Academic Year: 2022-23

Trimester IV
Program: PGDM-E

Course Name: Business Taxation

Course Code: E022-11001

Assignment No. 1

Submitted By:
Name: Dhrumil Sodani (2021E055), Drashti Jain(2021E011), Nishtha Agarwal
(2021E027), Parikshit Hegde (2021E028)

Submitted To:
Name of Course Teacher: Shri MC Gupta

Q.No 1 2 3 4 5 6 Total
CO
Max. Marks
Marks Obtained
(The above given table is for the use of faculty only)

Department of Entrepreneurship Education

Entrepreneurship Development Institute of India, Ahmedabad

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 The Concept of TDS

What is TDS?
TDS or Tax Deducted at Source is income tax reduced from the money paid at the time of
making specified payments such as rent, commission, professional fees, salary, interest etc.
by the persons making such payments. Usually, the person receiving income is liable to pay
income tax. But the government with the help of Tax Deducted at Source provisions makes
sure that income tax is deducted in advance from the payments being made by you.
The recipient of income receives the net amount (after reducing TDS). The recipient will add
the gross amount to his income and the amount of TDS is adjusted against his final tax
liability. The recipient takes credit for the amount already deducted and paid on his behalf.

When should TDS be deducted and by whom?

Any person making specified payments mentioned under the Income Tax Act is required to
deduct TDS at the time of making such specified payment. But no TDS has to be 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 the
payer basis of 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 from your income.
Similarly, you can submit Form 15G and Form 15H to the bank if your total income is below
the 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. The complete list of Specified Payments eligible for TDS
deduction along with the rate of TDS.

What is the due date for depositing the TDS to the government?
The 7th day of the subsequent month is the due date for depositing the TDS to the
Government. e.g. if you have deducted TDS any time between 1st to 30th September, you
have to deposit it by 7th October. However, it differs in two cases:

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 • If TDS is deducted in March, you can deposit it until 30th April of that calendar year.
• TDS deducted on rent or purchase of any property can be deposited within 30 days
from the end of the month you have deducted TDS.

What is the TDS Rate for different types of payments?

The TDS rate varies according to various sections.

Section and Nature of Payment Payer Applicable Rate

Applicable Income
Section 192, Salary Salaried individual Tax slab

Section 192A, Premature

withdrawal of EPF Individual 10% of the total sum

Section 193, Interest amount on

securities Individual 10%

Section 194, Dividends Domestic companies 10%

Individuals except for

Section 194A, Interest on assets & taxpayers and HUF
securities liable for audit 10%

Section 194B, Applicable on

money earned through any
competition or lottery Individual 30%

Section 194BB, Prize amount on

winning horse race Any individual 30%

Individuals except for 1% for individuals and

taxpayers and HUF HUF, 2% for other
Section 194C, Contractors liable for audit taxpayers

5% for individuals and

Section 194D, Insurance HUF and 10% for
commission Insurance aggregator other agents

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 Section 194DA, Life insurance
policy Individual 1%

Section 194E, Payments to a non-

residential sportsperson Individual 20%

Section 194EE, Deposit under NSS Individual 10%

Section 194G, Commission from

the sale of lottery ticket Individual 5%

Individuals except for

Section 194H, TDS on commission taxpayers and HUF
or brokerage earned liable for audit 5%

Individuals except for

taxpayers and HUF
Section 194I, TDS on rent liable for audit 2%

Section 194IA, TDS on funds

earned for transfer of immovable
assets (except agricultural land) Individual 1%

Individuals except for

Section 194IB, Rent by individuals taxpayers and HUF
& HUF liable for audit 5%

Section 194IC, Payment on

agreement Individual 10%

Individuals except for

Section 194J, Professional or taxpayers and HUF
technical services liable for audit 10%

Section 194LA, Compensation for

acquisition of an immovable asset Individual 10%

Section 194LB, Income from

infrastructure debt fund interest Infrastructure debt funds 5%

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 10% for resident
Section 194LBA, Income from individuals and 5% for
units of a business trust Business trusts NRI

Section 194LBB, Income from

units of investment funds Investment funds 10% for residents

Section 194 LBC, TDS on income 25% for individuals

earned from investments of and HUF and 30% for
securitization trusts Securitization trusts investor

Section 194LC, Income from an Indian companies and

Indian company business trusts 5%

Section 194LD, TDS on income

earned from certain Government
security and bond’s interest Individual 5%

Section 195, Payment to a non- As specified by

organizational entity or foreign DTAA or Income Tax
company Individual Act

However, if you cannot submit a PAN card, it will be deducted at 20%.

How and when to file TDS return?

Filing Tax Deducted at Source returns is mandatory for all the persons who have deducted
TDS. TDS return is to be submitted quarterly and various details need to be furnished like
TAN, amount of TDS deducted, type of payment, PAN of deductee, etc.
Also, different forms are prescribed for filing returns depending upon the purpose of the
deduction of TDS. Various types of return forms are as follows: Form 26QTDS on all
payments except salaries Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May

Form No Transactions reported in the return Due Date

Form 24Q TDS on Salary Q1 – 31st July, Q2- 31st October, Q3
– 31st January, Q4 – 31st May
Form 27Q TDS on all payments made to non- Q1 – 31st July, Q2 – 31st October,
residents except salaries Q3 – 31st January, Q4 – 31st May
Form 26QB TDS on sale of property 30 days from the end of the month in
which TDS is deducted

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 From 26QC TDS on rent 30 days from the end of the month in
which TDS is deducted

What is a TDS Certificate?

TDS Certificate is a type of certificate issued by the entity deducting TDS to the person from
whom TDS is deducted or the assessee. It serves as proof that the TDS deducted from you is
deposited into the Government account.
Another most important thing to know is what TDS certificate type is and what are the
various types of TDS certificates you should ask for.

Form Certificate for Type of Payment Frequency & Due Date

Form
16 Salary payment Yearly, 31st May

Form Quarterly, 15 days from the due date of

16 A Non-salary payments filing the return

Form Every transaction, 15 days from the due

16 B Sale of property date of filing the return

Form Every transaction, 15 days from the due

16 C Rent date of filing the return

What are penalty provisions of late or non-filing of TDS?

Not filing tax is a punishable offence; however, late payment incurs a penalty. The late fine is
₹200 for each day starting from the due date of payment until you file it. If the late fine
exceeds the total payable amount, the late fine will be equal to the TDS payable amount.
For instance, your TDS payable amount is ₹5000, and the due date is 20th May. You filed the
return of quarter1 on 24th November. So, you are late by 105 days.
₹200 X Days 105 = ₹21000.
However, your payable TDS amount is ₹5000, which is lower than ₹21000. Therefore, you
just have to pay ₹5000 as a penalty.

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Under What Circumstances Can Taxpayers Claim Refund or Reduction of Applicable
TDS?
• The total income is not within the income tax payable slab.
• TDS paid is more than tax payable liability.
• The taxpayer has got a loss of income in the current month.
• The previous year loss carried forward in the present year.
• The taxpayer is eligible for tax exemption.
You may avoid TDS deduction by submitting form 15G/15H. Form 13 can be submitted for
claiming a refund or non-reduction of TDS.
Each taxpayer should thoroughly know what TDS is and why it is deducted to file the return
and get maximum benefits. It is a payee-friendly act to justify the income tax payment
seamlessly.