TDS = Tax Deducted at Source i.e. deducted by PAYER or BUYER. e.g. Employer making salary payment or buyer of immovable property or person paying interest or commission or rent would deduct TDS and pay to the IT department. And Tax collected at source (TCS) Tax collected at source (TCS) is the tax payable by a seller which he collects from the buyer at the time of sale. Section 206C of the Income-tax act governs the goods on which the seller has to collect tax from the purchasers
What is TDS and why it is deducted?
TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.
Is TDS same as TCS?
TDS implies the amount deducted from the recipient’s income in the form of tax. TCS refers to an amount accumulated by the seller or company as a tax. While TDS is like expense for the company, TCS is income. … The payer or buyer deduct TDS, i.e. they are required to deduct tax at source.
Who is eligible for TDS?
Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such a 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.
Who is liable for TCS?
Only sellers whose total sales, gross receipts, or turnover exceed Rs 10 crore during the preceding fiscal year shall be liable to collect such TCS. “Central government may notify person, subject to conditions contained in such notification, who shall not be liable to collect such TCS,” the budget says.
Due Dates For TDS/TCS
TDS Due Dates of FY 2019-20 for Return Filing
| Quarter | Period | Last Date of Filing |
| 1st Quarter | 1st April to 30th June | 31st July 2019 |
| 2nd Quarter | 1st July to 30th September | 31st Oct 2019 |
| 3rd Quarter | 1st October to 31st December | 31st Jan 2020 |
| 4th Quarter | 1st January to 31st March | 30th June 2020 |
TCS Last Dates of FY 2019-20 for Return Filing
| Quarter | Period | Last Date of Filing |
| 1st Quarter | 1st April to 30th June | 15th July 2019 |
| 2nd Quarter | 1st July to 30th September | 15th Oct 2019 |
| 3rd Quarter | 1st October to 31st December | 15th Jan 2020 |
| 4th Quarter | 1st January to 31st March | 30th June 2020 |
TDS & TCS Payment Deposit Due Dates for Govt & Non-government
- The due date for depositing TCS is the 7th of next month.
- Due dates for depositing TDS as under:
- For non-government Deductors- 7th of next month (except for the month of March
where the due date is 30th of April) - For Government Deductors-
i) If paid through challan- 7th of next month
ii) If paid through book-entry- Same day i.e. the day on which TDS deducted
- For non-government Deductors- 7th of next month (except for the month of March
Penalties on TDS/TCS Return Filing After Due Date
TDS ensures an on-time payment of tax on behalf of income generator but not on behalf of the one who deducts the tax. For example: if an employer deducted tax on behalf of an employee, implies that employee has paid the tax but that doesn’t mean the employer has also paid the same. So, here comes the role of penalties and late payment charges.
In our day to day life, we come across such terms like late payment fees, fines, etc on pending bills or outstanding payments. The same is with income tax, the penalty or delayed payment fees are charged by the Income Tax Department (ITD) to an individual who is not in compliance with the IT law or could not meet his/her tax duties in a well- manner. So when such individuals fail to pay the taxes on time, the penalties are levied along with interest.
In the same way, if a deductor or employers who deduct the TDS (Tax Deducted at Source) from the income of their employees, fails to pay TDS to the government or fails to submit relevant tax documents to the IT department on time, becomes liable to pay penalties for the late or non-payment of TDS.
The section 234E of Income Tax Act, which was introduced on 1st July 2012, deals with the late payment fees or penalty applicable for late submission of quarterly TDS/TCS returns by the Deductor to the ITD.
Who is eligible for TDS?
Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such a 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.
Interest on Non-Payment of TDS/TCS
- in addition to the penalty, the interest will also be charged alongside. The interest is payable by the taxpayers before the filing of the TDS return. The details about interest rates are given in Section 201 A.
- For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 and 30th June 2020, the reduced interest rate at 9% instead of 12 %/18 % per annum ( i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.
However, none or short payments of TDS/TCS made after 30th June will attract following interest liability:- - When a part or whole amount of tax is Non-deducted at source then 1% per month interest is subject to TDS/TCS amount when the Interest period starts from the date on which the tax was deductible and lasts till the actual date of deduction.
- When a part or whole amount of TDS is not paid then 1.5% per month interest is subject to TDS/TCS amount when the Interest period starts from the deduction date and lasts till the actual date of payment.
- Interest at the rate of 1.5% per month ( from the date when it was deducted to the actual date of deposit) has to pay for late payment of TDS after deduction.
- Note: The interest is calculated on the basis of a number of months and not on the basis of a number of days so a part of a month will be taken as a whole month.
- The calculation of interest for payable TDS amount is done on the basis of the date from when TDS was deducted instead of the date on which it was due.
- For delayed payments of advanced tax, self-assessment tax, regular tax, TDS, TCS, equalization levy, STT, CTT made between 20th March 2020 and 30th June 2020, the reduced interest rate at 9% instead of 12 %/18 % per annum ( i.e. 0.75% per month instead of 1/1.5 percent per month) will be charged for this period. No late fee/penalty shall be charged for delay relating to this period.
Who is eligible for TDS?TDS Rate Chart For Financial Year 2020-21 and Assessment Year 2021-22:
| Section | Particulars | TDS Rate Individual/ HUF (Indian Resident)(in %) | TDS Rate for (NRI) in India (in %) | Domestic Company (in %) | Other than domestic Company (in %) |
| 192 | Payment of salary | Normal Slab Rate | Normal Slab Rate | – | – |
| 192A | Payment of accumulated balance of Provident fund which is taxable in the hands of an employee. Monetary Limit – Rs. 50,000 | 10 | 10.40 | – | – |
| 193 | Interest on Securities | – | – | ||
| a. | any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act; | 10 | – | 10 | – |
| b. | debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder; | 10 | – | 10 | – |
| c. | any security of the Central or State Government;(Monetary Limit – Rs 10,000) | 10 | – | 10 | – |
| d. | interest on any other security | 10 | – | 10 | – |
| 194 | Dividend (monetary limit- Rs 5000) | – | – | 10(W.e.f. 01.04.2020) | – |
| 194A | An Income by way of interest other than “Interest on securities”(Monetary Limit – Rs 40,000) | 10 | – | 10 | – |
| 194B | Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort (Monetary Limit – Rs 10,000) | 30 | 31.20 | 30 | 31.20 |
| 194BB | Income by way of winnings from horse races (Monetary Limit – Rs 10,000) | 30 | 31.20 | 30 | 31.20 |
| 194C | A Payment to contractor/sub-contractor (Monetary Limit – Rs 30,000 per contract or Rs 1,00,000 for aggregate amount during the year) | ||||
| a. | HUF/Individuals | 1 | – | 1 | – |
| b. | Others | 2 | – | 2 | – |
| 194D | Insurance commission(Monetary Limit – Rs 15,000) | 5 | – | 10 | – |
| 194DA | A Payment in respect of life insurance policy w.e.f. 1/9/2019, the tax shall be deducted on the amount of income comprised in insurance pay-out(Monetary Limit – Rs 1,00,000) | 5 | – | 5 | – |
| 194E | Payment to non-resident sportsmen / sports association | – | 20.80 | – | 20.80 |
| 194EE | A Payment in respect of deposit under National Savings scheme(Monetary Limit – Rs 2,500) | 10 | 10.40 | 10 | – |
| 194F | Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India | 20 | 20.80 | 20 | – |
| 194G | Commission, etc., on sale of lottery tickets(Monetary Limit – Rs 15,000) | 5 | 5.20 | 5 | 5.20 |
| 194H | Commission or brokerage(Monetary Limit – Rs 15,000) | 5 | – | 5 | – |
| 194-I | Rent(Monetary Limit – Rs 2,40,000) | ||||
| a. Plant & Machinery | 2 | – | 2 | – | |
| b. Land or building or furniture or fitting | 10 | – | 10 | – | |
| 194-IA | Payment on transfer of certain immovable property other than agricultural land(Monetary Limit – Consideration exceeding Rs 50,00,000) | 1 | – | 1 | – |
| 194-IB | A Payment of rent by individual or HUF not liable to tax audit(Monetary Limit – Rent for the month or part of the month exceeds Rs 50,000) | 5 | – | – | – |
| 194-IC | Payment of monetary consideration under Joint Development Agreements | 10 | – | 10 | – |
| 194J | A Payment for fees for Technical services, Professional services or royalty etc.(Monetary Limit –Rs 30,000 p.a) | ||||
| a. | Fee for technical services | 2(w.e.f. 01.04.2020) | – | 2(w.e.f. 01.04.2020) | – |
| b. | Fee in other all cases as per Section 194J | 10 | – | 10 | – |
| 194K | Payment of any income in respect of:a) Units of a Mutual Fund as per Section 10(23D)b) The Units from the administratorc) Units from specified company | 10(W.e.f 01/04/2020) | – | 10 | – |
| 194LA | A Payment of compensation on acquisition of certain immovable property(Monetary Limit –Rs 2,50,000 p.a.) | 10 | – | 10 | – |
| 194LB | Payment of interest on infrastructure debt fund | – | 5.20 | 5.20 | |
| 194LBA(1) | Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders. | 10 | – | 10 | – |
| 194LBA(2) | A Business trust shall deduct tax while distributing any interest income received or receivable by it from a SPV to its unit holders. | – | 5.20 | – | 5.20 |
| 194LBA(3) | Business trust shall deduct tax while distributing any income received from renting or leasing or letting out any real estate asset owned directly by it to its unit holders. | – | 31.20 | – | 41.6 |
| 194LBB | Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)] | 10 | 31.20 | 10 | 41.6 |
| 194LBC | Income in respect of investment made in a securitisation trust (specified in Explanation of section 115 TCA) | 25% in case of Individual or HUF 30% in case of other resident person | 31.20 | 10 | 41.6 |
| 194LC | Payment of interest by an Indian Company or a business trust in respect of money borrowed in foreign currency under a loan agreement or by way of issue of long-term bonds (including long-term infrastructure bond)Note: Now TDS at concessional rate of 5% will be applicable for borrowings made after April 1, 2020 but before July 1, 2023. | – | 5.20 | – | 5.20 |
| 194LD | A Payment of interest on rupee denominated bond of an Indian Company or Government securities to a Foreign Institutional Investor or a Qualified Foreign InvestorNote: Now TDS at concessional rate of 5% will be applicable for borrowings made after April 1, 2020 but before July 1, 2023. | – | 5.20 | – | 5.20 |
| 194M | Payment of commission (not being insurance commission), brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J. | 5 | – | 5 | – |
| 194N | Cash withdrawal in excess of Rs. 1 crore during the previous year from one or more account maintained by a person with a banking company, co-operative society engaged in business of banking or a post office | 2 | – | 2 | – |
| 194-O | Applicable for E-Commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform. | 1(w.e.f. 01.04.2020) | – | 1(w.e.f. 01.04.2020) | – |
| 195 | Payment of any other sum to a Non-resident | ||||
| a. | An Income in respect of investment made by a Non-resident Indian Citizen | – | 20.80 | – | – |
| b. | Income by way of long-term capital gains referred to in Section 115E in case of a Non-resident Indian Citizen | – | 10.40 | – | |
| c. | An Income by way of long-term capital gains referred to in sub-clause (iii) of clause (c) of sub-Section (1) of Section 112 | – | 10.40 | – | 10.40 |
| d. | Income by way of long-term capital gains as referred to in Section 112A | – | 10.40 | – | 10.40 |
| e. | An Income by way of short-term capital gains referred to in Section 111A | – | 15.60 | – | 15.60 |
| f. | Any other income by way of long-term capital gains [not being long-term capital gains referred to in clauses 10(33), 10(36) and 112A | – | 20.80 | – | 20.80 |
| g. | Income by way of interest payable by Government or an Indian concern on moneys borrowed or debt incurred by Government or the Indian concern in foreign currency (not being income by way of interest referred to in Section 194LB or Section 194LC) | – | 20.80 | 20.80 | |
| h. | The Income by way of royalty payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of copyright in any book on a subject referred to in the first proviso to sub-section (1A) of Section 115A of the Income-tax Act, to the Indian concern, or in respect of any computer software referred to in the second proviso to sub-section (1A) of Section 115A of the Income-tax Act, to a person resident in India | – | 10.40 | – | 10.40 |
| i. | Income by way of royalty [not being royalty of the nature referred to point g) above E] payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy | – | 10.40 | – | – |
| A) Where the agreement is made after the 31st day of march,1961 but before 1st April 1976 | – | – | – | 52 | |
| B) Where the agreement is made after the 31st March, 1976 | – | – | – | 10.40 | |
| j | Income by way of fees for technical services payable by Government or an Indian concern in pursuance of an agreement made by it with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to a matter included in the industrial policy, for the time being in force, of the Government of India, the agreement is in accordance with that policy | – | 10.40 | – | – |
| A) Where the agreement is made after the 29th February 1964 but before 1st April 1976 | – | – | – | 52 | |
| B) Where the agreement is made after the 31st March, 1976 | – | – | – | 10.40 | |
| k. | Any other income | – | 31.20 | – | 41.60 |
| 196B | Income from units (including long-term capital gain on transfer of such units) to an offshore fund | – | 10.40 | – | 10.40 |
| 196C | The Income from foreign currency bonds or GDR of an Indian company (including long-term capital gain on transfer of such bonds or GDR) | – | 10.40 | – | 10.40 |
| 196D | Income of foreign Institutional Investors from securities (not being dividend or capital gain arising from such securities) | – | 20.80 | – | 20.80 |