ITAA EDUCATION PVT. LTD.

TAX DEDUCTION AT SOURCE

Tax Pro Professional
A comprehensive guide on the provisions of TDS and TCS under
Income Tax Act, 1961
 Index

Sr. No. Topics Page Number

1 Introduction to tax deduction at source 2

2 Who is liable to deduct TDS? 2

3 Pictorial presentation of TDS process 3

4 Consequences in case TDS not deducted 4

5 Process of TDS 5

6 Due dates 5

7 Interest on late payment of TDS 6

8 Penalty 7

9 Various sections under TDS 9

a) TDS on Payment to contractors (Sec 194C) 9

b) TDS on Fees on Professional services (Sec 194J) 10

c) TDS on Commission (Sec 194H) 11

d) TDS on Rent (194I) 11

e) TDS on interest and dividend (Sec 194A and 194) 13

f) TDS on Transfer of immovable property (Sec 194IA) 14

g) TDS on Rent on Immovable Property (194IB) 15

h) TDS on Salary (Sec 192) 15

10 Lower or no deduction of TDS (Sec 197) 19

11 Forms and certificates 19

12 TDS return filing process 20

13 Equalisation levy 22

14 TDS for non-resident 22

15 Tax collection at source (TCS) 23

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 Introduction To Tax Deducted at Source

 Usually, the total income of an assessee for the previous year is taxable in the relevant assessment year.
 However, in several cases, income tax is recovered from the assessee in the previous year itself through Tax
Deduction at Source (TDS), Tax Collection at Source (TCS), or Payment of Advance Tax.
 Taxes paid by way of TDS/TCS or Advance tax can be deducted from the final tax liability of an assessee.
 Generally, the person who earns the income pays tax on such income either in the form of advance tax or in
the form of self-assessment tax. However, in certain situations, the person making prescribed payments is
required to deduct tax from such payments (at prescribed rates) and deposit the tax so deducted with the
Government. Such a form of tax deduction is called TDS. The person who deducts the tax is called ‘Deductor’
and the person whose tax is deducted is called ‘Deductee’.
 As shown in the image, the apple cut in the slice perfectly depicts the
concept of Tax Deduction at Source. The whole apple is the income in the
hands of the deductee and the slice represents the part of income that is cut
by the deductor and deposited to the government.

Who is liable to deduct Tax at source?

 TDS is treated as pre-paid taxes as it is paid in advance to the government. It is the duty of the person who
paid someone for his goods or services or both.
 The Income Tax Act has specified the payments like salary payments, interest on securities, contract
payments, dividends, etc. for the purpose of TDS.
 The person who deducts the TDS is called as deductor and whose tax is deducted is called as deductee.
 The following are the specified person who are liable to deduct TDS and deposit to the government on
behalf of deductee.: -
 All the companies, Partnership firms and LLPs are liable to deduct TDS.
 An Individuals or an H.U.F. is not liable to deduct TDS on such payment except where the individual
or H.U.F. is carrying on a business/profession where accounts are required to be audited u/s 44AB, in
the immediately preceding financial year. In other words, if the individual or HUF is carrying on a
business/profession and the accounts are required to be audited u/s 44AB (Tax Audit) in the
immediately preceding FY then that Individual or HUF is liable to deduct TDS on payment.
 Every person deducting/collecting tax at source is required to obtain a unique number called Tax Deduction
Account Number (TAN).
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 Companies and Partnership Firms

Mandatorily liable to deduct TDS

Individual and HUF liable for Tax

Audit

Pictorial Presentation of TDS Process

Raises the Invoice Rs. – 2,00,000 + @ 18 % GST –

Total – 2,36,000

Makes Payment Rs- 2,16,000 (2,00,000-20,000

(@10%) + 36000
Gada Electronics Pvt. Ltd.
(Deductor/Payer/Service recipient) Tarak Mehta
(Deductee/Payee/Service provider)
Paid to Amount
Pays Balance 20,000 Tarak Mehta 216000
Total tax payable 80000
to Government Govt. (26AS) 20000
Total paid 236000 TDS 20000
Net tax payable 60000

20,000 wll be reflected in Tarak Mehta’s 26AS

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 Consequences in cases TDS not deducted

 It will lead to Disallowance u/s. 40(a) while computing tax of the taxpayer.

Resident Non – Resident

30% on such amount on which TDS not 100% on such amount on which TDS not
Deducted deducted
 Disallowance means a particular amount will be added back to the Net profit while computing the total
income of the assessee. In other words, an assessee will not be able to claim a deduction for such payments
(Payments on which TDS is not deducted) while computing its taxable income.
 Let us try to understand this with the help of an illustration.

Illustrations
 ABC Ltd. has made a payment of Rs.100000 to Mr. Manav (Resident) towards professional services without
deducting TDS u/s 194J.
In such a case, Rs.30000 (100000*30%) will be disallowed and will be added back to the profit of the
company. In other words, ABC can claim a deduction of Rs.70000 only for such a payment.
Now you may think what if ABC Ltd. deducts and pays TDS in the next year? Will ABC be allowed to claim
Rs.30000 as a deduction? The answer is Yes. 30% of such expenditure i.e. Rs.30000 will be allowed as a
deduction in the subsequent year where ABC has deducted and deposited such TDS to the government in
the subsequent year.

 In general, if a person who is required to deduct TDS of a resident fails to do so, he will be deemed to be an
assessee in default. However, the person would not be deemed to be assessee in default if following have
been complied with: -
 Deductee has furnished return of income under section 139 and
 He has taken into account such sum for computing income in the return of income and
 He has paid the tax due on the income declared by him in such return of income, and payer
furnishes a certificate to this effect from an accountant.

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 Process of TDS


Deducted Tax


 Tax Payment Online

 Return Filing

Generating TDS certificate

Due Dates

The due date for payment of TDS (Section 200)

 TDS is to be deducted at the time of payment or date of credit in books of accounts, whichever is earlier.
 The TDS must be deposited with the government by the 7th of the subsequent month.
 For the amount of March- 30th April.
 Between April to February- 7th of the month succeeding the month in which tax is deducted or tax deduction
is due.

TDS Return (Section 200(3))

 E-filling of TDS Return - Deductor/collector is responsible for e-filling of quarterly returns.
 Due Dates of filing return of TDS.

Quarter ending Due date

30th June 31th July
30th Sep 31th October
30th December 31st January
31st March 31st May

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 Interest on late payment of TDS

 There are two cases for late payment of TDS-

 One is failure to deduct TDS when required to do so.
 Other is failure to pay TDS deducted to the government on the due date.
 Case 1- If any person, principal officer or company liable to deduct TDS does not deduct the whole or any
part of the tax, he or it shall be liable to pay simple interest-
 at 1% for every month or part of a month on the amount of such tax, from the date on which such
tax was deductible to the date on which such tax is deducted; and
 Case 2- If any person, principal officer or company liable to pay after deducting fails to pay the tax as
required, he or it shall be liable to pay simple interest-
 at 1.5% for every month or part of a month on the amount of such tax, from the date on which
such tax was deducted to the date on which such tax is actually paid.

Interest on late payment of TDS

Failure to deduct TDS on Failure to pay the deducted

the required due date TDS to government

1% for every 1.5% for every

month or part month or part
of month of month

Illustrations
 Example for Interest Calculation on delayed deduction:
The tax deduction due date is 2nd August 2022.
Tax Deducted on 20th November 2022.
Tax amount Rs.25,000
Calculate Interest payable for late Deduction.
Then the interest you owe Rs.1000 (25000* 1%*4 Months)
(4 months being from August to November)

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 Example for Interest Calculation on delayed payment:
Tax Deducted on 20th September 2019 Rs. 20,000
Tax Payment is done on 2nd February 2020
Calculate Interest payable for late Payment.
Then the interest you owe Rs.1800 (20000* 1.5%*6 Months)
(6 months being from September to February)

Penalty (Section 271H)

 Late fee of Rs. 200 per day is applicable to be paid to the Income Tax Department towards the late filing of
TDS/TCS return. That means the fine will be levied for everyday of delay until the fine amount is equal to the
amount of TDS and not more.
 In simple words- Lower of following will be the penalty towards late filing-
 Rs. 200 per day till the date of filing return or
 Amount of TDS required to be deducted.
 The late fee should be deposited before filing the TDS/TCS return
 Delay in filling TDS statement for more than a year from the due date of filling of such TDS return – If the
TDS statement is not filed within one year from the due date of furnishing of TDS return, then a minimum
penalty of Rs 10,000 but maximum Rs 1,00,000 can be levied. The penalty under this section will be in
addition to the late filing fee under section 234E.
Illustrations
1. Say that the TDS amount payable of Q1 is Rs.5000. Return is file on 17th November.
Calculate the amount of Late fees.
Solution: The due date for Q1 return is 31st July.
Accordingly, the late fees comes out to Rs 200 x 109 days = Rs.21800, (109 days being days from 1st
August to 17th November). However, since this is greater than the tax amount of Rs.5000, assessee will
have to pay only Rs 5000 as the late filing fee.

2. Say that the TDS amount payable of Q2 is Rs.6,000. Return is file on 15th November.
Calculate the amount of Late fees.
Solution: The due date for Q2 return is 31st October.
Accordingly, the late fees comes out to Rs.200 x 15 days = Rs.3000 (15 days being days from 1st
November to 15th November).

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Student’s Notes

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 Various sections under TDS

Section 194C (TDS on Payment to Contractors)

Nature of Any specified person responsible for paying any sum to a

payment resident contractor for carrying out any “work” (including
supply of Labour for carrying out any work) in pursuance
of a Contract.
Payer Any specified assessee.
(deductor )
Payer Any person being resident in India.
(deductee )
Limit Rs.30,000 for single payment or aggregate amount Rs.1,00,000 p.a.
Rate  For Individual or HUF: 1 %
 For any other case : 2 %
Time of At the time of payment or credit whichever is earlier.
deduction
Special point 1. No TDS is required in case of contracts of personal nature.
2. Contract shall include sub-contract.
3. No TDS is required in case of contractor during the course of business of plying, hiring
or leasing goods carriages owning less than 10 goods carriages at any time during the
PY and furnishes a declaration to that effect along with his PAN, to the person paying or
crediting such sum.
4. No TDS Where materials are supplied by the government.
5. FD Commission and brokerage are not covered under section 194C
6. Payment made to travel agent or an airline for purchase of a ticket is not subjected to
TDS under section 194C. However, if the plane, bus or any other mode is chartered, then
TDS is liable to be deducted under section 194C.
7. Payment made to clearing and forwarding agents for the carriage of goods is liable to
TDS under section 194C.
8. Sale of goods are not covered under 194C but when sale is of customize goods then
provision of 194C will be applicable

Illustrations
1. A Ltd makes below payments to Mr. B, a contractor during FY 2021-22
Rs. 25,000 on 01-06-2021
Rs. 30,000 on 05-08-2021
Rs. 25,000 on 12-08-2021
Rs. 28,000 on 20-12-2021

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  In above, single payment does not exceed Rs. 30,000 so no TDS is required to be deducted at that time
but while making payment on 20-12-2021, aggregate payment in a financial year exceeds Rs. 1,00,000/-
hence TDS will be deducted.

Particulars Amount
Total payment 1,08,000
TDS @ 1% 1080
Net payment on 20-12-2021 26,920
(28,000-1,080)

Section 194J (TDS on Fees for Professional or Technical Services)

Nature of Payment by way of –

Payment a. Fees for professional services or
b. Fees for technical services or
c. Royalty or
d. Non-compete fees or
e. Any remuneration or fees or commission other than salary to a Director of the
company.
Payer All Assesses (except those individuals & HUF who are not liable for audit in the
(deductor ) preceding previous year).
Payer Any person being resident.
(deductee )
Limit Rs.30,000 p.a. except in case of any sum paid to Directors. (There is no threshold limit
for payment made to directors).
Rate 10% for Professional services & 2% for Technical Services.
Time of At the of payment or credit whichever is earlier.
deduction
Special points 1. Professional services means services rendered by a person in the course of carrying
on Legal, Medical, Engineering, Architectural, Accountancy, or other services as may
be specified.
2. No TDS is required where services received are exclusively for personal purposes.

Illustrations
1. Suppose ABC ltd. receives professional services for its new project for Rs.50,000. Is the company liable to
deduct TDS?
Solution: Yes, Under Section 194J, the company must deduct TDS at the rate of 10% before paying the
Professional for his services.

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 2. The TDS amount will be Rs.5,000 (10% of Rs.50,000), and the company will pay the Professional a net
amount of Rs.45,000. The company is required to deposit the TDS amount with the government and file
a TDS return.

Section 194H (TDS on Commission)

Nature of Payment by way of commission or brokerage other than commission on insurance.

Payment
Payer All Assesses (except those individuals & HUF who are not liable for audit in the
(deductor ) preceding previous year).
Payer Any person being resident.
(deductee )
Limit Rs.15,000 p.a.
Rate 5%
Time of At the of payment or credit whichever is earlier.
deduction

Illustrations
1. ABC ltd. hires a sales agent to sell its products and pays him a commission of Rs. 10,000 for each product
sold. During the last month, agent sold 5 products. Determine the amount of TDS.
Solution: Amount of commission = 10000*5 = 50000.
As per Section 194H, since the commission amount exceeds Rs.15000, ABC ltd. is required to deduct TDS
at the rate of 5% on the commission amount paid to the sales agent. Therefore, TDS = 50000*5% = 2500.
Net amount of commission payable to the sales agent = 50000-2500 = 47500.

Section 194I (TDS on Rent)

Nature of “Rent” means any payment, by whatever name called, under any lease, sublease, tenancy
Payment or any other agreement or arrangement for the use of (either separately or together)
any,
 Land; or
 Building (including factory building); or
 Land appurtenant to a building (including factory building); or
 Plant or Machinery; or
 Equipment; or
 Furniture; or
 Fitting
Whether or not any or all the above are owned by the payee.

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 Payer All Assesses (except those individuals & HUF who are not liable for audit in the
(deductor ) preceding previous year).
Payer Any person being resident.
(deductee )
Limit Rs.2,40,000 p.a.
Rate a) For use of Plant & Machinery and Equipment -2%
b) For use of another asset- 10%
Time of At the of payment or credit whichever is earlier.
deduction
Special Points 1. Where the share of each co-owner in the property is definite and ascertainable, the
limit of Rs.240000 will be applicable to each co-owner separately.
2. TDS on deposits:
 TDS on security deposit adjusted at the end of the lease period
Adjustment against Rent TDS is deduction
Not adjustable against rent No TDS is deduction

 TDS on Non- refundable deposit made by Tenant-Clarification from CBDT

Non-Refundable  TDS is deductible
Refundable No TDS is deducted

 TDS on payment made to Hotels-Circular No, 5/2002

Accommodation on regular basis TDS is deducted
Accommodation not on regular No TDS is deducted
basis

Illustrations
1. ABC ltd. pays rent for building Rs.200000 and rent for plant & machinery Rs.100000 to Mr.Rajesh. Calculate
the amount of TDS to be deducted.
Solution: Total rent paid to Mr. Rajesh exceeds Rs.240000. Hence, tax should be deducted at source-
10% on Rs.200000 for rent on building =20000
2% on Rs.100000 for rent on P&M =2000
Total TDS to be deducted =20000+2000 = 2000.
Net amount payable to Mr. Rajesh = 300000-22000 = 278000.

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Section 194A (TDS on Interest other than Interest on Securities)

Nature of Interest paid other than interest on securities like interest on FDs, loan etc,
Payment
Payer (Deductor) All Assesse (except those individuals & HUF who are not liable for audit in the
preceding previous year).

Payee Any person being resident.

(Deductee)-
Limit The limits are as under:
Others If interest payment exceeds Rs.5,000 p.a.
Bank/ post office /co- If interest payment exceeds Rs.40,000 p.a.
operative society If Assessee is senior citizen, then TDS only if
interest exceed 50,000 p.a.
Rate 10%
Time of At time of credit or payment whichever is earlier
Deduction
Special points 1. No TDS to be deducted on interest credited or paid by a firm to a partner of
the firm.
2. No TDS to be deducted on interest on savings bank a/c.

Illustrations
1. Mr. Ajay (Age 36) has made one FD with HDFC Bank. On 30.06.2022, Interest was accrued to his FD of
Rs.42000. Determine the implications of TDS on the above interest amount.
Solution: Since Mr. Ajay is not a senior citizen and the deductor is a Bank, the threshold limit applicable
in this case will be Rs.40000. As the interest accrued to Mr. Ajay’s FD exceeds Rs.40000, TDS @10% shall
be deductible by HDFC bank. TDS = 10% of 42000 = Rs.4200.

Section 194 (TDS on Dividend)

Nature of Dividend distributed or paid by domestic company to Resident shareholders.

Payment
Payer Domestic companies.
(Deductor)
Payee Any person being resident Shareholder.
(Deductee)-
Time of At the time of payment.
Deduction
Limit Rs.5000
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 Rate 10%
Special points 1. No TDS to be deducted where dividend is paid to the individual by any mode
other than cash and the aggregate amount in a FY by a company to such
shareholder does not exceed Rs.5000.

Illustrations
1. Mr. Krishna holds 1000 shares of HUL and the company declared dividend of Rs.8 per share in the current
FY. Determine the applicability of TDS.
Solution: Amount of Dividend by HUL to Mr. Krishna in a FY = 1000*8 = Rs.8000.
As the dividend paid to Mr. Krishna is over and above the threshold limit of Rs.5000, HUL shall deduct
TDS on Rs.8000@ 10% i.e. Rs.800.

Section 194IA (TDS on Payment on transfer of certain immovable property other than Agriculture land)

Nature of TDS on transfer of any immovable property. (other than rural agricultural land),
Payment
Payer Any person, being a transferee, responsible for paying
(Deductor) (other than the person referred to in section 194LA)
Payee Any person being resident transferor.
(Deductee)-
Time of At time of credit or payment whichever is earlier.
Deduction
Limit Rs.50,00,000 or more.
Rate 1% of consideration or the stamp duty value of such property whichever is higher.
Special points 1. The deductor need not obtain a TAN (Tax Deduction Account Number) for
making payment of the TDS on immovable property under this section. You can
make the payment using your PAN.
2. For calculating the amount/consideration, all charges like parking fee, club
membership fee, maintenance charges etc., shall be included.
3. This limit is property specific. In other words, value of the property is to be
considered for determining applicability of TDS irrespective of no. of buyers or
sellers.
4. The deductor shall comply with the furnishing of Form 26QB and depositing
the amount deducted to the Government.

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 Illustrations
1. Mr. A bought a house at Rs. 55lakhs. He also paid Rs. 5 lakhs towards parking fee, Rs 1 lakh for water
facility fee and Rs 1 lakh for electricity fee. Calculate the amount of TDS.
Solution: TDS shall be deducted on total amount paid including other charges. Therefore,
TDS = 1% of 62 lakhs (55+5+1+1)
TDS payable would be Rs 62,000.

Section 194IB (TDS on rent payable other than covered in 194I)

Nature of Rent payable by certain Individuals or HUFs.

Payment
Payer Individual or HUF not liable for tax audit i.e., not covered in the section 194I
(Deductor)
Payee Any person being resident.
(Deductee)-
Time of At the of payment or at the time of credit of rent of last month whichever is earlier.
Deduction
Limit If the amount of rent exceeds Rs.50,000 per month of part of the month.
Rate 5%.
Special points 1. The deductor need not obtain a TAN (Tax Deduction Account Number) for
making payment of the TDS on immovable property under this section. You can
make the payment using your PAN.
2. Property can be any residential or commercial property.
3. Deduction is only one time in a year.
a. Where property is rented throughout the year – TDS to be deducted from
the rent of the last month of the year.
b. Where property is vacated during the year – TDS to be deducted from the
rent of the last month of tenancy.

Illustrations
1. Mr. A stays in the rented house from 01.11.2022 to 31.01.2023 and paid the rent of Rs.55000 per month.
Calculate TDS and specify its time of deduction.
Solution: Mr. A shall deduct TDS @ 5% on Rs. 165000. i.e. Rs.8250. The same shall be deducted from the
rent of January, 2023. Net rent payable for January = 55000-8250 = 46750.

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Section 192 (TDS on Salary)

Nature of Any amount paid which is chargeable under the head

Payment “salaries”.
Payer Any person (Employer)
(Deductor)
Payee Employee.
(Deductee)-
Time of At the time of payment.
Deduction
Limit If annual salary (after considering deductions, exemptions & other incomes as provided
by employee) exceeds basic exemption limit.
Rate At average rate of tax as per the Slab rates applicable for that FY.
Special points 1. Salary paid to partners of the firm is not covered u/s 192.
2. Employee shall provide all information and proof in form 12BB of any deductions
or exemptions he wants to claim or other income he want to declare.
Illustrations
1. Param is having a salary of Rs. 15,00,000 per annum. The bifurcation of the gross salary is as follows-
Basic salary-Rs. 10,00,000
Dearness allowance- Rs. 2,00,000
House rent allowance- Rs. 1,00,000
Bonus- Rs. 2,00,00
Apart from this, Param has paid life insurance premiums which are qualified under section 80C which
amounts to Rs.1,80,000. Compute TDS to be deducted by the employer of Param, who is not senior
citizen.
Solution:.
Computation of taxable of Salary
Particulars Amount
Basic Salary 10,00,000
Add: Dearness Allowance 2,00,000
Add: HRA 1,00,000
Add: Bonus 2,00,000
Gross Salary 15,00,000
Less: HRA Exemption (Assume that entire amount is allowed) (1,00,000)
Less: Standard Deduction (50,000)
Net Salary 13,50,000
Less: 80C Deduction (1,50,000)
Net taxable Salary 12,00,000

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 Computation of Tax on Salary and TDS rate
Income slab Rate Amount
0-250000 0 0
250000-500000 5% 12500
500000-1000000 20% 100000
1000000 & above 30% 60000
Basic tax 172500
Add : cess @ 4% 6900
Total tax payable 179400
TDS to be deducted/month 14950 (179400/12)

For the sake of understanding, tax is calculated as per old tax regime. However, in practice, individual has
an option to choose among old vs new tax regimes.

Student’s Notes

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 Summary Chart
Sr. No. Section No. Description Limit Rate of TDS
1 Sec 194C TDS on Payment to Rs. 30,000 for single For Individual or
Contractors payment or in aggregate HUF-1%
Rs.1,00,000 For Others-2%

2 Sec 194J TDS on payment of Fees of Rs.30,000 For professional-10%

professional or technical For Technical-2%
services

3 Sec 194A TDS On Interest Other a) For Bank/Post Office- 10%

than interest on securities Rs.40,000/Rs.50,000 p.a.
a) For Others- Rs. 5000 p.a.

4 Sec 194 TDS on Dividend b) Rs. 5000 10%

5 Sec 194H TDS on Commission c) Rs. 15,000 5%

6 Sec 194I TDS on Rent Rs.2,40,000 For P&M-2%
For Others-10%

7 Sec 194IB TDS On Rent Paid to Rs. 50,000 per month 5%

Individual or HUF

8 Sec 194IA TDS on Payment on Rs.50,00,000 1%

transfer of Immovable
Property

9 Sec 192 TDS On Salary Basic Exemption Limit Normal Slab Rate

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 Section 197(Lower or No Deduction of TDS)

 Where the total tax due is anticipated to be less than the TDS amount, Section 197 permits taxpayers to ask
for a lower TDS deduction rate.
 Here, assessee can make an application online in form 13 to the AO, for deduction of tax at lower rate or no
deduction of tax.
 Assessee is required to submit 3 year’s financial statements along with provisional financials for current year.
 If Assessing officer is satisfied that the total income of recipient justifies the lower or no deduction, he may
issue certificate to the assessee to such effect.
 It is generally issued to those assessees who have a trend of refund since last 3 years.
 Such certificate will be submitted by the assessee to all debtors so they can deduct tax at lower rate. (The
debtors will verify at TRACES about validity of certificate).
 Certificate is valid for particular Quarter or Year as per the discretion of AO.

Forms and Certificates

Forms of TDS to be submitted by Deductor

 Return filing forms are specified below:

For salary u/s 192 24Q

Other than salary 26Q
Non –resident TDS 27Q
For resident transferor of Property – 194IA 26QB
For Rent on Property – 194IB 26QC

TDS certificate to be issued to deductee (Section 203)

TDS deducted Form no Periodicity Due date

Under 192 16 Annual 15th June of following year.
Any section except 192 16A Quarterly Within 15 days of due date of
filling TDS return
194-IA 16B Within 15 days 15 days from due date of
filing form 26QB.
194-IB 16C Within 15 days 15 days from due date of
filing form 26QC.

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 TDS Returns Filing Process

Process through Return Preparation Utility (RPU)-Government

Step 1:

Download the software

Step 2:
from TIN-NSDL Portal Step 3:
Extract the software- Open
Select the form to be
‘.Jar’ File Java Based
submitted & fill up details

Step 4:

Challan details and

Step 5: Deductee details

Pan Verification & Generate

Step 6:
‘.CSI’ file from Oltas portal
Attach ‘.CSI’ file & Generate
Error Report

Step 7:

Solve errors & generate

‘.FVU’ file Step 8:

Submit ‘.FVU’ file at NSDL Centre

or at Income tax portal

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Process through packaged software- Private

Step 1:

Generate Excel template Step 2:

from package Step 3:
Fill up details in excel
Upload filled up excel
template
template in package

Step 4:

Press on PAN Verification

Step 5: tab

Step 6: Press on Generate .CSI file

Validate the data and

Generate errors

Step 7:

Solve errors and Generate

.FVU file Step 8:

Submit .FVU file at NSDL Centre or

at Income tax portal

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 Equalisation Levy

Introduction
 Under the Finance Act,2016, the Equalisation levy was
imposed to levy tax on consideration received by a non-
resident for following services-
o Online Advertising or
o Any provision for digital advertising space or
o Any other facility or service for online
advertising.
 The service is provided by-
o A person resident in India and carrying on business or profession
o A non-resident having permanent establishment in India.
 The equalisation levy will be levied at the rate of 6% on consideration received or receivable.
 The equalisation levy deducted during any calendar month is to be paid by every assessee to the credit of
Central Government by the 7th of the month immediately following the said calendar month through an
equalization levy challan.
 Equalisation levy will be charged when the amount for providing the services exceeds Rs.1,00,000 in a FY.
 For instance, if the Indian company paid $10,000 to the foreign company for the online advertising services,
it would need to deduct an Equalisation Levy of 2% or $200 from the payment and pay the balance amount
of $9,800 to the foreign company.

TDS for Non-Resident Indians

Nature of Any payment made to non-resident other than salary.

Payment
Payer All Assesses.
(Deductor)
Payee Any person being non-resident or foreign company
(Deductee)-
Time of At the of payment or credit whichever is earlier.
Deduction

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 Limit No specified limit. However, no tax shall be deducted in case of exempt income or any
other income which is not taxable under the Income Tax Act, 1961.
Rate As provided in the below table.

Section 195 (TDS on making payment to Non-resident or Foreign company)

 Following are certain rates and nature of payments -

Nature of payment TDS Rate
The income from the royalty payable by the Government 10%
or an Indian concern
Income/payments/transactions from the investments done by an NRI 20%
The interest that is payable on borrowed money in foreign currency 20%
The income from the royalty other than that which is payable by the 10%
Government or an Indian concern
The income from the fees for technical services that are payable by the 10%
Government or an Indian concern
Any other source of income 30%

Tax Collection at Source (TCS- Section 206C)

 Section 206C of the Income Tax Act requires certain sellers to collect tax at source (TCS) from buyers on the
sale of specified goods.
 The purpose of 206C-TCS is to ensure that tax is collected at the source of the transaction, rather than relying
on the buyer to pay the tax later.
 TCS shall be collected at the time of receipt of amount by seller or debiting the account of buyer whichever
is earlier.
 Buyer can claim a credit of TCS while filing his return.
 Rate- Rates at which tax is to be collected is as follows for specified goods-

Sr. No. Nature of Goods Percentage

1 Alcoholic Liquor for human consumption 1%
2 Tendu leaves 5%
3 Timber obtained under a forest lease 2.5%
4 Timber obtained by any mode other than under a forest lease 2.5%
5 Any other forest produces not being timber or tendu leaves 2.5%

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 6 Scrap 1%
7 Minerals, being coal or lignite or iron ore 1%
8 On grant of a lease or a license or on entering into a contract 2%
for any parking lot or toll plaza or mine or quarry
9 Sale of Motor vehicle where the value exceeds Rs.10 Lakhs 1%

Illustration

Let's say a company sells scrap metal to a buyer for Rs.1,00,000. Here, the company must collect TCS @1% from
the buyer, which amounts to Rs. 1,000. The company must then remit this amount to the Government and file
regular returns.
The buyer can then claim a credit for the TCS against their own tax liability. For example, if the buyer's total tax
liability for the year is Rs. 50,000, they can reduce their liability by Rs. 1,000, resulting in a total tax liability of Rs.
49,000.

Due date of TCS Payment - Monthly

Month Due Date

April 7th May
May 7th June
And so on till Feb 7th of subsequent month
March 7th April

Due date of filing TCS return - Quarterly

Quarterly Due Date

Quarter ending 30th June 15th July
Quarter ending 30th September 15th October
Quarter ending 31st December 15th January
Quarter ending 31st March 15th May

Student’s Notes

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