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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.

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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 194C of Income Tax Act, 1961 mandates that TDS to be deducted by the payer while making payment to contractors or sub-contractors.

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TDS is required to be deducted: –

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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 to contractors or sub–contractors during the F.Y.

NOTE: –

This section i.e. TDS on payments to contractors or sub-contractors is not applicable while making such payments to non-resident contractors or sub-contractors.

Example: –

Wings Ltd has paid amount od Rs. 15 lakhs during the year ended 2024-25 to Airports Authority of India towards landing and packing charges does it attract TDS under 194C?

Answer- The Landing & parking charges which are fixed by the Airports Authority of India are not merely for the use of land. These charges are also for services and facilities offered in connection with the aircraft operations at the airport which include providing air traffic services, ground safety services, aeronautical communication facilities, installation and maintenance of navigational aids and meteorological services at the airport.

Hence tax under section 194C @2% is deductible by wings ltd on payment od Rs. 15 lakhs to the Airport Authority of India.

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The TDS rate under this Section is: –

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No TDS if: –

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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.

FREQUENTLY ASKED QUESTIONS?

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

A. NO, this section only covers payment of contract or subcontract to resident person only. So, payment made to non- resident is not covered under 194C.

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Q. Does office maintenance charges comes under this Section?

A. Yes, TDS on office maintenance is deducted under 194C.

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Q. At what amount TDS is to be deducted at gross amount or net amount?

A. TDS should be deducted at the amount after deduction of all taxes like Gst.

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Q. Is it mandatory to have written contract to attract TDS under this section?

A. NO, it is not mandatory to have written contract to attract TDS under section 194C.

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Q. Landing & Packing charges to Airport authorities by airline companies attract TDS under 194C or 194I?

A. Since, the charges is not merely for the use of land but also for various other services provided like air traffic services, ground safety services etc. so TDS is not deductible under 194I it is deductible under 194C.

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Q. Is TDS liable under section 194C if payment is made to advertisement agency?

A. Yes, the payment made to advertisement agency is included in the definition of work therefore it is liable for TDS deduction under 194C.

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Q. TDS on payments by broadcaster/ telecaster to production houses for production of content for broadcasting/ telecasting.

A. Where the content is produced as per specification of broadcaster and the copyright of the content is also transferred to them then such contract is covered under the definition of the term work u/s 194C, and it is subject to TDS u/s 194C.

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Where telecaster acquires only the telecasting rights of the content already produced by the production house (eg. Rights of original Ramayan) then it is not covered under 194C and not TDS is deductible under 194C.

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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 194BA of Income Tax Act, 1961 mandates that TDS to be deducted on income by way of winning from online games.

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Computation of net winnings for the purpose of TDS under this section: (A+D) – (B+C)

Example: –

Mr Sarthak is online fantasy game addict. He is having user account with Dream 11.

Opening Balance as on 01/04/2024: Rs. 70,000

Amount deposited during the P.Y 24-25 in user account– Rs. 1,60,000

Amount withdraw during the P.Y 24-25 from user account- Rs. 3,40,000

Closing balance as on 31/03/2025: Rs. 80,000

In this case for the purpose of TDS net winnings is Rs. (3,40,000+80,000) – (1,60,000+70,000) = Rs. 1,90,000.

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TDS is to be deducted at the time of withdrawal during the P.Y from user accounts as well as at the end of Financial Year.

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Any person obligated to pay winnings from online games to any payee is liable to deduct TDS under Section 194BA.

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The TDS rate under this Section is 30% for residents & 31.2% (30% plus 4% surcharge) in case of non-resident.

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Notes: –

Example: –

From following information calculate TDS required to be deducted by DREAM 11 from the winning of Mr Sarthak. Opening balance of DREAM 11 is Rs. 60,000 & closing balance of account is Rs. 72,000.

Before calculating TDS we need to understand how to calculate Net winnings at the First withdrawal, Subsequent withdrawals & Net winnings at the end of F.Y.

FIRST WITHDRAWAL: – A-(B+C)

SUBSEQUENT WITHDRAWAL: – A-(B+C+E)

Net winnings at the end of FY: – (A+D)-(B+C+E)

Now we solve the above problem: –

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In order to remove difficulty in deducting TDS for insignificant withdrawal, it is clarified that may not deducted on withdrawal on satisfaction of all the following conditions: –

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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.

.

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..

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 194BB of Income Tax Act, 1961 mandates that TDS to be deducted on income by way of winning from horse races, being the amount or aggregate of amounts exceeding ten thousand rupees during the financial year.

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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 whichever is earlier, but in case of TDS u/s 194BB the TDS must be deducted at the time of payment only.

Few examples of date of deduction are: –

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Following mentioned persons are required to deduct TDS under Section 194BB: –

The TDS rate under this Section is 30% for residents & 31.2% (30% plus 4% surcharge) in case of non-resident.

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Notes: –

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Example: –

Q. Mr. Chandan bet on 2 horse races in the first one he won Rs. 50,000 and the second he lost Rs. 20,000, how much TDS is to be deducted?

A. Section 194BB provides that the person responsible for paying to any persons, any income by way of winnings from horse races and the amount of winnings exceeds Rs. 10,000, tax shall be deducted @30%.

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However, if the person has winnings from one horse race and loss from another race horse then the TDS has to be deducted from winnings and then set off from losses and the balance has to be paid of afterwards.

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Therefore, in our case since Mr. Chandan has won Rs. 50,000 from first horse race and loss of Rs. 20,000 from second horse race, the TDS to deducted in this case is Rs. 5,000 (10% of Rs. 50,000) and then the balance amount of Rs. 25,000(Rs. 50,000(winnings)- Rs. 5,000(TDS u/s 194BB)- Rs. 20,000(loss)) to be paid to Mr. Chandan.

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No TDS under this section if the winning or accumulated winnings is upto Rs. 10,000 during the financial year.

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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: –

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..

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.

.

Section 194B of Income Tax Act, 1961 mandates that TDS to be deducted on income by way of winning from lottery or crossword puzzle or card games or any other game of any sort or from gambling or betting of any form or nature whatsoever, being the amount or aggregate of amounts exceeding ten thousand rupees during the financial year.

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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 whichever is earlier, but in case of TDS u/s 194B the TDS must be deducted at the time of payment only.

Few examples of date of deduction are: –

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Any person who is liable to pay following income is liable to deduct TDS under Section 194B: –

The TDS rate under this Section is 30% for residents & 31.2% (30% plus 4% surcharge) in case of non-resident.

Notes: –

Example: –

Q. Mr Gopal won the first prize in lottery and the prize was a Maruti car worth Rs. 5 lakhs, how will TDS be deducted under this situation?

A. Section 194B provides that the person responsible for paying to any persons, any income by way of winnings from lottery or crossword puzzle, card games or any other game of any sort and the amount of winnings exceeds Rs. 10,000, tax shall be deducted @30%.

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However, if the winnings is wholly in kind, the person responsible for paying the prize shall before releasing the winnings, ensure that tax has been paid in respect of such winnings.

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Therefore, in our case since the entire winning is in kind, it must be ensured that the sum equal to the TDS (i.e. Rs. 1,50,000 being 30% of 5,00,000) is paid by Mr Goal before the car is release in his favour.

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No TDS under this section if the winning or accumulated winnings is upto Rs. 10,000 during the financial year.

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

8.What is the due date for filing of TDS return under Section 194B?

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: –

.

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.

.

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..

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.

.

Section 194A of Income Tax Act, 1961 mandates the TDS on payment of interest made to a resident, excluding interest paid to partners of partnership firms. This includes TDS only of interest other than interest on securities.

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TDS is required to be deducted: –

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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 interest payments other than interest on securities to residents.

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NOTE: –

This section i.e. TDS on interest other than interest on securities is not applicable while making such payments to non-residents.

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The TDS rate under this Section is 10%, however if the concerned person is unable to provide PAN to the payer, then TDS rate will be 20%.

Example: –

Mr. Mayank has an FD of Rs. 20 lakhs in DDB bank invested @8% interest rate. The total interest due to Mr Mayank during the year will be Rs. 1.6 Lakhs, so DDB bank must deduct TDS on Rs. 1.6 lakhs @10% i.e. Rs. 16,000.

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No TDS in the following cases: –

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

.

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: –

.

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.

.

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.

NOTES: –

.

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.

.

Section 194 of Income Tax Act, 1961 mandates the TDS on payment of Dividend means any income received by a shareholder from a company which is in the nature of the Dividend is liable to the provisions of TDS under section 194.

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As per Income Tax Act dividend means: –

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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 whichever is earlier, but in case of TDS u/s 194 the TDS must be deducted at the time of payment only.

Few examples of date of deduction are: –

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Income Tax Act mandates that the principal officer of an Indian company is required to deduct TDS at the required rate before making payment of dividend to resident person.

NOTE:

This section i.e. TDS on Dividend is not applicable to making such payments to non-resident.

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The TDS rate under Section is 10%, however in case the payee is unable to furnish his/ her PAN then the TDS will be deducted at 20%.

Example: –

Hindustan Uniliver Limited (HUL) declares dividend of Rs. 20 per share to its shareholders. Mr Arjun holding 1000 shares is entitled to receive Rs. 20*1000= 20,000 as dividend income from HUL. The principal officer of HUL is therefore required to deduct TDS @10% i.e. 2000 while making payment of TDS to Mr. Arjun.

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No TDS under Section 194 if: –

Special purpose vehicle (SPV) is a separate legal entity created by an organization. The SPV is a distinct company which has its own Assets and Liabilities, as well as its own legal status. Usually, they are created for specific objective, often to isolate risk.

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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: –

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.

.

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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