Central University

of South Bihar

Project Work

Name : MRIGANK SHEKHAR

Course : B.A. LL.B. (Hons)
Semester : 9TH
Enrolment No.: : CUSB1513125025
Subject : TAX LAW
Submitted To : MANI PRATAP
ACKNOWLEDGEMENT
The project work of “TAX” on the topic “TAX DEDUCTION AT SOURCE”
This project is given by our Honorable subject professor “MANI PRATAP ” and
first of all I would like to thank her for providing me such a nice topic and
making me aware as well providing me a lot of ideas regarding the topic and
the methods to complete the project.

I would like to thank all the Library staffs who helped me to find all the desired
books regarding the topic as the whole project revolves around the doctrinal
methodology of research. I would like to thank to my seniors as well as class
mates who helped me in the completion of this project. I would also like to
thanks to Google and Wikipedia as well as other web sites over web which
helped me in the completion of this project. Last but not the least, thanks to all
who directly or indirectly helped me in completing of this project.

I have made this project with great care and tried to put each and every
necessary information regarding the topic. So at the beginning I hope that if
once you will come inside this project you will be surely glad.

-Mrigank Shekhar
Introduction
The concept of TDS was introduced with an aim to collect tax from the very source of
income. As per this concept, a person (deductor) who is liable to make payment of specified
nature to any other person (deductee) shall deduct tax at source and remit the same into the
account of the Central Government. The deductee from whose income tax has been deducted
at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS
or TDS certificate issued by the deductor.

What is TDS ?1

TDS or tax deducted at source is a deduction made by someone while making a payment or
crediting the account, whichever is early. This could be your employer, customer or even a
bank paying you interest on a fixed deposit. Before making a payment to you, the payer
deducts and pays tax on your behalf to the Income tax department. You can claim/adjust TDS
credit while filing your income tax return against income tax payable. You can view the
details of the TDS credit in Form 26AS by logging into your income tax efiling account.

TDS could be while purchasing a property, paying rent or paying a salary to any person. In
such circumstances, you should know how much tax to deduct (TDS) as well as how and
when to pay it to the Income Tax Department. For example, if you are a company/partnership
paying professional fees of Rs 60,000, you have to deduct TDS of 10% (see details below).
This means Rs 6,000 to be deducted as tax from professional fees. Alternatively, if you have
purchased a flat worth Rs 60 lakhs, you have to deduct TDS at 1%. This means you have to
keep aside Rs 60,000 and pay this amount to the Income Tax Department rather than to the
seller. To know more about when to deduct TDS and how to pay it, is elaborated below

TDS Rate Chart

Income Type TDS Rate

Salary Slab Rate

Fixed Deposit Interest 10%

Bonds 10%

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Insurance Commissions 5%

Contractor Services 1%/2%

Rent 2%/10%/5%

Shares/Mutual Funds Nil

Savings Account Interest Nil

NCDs listed on exchange Nil

Property 1%

Brokerage 5%

Professional and Technical Services 10%

The rates mentioned are for payments made to Resident individuals who have provided their
PAN to the person responsible for deducting tax. Different rates apply under the various
heads mentioned for specific circumstances and other categories of taxpayers. Please refer to
the notes below.

TDS on Salary

Tax is deducted by your employer as per your income tax slab under section 192 of the
Income Tax Act, 1961.This is why employers asked for investment declarations at the start of
the year and investment proofs towards the end. This enables them to calculate your taxable
income and applicable slab and deduct tax accordingly. If your slab is 30%, the tax will be
deducted at 30% and so on.

TDS on Interest Income (Fixed Deposit)

Interest Income of resident person is taxable under section 194A of the Income Tax Act,
1961. Banks are required to deduct tax on anyone whose interest payment on a time deposit
(FD) exceeds Rs 10,000. This threshold applies to interest from a single FD or the cumulative
interest from all FDs with the bank if there are more. The rate at which the bank deducts tax
is as follows:
Case TDS Rate

If PAN number is not given to the bank 20%

If PAN number is given to the bank 10%

If an individual submits form 15G/15H No TDS

If your total income is below the taxable limit, you can submit form 15G/15H to prevent the
bank from deducting tax on your fixed deposits. Form 15H is for senior citizens, those who
are 60 years or older; while Form 15G is for persons other than senior citizens.

TDS on interest received from bonds

Interest paid on bonds, is subject to Tax deducted at source (TDS) at 10% under section 193
of the Income Tax Act, 1961. This would also include government issued bonds like the
7.75% Savings (Taxable) Bonds. In case of tax-free bonds, this provision would not apply.

TDS on Insurance Commission

Individual & HUF who receive insurance commission will have tax deducted on this
commission income under Section 194D of the Income Tax Act, 1961. The rate of deduction
is 5% if the payee’s PAN is provided. For entities other than individual & HUF however, the
TDS rate is 10% if PAN is provided. If PAN is not provided then TDS rate is 20%. Those
getting commissions less than Rs 15,000 per annum will not have any TDS deducted.

TDS for contractors

Contractors undertaking various types of work such as construction projects for governments
at different levels, local bodies or co-operative societies are subject to TDS under Section 194
C of the Income Tax Act, 1961. This can include even services such as advertising or
catering. The applicable rate is 1% for individuals & HUF and 2% for entities other than
Individuals & HUF (like companies/firms). If the PAN number is not furnished, the rate of
deduction is 20%. Those getting payments upto Rs 30,000 in a single payment or upto Rs
100,000 in aggregate in a financial year, will not have any tax deducted under this section.

TDS on interest on deposits in savings accounts

No TDS is applicable to savings account interest. In fact savings account interest up to Rs

10,000 per annum is available as a deduction under Section 80TTA. For senior citizens, the
deduction is higher under Section 80TTB upto Rs 50,000 for all kinds of deposits.

TDS on rent
Individuals or HUFs who are subject to tax audit are under an obligation to deduct the tax at
source if the rent paid by them is more than Rs 1.8 lakhs in a financial year. The rate of
deduction is 2% for the use of any machinery, plant and equipment and 10% for the use of
any land, building and furniture or fittings.

For individual or HUF (Not liable for Tax Audit)

Any individual or HUF not liable for tax audit, paying rent to a resident for use of land or
building or both of more than Rs 50,000 for a month or part of the month is required to
deduct 5% tax under section 194IB of Income tax Act, 1961.They have to deduct tax at the
time of credit of rent for the month of March or the last month of tenancy, if the property is
vacated during the year, as the case may be. They have to pay the tax deducted to the
government within a period of 30 days from the end of the month in which the deduction is
made accompanied by a challan-cum-statement (Form 26 QC).

The person deducting the tax has to provide a tax deduction certificate (Form 16C) to the
landlord within 15 days from due date of tax payment and submission of form 26QC. Tenants
do not need a Tax Deduction Account Number (TAN) for deducting TDS under this section.
If the landlord does not provide his PAN number, the tenant has to deduct tax at 20% instead
of 5% of the rental payment.

TDS on shares and mutual funds

There is no Tax deducted at source (TDS) on capital gains in shares and mutual funds.

TDS on property

Buyers of flats, houses or other property which has a value of Rs.50 lakhs or above have to
deduct tax of 1% of the purchase value. If the seller’s PAN number isn’t provided to the
buyer, tax will be deducted at 20%. The buyer does not need to obtain a TAN for this
purpose. The buyer has to pay the tax deducted to the government within a period of 30 days
from the end of the month in which the deduction is made accompanied by a challan-cum-
statement (Form 26 QB).

The person deducting the tax has to provide a tax deduction certificate to the landlord within
15 days from the due date of tax payment and submission of form 26QB.

TDS on brokerage

Any Person (other than individual or HUF) who is paying brokerage or commission (other
than insurance commission) to a resident shall deduct tax at the time of credit to the account
of the payee or at the time of payment, whichever is earlier at the rate of 5% under section
194H of the Income Tax Act, 1961. If PAN number is not provided to the person making the
deduction, tax will be deducted at the rate of 20%. However if the amount payable is less
than Rs 15,000 in a financial year, no TDS will be deducted. Individuals or HUFs who are
subject to tax audit are also under an obligation to deduct the tax at source under this section.

TDS on fees for professional and technical services

Any Person (other than individual or HUF) who is paying fees for professional services or
technical services to a resident shall deduct tax at the time of credit to the account of the
payee or at the time of payment, whichever is earlier at the rate of 10% under section 194J of
the Income Tax Act, 1961. The rate of deduction is 20% if PAN is not furnished to the person
making the deduction. No deduction will be made if the professional fee paid in a financial
year does not exceed Rs 30,000.

Individuals or HUFs who are subject to tax audit are also under an obligation to deduct the
tax at source under section 194J of Income Tax Act, 1961.

When should TDS be deducted and by whom?2

Any person making specified payments mentioned under the Income Tax Act are required to
deduct TDS at the time of making such specified payment. But no TDS has to deducted if the
person making the payment is an individual or HUF whose books are not required to
be audited.
However, in case of rent payments made by individuals and HUF exceeding Rs 50,000 per
month, are required to deduct TDS @ 5% even if the individual or HUF is not liable for a tax
audit. Also, such Individuals and HUF liable to deduct TDS @ 5% need not apply for TAN.
Your employer deducts TDS at the income tax slab rates applicable. Banks deduct TDS
@10%. Or they may deduct @ 20% if they do not have your PAN information. For most
payments rates of TDS are set in the income tax act and TDS is deducted by payer basis these
specified rates.
If you submit investment proofs (for claiming deductions) to your employer and your total
taxable income is below the taxable limit – you do not have to pay any tax. And therefore no
TDS should be deducted on your income. Similarly, you can submit Form 15G and Form
15H to the bank if your total income is below taxable limit so that they don’t deduct TDS on
your interest income.
In case you have not been able to submit proofs to your employer or if your employer or bank
has already deducted TDS and your total income is below the taxable limit) – you can file a
return and claim a refund of this TDS.

TDS Refund

If excess tax is deducted, you will have to claim a refund in your income tax return. For most
individuals the return has to be filed by 31st July for the previous financial year.

TDS Payment Online

1. Login to the NSDL tax payment website.

2. Select Challan no/ ITNS 281.

3. Select company or non-company deductee as applicable.

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 4. Enter the Tax Deduction or Collection Account Number and assessment year to which
the payment relates. Assessment year is the year which follows the financial year of
the transaction

5. Now select, whether payment is made by taxpayer for regular assessment.

6. Enter the nature of payment, mode of payment and hit ‘submit.’

7. If the TAN is valid, the full name of the taxpayer will be displayed on the
confirmation screen.

8. Once you confirm the data, you will be redirected to your net-banking account.

9. Enter the password and OTP/authentication device password and make the payment.

10. On payment, a challan will be generated displaying the details of the payment made.

Important Dates for TDS Payment

The due date for each TDS payment is the 7th of the month following the month in which
you have made the deduction. For example if TDS is deducted on 15th January, it must be
deposited with the Income Tax Department before 7th February, except in certain cases as
specified above. After making payment, you have to file a TDS return. The due date for each
TDS return is the last day of the month following the quarter in which TDS has been paid
(except for the Jan-March quarter). Have a look at the table below.

Quarter TDS Payment Date TDS Return Date

Jan – March 7th Feb, 7th March, 30th April 31st May

April – June 7th May, 7th June, 7th July 31st July

July – September 7th August, 7th, September, 7th October 31st October

October - December 7th November, 7th December, 7th January 31st January

What is TDS and how does it work?3

TDS is applicable on the various incomes received such as salaries, interest received etc.
which is deducted when income is generated rather than at later date.
who is making the payment is responsible for deducting the tax and depositing the same with
government.

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TDS stands for 'Tax Deducted at Source'. It was introduced to collect tax at the source from
where an individual's income is generated.

The government uses TDS as a tool to collect tax in order to minimise tax evasion by taxing
the income (partially or wholly) at the time it is generated rather than at a later date.

TDS is applicable on the various incomes such as salaries, interest received, commission
received etc.

TDS is not applicable to all incomes and persons for all transactions. Different rates of TDS
have been prescribed by the Income Tax Act for different payments and different categories
of recipients. For example, payment of redemption proceeds by a debt mutual fund to a
resident individual is not subject to TDS but for a Non-resident Indian is subject to TDS.

How TDS on salaries is calculated and deducted

TDS works on the concept that every person making specified type of payments to any
person shall deduct tax at the rates prescribed in the Income Tax Act at source and deposit the
same into the government's account.

The person who is making the payment is responsible for deducting the tax and depositing
the same with government. This person is known as 'deductor'. On the other hand, the person
who receives the payment after the tax deduction is called 'deductee'. Form26AS is a
statement which shows the amount of tax deducted and deposited in a person's name/PAN.

An individual can, therefore, view/check the TDS from incomes paid to him by viewing
this Form 26AS. Each deductor is also duty bound to issue a TDS certificate certifying how
much amount is deducted in the deductee's name and deposited with the government.

How TDS works

The entity making a payment (which is subject to TDS) deducts a certain percentage of the
amount paid, as tax and pays the balance to the recipient. The recipient also gets a certificate
from the deductor stating the amount of TDS. The deductee can claim this TDS amount as
tax paid by him (i.e. the deductee) for the financial year in which it is deducted.

The deductor is duty bound to deposit the TDS with the government. Once deposited this
amount reflects in the Form 26AS of individual deductees on the TRACES website linked to
the income tax department's e-filing website.
Rates prescribed for different types of payments
There are different rates for TDS described in the different sections of the Act,
depending on the nature of the payments. Some of the incomes subject to TDS are
as follows:
Relevant TDS rate (rate at which tax is to
Nature of payment Section be deducted at source)
At applicable income tax rates.
Salaries Section 192 Inclusive of cess
Accumulated taxable part of PF Section 192A 10%
Interest on securities Section 193 10%
Deemed Dividend Section 194 10%
Interest other than interest on securities Section 194A 10%
Winnings from lottery, crosswords or any
sort of game Section 194B 30%
Section
Winnings from horse race 194BB 30%
Insurance commission received by an
individual Section 194D 5%
Life insurance policies not exempt under Section 1% in case payment in FY exceeds
section 10(10)D 194DA Rs 1 lakh
Commission or brokerage received except 5% in case payment in FY exceeds
for insurance commission Section 194H Rs 15,000
Payment made while purchasing land or Section
property 194IA 1%
Payment of rent by individual or HUF Section
exceeding Rs 50,000 per month 194IB 5%
Source: Income tax website

TDS only applicable above a threshold level

One must remember that TDS on specified transactions is deducted only when the
value of payment is above the specified threshold level. No TDS will be deducted if
the value does not cross the specified level.

Different threshold levels are specified by the Income Tax department for different
payments such as salaries, interest received etc. For example, there will be no TDS
on the total interest received on FD/FDs from a single bank if it is less than Rs
10,000 in a year from that bank.

How to avoid TDS

If a person expects that his total income in a financial year will be below the
exemption limit, he can ask the payer not to deduct TDS by submitting Form
15G/15H.

While receiving payment which is subject to TDS, deductee is required to provide his
PAN details to avoid tax deduction at the higher rates.

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
deducted.
TDS is deducted on the following types of payments:

 Salaries
 Interest payments by banks
 Commission payments
 Rent payments
 Consultation fees
 Professional fees

However, individuals are not required to deduct TDS when they make rent payments
or pay fees to professionals like lawyers and doctors.
TDS is one kind of advance tax. It is tax that is to be deposited with the government
periodically and the onus of the doing the same on time lies with the deductor. For
the deductee, the deducted TDS can be claimed in the form of a tax refund after they
file their ITR.

What is TDS return?

A deductor has to deposit the deducted TDS to the government and the details of the
same have to be filed in the form of a TDS return. A TDS return has to be filed
quarterly. Different types of TDS deductions have to be filed using different TDS
return forms.

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TDS credits in Form 26AS
It is important to understand how TDS is linked to your PAN. TDS deductions are
linked to PAN numbers for both the deductor and deductee. If TDS has been
deducted from any of your income you must go through the Tax Credit Form 26AS.
This form is a consolidated tax statement which is available to all PAN holders. Since
all TDS is linked to your PAN, this form lists out the details of TDS deducted on your
income by each deductor for all kinds of payments made to you – whether those are
salaries or interest income – all TDS linked to your PAN is reported here. This form

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also has income tax directly paid by you – as advance tax or self assessment tax.
Therefore, it becomes important for you to mention your PAN correctly, wherever
TDS may be applicable on your income.
You can easily file your TDS returns through ClearTax software i.e. ClearTDS. It is
an online TDS software that requires no download or desktop installation or software
update. It helps you to prepare regular & correction e-TDS statements online easily
with just a few clicks on your computer. It is also compatible with TDS returns of
previous financial years for easy import.

SMS Alerts for Higher Transparency5

The income tax department has been sending SMS to the taxpayers from VK-
ITDEFL that mentions the amount of tax deducted at source (TDS) against the PAN
(Permanent Account Number) of the taxpayer. The SMS alert will let you know the
TDS credited in respect of your income from salary, interest etc., every quarter. The
amount of TDS would stand accumulated in your Form 26AS for the respective
financial year.
This initiative was implemented by the Finance Ministry to increase transparency and
reduce the cases of TDS mismatches at the time of income tax filing. Taxpayers can
cross-check the information provided in the SMS with the information on the payslips
to make sure that there is no mismatch. TDS mismatch could be a common reason
for incorrect income tax return filing.

Tax liability in a case where TDS is already deducted from Income6

On salary, TDS is deducted based on the income tax slab applicable to you. In the
case of other income types, the TDS rates are fixed and vary between 10% and
20%. The tax rates are not based on your total income. Hence, you would suffer a
TDS on your receipts in certain cases.
Separately, you would be required to calculate your annual income by aggregating
income from all sources. Your actual tax liability would be calculated on the total
taxable income.
From the taxes calculated, you can claim credit for TDS deducted on your various
receipts. Reduce the tax deducted at source from your actual tax liability to know the
balance to be paid to the income tax department. You may have a refund too. In both
cases, you have to file an income tax return and pay the tax due or claim a refund.

Which are the different forms prescribed for TDS Return?7

Before that we will get a general idea about which forms are applicable to different
cases. These forms are to be prepared in consultation with your tax advisor to avoid
any mistake and then to file corrected TDS return.
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Here is how ProfitBooks can help
Form Detector type
Form 24 Q Deductions made in a salaried case
Form 26 Q Deductions made in the non-salaried case
Form 27 Q Deductions made in the case of NRIs

Now that we know the different forms, in the below table we can see the due dates
for different forms and different quarters as well:

Quarter Form 24Q & 26Q Form 27Q

April to June 15 July 15 July
July to September 15 October 15 October
October to December 15 January 15 January
January to March 15 May 15 May

What are penalty provisions for non-deduction of TDS?8

There are several instances where interest, fees, and penalty are levied on non-compliance of
TDS provisions. The same are discussed here step by step:

1. Consequences of non-deduction of TDS

If a person who was responsible for deducting tax at source fails to do so, then the
ASSESSING OFFICER has powers to disallow whole of such expenditure for
ascertaining taxable profits. For example, ABC Limited paid a commission of Rs
2,00,000/- during the year to a single person and omitted to deduct tax on the same, then
the Assessing Officer has powers to disallow deduction whole of such expenses while
ascertaining taxable profits.

2. Late deduction of TDS

Tax is to be deducted at the time of payment/credit getting due or payment whichever is
earlier. In the terms of income tax, even a single day is counted as a month for the purpose
of calculating interest. In cases of late deduction of tax, interest @ 1% per month of the
TDS amount subject to maximum amount of TDS is levied. For example, ABC company
was supposed to deduct tax of Rs 20000/- on 15th July but instead the same was deducted
by the company on 1st August. In this case interest of Rs 200/- (@1% for one month) is
required to be paid by the assessee.

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3. Late payment of TDS
Tax is to be deducted and paid to the credit of government on every 7th day of the
succeeding month in which the tax has been deducted, otherwise, interest @ 1.5% per
month of TDS amount subject to maximum amount of TDS is levied. For example, ABC
Ltd was supposed to deposit TDS of Rs 20000/- deducted in the month of April by 7th of
May but fails to deposit the same on time and actually deposited the same in the following
month. In this case interest of Rs. 300/- (@ 1.5% for one month) is required to paid by the
assessee.

4. Late filing of return of TDS

TDS returns are required to be filed in the last month of following quarter i.e. 31st July,
31st October, 31st January and in the case of March it is 31st May. Fees under section 234E
are levied @ Rs 200/- per day subject to maximum amount of TDS until the return is filed.
Example, M/s ABC, a partnership deducted and paid a total TDS of Rs 40000/- in the first
quarter of FY and was supposed to file its TDS return by 31st July but filed its return on
31st August. Total fees of Rs 6200 (200/- per day for 31 says) shall be paid before filing of
return.

5. Penalty for late filing of TDS return

Assessing officer may direct a person who fails to file the statement of TDS within due
date to pay penalty minimum of Rs. 10,000 which may extend to Rs.1,00,000. The penalty
under this section is in addition to the penalty u/s 234E and also cover the cases of
incorrect filing of TDS return.

How do I know how much TDS has been deducted and whether it has been
credited to me?9

It is very simple to know how much TDS has been deducted and whether it is credited to you
or not. Follow these simple process to find it out:

Step 1: Log on to Income Tax India eFiling website and click on the link “Register Yourself”
Step 2: Enter your details as per PAN and generate a password
Step 3: Once you have logged into the portal, click on the option “View Tax Credit
Statement (26 AS)”
Step 4: After clicking on this link you will be directed to another website called TRACES
(TDS Reconciliation Analysis and Correction Enabling System) where you can know about
complete details of your tax deducted at source, advance tax paid and other important details.

26AS is a tax credit statement and covers all the amounts of TDS deducted by others. This
might happen that someone has deducted your tax but the same isn’t appearing in your tax
credit statements, which may be simply due to non-filing of TDS return by the deductor. In
such cases, please make sure to obtain a TDS certificate as this will be an ultimate proof that
your tax has been deducted at source.

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Can I request tax deductions to not deduct tax from an amount and pay the
whole amount to me?10

Yes, if your gross income is well below the basic exemption limit then you can request the
person who is responsible for TDS, to not to deduct tax on such income. For doing the same
you have to options:

1. Apply to the Assessing officer under whose jurisdiction you fall in Form 13 to get a
certificate approving deduction of tax at a lower rate or NIL rate.
2. Submit a declaration in Form 15G/15H in which you declare that your income is below
the basic exemption limit during the financial year and tax is required to be deducted at
source. This certificate has to be submitted every year and non-submission may lead to
deduction of tax. Please note that Form 15G is for individuals and Form 15H is for senior
citizens.

One major difference between Form 13 and Form 15G/15H is Form 15G/15H can be issued
only by individuals assesses, whereas request in Form 13 can be submitted by any person i.e.
individual, partnership firm, company, etc. to the ASSESSING OFFICER to get approval for
deduction of taxes at lower or NIL rate.

What is applicability of TDS on transactions of immovable property?11

There are mainly two sections that prescribe for deduction of taxes on transactions related to
an immovable property:

1. Section 194-I: Section 194-I requires for deduction of tax at source on rental income @
10% for rent on land & building if the total amount of rent paid/credited or to be paid/to
be credited exceeds the cap of Rs 1,80,000/- during a financial year. Please note that
individuals and HUFs who are not subject to tax audits under section 44AB need not
deduct tax at source on such rental expenses.
2. Section 194IA: Section 194IA came into effect from June 2013 which required deduction
of tax by the transferee before making payment to transferor @ 1% of the consideration
for immovable property. Any sum paid by way of consideration for the transfer of any
immovable property (other than agricultural land) is covered under section 194-IA,
provided the consideration for the transfer of an immovable property is not less than Rs.
50 lakhs.
3. Section 194LA: Section 194LA provides for deduction of tax at source @ 10% for the
payment to be made to the assessee as a compensation on account of compulsory
acquisition of immovable property. Please note that no deduction shall be made under this
section where the amount of such payment or, as the case may be, the aggregate amount of
such payments to a resident during the financial year does not exceed Rs 250000/-.

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What are TDS rules?

There are certain rules set out by the tax authorities in regard to TDS, that if complied
properly you will not end up paying penalty, interest, and fees.

1. Tax deduction rules: Tax is required to be deducted at the time of payment getting due or
actual payment whichever is earlier. Delay in deduction of tax will attract interest @ 1%
per month until the tax is deducted.
2. TDS payment rules: Every person is required to pay the tax deducted to the credit of
government by the 7th day of the following month. Non-payment or late payment of TDS
will attract interest @ 1.5% per month until the tax has not been deposited.
3. TDS return filing rules: TDS returns are required to be filed timely on the 31st day of July,
October, January, and May during a financial year. Non-filing or filing of return after the
due date will attract fees under section 234E @ Rs 200/- per day until the return is filed.
However, this amount shall not exceed the amount of tax.12

Budget 2019: Individuals must deduct TDS on these 3 types of

payments now13
While the government's aim is to widen and deepen the tax base through these steps, it
increases the financial accounting liability for individuals impacted by these rules.

With Budget 2019 increasing their TDS responsibilities, individuals will now have to
deduct tax at source in three different types of situations. "High value payments
made by individuals have now come in the compliance net and require tax deduction
at source (TDS). An individual or HUF (Hindu Undivided Families) availing
contractual or professional services will have to deduct TDS at the rate of 5 per cent
in case the aggregate payments made to a single service provider during the year
exceeds Rs 50 lakh," Shalini Jain, tax partner, EY India. Budget 2019 proposes to
make it mandatory for individuals to deduct tax at source on:

(i) Payments of over Rs 50 lakh to contractors, professionals

It has been proposed to make it mandatory for individuals and HUFs to deduct tax at
source (TDS) on any payment of Rs 50 lakh per annum to contractors and
professionals. This means if the total payments you have made to a single contractor
for wedding functions, house renovation or to a single professional during a financial
year exceeds Rs 50 lakh, then TDS will be cut at 5 percent.

(ii) Payment of parking charges, maintenance charges etc when buying a

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House
Charges such as club membership fees, car parking fees, electricity and water
facility fees, maintenance fee, advance fee etc. will soon need to be added into the
cost of buying property amount while determining the amount of tax to be deducted
at the time of buying the property. This amendment will come into effect from
September 1, 2019.

Currently, these charges were excluded while calculating the amount of tax to be
deducted at the time of making payment for property. Only amount paid for buying a
house is considered to determine the amount of tax to be deducted. Currently one
has to deduct tax only on the payment made to buy a house.

(iii) TDS on monthly rent payments above Rs 50,000

These are in addition to the existing responsibility to deduct tax at source from rent
payments exceeding Rs 50,000 per month.

Individuals and HUFs who are not required to get their financials audited and are
paying rent of more than Rs 50,000 per month have to deduct 5 percent of the rent
paid in a financial year as tax. And if you do not comply, you have to pay 1% interest
for every month of delay in deducting the tax. The penalty is higher at 1.5% per
month if the tax has been deducted but not deposited.

While the government's aim is to widen and deepen the tax base through these
steps, it increases the financial accounting liability for individuals impacted by these
rules.

Conclusion
If you do not have an accounting background, managing tax compliance can be a difficult
task. A good accounting software can not only help you keep your books in order but can also
help you avoid penalties arising due to non-compliance.
ProfitBooks is one such accounting software which will help you comply with new GST
laws. It helps you right from creating GST invoices to filing GST returns online.