Scheme of Tax Deducted at Source

Scheme of Tax Deducted at Source

under the scheme of tax deduction at source (TDS), persons responsible for making payment of income, covered by the scheme, are responsible to deduct tax at source and deposit the same to the Government's treasury within the stipulated time. The recipient of income gets only the net amount (after deduction of tax at source) and the amount deducted at source is adjusted against his final tax liability.

Payments covered by TDS Scheme

TDS Scheme covers payments like 

• Salary (Resident or Non-Resident
• Payments other than salary to resident such as Interest, Dividend, Rent, Commission/Brokerage, Lottery Winnings, Winnings of races, Technical / professional fees, Royalty, Compensation etc
• Payments to non-residents / foreign companies.

TDS Rates for the financial year 2013-14

Sr no.	Section of Act	Nature of Payment	Cut off Amount	Rate %
				HUF/ Individual	Others
1	192	Salaries		Average Rate
2	193	Interest on Debentures	5000	10%	10%
3	194	Deemed Dividend	-	10%	10%
4	194A	Interest other than Int. on Securities (by Bank)	10000	10%	10%
5	194A	Interest other than Int. on Securities (by Others)	5000	10%	10%
6	194B	Lottary / Cross Word Puzzale	10000	30%	30%
7	194BB	Winning from horse races	5000	30%	30%
8	194C (1)	Contracts	30000	1%	2%
9	194C (2)	Sub-Contracts / Advertisments	30000	1%	2%
10	194D	Insurance Commission	20000	10%	10%
11	194EE	Payments out of Deposit under NSS	2500	20%	-
12	194F	Repurchase of units by MF/UTI	1000	20%	20%
13	194H	Commission or Brokerage	5000	10%	10%
14	194G	Commission on Sale of Lottary Ticket	1000	10%	10%
15	194I	Rent (Land & Building) Furniture & Fittings	180000	10%	10%
		Rent (Plant & Machinery), Equipment	180000	2%	2%
16	194IA	TDS on immovable property other than agriculture land (w.e.f. 01.06.2013)	50 Lakh	1%	1%
17	194J	Professional / Technical Charges / Royalty & Non-Compete Fees	30000	10%	10%
18	194J(1) (ba)	any remuneration or commsion paid to director of the company (from 1.07.12)	NIL	10%	10%
19	194 LA	Compensation on acquisition of immovable property	200000	10%	10%

Note: 

1. Yearly Limit u/s 194C: Where the aggregate of the amounts paid/credited or likely to be paid/credited to Contractor or Sub-contractor exceeds Rs.75,000 during the financial year, TDS has to be deducted u/s 194C.
2. TDS at higher rate ie., 20% has to be deducted if the deductee does not provide PAN to the deductor.(read detail u/s 206AA)
3. No TDS on Goods Transport :No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages on furnishing of his Permanent Account Number, to the person paying or crediting such sum.(read details here No TDS on Goods Transport )
4. Surcharge on tax is not deductible/collectible at source in case of resident individual/HUF /Firm/ AOP / BOI/Domestic Company in respect of payment of income other than salary.
5. Surcharge on TDS is applicable on payment made to non resident other than company ,if payment is in excess of one crore.(10 %)
6. Surcharge on TDS on salary is applicable if taxable salary is more than one crore @ 10 %
7. In the case of Company other than Domestic Company, (i) at the rate of two per cent. of such tax, where the amount or the aggregate of such amounts collected and subject to the collection exceeds one crore rupees but does not exceed ten crore rupees; (ii) at the rate of five per cent. of such tax, where the amount or the aggregate of such amounts collected and subject to the collection exceeds ten crore rupees.
8. No Cess on payment made to resident: Education Cess is not deductible/collectible at source in case of resident Individual/HUF/Firm/ AOP/ BOI/ Domestic Company in respect of payment of income other than salary.Education Cess @ 2% plus secondary & Higher Education Cess @ 1% is deductible at source in case of non-residents and foreign company.
9. TDS by Individual and HUF (Non Audit) case not deductible :An Individual or a Hindu Undivided Family whose total sales, gross receipts or turnover from business or profession carried on by him does not exceeds the monetary limits(Rs.100,00,000 in case of business & Rs.25,00,000 in case of profession) under Clause (a) or (b) of Sec.44AB during the immediately preceding financial year shall not be liable to deduct tax u/s.194A,194C, 194H, 194I & 194J.So no tax is deductible by HUF/Individual in first year of operations of business even sales/Fees is more than 100/25 Lakh.