB	Rent by Individual / HUF (w.e.f. 01.06.2017)	50000/PM	5	-	NO
194LA	Compensation on transfer of certain immovable property other than agricultural land	250000	10	10	NO
194LA	Immovable Property (TDS exempted under RFCTLARR Act (w.e.f. 01.04.2017)	-	-	-	NO
194LB	Income by way of interest from infrastructure debt fund (non- resident)	-	5	5	NO
194LC	Income by way of interest by an Indian specified company to a  non-resident / foreign company on foreign currency approved loan / long-term infrastructure bonds from outside India (applicable from July 1, 2012)	-	5	5	NO
194LD	Interest on certain bonds and Govt. Securities (from 01-06-2013)	-	5	5	NO

Notes:

a) No TDS on Goods & Service Tax: As per circular no. 23/2017 dated 19.07.2017 of CBEC, TDS is not applicable on Goods and Service Tax (GST) where GST is shown separately.

b) No Surcharge, Health & Education Cess is not deductible on payments made to residents, other than salary

c) Deduction of TDS at a lower rate or non-deduction of TDS:

i) Deduction of TDS at a lower rate:

In case where a certificate for deduction of TDS at a lower rate u/s. 197 is obtained from the customer/ vendor, it should be confirmed whether the amount of payment is within the limit and valid for the period specified in the certificate u/s. 197 along with the certificate no. using the ‘197 Validation’ facility on the TRACES website.

ii) Non-deduction of TDS:

Please note that Form No. 15G can be accepted by the Assessee only when the total interest amount payable is less than the minimum exemption limit, which is ₹ 2,50,000 for financial year 2018-19. In case the same exceeds the above limit, then TDS is to be deducted as per the applicable provisions.

In case of Form No. 15H, the same is not acceptable if the total taxable income of the customer/ vendor including the interest income after claiming deductions under chapter VI(A) exceeds the minimum exemption limit, which is ₹ 3,00,000 for senior citizen/ ₹ 5,00,000 for super senior citizen for financial year 2018-19.

d) TDS at higher rate: If a person fails to furnish PAN to the Assessee whose receipts are  subject to TDS, then, the TDS is to be deducted at higher of the following rates”

       i) The rates in force or

       ii) 20%

Exemption for deduction of TDS at a lower rate or non-deduction of TDS as discussed in Point 1-C is not admissible in case of Invalid PAN/ No-PAN.

e) TDS on Good Transport: TDS shall be applicable on payment to transporters, i.e., contractors in the business of plying, hiring or leasing goods carriages. However, TDS exemption will be available to transporter owning 10 (ten) or less goods carriage at any time during the previous year. For claiming such exemption, transporter would also need to furnish a declaration to the Assessee along with a copy of PAN. For transporter not covered above, TDS is to be deducted at normal rates as given in above table.

f) TDS on interest u/s 194A paid to resident senior citizen: Finance Act, 2018 has increased the threshold limit u/s section 194A of the Income Tax Act, 1961 for “resident” Senior Citizens to ₹ 50,000/-.

2) Due dates for deposit/remittance of TDS to Central Government are as under:

Other than Section 194IA/194IB

• For the months of April to February (Monthly) – on or before 7th day from the end of the month in which tax is deducted.
• For the month of March –  30th April

Section 194IA/194IB

• For any month – on or before 30th day from the end of the month in which tax is deducted.

3)  Interest on non-deduction/ non-payment of TDS:

As per Sec. 201(1A) of the Income-tax Act, 1961, if the Assessee does not deduct the whole or any part of the TDS or after deducting fails to pay the TDS as required by or under the Act, then the Assessee is liable to pay simple interest on the amount of such TDS, for every month or part of a month, at the rate of:

• 1% from the date on which such TDS was deductible up to the date on which such TDS is deducted; and
• 1.5% from the date on which such TDS was deducted up to the date on which such TDS is paid

4)  Late filing Levy:

As per Sec 234E of Income tax Act 1961, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues, maximum to the amount of tax deducted.

5) Due dates for filing of e-TDS returns & issue of TDS certificates:

a) In respect of any other TDS (other than TDS u/s. 194-IA):

Quarter	Period	Due Date for filing of e-TDS Return	Due Date for issuing TDS certificate [in Form no. 16A]
Q-1	1st April to 30th June	31st July	15th August
Q-2	1st July to 30th September	31st October	15th November
Q-3	1st October to 31st December	31st January	15th February
Q-4	1st January to 31st March	31st May	15th June

b) In respect of TDS u/s 194IA

i) A challan-cum-statement in Form No.26QB is to be filed within 30 days from the end of the month in which the deduction is made

ii) TDS certificate in Form no.16B is to be issued to the payee within 15 days from due date of furnishing statement in Form no. 26QB

c) In respect of TDS u/s 194IB

i) A challan-cum-statement in Form No.26QC is to be filed within 30 days from the end of the month in which the deduction is made

ii) TDS certificate in Form no.16C is to be issued to the payee within 15 days from due date of furnishing statement in Form no. 26QC

Annexure-I

TAX SLABS FOR FY 2018-19 AY 2019-20

1. Income Tax Slab for Individual Tax Payers & HUF (Less Than 60 Years Old)

Income Tax Slab	Tax Rate
Income up to ₹ 2,50,000	No tax
Income from ₹ 2,50,000 – ₹ 5,00,000	5%
Income from ₹ 5,00,000– 10,00,000	20%
Income more than ₹ 10,00,000	30%

Surcharge: 10% of income tax, where total income exceeds ₹ 50 lakh up to ₹ 1 crore.

Surcharge: 15% of income tax, where the total income exceeds ₹ 1 crore.

Health & Education Cess: 4% of Income Tax.

2. Income Tax Slab for Senior Citizens (60 Years Old or More but Less than 80 Years Old)

Income Tax Slab	Tax Rate
Income up to ₹ 3,00,000	No tax
Income from ₹ 3,00,000 – ₹ 5,00,000	5%
Income from ₹ 5,00,000– 10,00,000	20%
Income more than ₹ 10,00,000	30%

Surcharge: 10% of income tax, where total income exceeds ₹ 50 lakh up to ₹ 1 crore.

Surcharge: 15% of income tax, where the total income exceeds ₹ 1 crore.

Health & Education Cess: 4% of Income Tax.

3. Income Tax Slab for Senior Citizens (80 Years Old or More)

Income Tax Slab	Tax Rate
Income up to ₹ 5,00,000	No tax
Income from ₹ 5,00,000– 10,00,000	20%
Income more than ₹ 10,00,000	30%

Surcharge: 10% of income tax, where total income exceeds ₹ 50 lakh up to ₹ 1 crore.

Surcharge: 15% of income tax, where the total income exceeds ₹ 1 crore.

Health & Education Cess: 4% of Income Tax.

For further clarification and professional assistance, feel free to contact at [email protected]

(Mr. Sandeep Rawat has vast experience & knowledge in dealing with Direct and Indirect Taxation. He is providing his expertise service as Managing Partner at SRT Consultancy & Service. He can be reached[email protected])