FAQs

What is tax deducted at source?

The provisions of deduction of tax at source are applicable to several payments such as salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. In respect of payments to which the TDS provisions apply, the payer has to deduct tax at source on the payments made by him and he has to deposit the tax deducted by him to the credit of the Government. The following illustration will explain the TDS mechanism. Illustration
Mr. Raja has made a fixed deposit with XYZ Bank. Annual interest on the deposit is Rs. 8,40,000. Will the bank be liable to deduct any tax from the interest paid to Mr. Raja?
** Interest on fixed deposit is covered under the TDS mechanism and, hence, the bank has to deduct tax from interest and has to pay the net interest to Mr. Raja.
The rate of TDS on interest is 10% and, hence, the bank will deduct tax of Rs. 84,000 from the interest and will pay the net interest of Rs. 7,56,000 (i.e., Rs. 8,40,000 – Rs. 84,000) to Mr. Raja.
The TDS of Rs. 84,000 will be paid by the bank to the Government and Rs. 84,000 will be treated as prepaid tax of Mr. Raja and he can claim tax credit of Rs. 84,000 just like advance tax at the time of filing his return of income.
The above mechanism of deducting the tax at the point of generation of income is called TDS mechanism.

What are the payments covered under the TDS mechanism and the rates for deduction of tax at source?

What are the payments covered under the TDS mechanism and the rates for deduction of tax at source?

Tax is deductible at source at the rates given in table (infra). If PAN of the deductee is not intimated to the deductor, tax will be deducted at source by virtue of section 206AA either at the rate given in the table or at the rate or rates in force or at the rate of 20 per cent, whichever is higher. Further, under section 94A(5), if payment or credit is made or given to a deductee who is located in a notified jurisdictional area, tax is deductible at the rate given in the table or at the rate of 30 per cent, whichever is higher. TDS rates for the financial year 2016-17 are as follows—

CATEGORY A - WHEN RECIPIENT IS RESIDENT
Nature of payment TDS (SC : Nil, EC : Nil, SHEC : Nil)
• Sec. ​192 - Payment of salary [normal tax rates are applicable – SC : 15% (if net income
  exceeds Rs. 1 crore), EC : 2% and SHEC : 1%] 		15%
• Sec. ​192A -Payment of taxable accumulated balance of provident fund 10
• Sec. 193 -Interest on securities—
a. interest on (a) debentures/securities for money issued by or on behalf of any local authority/statutory corporation, (b) listed debentures of a company [not being listed securities in demat form], (c) any security of the Central or State Government [i.e., 8% Savings (taxable) Bonds, 2003, but not any other Government security] 10
b. any other interest on securities (including interest on non-listed debentures) 10
• Sec. ​194 -Dividend—
a. deemed dividend under section 2(22)(e) 10
b. any other dividend Nil
• Sec. 194A -Interest other than interest on securities 10
• Sec. 194B -Winnings from lottery or crossword puzzle or card game or other game of any sort 30
• Sec. 194BB -Winnings from horse races 30
• Sec. 194C -Payment or credit to a resident contractor/sub-contractor—
a. payment/credit to an individual or a Hindu undivided family 1
b. payment/credit to any person other than an individual or a Hindu undivided family 2
• Sec. 194D -Insurance commission 10
- payment/credit to an individual or a Hindu undivided family 5
- payment/credit to any person other than an individual or a Hindu undivided family 10
​• Sec. 194DA -Payment in respect of life insurance policy (applicable from October 1, 2014) 2%
• Sec. 194EE -Payment in respect of deposits under National Savings Scheme, 1987 20
​• Sec. 194F -Payment on account of repurchase of units of MF or UTI 20
​• Sec. 194G -Commission on sale of lottery tickets 10
​• Sec. 194H -Commission or brokerage 10
​• Sec. 194-I -Rent—
a. rent of plant and machinery 2
b. rent of land or building or furniture or fitting 10
​• Sec. 194-IA​ -Payment/credit of consideration to a resident transferor for transfer of any
  immovable property (other than rural agricultural land) 		1
​• Sec. 194J -Professional fees, technical fees, royalty or remuneration to a director 10
​• Sec. 194LA -Payment of compensation on acquisition of certain immovable property 10
​• Sec. 194LBA(1) -Payment of the nature referred to in section 10(23FC) or section 10(23FC)(a)
  (with effect from June 1, 2016) or section 10(23FCA) by business trust to resident unit holders 		10
• Sec. 194LBB -Payment in respect of units of investment fund specified in section 115UB 10
• Sec. 194LBC(1) -Payment in respect of an investment in a securitisation trust specified in
  clause (d) of the Explanation occurring after section 115TCA (with effect from June 1, 2016) 		-
- if recipient is an individual or a Hindu undivided family 25
- if recipient is any other person 3​0

CATEGORY B - WHEN RECIPIENT IS NON-RESIDENT OR FOREIGN COMPANY
Aggregate payment or credit subject to TDS during the financial year 2014-15 → If recipient is non-resident non-corporate person ​If recipient is non-domestic company​
Rs. 1 crore or less More than Rs. 1 crore Rs. 1 crore or less​ More than Rs. 1 crore but not more than Rs. 10 crore​ More than Rs. 10 crore​
If recipient is non-resident individual/HUF/AOP/BOI/artificial judicial person If recipient is non-resident co-operative society/firm​
Nature of payment TDS (inclusive of SC : Nil, EC : 2%, SHEC : 1%) TDS (inclusive of SC : 15%, EC : 2%, SHEC : 1%) TDS (inclusive of SC : 12%, EC : 2%, SHEC : 1%) TDS (inclusive of SC :Nil, EC : 2%, SHEC : 1%) TDS (inclusive of SC : 2%, EC : 2%, SHEC : 1%) TDS (inclusive of SC : 5%, EC : 2%, SHEC : 1%)
• Sec. 192 -Payment of salary [normal tax rates are applicable – SC : 10% (if net income exceeds Rs. 1 crore), EC : 2% and SHEC : 1%] – – – – – –
• Sec. 192A -Payment of taxable accumulated balance of provident fund​ 10.3 11.845​ – – – –
• Sec. 194B -Winnings from lottery or crossword puzzle or card game or other game of any sort​ 30.9 35.535 34.608 30.9 31.518 32.445
• Sec. 194BB -Winnings from horse races 30.9 35.535 34.608 30.9 31.518 32.445
• Sec. 194E -Payment to a non-resident foreign citizen sportsman/entertainer or non-resident sports association 20.6 23.69 23.072 20.6 21.012 21.63
• Sec. 194EE -Payment in respect of deposits under National Saving Scheme, 1987 20.6 (10.3% from June 1, 2016) 23.69 (11.845% from June 1, 2016)​ 23.072 (11.536% from June 1, 2016)​ NA NA NA
• Sec. 194F -Re-purchase of units of MF or UTI 20.6 23.69 23.072​ NA NA NA
• Sec. 194G -Commission on sale of lottery tickets 10.3 (5.15% from June 1, 2016) 11.845 (5.9225% from June 1, 2016)​ 11.536 (5.768% from June 1, 2016) 10.3 (5.15% from June 1, 2016) 10.506 (5.253% from June 1, 2016) 10.815 (5.4075% from June 1, 2016)
• Sec. 194LB -Payment/credit by way of interest by infrastructure debt fund 5.15 5.9225 5.768 5.15 5.253 5.4075
• Sec. 194LBA(2) -Payment of the nature referred to in ​section 10(23FC) by business trust to unit holders (applicable from October 1, 2014) 5.15 5.9225 5.768 5.15 5.253 5.4075
• Sec. 194LBA(3) -Payment of the nature referred to in ​section 10(23FCA) by business trust to unit holders 30.9 35.535 34.608 41.2 42.024 43.26
• Sec. 194LBB -Payment in respect of units of investment fund specified in section 115UB 10.3 (30.9% from June 1, 2016) 11.845 (35.535% from June 1, 2016) 11.536 (34.608% from June 1, 2016) 10.3 (41.2% from June 1, 2016) 10.506 (42.024% from June 1, 2016) 10.815 (43.26% from June 1, 2016)
• Sec. 194LBC(2) -Payment in respect of an investment in a securitisation trust specified in clause (d) of the Explanation occurring after section 115TCA (with effect from June 1, 2016) 30.9 35.535 34.608 41.2 42.024 43.26
• Sec. 194LC -Payment/credit of interest by an Indian specified company on foreign currency approved loan/long-term infrastructure bonds (with effect from October 1, 2014, any bond) from outside India 5.15 5.9225 5.768 5.15 5.253 5.4075
• Sec. 194LD -Interest on a rupee denominated bond of an Indian company or Government security (from June 1, 2013) 5.15 5.9225 5.768 5.15 5.253 5.4075
• Sec. 195 -Payment/credit of other sum to a non-resident — - - - - - -
• Sec. 195 -Payment/credit of other sum to a non-resident — - - - - - -
a. income of foreign exchange assets payable to an Indian citizen 20.6 23.69 23.072 NA NA NA
b. income by way of long-term capital gains referred to in section 115E or section 112(1)(c)(iii) 10.3 11.845 11.536 10.3 10.506 10.815
c. short-term capital gains under section 111A 15.45 17.7675 17.304 15.45 15.759 16.2225
d. any other long-term capital gains [not being covered by ​196D ​section 10(33), 10(36) and 10(38)] 20.6 23.69 23.072 20.6 21.012 21.63
e. income by way of interest payable by Government/Indian concern on money borrowed or debt incurred by Government or Indian concern in foreign currency (not being interest referred to in section 194LB or 194LC or 20.6 23.69 23.072 20.6 21.012 21.63
f. royalty [see Note 5] 10.3 11.845 11.536 10.3 10.506 10.815
g. royalty [not being royalty of the nature referred to in (f) supra] [see Note 6] – - - - - - -
□ where the agreement is made after March 31, 1961 but before April 1, 1976 10.3 10.845 11.536 51.5 52.53 54.075
□ where the agreement is made on or after April 1, 1976 10.3 10.845 11.536 10.3 10.506 10.815
h. fees for technical services [see Note 7] – - - - - - -
□ where the agreement is made after February 29, 1964 but before April 1, 1976 10.3 10.845 11.536 51.5 52.53 54.075
□ where the agreement is made on or after April 1, 1976 10.3 10.845 11.536 10.3 10.506 10.815
i. any other income 30.9 35.535 34.608 41.20 42.024 43.26
• Sec. 196B -Payment/credit of income from units (including long-term capital gains on transfer of such units) to an offshore fund 10.3 10.845 11.536 10.3 10.506 10.815
• Sec. 196C -Payment/credit of interest of foreign currency bonds or GDR (including long-term capital gains on transfer of such bonds) (not being dividend referred to in section 115-O) 10.3 10.845 11.536 10.3 10.506 10.815
• ​Sec. 196D -Payment/credit of income from securities (not being dividend, short-term or long-term capital gain) to Foreign Institutional Investors 20.6 23.69 23.072 20.6 21.012​ 21.63

​What is Form 16 / 16A ?

What is the due date for the issue of these certificates ?

Following are the forms for TDS/TCS returns and thier periodicity:
Sr. No. Form ​Periodicity ​Due Date
1 16 Annaul By 31st day of May of the financial year immediately following the financial year in which the income was paid and tax deducted
2 16A Quarterly Within fifteen days from the due date for furnishing the statement of tax deducted at source under rule 31A

​I have not received TDS certificate from the deductor. Can I claim TDS in my return of income?

​​Yes, the tax credit in your case will be reflected in your Form 26AS and, hence, you can check Form 26AS and claim the credit of the tax accordingly. However, the claim of TDS to be made in your return of income should be strictly as per the TDS credit being reflected in Form 26AS. If there is any discrepancy in the tax actually deducted and the tax credit being reflected in Form 26AS then you should intimate the same to the deductor and should reconcile the difference. The credit granted by the Income-tax Department will be as per Form 26AS.

​What are the due dates for filing quarterly TDS Returns ?

The due dates for filing quarterly TDS returns, both electronic and paper are as under:
Quarter Due Date ​Due Date for 27 Q​
April to June July 15 14 July
July to September October 15 14 October
October to December January 15 14 January
January to March June 15 14 June

​What are the forms to be used for filing annual/quartly TDS/TCS returns ?

Following are the forms for TDS/TCS returns and thier periodicity:
Form No. Particulars ​Periodicity
Form No. 24 Annual return of 'Salaries' under Section 206 of Income Tax Act, 1961 Annaul
Form No. 26 Annual return of deduction of tax under section 206 of Income Tax Act, 1961 in respect of all payments other than 'Salaries' Annual
Form No. 27 Statement of deduction of tax from interest, dividend of any other sum payable to certain persons Quarterly
Form No. 27E Annual retrun of collection of tax under section 206C of Income Tax Act, 1961 Annual
Form No. 24Q Quarterly statement for tax deducted at source from 'Salaries' Quarterly
Form No. 26Q Quarterly statement for tax deducted at source in respect of all payments other than'Salaries' Quarterly
Form No. 27Q Quarterly statement of deduction of tax from interest, dividend or any other sum payable to non-residents Quarterly
Form No. 27EQ Quarterly statement of collection of tax at source Quarterly

​​I do not have PAN. Can I furnish Form 15G/15H for non-deduction of TDS from interest?

    As per section 206AA​​, a declaration in Form No. 15G or Form No. 15H is not a valid declaration, if it does not contain PAN of the person making the declaration. If the declaration is without the PAN, then tax is to be deducted at higher of following rates :
  • At the rate specified in the relevant provision of the Act.
  • At the rate or rates in force, i.e., the rate prescribed in the Finance Act.
  • At the rate of 20%.​

​At what rate the payer will deduct tax if I do not furnish my Permanent Account Number to him?

    As per section 206AA​, if you do not furnish your Permanent Account Number to the payer (i.e., deductor), then the deductor shall deduct tax at the higher of the following rates :
  • At the rate specified in the relevant provision of the Act.
  • At the rate or rates in force, i.e., the rate prescribed in the Finance Act.
  • At the rate of 20%.​