All posts by : Nayan Saluja

TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

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TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

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The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

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The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

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Note: –

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

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Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

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Section 194S of Income Tax Act, 1961 mandates the deduction of tax at source (TDS) on payments made for the transfer of virtual digital assets, including cryptocurrencies.

Virtual Digital Assets means: –

TDS is required to be deducted: –

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When specified person’s payment for transfer (purchase) of virtual digital assets (VDA) exceeds Rs. 50,000 during the Financial Year or Rs 10,000 in any other situation then TDS under Section 194S of Income Tax Act becomes applicable.

The TDS rate under this Section is: –

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Note: –

The provision of this Section i.e. 194S is applicable from 01/07/2022.

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No TDS if: –

A Specified person means: –

Transfer of VDA (in cash)

If the transfer of VDA takes place on or through exchange (who does not own VDA), then the exchange shall deduct TDS @ 1% and remit the remaining amount.

In the case the exchange would be required to furnish a quarterly report in form 26QF on or before due date.

Transfer of VDA (in kind) (one VDA sold for another VDA)

Unlike the above cases, the payments could be in kind. In such cases, the exchange may deduct TDS on both legs of transaction through following method: –

The due date for deposit of TDS is as below: –

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TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TDS under this section has to filed quarterly through FORM 26QF/26QE and the deductor has to issue FORM 16A to the employee after filing of return.

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Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.

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Q. What is the threshold limit for TDS under 194S?

A. The threshold limit for TDS under 194S is Rs. 50,000 in case of specified person and Rs. 10,000 in case of others.

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Q. Is Section 194S applicable when the payee is a non-resident?

A. YES, this section also applies when the transferor of VDA is non-recipient.

TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

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TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

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The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

.

The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

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Note: –

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

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Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

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Section 194T of Income Tax Act, 1961 mandates that TDS to be deducted while paying to partners of the firm( it includes Partnership firms as well as LLP) any sum which is the nature of interest, bonus, commission or remuneration.

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TDS is required to be deducted: –

Few examples of date of deduction are: –

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Any firm paying to its partners any sum which is the nature of remuneration, commission, bonus or interest, and the sum paid or payable during the financial year exceeds Rs. 20,000.

Payment made to partner that are covered under Section 194T are as follows: –

The TDS rate under this Section is: –

Note: –

The provision of this Section i.e. 194T is applicable from 01/04/2025.

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No TDS if: –

The due date for deposit of TDS is as below: –

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TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.

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Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.

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Q. What is the threshold limit for TDS under 194T?

A. The threshold limit for TDS under 194T is Rs. 20,000.

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Q. Is Section 194T applicable when the payee is a non-resident?

A. YES, this section also applies when the payee is non-recipient.

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Q. Is TDS applicable on repayment of Capital Balance?

A. NO, TDS u/s 194T is not applicable on repayment of Capital Balance.

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Q. From which date TDS is applicable in accordance with the provision of Section 194T?

A. From 01/04/2025, the provision of Section 194T will be applicable.

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Q. Rate in case the partner is a non-resident?

A. In case the partner is a non-resident, then the TDS rate will be 10% plus the applicable surcharge plus 4% health and education cess.

TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

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TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

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The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

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The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

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Note: –

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

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Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

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Section 194LA of Income Tax Act, 1961 mandates that TDS to be deducted while paying compensation related to compulsory acquisition of immoveable property.

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Normally the TDS is to be deducted at the time of payment or at the time of crediting the party in the books of accounts but in case of TDS u/s 194LA the TDS must be deducted at the time of payment only.

Few examples of date of deduction are: –

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Any person paying to a resident payee any amount related to compensation on compulsory acquisition of Immoveable Property when the compensation exceeds Rs. 2,50,000 in a Financial Year.

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NOTE: –

This section i.e. TDS on payments related to compensation of compulsory acquisition of Immoveable Property is not applicable when the payee is non- resident.

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Example: –

Q. Mr. Debendra had a property in the Delhi region due to the construction of metro in the region government acquired his property and paid him Rs. 1 crore as a compensation. Discuss the TDS implications?

A. As per Section 194LA the payer is required to deduct TDS for compensation paid for compulsory acquisition of immovable property.

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In the give case government paid Rs. 2 crores as compensation to Mr. Dev for acquisition of his property and since the amount is greater than Rs. 2,50,000 they are liable to deduct TDS u/s 194N @ 10%.

The TDS rate under this Section is: –

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No TDS if: –

A rural agricultural land is considered rural if:

The due date for deposit of TDS is as below: –

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9.What is the due date for filing of TDS return under Section 194LA?

TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.

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Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.

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Q. What is the threshold limit for TDS under 194LA?

A. The threshold limit for TDS under 194LA is Rs. 2,50,000.

Q. Is Section 194LA applicable when the payee is a non-resident?

A. NO, this section does not apply when the payee is non-recipient.

Q. What do you mean by agriculture Land?

A. Immoveable property means any land (other than agricultural land) or any building or part of building.

Q. When is TDS to be deducted u/s 194LA?

A. TDS is to be deducted at the time of payment only.

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TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

.

TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

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The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

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The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

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Note: –

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

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Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

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Section 194R of Income Tax Act, 1961 mandates that TDS to be deducted when a business gives its distributors or channel partners any such perquisite or incentives whether in cash or in kind or partly in cash and partly in kind.

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TDS is required to be deducted: –

Few examples of date of deduction are: –

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Any person other than Individuals and HUF (Individuals and HUF required to deduct TDS, if last year turnover is more than Rs. 1 crore in case of business or gross receipts more than Rs. 50 lakhs in case of profession.) are required to deduct TDS while making payments of which in the nature of perquisite or incentives whether in cash or in kind or partly in cash and partly in kind.

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NOTE: –

This section i.e. TDS on payments r which in the nature of perquisite or incentives whether in cash or in kind or partly in cash and partly in kind is not applicable while making such payments to non-resident.

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Example: –

Q. Mr. Kunal an authorized seller of Tata products sold products worth Rs. 5 crores of Tata. As a token of appreciation Tata products gave Mr. Kunal a paid trip to Thailand, the market value of such trip is Rs. 2 lakhs. Discuss the TDS implications?

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As per Section 194R when a business gives its distributors or channel partners any such perquisite or incentives whether in cash or in kind or partly in cash and partly in kind where value of such thing is more than 20,000 in the Financial Year then the provider of such benefits is required to deduct TDS @ 10%.

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In the give case Tata products provided a fully paid trip to Mr. Kunal where value of such benefit is 2 lakhs so the tata products has to deduct TDS @ 10 on such value.

The TDS rate under this Section is: –

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No TDS if: –

The due date for deposit of TDS is as below: –

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TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.

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Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.

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Q. What is the threshold limit for TDS under 194R?

A. The threshold limit for TDS under 194R is Rs. 20,000.

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Q. Is Section 194R applicable when the recipient is a non-resident?

A. NO, this section does not apply when the recipient is non-recipient.

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Q. If the benefits give is non-monetary, then how to calculate price for TDS?

A. The price of a non-monetary benefit or perquisite should be calculated based on the fair market value or the purchase price of such products.

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Q. Will discounts, cash discounts and rebates be considered as benefits or perquisites?

A. NO, they will not be considered as benefits or perquisites, they will be reduced from sales price.

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Q. Who is required to deduct TDS u/s 194R?

A. The provider of benefits or perquisites provided to a resident in respect of business or profession is required to deduct TDS.

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TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

.

TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

.

The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

.

The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

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Note: –

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

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Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

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Section 194Q of Income Tax Act, 1961 mandates that TDS to be deducted by purchaser of goods while making the payments to the payer.

TDS is required to be deducted: –

Few examples of date of deduction are: –

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The Section applies to a buyer in the following cases: –

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NOTE: –

This section i.e. TDS u/s 194Q is not applicable when seller is non- resident.

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Example: –

Aryan Ltd a domestic company has a turnover of Rs. 12 crores during the financial year 2023-24, purchased goods worth Rs. 85 lakhs from M/s Varun & Co. a resident firm. The details of payments are as follows: –

On 28/05/2024- 30 lakhs, 28/06/2024- 25 lakhs, 10/12/2024- 20 lakhs, 20/02/2025- 10 lakhs. What are the TDS implications?

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Since the turnover of Aryan Ltd. during the Previous year exceeds Rs. 10 crores and during the current year purchases from M/s Varun & Co. exceeds Rs. 50 lakhs, Aryan Ltd is liable to deduct TDS u/s 194Q.

The TDS rate under this Section is: –

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No TDS if: –

The due date for deposit of TDS is as below: –

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TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.

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Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.

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FREQUENTLY ASKED QUESTIONS?

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Q. Is there any threshold under Section 194Q?

A. The threshold under this section is Rs 50 lakhs i.e. if the purchase increases Rs. 50 lakhs then only TDS applies only to the amount above Rs. 50 lakhs.

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Q. Is 194Q applies to non-residents?

A. NO, Section 194Q does not apply if seller is a non – resident, but in case the non- resident seller has a PE in India and purchases are related to that PE, then 194Q will apply.

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Q. Does amount on which TDS u/s 194Q is deducted also includes indirect expenses?

A. NO, indirect taxes like gst has to be deducted for deducting amount under Section 194Q.

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Q. Does this section 194Q also includes transactions carried through various exchanges?

A. NO , transaction in securities and commodities market which are traded through recognized stock exchanges or cleared or settled by recognized clearing corporation including recognized stock exchanges or RCC located in IFSC or transaction in electricity, renewable energy certificates and energy saving certificates traded through power exchanges.

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FEW IMPORTANT POINTS

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TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

.

TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

.

The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

.

The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

.

Note: –

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

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Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

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Section 194P of Income Tax Act, 1961 was introduced to provide conditional relief to senior citizen above the age of 75 years from filing of Income Tax Returns.

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TDS is required to be deducted: –

Few examples of date of deduction are: –

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Section 194P mandates that the senior citizens are not required to filed Income Tax return if the bank has deducted TDS on their income.

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NOTE: –

This section i.e. TDS u/s 194P is not applicable when the senior citizen is a non-resident.

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Example: –

Mr. Singh a resident of India aged 77 years has pension income of Rs 52000 per month and the same is credited to SBI bank. In addition, he gets interest @ 8% on deposits of Rs. 20 lakhs with the same bank. Out of the deposit of Rs. 20 Lakhs, Rs. 2 lakhs represent Five-year term deposit made by him. Interest on Saving bank credited to his saving account was Rs. 9500? Compute the TDS deductible by SBI bank if Mr. sharma has filed a declaration with them?

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Computation of tax liability under old scheme

Computation of tax liability under new scheme (115 BAC)

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Since Mr Singh liability is less under new scheme i.e. 115BAC so bank must deduct TDS under new scheme @ 2544 (approx.) per month (30,520/12).

Mr. Singh is not required to file his Income tax return as all conditions of 194P are satisfied.

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The TDS rate is determined as per the slab rate of the resident individual.

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The due date for deposit of TDS is as below: –

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TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.

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Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.

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FREQUENTLY ASKED QUESTIONS?

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Q. Which tax regime will be applied wile deducting TDS u/s 194P?

A. The bank calculates the taxable income after getting the declaration from the senior citizen and applies the beneficial tax regime to the taxpayer to arrive at the TDS to be made u/s 194P.

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Q. What is the age limit for 194P?

A. The age limit for relaxation of filing of ITR under Section 194P is 75 years or above.

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Q. Is there any threshold under Section 194P?

A, Yes, if the income is below the basic exemption limit then TDS will not be deducted.

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DECLARATION BY A SENIOR CITIZEN

The Specified bank, as mentioned above, shall deduct TDS based on a declaration submitted by the senior citizen to the bank.

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The declaration should contain the below- mentioned details:

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TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

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TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

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The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

.

The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

.

Note: –

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

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Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

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Section 194O of Income Tax Act, 1961 mandates that TDS to be deducted by e-commerce operators of the gross sales amount made by e-commerce participant on the platform facilitated by the e-commerce operators.

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E-commerce operator

An E-commerce operator is a person who owns, operates, or manages a digital/ electronic facility for sale of goods and services. He is responsible for making payments to the e-commerce participant on such sales.

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E-commerce participant

An E-commerce participant is a person who sells goods, services or both through an electronic facility provided by an E-commerce operator. He must be a resident in India.

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TDS is required to be deducted: –

Few examples of date of deduction are: –

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The E-commerce operator shall deduct TDS of the gross sales amount made by resident e-commerce participant on the platform facilitated by the e-commerce operators.

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NOTE: –

This section i.e. TDS u/s 194O is not applicable when the e-commerce participant is non- residents.

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Example: –

Mrs. Harsha sales kesar through flipkat.com an E-commerce operator. Flipkart is using payment gateway of CC- Avenue? What are the TDS implications?

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In this case Flipkart is required to deduct TDS u/s 194O of Mrs. Harsha and CC-Avenue is not required to deduct TDS of Flipkart as Payment gateway will not be required to be deduct TDS u/s 194O, if the tax has been deducted by the e-commerce operator u/s 194O provided CC-avenue takes undertaking from Flipkart regarding deduction of Tax by Flipkart.

The TDS rate under this Section is: –

NOTE: –

From 1^st October 2024 TDS rate will be reduced from 1% to 0.1%.

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No TDS if all the following conditions are satisfied: –

The due date for deposit of TDS is as below: –

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TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.

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Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.

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FREQUENTLY ASKED QUESTIONS?

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Q. Is there any threshold under Section 194O?

A. No, there is no threshold for TDS u/s 194O, but in case of Individuals or HUF and the amount of sales or services is upto 5 lakhs during the financial year then no TDS will be required to be deducted.

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Q. Is 194O applies to non-residents?

A. NO, Section 194O does not apply if the e-commerce applicant is non-resident.

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Q. From when TDS under Section 194O is reduced to 0.1%?

A. TDS on e-commerce transaction u/s 194O is reduced to 0.1% from 1^st October 2024.

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Q. Does this section 194O includes on TDS on sale of goods through e-commerce?

A. NO, TDS under 194O also includes sale of services and services includes fees for professional and technical services also.

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FEW IMPORTANT POINTS

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TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

.

TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

.

The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

.

The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

.

Note: –

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

.

Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

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Section 194N of Income Tax Act, 1961 mandates that TDS to be deducted on cash withdrawn from banks, Co. op. banks, Post office etc.

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Normally the TDS is to be deducted at the time of payment or at the time of crediting the party in the books of accounts but in case of TDS u/s 194N the TDS must be deducted at the time of payment only.

Few examples of date of deduction are: –

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The person (payer) making the cash payment will have to deduct TDS under Section 194N. Here is a list of such persons: –

NOTE: –

NO, TDS if the cash withdrawal is upto Rs. 1 crore during the Financial Year.

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Example: –

Mr. Budhiraja has a savings account and a current account with IDFC bank. During the F.Y 2024-25, he withdraws cash of Rs. 50 lakhs from saving accounts and Rs. 60 lakhs from current account. What will be the rate of TDS u/s 194 and the amount to be deducted by Bank?

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The TDS rate under this Section is: –

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No TDS if: –

The due date for deposit of TDS is as below: –

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TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.

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Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.

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FREQUENTLY ASKED QUESTIONS?

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Q. Is there any threshold under Section 194N?

A. If the payee has not filed income tax returns for the last 3 years, then the threshold will be Rs. 20 lakhs otherwise the threshold will be Rs. 1 crore.

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Q. Is 194N applies to non-residents?

A. Yes, Section 194N also applies to withdrawal made by the non-resident.

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Q. From when TDS under Section 194N is applicable?

A. TDS on cash withdrawal u/s 194N is applicable starting 1^st September 2019.

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Q. Can we claim TDS on cash withdrawal u/s 194N?

A. Yes, payee can claim TDS while filing their return.

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Q. What is the TDS rate if PAN is not available, or PAN is not linked to AADHAR?

A. If PAN is not available or PAN and AADHAR are not linked to each other then the TDS rate will be 20% and threshold will be Rs. 20 lakhs.

TDS stands for Tax Deducted at Source. TDS is a kind of tax that is deducted by the payer before making certain payments like Salary, Rent, Commission, Interest, Royalty, Professional Fees etc. to the payee.

.

TDS is required to be deducted at the source if the money to be paid and the money already paid exceeds a specified amount.

.

The Payee can claim this tax deducted by the payer while paying his income tax liability for the year, and if the TDS deducted is more than the income tax liability of the assessee then he/ she will be entitled to a refund.

.

The main purpose of introduction of TDS was to reduce the Tax evasion by the person receiving the income.

.

Note: –

Payer- A payer is a person or organization who is responsible for deducting TDS before paying the amount to Payee.

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Payee- A Payee is a person or organization who receives the payment from the payee after the TDS deduction.

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Section 194K of Income Tax Act, 1961 mandates that TDS to be deducted by the payer while making payment related to income from unit trust of India or mutual fund units.

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TDS is required to be deducted: –

Few examples of date of deduction are: –

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Any person making payments related to Income from Unit trust of India (UTI) or Mutual fund units to a resident person during the financial year if the amount exceeds Rs. 5,000.

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NOTE: –

This section i.e. TDS on payments related to Income from Unit trust of India (UTI) or Mutual fund units is not applicable while making such payments to non-resident.

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Example: –

Mr. Kunal holding 10,000 units if HDFC mutual funds, during the F.Y 2024-25 HDFC mutual fund announce income of 10 per unit to its unit holders. Discuss the TDS implications?

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As per Section 194K a mutual fund unit has to deduct TDS if during the Financial Year income form units given to a resident person is above Rs. 5,000. In the give case Mr. Kunal has earned income of Rs. 1,00,000 (10,000 units * 10 per unit), so the HDFC mutual funds are required to deduct TDS @ 10% i.e. 10,000 before distributing the income to Mr. Kunal.

The TDS rate under Section 194K is 10% and in case the PAN of the person is not provided TDS rate will be increased to 20% form 10%.

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No TDS if: –

The due date for deposit of TDS is as below: –

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TDS is to be deposited monthly on the dates mentioned above but the return is to be filed quarterly on or before the below mentioned dates: –

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9.Type of TDS return & form to be issued?

TDS under this section has to filed quarterly through FORM 26Q and the deductor has to issue FORM 16A to the employee after filing of return.

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Following penalties/fees will be levied if there is delay in TDS deduction or delay in deposit of TDS or non-filing of quarterly return.

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FREQUENTLY ASKED QUESTIONS?

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Q. Whether TDS is required to be deducted under 194K if payment is made to non-resident?

A. NO, this section only covers payment to resident person only. So, payment made to non- resident is not covered under 194K.

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Q. Is there any threshold for TDS u/s 194K?

A. Yes, the threshold limit is Rs. 5,000, but in case of payment of remuneration to directors there is no threshold limit.

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Q. Who deducts TDS under Section 194K?

A. The Asset Management Company (AMC) or the funds are liable to deduct TDS. Following are the types of entities that are required to deduct TDS.

Q. What is an Asset Management Company?

A. An Asset Management Company (AMC) is an company that collects funds from investors and invest them in various investment channels such as equities, debt, gold etc.

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