Tax Deduction at Source

TDS {section 190}

TDS by the payer at the prescribed rate at the time of

accrual or payment of such incomes to the payee. TDS by the seller from buyer/licencee at the time of debiting the amount to account of the buyer/licencee or the receipt of the payment whichever is earlier.

Section 192 TDS on salaries Tax deducted at average of income tax{192(1)}

Any person responsible for paying any income

chargeable under the head salaries shall at the time of payment Deduct income tax on the estimated income of the employee under the head of salaries for the financial year.

Tax on non-monetary perquisites can be paid by employer {sec 192(1A)and (1b)}

Sub-section (1A) provides that an employer shall have

an option to pay tax on behalf of an employee. Without making any deduction from his income, on the income in the nature of perquisites ,where are not provided for by way of monetary payment. Employer shall to deduct the tax on whole or part of such income.

Salary from more than one employer{section192(2)}

Where during the F.Y.,an assessee: a. Is employed simultaneously under more than one employer, or b. Has changed the employment during the P.Y.,

Relief under section 89 {sec 192(2A)and rule 21AA}

Where the assessee is: A. A Government servant,or B. An employee in a: i. Company ii. Co-operative society iii. Local authority iv. University v. Institution vi. Association or Body and if he is entitled to relief under section 89.

Employer to furnish a statement to employee{section 192(2C) and rule 26A(2)}

person responsible for paying any income chargeable

under the head salaries, shall furnish to the employee a statement giving correct and complete particulars of perquisites or profits in lieu of salary, provided to him and the value thereof in :a) In relevant columns provided in form no. 16,if the amount of salary paid or payable to the employee is not more than Rs 150000, or b) In form no.12BA,if the amount of salary paid or payable to the employee is more than Rs 150000.

Deduction of tax from interest on securities(section 193)

Any person responsible for paying interest on securities

shall deduct interest at the prescribed rates. Tax is to be deducted at the time of:1. Payment of interest or 2. Making interest due; which ever is earlier.

Rates of TDS for financial year 2010-11

Income by way of interest payable ona. Any debentures or securities other than security of

the central or State Government issued by or on behalf of local authority is 10%. b. Any debentures issued by a company where such debentures are listed on a stock exchange in India is 10 %. c. Debentures are not listed on a recognised stock exchange is 10%.

Where no taxes to be deducted at source

Interest payable to the insurance company.
Interest paid or credited by widely held company not

exceeding Rs.2500. Interest paid or credited on 8% saving bonds 2003 issued by the central government provided the interest on such bonds does not exceed Rs.10000. Where a self declaration under form no. 15G is furnished by a particular person{sec.197A(1),(1A),(1B)}. Any interest payable on any security issued by a company , where security is dematerialised form.

Deduction of tax from dividends(section 194)

Who is liable to deduct tax:

a. The principal officer of an Indian company. b. A company which has made the prescribed

arrangements for the declaration and payment of dividend within India.

when TDS to be deducted:

a. Before making any payment in cash. b. Before issuing any cheque or warrant in respect of any dividend

Rates of TDS
Payment is made to Non-company assessees:
a. Resident in India : 10% b. Non-resident in India : 30% + education cess @ 2% +

SHEC@ 1% Payment is made to company assessees: a. Domestic companies : 20% b. Foreign companies : 40% + surcharge@ 2.5% if applicable + education cess@ 2% + SHEC@ 1%.

Winning from lottery, crossword puzzle, card game, etc.

Any person responsible for paying income on winning from lottery or crossword puzzle shall deduct tax @ 30%.
TDS is payable if the amount of winning exceeds Rs 5,000. Thus, no TDS on payment of Rs 5,000 or less. TDS is to be made at the time of actual payment of each such instalment.

TDS on Rent(Section 194-I)

Applicable to all payers, except Individuals and HUF
Applicable to Individuals and HUF only if they are

liable to tax audit during the preceding financial year When to deduct? At the time of payment or credit whichever is earlier At what rate to deduct?
Machinery, Plant or Equipment - 2% Furniture, Land or Building - In All cases: 10%

No TDS if the amount paid or likely to be paid during the financial year does not exceed Rs. 1,20,000 in aggregate

Thank you