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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 194IA of Income Tax Act, 1961 mandates that TDS to be deducted by the buyer when purchasing immoveable property (other than rural agriculture land), be it residential or commercial from a resident person during the F.Y.

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A rural agricultural land is considered rural if:

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TDS is required to be deducted: –

Few examples of date of deduction are: –

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TDS is to be deducted by the buyer while purchasing immoveable property (other than rural agriculture land), be it residential or commercial from a residential seller if the value of the property (SDV or Consideration) exceeds Rs. 50,00,000.

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NOTE: –

This section i.e. TDS on payments related to transfer of immoveable property is not applicable if the seller is a non-resident person.

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Example: –

Mr. Josh a resident of United States sold immoveable property to Mr. Mayank in India. Does the provision of Section 194IA applies?

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The TDS rate under this Section is: –

NOTE:

In case the PAN & AADHAR of the seller is not linked then the TDS rate will be 20% instead of 1%.

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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 also the statement of TDS has to be filed monthly as follows: –

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TDS under this section has to filed monthly through FORM 26QB and the deductor has to issue FORM 16B to the employee after filing of return within 15 days of filing 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 194IA?

A. The threshold limit for TDS under 194IA is Rs. 50,00,000.

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Q. What do you mean by consideration under 194IA?

A. Consideration for transfer of immoveable property includes club membership fees, car parking fees, maintenance fees, advance fees, or any other similar charges incidental to transfer of immoveable property.

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Q. Is 194IA applicable when purchasing immoveable property from non-resident?

A. No, this section is not applicable while purchasing immoveable property from non-resident persons.

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Q. Are all agricultural land exempt from provision of 194IA?

A. No, only rural agricultural land is exempt from the provision of 194IA, urban agricultural land will attract TDS under the provisions of Section 194IA.

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Q. Is it mandatory to obtain tax deduction account number (TAN) to deduct TDS under Section 194IA?

A. No, TAN is not required to deduct TDS under Section 194IA as PAN is used for filing of 26QB statement.

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Q. What do you mean by SDV?

A. It means the value adopted or assessed by any authority of a state government for the purpose of payment of stamp duty.

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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. .

Section 194I of Income Tax Act, 1961 mandates that TDS to be deducted by the payer while making payments related to rent of plant & machinery, equipment’s, building, furniture & land to resident person.

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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 related to rent of plant & machinery, equipment’s, building, furniture & land to resident person.

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NOTE: –

This section i.e. TDS on payments related to rent of plant & machinery, equipment’s, building, furniture & land to resident person is not applicable while making such payments to non-resident.

Example: –

Q. Mr. Anand is a sole proprietor whose turnover exceeds Rs. 2 crores during the A.Y 2024-25. He pays a monthly rent of Rs 15,000 for office rent to Mr. R, besides that he also pays service charge of Rs. 6,000 to Mr. R for the use of furniture & fixture? What is the TDS implication on Mr. Anand.

A. Mr. Anand is liable to deduct TDS u/s 194I in case the rent paid (includes rent payment by whatever name called, for the use of land or building together with furniture, fittings etc.) to a resident person is more than Rs. 2,40,000 is a F.Y.

In the give case total rent paid during the year is Rs. 2,52,000 (21000*12) which is more than Rs. 2,40,000 so he is liable to deduct TDS u/s 194I @ 10%.

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

A. The threshold limit for TDS under 194I is Rs. 2,40,000.

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Q. Are warehousing charges subject to TDS u/s 194I?

A. Yes, warehousing charges are subject to TDS u/s 194I.

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Q. Is it necessary that payee must be the owner of the above-mentioned assets?

A. No, it is not necessary that payee must be the owner of the above-mentioned assets to receive rent and liable under Section 194I.

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Q. Is TDS u/s 194I applicable in case of deposit in relation to rent?

A. In case the deposits are refundable, so no TDS is to be deducted by the payer and in case the deposits are non-refundable then it is subject to TDS under 194I.

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Q. Is advance rent subject to TDS u/s 194I?

A. Yes, advance rent is subject to TDS u/s 194I.

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Q. Would the rent exemption limit of Rs. 2,40,000 under section 194I would apply separately to each co-owner of a property?

A. In case there are co-owners in a property and each person have a definite and ascertainable share in the property, then the limit of Rs. 2,40,000 will apply to each co-owner separately.

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Q. Will tax be deducted from the GST added in the rent?

A. No, GST is not considered as an income of the landlord, so it must be reduced from rent paid while deducting the TDS.

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Q. Does rent include payment made to a hotel for rooms hired during the year?

A. Yes, TDS u/s 194I will be applicable for hiring hotel rooms regularly.

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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 194H of Income Tax Act, 1961 mandates that TDS to be deducted by the payer while making any commission or brokerage payment to resident person.

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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 commission or brokerage payment to resident person.

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NOTE: –

This section i.e. TDS on payments relating to commission or brokerage is not applicable while making such payments to non-resident.

Example: –

Q. DEHP Ltd. a public sector bank in India, paid Rs. 20 crores to M/S NFGS Ltd. an organization that provides ATM network to the banks as commission for facilitating ATM credit/ debit cards? Whether TDS u/s 194H applies on such transactions?

A. The relationship between DEHP Ltd. a public sector bank, and M/S NFGS Ltd. is not of an agency but of two independent parties on principal-to-principal basis. Therefore, TDS provisions u/s 194H would not be attracted on commission made by DEHP Ltd.

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The TDS rate under this Section is: –

.NOTE: –

It is to be noted that effective 1^st October 2024 the TDS rates for payment of commission on sale of lottery tickets to any person will be reduced to 2% from 5%.

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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. What is the threshold limit for TDS under 194H?

A. The threshold limit for TDS under 194H is Rs. 15,000.

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Q. Stamps taken by stamp vendors at lower price from court attracts TDS u/s 194H?

A. NO, stamp vendors take stamps from court at lower value and give it to people at the value engraved in the stamp. It was held by the court that such margin does not amount to commission, but it is in the nature of discount given to them by courts as stamp vendors deal on principal-to-principal basis.

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Q. Does this applies to primary commission given by Airline company to travel agents, or does it apply to both primary as well as secondary?

A. It applies to both primary and supplementary commissions given by Airline company to travel agents.

We can understand by following example: –

In the above case, TDS u/s 194H is required to be deducted on standard commission of Rs. 7,000 and supplementary commission of Rs. 20,000 i.e. total 2% to be deducted on Rs. 27,000.

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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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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 194G of Income Tax Act, 1961 mandates that TDS to be deducted by the payer while making commission payments from sale of lottery tickets to any person.

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TDS is required to be deducted: –

Few examples of date of deduction are: –

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Any person while making above mentioned payments to the any person during the financial year is required to deduct TDS u/s 194G (provided the income exceeds Rs.15,000).

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Example: –

Q. Mr. Chaman is a lottery ticket seller selling tickets all over India, during the year he sells lottery tickets worth Rs. 1cr for which he receives Rs. 1.5 lakhs commission. Mr. Arun a lottery buyer purchases the ticket and won Rs. 10 lakhs. Explain the TDS applicability under 194G & 194B?

A. Section 194B of Income tax Act talks about TDS on winnings from lotteries whereas 194G talks about TDS on commission on sale of lottery tickets.

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In case of Mr. Chaman.

Mr. Chaman is a seller of lottery tickets and earns commission from selling such tickets so the person paying commission to Mr Chaman is liable to deduct TDS u/s 194G @ 2% i.e. 2%*1.5 lakhs = Rs. 3,000

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In case of Mr. Arun

Mr. Arun won a lottery worth Rs. 10 lakhs person making such payments should deduct TDS @30% i.e. 3 lakhs (10lakhs* 30%) and pay the remaining balance to Mr. Arun.

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The TDS rate under this Section is: –

.NOTE: –

It is to be noted that effective 1^st October 2024 the TDS rates for payment of commission on sale of lottery tickets to any person will be reduced to 2% from 5%.

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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. What is the threshold limit for TDS under 194G?

A. The threshold limit for TDS under 194G is Rs. 15,000.

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Q. Whether TDS is required to be deducted under 194G if commission on sale of lottery ticket is paid to non-resident?

A. YES, this section also covers payment of commission on sale of lottery ticket made to non- resident persons also. So, TDS u/s 194G is deductible when making payment of commission on sale of lottery ticket to non-resident persons.

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

A. TDS should be deducted at the net amount after deducting all taxes like GST.

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Q. What is the benefit of 2% TDS to lottery agents?

A. The agents will receive higher payout and will be able to use money throughout the year rather than waiting for a refund.

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Q. Is there any way to reduce or avoid TDS under Section 194G?

A. Yes, the payee can submit form 15G/ 15H to the payer or apply for a lower deduction certificate under Section 197 to reduce or avoid TDS.

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Q. What is the difference between 194G & 194B?

A. The major difference is nature of payment and the person to whom payment is made. Income from sale of lottery tickets are covered under 194G, while winnings from lottery tickets are covered by 194B.If a lottery ticket agent wins the lottery himself then the TDS will be deducted under 194B.

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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 194E of Income Tax Act, 1961 mandates that TDS to be deducted by the payer while making mentioned payment to a person who is Non-resident sportsperson or Non-resident entertainer or Non-resident sports association.

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TDS is required to be deducted: –

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Any person while making payments to Non-resident sports person or Non-resident entertainer or Non-resident sports association is liable to deduct TDS.

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NOTE: –

This section i.e. TDS on payment to Non-resident sports person or Non-resident entertainer or Non-resident sports association is not applicable while making such payments to resident persons.

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Example: –

Q. Payment of Rs. 5 lakhs were received by Mr. Phelps who is an athlete by a manufacturer of a swim wear for brand ambassador. What is rate of TDS if

a. he is a resident b. he is non-resident?

A. Payment to a resident sports person is deductible under Section 194J @ 10% if the sports person is a non-resident (who is not a citizen of India) then TDS is deductible @ 20.8% (20%+4%) under Section 194E.

The TDS rate under this Section 194E is 20% plus 4% cess i.e 20.8%.

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No exemption under this section every payment made to person specified above shall be liable for TDS deduction.

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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. Is this section also applicable to payment to Resident sports person?

A. NO, this section is applicable to payments made to Non-resident sports person or Non-resident entertainer or Non-resident sports association.

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Q. TDS under Section 194E is flat rate or it includes cess also?

A. TDS under Section 194E is not deductible at flat rate it includes cess also i.e. 20% + 4% cess.

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Q. Is there any exemption under Section 194E?

A. NO, there is no exemption under Section 194E of the income tax act.

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Q. What all income earned by non-residents are liable for TDS deduction under Section 194E?

A. Income received by a Non-resident sports person (who is not a citizen of India) by way of: –

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.

.

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

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Section 194DA of Income Tax Act, 1961 mandates that TDS to be deducted by the payer while making payment to resident persons in respect of life insurance policy.

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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 194DA 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 maturity proceeds of life insurance policy to any resident person is liable to deduct TDS under section 194DA.

NOTE: –

This section i.e. TDS on payment of maturity proceeds from life insurance is not applicable while making such payments to non-residents.

Example: –

Q. Mr. X, a resident is due to receive Rs. 4.5 lakhs on 31.03.2025, towards maturity proceeds of LIC policy taken on 01.04.2022 for which sum assured is Rs. 4 lakhs and the annual premium paid was Rs. 1.25 lakhs. Should TDS be deducted if yes them at what amount and how much?

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A. Since the annual premium exceeds 10% of the sum assured in respect of a policy taken after 31.03.2012, the maturity proceeds of Rs. 4.5 lakhs due on 31.03.2025 are not exempt u/s 10(10D) in the hands of Mr. X. Therefore, tax is required to be deducted @2% u/s 194DA on the amount of income comprised therein i.e. on Rs 75,000 (Rs. 4.5 lakhs – Rs. 3.75 lakhs(premium paid)).

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The TDS rate on life insurance payout is 5% but effective 01/10/2024 it is reduced to 2%.

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NOTE: –

TDS has to be deducted on income component i.e. maturity proceeds from life insurance policy minus the premium paid till date.

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?

Q. Is amount received on keyman insurance policy taxable?

A. YES, the amount received on keyman insurance policy is taxable and the TDS is to be deducted under section 194DA if the amount received is more than Rs. 1,00,000.

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Q. Is TDS to be deducted on full amount of maturity proceeds?

A. NO, the TDS under section 194DA is to be deducted on the income portion only i.e. maturity proceeds as reduced by the amount of premium paid till date.

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Q. Does TDS under Section 194DA applies to all types of insurance policies, including ULIPS?

A. NO, TDS applies to only life insurance policies and ULIPS only if they do not fall under Section 10(10D) exemption.

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Q. TDS under 194DA if PAN is not provided?

A. If one fails to provide TDS, then the rate of TDS will be 20% instead of 2%.

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Q. Does TDS under Section 194DA also applies to non-resident?

A. NO, TDS under Section 194DA only applies to resident persons, so non-resident persons are out of scope from this section.

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Q. Is there any threshold limit for TDS under Section 194DA?

A. YES, TDS under Section 194DA applies only if the payout during the policy terms exceeds Rs. 1 lakh in a F.Y.

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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.

.

Section 194D of Income Tax Act, 1961 mandates that TDS to be deducted by the payer while making payment to resident persons by way of commission for the following purposes: –

TDS is required to be deducted: –

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Any person while making above mentioned payments to the resident person during the financial year is required to deduct TDS u/s 194D (provided the income exceeds Rs.15,000).

NOTE: –

This section i.e. TDS on payment of Insurance commission is not applicable while making such payments to non-residents.

Example: –

Q. Mr. Dhanraj is an insurance agent for LIC, during the year his income from insurance commission was Rs. 1,20,000 he filed formed 15G/ 15H with the LIC stating that my income is below exemption limit. At what rate TDS should be deducted in this case?

A. In case of insurance commission the rate of TDS 10% if the income form insurance exceeds Rs. 10,000 but in this since the payee has submitted form 15G/ 15H to the payer no TDS liability arises in hand of the payer, so no TDS is required to be deducted.  

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The TDS rate under this Section is: –

NOTE: –

It is to be noted that effective 1^st April 2025 the TDS rates for payment of insurance commission to residents other than company will reduced to 2% from 5%.

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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: –

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. What is the threshold limit for TDS under 194D?

A. The threshold limit for TDS under 194D is Rs. 15,000.

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Q. Whether TDS is required to be deducted under 194D if insurance commission is paid to non-resident?

A. NO, this section only covers payment of insurance commission made to resident persons only. So, TDS u/s 194D is not deductible when making payment if insurance commission to non-resident persons.

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Q. Is TDS deductible under section 194D for reinsurance commission?

A. NO, under section 194D TDS is not deductible for reinsurance commission.

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

A. TDS should be deducted at the net amount after deducting all taxes like GST.

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Q. What is the benefit of 2% TDS to Insurance agents?

A. The agents will receive higher payout and will be able to use money throughout the year rather than waiting for a refund.

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Q. Is there any way to reduce or avoid TDS under Section 194D?

A. Yes, the payee can submit form 15G/ 15H to the payer or apply for a lower deduction certificate under Section 197 to reduce or avoid 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.

.

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 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.

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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 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.

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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..