Today we are discussing frequently asked question on TDS – Meaning of TDS, Applicability of TDS, Application for TAN, Due date for TDS Payments, Interest and Penalty for Non compliance of TDS.
To Know the TDS Rates see our blog TDS Rate Chart.
1.What do you mean by TDS ?
TDS Stands for Tax Deducted At Source.
It is one of the way of collecting Tax on income before filling of return.
For. E.g. Mr. A pays a interest of Rs. 50000/- to Mr. B. In this Mr. A is deducting Tax of Rs. 5000/- & pay Rs. 45000 to Mr. B. Then after Mr. A is liable to deposit the same amount of tax deducted to Government before due date.
2.Who is liable to deduct TDS ?
Every Person who is paying above a specified amount to some another person for expenses than the person who is paying is liable to deduct TDS.
An Individual or HUF is liable to deduct TDS only when if in the immediately preceding year there books of accounts are audited u/s. 44 AB or 44 AD of Income Tax Act, 1961.
Person other than Individual or HUF is always liable to deduct TDS.
A person is liable to gets its accounts audited u/s. 44AB if during the relevant financial year its gross sale/turnover or gross receipts exceeds Rs. 1 Crore (A.Y. 2014-15, 2015-16) in case of a business, or Rs. 25 lacs (A.Y.2014-15, 2015-16) in case of a profession.
A Person liable for Audit U/s 44AD if his turnover is less than 1 Crore and shows Income less than 8% of deemed profit.
3. When a Person has to apply for TAN ?
Ans. Persons who are liable to deduct TDS as per above stated conditions must apply for allotment of ‘TAX DEDUCTION AND COLLECTION ACCOUNT NUMBER’ (TAN) in form No. 49B within one month from the end of the month in which tax was deducted. TAN is mandatory to mention on all transaction related to TDS like TDS certificate( Form 16/FOrm 16B), TDS Returns (Form 24Q , 26Q and 27Q) and other related documents. There is penalty of Rs. 10,000 on failure to apply TAN.
4.When a person is not liable to deduct TDS ?
Ans.There are also some conditions where is no liability of deductor to deduct TDS as follows.
a)On declaration furnished by payee on Form 15G or 15H as the case may be
b)On certificate issued by ITO Payment to Government/RBI/Statutory Corporation etc
c)Exempt Incomes
d)Interest Payment by Offshore Banking Unites
e)Payment to New Pension System Trust
f)Notified payment to Notified Institutions/Associations
5. What are the consequences of failure to deduct TDS ?
Interest – 1% of the tax deductible.
Penalty – equal to the amount of tax deductible but not deducted.
If TDS is not deducted expenses will be disallowed in income tax act and it will be allowed later when its deducted.
6.What are the due dates for payment of TDS ?
| Quarter | Salary Payments | Other Payments |
| April to February | 7th of next month | 7th of next month |
| March | 30th April | 30th April |
For e.g. TDS deducted for the month of April is to be deposited on or before the 7th of May.
7.What are the consequences of failure to deposit the TDS on due date ?
Interest @ 1.5% per month or part of month of tax not deposited is payable u/s 201(A).
Punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine under Section 276(B).
8.What is the procedure to pay TDS ?
Ans. Go to this site NSDL & fill the appropriate field & make online payment.
