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INCOME TAX REVIEW

Rules & Forms

Sec. Of I.T. Act & nature of income/ payment When to deduct tax at source At what rate tax is to be deducted at source When to deposit tax deducted tax [as per col. 3] in Government account ANNUAL RETURN TDS CERTIFICATE
Prescribed Form No. Time limit for filing Prescribed Form No. Time limit for issue of certificate
1 2 3 4 5 6 7 8
192: Salary Monthly at the time of payment where estimated taxable salary exceeds Rs.4,166/- p.m./ Rs.50,000/- p.a. At the rates prescribed in part III of the First Schedule to the Finance Act. Within 1 week from the last day of the month in which the deduction is made [Refer note 1] Form No.24 [Refer note 10] 30-06-05

Form No. 16 or 16AA, as the case may be [can be issued on own Stationery Refer note 6]

 30-04-05
193: Interest on securities At the time of credit or payment, whichever is earlier.For no deduction of tax in certain cases where the interest on Debenture does not exceed Rs.2,500/- ¥, [Refer note 4 & 5] At the rates prescribed in part II of the First Schedule to the Finance Act; i.e., @ 10% as I.T. + S. C. & Addl. S.C.# [In the case of domestic co., @ 20%as I. T. + S. C. & Addl. S.C.#] Within 1 week from the last day of the month in which the deduction is made[Refer note 2] Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit/ payment [Refer note 2]
194: Dividends$ Before making payment to resident shareholder. For no deduction of tax in certain cases, refer 1st proviso to section 179 [Refer note 3, 5 & 13] At the rates prescribed in part II of the First Schedule to the Finance Act i.e., @ 20% as I.T. + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made Form No.26 [Refer note 10]
OR
Form No. 27 (=>)[Refer note 14]		 30-06-05
=>Within 14 days from the end of the relevant quarter		 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month of issue of cheque/ warrant.
194A: Interest other than “interest on securities” payable by persons other than individual/ HUF** At the time of credit or payment, whichever is earlier, when the aggregate sums payable during the financial year exceeds Rs.5,000/- ##[Refer note 4 & 5] At the rates prescribed in part II of the First Schedule to the Finance Act; i.e., @ 10% as I.T. [In the case of a domestic co., @ 20% as I.T] + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made [Refer note 1 & 2] Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit / payment [Refer note 1 & 2]
194B: Winning from lottery or crossword puzzle or card game & other game At the time of payment when it exceeds Rs. 5,000 At the rates prescribed in part II of the First Schedule to the Finance Act i.e., @ 30% as I.T. + S.C & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made Form No.26 [Refer note 10] 30-06-05

Form No. 16A [can be issued on own Stationery]

 Within 1 month from end of the month during which payment is made
194BB:Winning from horse race [Refer note 15] At the time of payment when it exceeds Rs. 2,500 At the rates prescribed in part II of the First Schedule to the Finance Act i.e., @ 30% as I.T. + S.C & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which payment is made
194C: Payments to contractors/sub-contractor (payable to sub-contractor by persons other than individual /HUF**) At the time of credit or payment, whichever is earlier, where the aggregate of amounts of sums credited or paid during the financial year exceeds Rs. 50,000¶¶ In case of payment made to-1. Contractor @2% ¶ as I.T. + S.C. & Addl. S.C.#2. Sub - contractor @ 1% as I.T. + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made [Refer note 2] Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit/ payment [Refer note 2].
194D: Insurance Commission At the time of credit or payment, whichever is earlier, when the aggregate sums payable during the financial year exceeds Rs.5,000/- At the rates prescribed in part II of the First Schedule to the Finance Act i.e., @ 10% as I.T. [In the case of a domestic co., @ 20%as I.T.]+S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made [Refer note 1& 2] Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] 30-04-05 [Refer note 1 & 2].
194EE: Payments out of deposits under National Savings Scheme ref. to in sec. 80CCA & not sec. 88 At the time of payment when the aggregate sums is Rs. 2,500 or more in a financial year. No deduction, if paid to heirs of the depositor [Refer note 3 & 5] At the rate 20% as I.T. + S.C. & Addl. S.C.# On the day of deduction itself Form No. 26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which payment is made
194F: Payments on account of repurchase of units referred to in sec. 80CCB & not sec. 88 At the time of payment of any amount referred to in sec. 80CCB(2) At the rate 20% as I.T. + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made. Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which payment is made
194G: Commission etc. on sale of lottery tickets At the time of credit or payment, whichever is earlier, where it exceeds Rs. 1,000/- At the rate 10% as I.T. + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made [Refer note 2] Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit/ payment [Refer note 2].
194H: Commission or brokerage, payable by persons other than individual /HUF** At the time of credit or payment, whichever is earlier, when aggregate sums credited/ paid during the financial year exceeds Rs.2,500/- At the rate 5% as I.T. + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made [Refer note 1 & 2] Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit/ payment [Refer note 1 & 2].
194 - I: Rent payable by persons other than individual/ HUF** At the time of credit or payment, whichever is earlier, when aggregate sums credited/ paid during the financial year exceeds Rs1,20,000 At the rate of - [1] @ 15% as I.T. + S.C. & Addl. S.C.# if the payee is an individual or a HUF; and [2] @ 20% as I.T. + S.C. & Addl. S.C.#, if the payee is other than an individual or a HUF Within 1 week from the last day of the month in which the deduction is made [Refer note 2] Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit/ payment [Refer note 2].
194-J: Fees for - (1) Professional services; or (2) Technical services [payable by persons other than individual/ HUF**] At the time of credit or payment, whichever is earlier, when aggregate sums credited/ paid during the financial year exceeds Rs. 20,000 in either case At the rate 5% as I.T. + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made [Refer note 2] Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit/ payment [Refer note 2].
194 LA: Payment of Compensation on acquisition of certain immovable property. At the time of payment, when aggregate sums paid exceeds Rs. 1,00,000 @ 10 % as I.T + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made Form No.26 [Refer note 10] 30-06-05 Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit / payment is made.
195: Payments made to non residents, excluding Salary & Dividends u/s 115 O At the time of credit or payment, whichever is earlier Refer Note § Within 1 week from the last day of the month in which the deduction is made Quarterly Return in Form No. 27. Refer Note §§ Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit / payment is made.
196 B:(a) Income in respect of Units Purchased in Foreign Currency. OR(b) Income by way of LTCG from transfer of units purchased in Foreign currency. At the time of credit or payment, whichever is earlier At the rate 10% as I.T. + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made Quarterly Return in Form No. 27. Refer Note §§ Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit / payment is made.
196 C: Income from Foreign currency Bonds or GDR of an Indian company.   At the rate 10% as I.T. + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made Quarterly Return in Form No. 27. Refer Note §§ Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit / payment is made.
196 D: Income in respect of securities referred in sec 115AD(1) (A) [other than units referred to sec 115AB] listed in a recognized Stock Exchange   At the rate 20% as I.T. + S.C. & Addl. S.C.# Within 1 week from the last day of the month in which the deduction is made Quarterly Return in Form No. 27. Refer Note §§ Form No. 16A [can be issued on own Stationery] Within 1 month from end of the month during which credit / payment is made.
¥ W.e.f. 1-6-1997, tax is not required to be deducted at source on any interest payable on any security of the Central / state Government.
$ It may be noted that u/s. 194 [i.e., dividends], w.e.f. 1-4-2003, tax is not required to be deducted at source in respect of any dividends, referred to in section 115-0, declared distributed or paid, as the case may be, on or after 1-4-2003.
## Tax is also required to be deducted at source on payment/credit of income by way of interest exceeding Rs. 5000:
  1. On time deposits [i.e. fixed deposits other than recurring deposits], with a bank including a co-operative bank [other than co-operative land mortgage bank or a co-operative land development bank], and
  2. On deposits with an Indian Public Company with main object of carrying on the business of providing long-term finance for purchase / construction of residential houses in India. The limit of Rs. 5000 is to be computed with reference to the income credited or paid by a branch of the bank / co-op. bank / Public Company.
    3.
¶¶ If the amount of any sum credited or paid or likely to be credited or paid exceeds Rs. 20,000, tax @ source is required to be made.
  Upto 30-9-2004, where the contract value exceeds Rs. 20,000, tax@ source is required to be made.
In respect of advertising contracts, income-tax is required to be deducted at source at the rate of 1%, as against 2%, as I.T.
** W. e. f. 1-6-2002, in the case of an individual/HUF, whose total sales, gross receipts or turnover from the business or profession carried on by him, exceeds the monetary limits specified u/s. 44 AB [a]/[b] during the financial year immediately preceding the financial year in which sum is credited or paid, shall be liable to deduct income –tax u/s. 194A(1) or 194C(2) or 194H or 194-I or 194-J(1), as the case may be. W.e.f. 1-6-2003, provision of section 194-J [1] will not apply in the circumstances as explained, where the payment of fees for professional services is for personal purpose of such individual or any member of HUF.
§ In case of remittance to a country with which a Double Taxation Avoidance Agreement is in force, the Board have clarified that tax should be deducted at source at rates provided in the Finance Act or at the rate provided in the said Agreement, whichever is more beneficial to the payee.
§§ Where the amount is credited by person to the account of the payee as on the date up to which the accounts of such person are made, return is to be filed within 14 days after expiry of 2 months from the end of the month in which income is so credited. In other case, return shall be submitted within 14 days from the end of the quarter.
# 1 Rate of surcharge on income tax:
  1. In case of individual, HUF, AOP and BOI, the rate of S.C. is @ 10% of IT, where the income on aggregate of such income (i.e., referred to in sections in the chart) paid or likely to be paid and subject to the deduction exceeds Rs. 8,50,000/-.
  2. In case of all other persons, other than persons referred to in (a) above, the rate of S.C. is @ 2.5% of I.T.
    3.
2 Rate of additional surcharge( i.e. Education Cess) on aggregate of income tax and surcharge on income-tax:
  The amount of income tax and surcharge on income tax, if any, so deducted shall be increased by an additional surcharge (i.e., Education Cess) calculated at the rate of 2% of such income tax and surcharge, if any [Refer section 2(11) of the Finance (No.2) Act, 2004].
Notes:
1 The Assessing Officer may permit any person to pay tax deducted from income by way of:
  1. Salary, quarterly on 15th June, 15th September, 15th December , & 15th March; and
  2. Interest u/s. 194A or insurance commission u/s. 194D or commission or brokerage u/s. 194H, quarterly on 15th July, 15thOctomber, 15th January &15th April.
  Time limit for issue of certificate referred to in sections 194A, 194D & 194H is within 14 days from the date of payment of tax [Refer proviso to rule 30 (1) (b) and 3rd of the I.T. Rules].
2 Where the income referred to in sections 193, 194A, 194C, 194D, 194–H, 194–I, & 194J is credited by a person to the account of the payee as on the date upto which accounts of such person are made, tax deducted has to be deposited in Government account within 2 months of the expiration of the month in which that date falls. The time limit for issue of certificate in such a case is within a week after the expiry of 2 months from the income is so credited [Refer rule 30(1)(b)(i)(1) & 1st proviso to rule 31(3) of I.T. Rules].
3 In the case of a resident individual, tax is not be to deducted u/s. 194 and 194EE, if such an individual furnishes to the payer a declaration in writing in duplicate in the prescribed Form No. 15G [Refer section 197A (1) read with rule 29C of the I. T. Rules].
4 In the case person [not being a company or a firm], tax is not to be deducted u/ss. 193 & 194A, if such a person furnishes to the payer a declaration in writing in duplicate in the Form No. 15G [Refer section 197A(1A) read with the rule 29C of the I.T. Rules].
5 W.e.f. 1-6-2003, in the case of an individual resident in India, who is age of 65 years or more at any time during the previous year and is entitled to rebate of [deduction from] income-tax u/s. 88B, tax is not to be deducted u/ss. 193, 194, 194A, 194EE & 197A (1B), if such an individual furnishes to the payer a declaration in writing in duplicate Form No. 15H [Refer section 197A(1C) read with the rule 29C of the I.T. Rules.]
6 W.e.f. 1-6-2001, a person responsible for paying salary [i.e., employer] is required to furnish to the employee to whom such payment is made, a statement giving correct & complete particulars of perquisites and/or profits in lieu of salary provided to him and the value therefore in the prescribed Form No.12BA, if the amount of salary paid or payable to the employee is more than Rs. 1,50,000. Form No.16AA, if the amount of salary paid or payable to the employee is not more than Rs. 1,50,000. For failure to furnish such statement will attract penalty of Rs. 100 for every day during which the failure continues vide section 272A(2)(i)[Refer section 192(2C) read with rule 26A(2) of the I.T. Rules].
7 W.e.f. 2-7-1996, where more than one certificate is required to be furnished to a payee for TDS made during a financial year, the person deducting the tax, may on the request from such payee, issue within one month from the close of such financial year a consolidated certificate in Form No.16A for tax deducted during whole of such financial year [Refer 4th proviso to rule 31(3)].
8 For failure to deduct correct tax @ source on due dates, interest u/s. 201(1A) is leviable. Similarly, penalty is also leviable u/s. 271C, 272A(2)(C) & 272A(2)(g).
9 For liberalized guidelines for compounding of first technical offences such as delay in depositing the tax deducted at source or tax collected at source, refer PIB Press Release dt. 11-12-1994 [210 ITR [St,] 89].
10 W.e.f. 1-6-2003, section 206(2) provides that a person responsible for TDS under Chapter XVII-B desires to file [principle officer in the case of such person being a company, has to file] any return/ statement referred to in rule 37 on a computer media, he shall deliver such return/statement within time specified in rule 37 and is accompanied with Form No. 27A furnishing the information specified therein in accordance with the scheme specified [i.e., Electronic Filling of Returns of Tax Deducted at Source Scheme, 2003; 263 ITR [St.]14] [Refer rule 37B]
11 Where the tax has been deducted or deposited on or after 1-4-2005 there is no requirement to furnish this certificate. However, the TDS certificate shall be issued by the prescribed income tax authority or the person authorised by such authority within the prescribed time after the end of each financial year beginning on or after 1-4-2005 to the person from whom tax has been deducted at source.
12 In case of TDS on or after 1-4-05 the person deducting the tax shall, after depositing the tax to the credit of the Government within the prescribed time, prepare and file with the prescribed income tax authority or the person authorised by such authority, quarterly statements for the period ending on 30th June, 30th September, 31st December and 31st March in each financial year in the prescribed form and within prescribed time.
13 W.e.f. A.Y. 2004-05, Dividends paid by Domestic companies have been exempted from tax in the hands of recipient. Thus TDS provisions are not applicable in respect of dividends referred to in Sec 115O (i.e., dividends, not being covered by sec 2(22) (e) from Domestic company)
14 A statement of dividend paid to the following shall be submitted quarterly:
  1. A person (not being a company) who is non-resident or resident but not ordinary resident; or
  2. A company which neither an Indian company nor a company which has made prescribed arrangements for declaration & payments of dividends in India.
15 Where the payment is wholly in kind, the payer shall before releasing the winnings ensure that tax has been paid in respect of the winnings. This means that the payer must recover the tax from the winner and then release the winnings, or himself bear the tax liability, and then pay the tax due to the credit if the Government. Where the payment is partly in cash and partly in kind, tax can be deducted on the total value of cash and kind from the cash portion and remitted to the Government. If the cash portion is found insufficient to meet the tax due, the payer must either recover the deficit in tax from the winner before releasing the winnings, or himself bear such deficit, and then pay tax due to the credit of the Government.

CHART FOR COLLECTION OF TAX AT SOURCE

[In respect of receipts from resident assessee during the financial year 2004-2005]
Sec. of I.T. Act When to collect tax at source Nature of receipt & rate at which tax is to be collected at source When to deposit tax coallected [as per col. 3] in Government account

Half Yearly Return

TCS CERTIFICATE
Prescribed Form No. Time limit for filing Prescribed Form No. Time limit for issue of certificate
1 2 3 4 5 6 7 8
Sec 206C: At the time of debit/ receipt, whichevaer is earlier.
1 Alcoholic liquor for human consumption 1%
2 Tendu leaves 5%
3 Timber obtained under a forest lease 2.50%
4 Timber obtained other than under a forest lease 2.50%
5 Any other forest produce not being Timber or Tendu leaves 2.50%
6 Scrap 1%
7 Parking Lot* (Appl. From 1-10-04) 2%
8. Toll Plaza 2%
9. Mining & Quarrying 2%
Within 1 week from the last day of the month in which the deduction is made. Form No. 27E One month from the end of the relevant period i.e. one month from the end of 30th Sept. or 31st March as the case may be. Note: With effect from 1-10-04 prescribed returns are to be filed within prescribed time after the end of each financial year. Form No.27D Within 1 month from end of the month during which debited or collected.

 
 

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