Tax Deduction at Source

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About Tax Deduction at Source

Tax deduction at source (TDS) is a means of collecting tax on income, dividends, or asset sales, by requiring the payer to deduct tax due before paying the balance to the payee and deposit the tax to the revenue authority.

Income tax must be deducted at source as per the provisions of the Income Tax Act, 1961. Any payment covered under these provisions shall be paid after deducting a prescribed percentage of income tax It has a great importance while conducting tax audits. Assessee is also required to file quarterly return to CBDT. Returns states the TDS deducted & paid to government during the Quarter to which it relates.

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TDS on immovable property

1.Section 194IA of Income Tax Act,1961.

It seeks deduction of tax at source on transfer of certain immovable property other than agricultural land to a resident transferor.
Any person being a Buyer who is liable to Pay to a resident seller by way of consideration for transfer of any immovable property exceeding 50 Lakhs shall at the time of credit of such sum to the account of the transferor or at the time of payment in whatever manner, has to deduct tax at source at 1% of the sale value.

This TDS on property is required to be deposited in 30 days from the end of the month in which deduction is made.

2.Section 194IB of Income Tax Act,1961.

It seeks deduction of tax at source on payment of rent exceeding Rs. 50,000 in a month by an individual or HUF to a resident landlord.
TDS shall be deducted @ 5% at the time of credit of rent for the last month of the previous year or the last month of tenancy, if the property is vacated during the year, as the case may be.

3.Section 194C of Income Tax Act,1961.

It seeks deduction of tax at source on payment of contractual payment.

Tax needs to be deducted 1% (for individual, HUF)/ 2% (for others) of payment where payment is made for carrying out any work (including supply of labor for carrying out any work and advertisements) by a contractor/sub-contractor.

TDS is to be deducted at the time of credit to the account of contractor or at the time of payment in cash or by cheque or draft or by any other mode whichever is earlier.
No TDS shall be deducted if the single time payment to contractor does not exceed RS. 35000 or Rs. 1,00,000 in aggregate during the year.

4.Section 194J of Income Tax Act,1961.

It seeks deduction of tax at source on payment of fees for professional services, for technical services, Royalty, remuneration/fees/commission paid to director of the company (excluding salary); contractual payment.

TDS is to be deducted at the time of credit to the account of the service provider or at the time of payment in cash or by cheque or draft or by any other mode whichever is earlier.
No TDS shall be deducted if the single time payment to contractor does not exceed RS. 30,000 in aggregate during the year.

TDS Return Filing Due Dates

Quarter	Period	Due Date
1st Quarter	1st April to 30th June	31st August 2024
2nd Quarter	1st July to 30th September	31st October 2024
3rd Quarter	1st October to 31st December	31st January 2025
4th Quarter	1st January to 31st March	31st May 2025

TDS Return Forms

Nature of Payment	Form
TDS on Salary	Form 24Q
TDS where deductee is a non-resident, foreign company	Form 27Q
TDS on payment for the transfer of immovable property	Form 26QB
TDS in any other case	1st January to 31st March

TDS Certificates

A deductor is required to issue a TDS certificate called

Form 16 – for salaried employees and

Form 16A – for non-salaried employees within a specified time.

Deductor has to issue TDS Certificates within two months of the next financial year

Impact of Non-Compliance to TDS

Income Tax Act, 1962

Disallowance u/s. 40(a) (ia) of Income Tax Act, 1962 (Act)
Raising of demand u/s. 201(1) of the Act
Charging of Interest u/s (1A) of the Act
Levying penalty u/s. 271C of the Act

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