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TDS basic

CA Dushyant Maharishi (CA) (178 Points)

09 February 2008

i want to know about basic of tds as i totally unaware of this?

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39 Replies

Nagesh Midde (student) (191 Points)
Replied 09 February 2008

TDS is nothing but Tax Deducted at Source. whenever we pay against bills (for services) first we deduct some amount from that bill and pay to income tax dept in form of challans at banks. and remaining amount after deduction of tax, we pay to parites. There are some sections based on different type of services. Eg: 194C related to contracts, sub-contracts, advertisements... present rates are 2% for contracts and 1% for sub-contracts and advertisements.

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MOHIT MAHAJAN (LCS, ACA) (2050 Points)
Replied 09 February 2008

TDS stands for Tax deducted at source. Any income payable to the assessee shall be liable for deduction of tax at source by the person responsible for making payment.
The tax so deducted at source by the payer, has to be deposited in the Government treasury to the credit of Central Govt. within the specified time. The tax so deducted from the income of the recipient is deemed to be payment of Income-tax by the recepient at the time of his assessment. Income from several sources is subjected to tax deduction at source. Presently this concept of T.D.S. is also used as an instrument in enlarging the tax base. Some of such income subjected to T.D.S. are salary, interest, dividend, interest on securities, winnings from lottery, horse races, commission and brokerage, rent, fees for professional and technical services, payments to non-residents etc.

Sec.190 of income tax act deals with deduction at source and advance payments. Other related sections are 192-salary, 193-interest on security, 194-dividend, 194A- interest other than interest on securities, 194B- lottery and crossword puzzles, 194C-payment to contractor and sub contractor, 194J-Professional and technical services, 195 payment to non-residents etc. Effective rates are 1% for contractor(advt.), 2% for other contractors, 10% for professional and technical services, 194D-Insurance Commission-10%, 195-30% etc. for more explanation you can read the relevant sections from any book of direct tax laws.

(Guest)

Please provide your e-mail address for any further assistance. Regards, TAX DEDUCTED AT SOURCE S.NO SECTION NAME OF THE SOURCE RATE OF TDS EXEMPTIONS REMARKS "QUARTERLY STATEMENT IN FORM NO:" 1 192 Salary Slab Rates "Deduction at lower rate if certificate issued by AO(apllication in form:13) " Only loss from house property can be adjusted 24Q 2 193 Interest on securities "in case of listed 10% if not listed 20%" "amt<2500 in case of listed debentures payment in a/c payee cheque to the resident individual" forms15G,15H in case of non deduction 26Q ` 3 194 Dividends "non coy assessees: resident 20% non resident30% coy assessees: domestic coy20% foreign coy40%" "amt<2500 in case of resident individual" forms15G in case of non deduction 26Q 4 194A interest other than on securities "person other than company resident in india 10% domestic company 20% " "amt<5000and 10000 in case payer is banking coy, co-operative society and post office" forms15G,15H in case of non deduction 26Q 5 194B winnings from lottery etc.. 30% amt<5000 26Q 3 6 194BB winnings from horse races 30% amt<2500 26Q 7 194C "payments to contractors & sub contractors" "2% in normal advt contracts 1%" "single payment <20000 aggregate payment <50000" "Deduction at lower rate if certificate issued by AO(apllication in form:13) " 26Q 8 194D insurance commission "person other than company resident in india 10% domestic company 20% " amt<5000 "Deduction at lower rate if certificate issued by AO(apllication in form:13) " 26Q 9 194E "payments to nonresident sportsmen or sports associations" 10% 27Q 10 194F "payments on account of repurchase of units by mutual fund or UTI " "applicable only in relation to amount invested before 1-4-92" 11 194G "commission on sale of lottery tickets" 10% amt<1000 "Deduction at lower rate if certificate issued by AO(apllication in form:13) " 26Q 12 194H commission & brokerage 10% amt<2500 "Deduction at lower rate if certificate issued by AO(apllication in form:13) " 26Q 13 194I rent "in case of payee being: ind or HUF 15% any other person 20% in case of plant & machinery 10%" amt<120000 "Deduction at lower rate if certificate issued by AO(apllication in form:13) " 26Q 14 194J fees for proffessional , technical service, royalty or non compete fee 10% amt<20000 "Deduction at lower rate if certificate issued by AO(apllication in form:13) " 26Q 15 194K income in respect of units 10% amt<1000 "Deduction at lower rate if certificate issued by AO(apllication in form:13) non deduction also available when forms 15G/H are filed " 16 194LA payment of compensation on acquisition of property 10% amt<100000 "Deduction at lower rate if certificate issued by AO(apllication in form:13) " 26Q TAX COLLECTED AT SOURCE S.NO SECTION NAME OF THE SOURCE RATE OF TDS EXEMPTIONS REMARKS "QUARTERLY STATEMENT IN FORM NO:" 1 206C sale of prescribed products "alcoholic liquor/scrap 1% tendu leaves 5% timber & forest produce 2&1.5%" "Deduction at lower rate if certificate issued by AO(apllication in form:13) " "self declaration by buyer in form no:27C that the goods are purchased for the purpose of manufacturing" 27EQ TDS CERTIFICATE : FORM 16A; also 12BA;16AA in case of salaries TCS CERTIFICATE : FORM 27D

(Guest)

what is the procedure to deduct t.d.s. on salary income? further,whether all the benefit given to employee by employer are considered while taking salary for tds purpose?

P.VEERABHADRA RAO (ACCOUNTANT) (23 Points)
Replied 23 February 2008

HI MAHISH,

This is Veeru, from hyderabad i have small doubt about tds deduction i.e.

Mr.X IS A TRANSPORTER HE SEND US THE MATERIAL AND I HAVE TO DEDUCT THE TDS ON FREIGHT CHARGES NOW HE IS SHOWING TDS DEDUCTION CERTIFICATE ON HIS NAME NOT ON THE TRANSPORT NAME...IN THIS CASE CAN I DEDUCT TDS OR NOT PLESAE ADVISE ME ...URGENT U CAN SEND ME YOUR REPLY AT p_vbrao2007 @ rediffmail.com

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CA. Kirti S. Ganatra (Service) (1461 Points)
Replied 25 February 2008

It is on deduction on payment of specific payment at rate and payment exceeding particular amount. In income tax act TDS detail is given in section 192 to 195.

Saroj Rana (MBA Finance) (417 Points)
Replied 25 February 2008

Tax Deducted At Source is one of the modes of collecting income tax from the tax payers.Such collection of tax is affected at the source when income arises or accrues.

Saroj Rana (MBA Finance) (417 Points)
Replied 25 February 2008

Deer Videsh, TDS on salary should be deducted on an average basic For example, First calculate the tax liability for the whole year and then divided it by 12, the resulting amount is the TDS on salary.

(Guest)

Does Works contract attact Service TAX???

(Guest)

In case of Composite contract involving works contract as well as supply contract how is the itax (TDS of 2%) deductible, when the value of supply portion is distinct and ascertainable. Whether on the Gross amount or Gross amount - value of supply contract. Does this contract attracts Service Tax???

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(Guest)

send new tax rates for financial year 2008-9

Srividya Vasudevan (Employee) (21 Points)
Replied 01 March 2008

Pls clarify if TDS is to be deducted on purchase of software (includes supply, installation, commencement and training of software)

Saroj Rana (MBA Finance) (417 Points)
Replied 06 March 2008

New tax rates r available in the share files section

(Guest)

I want to know whether there is a letest amendment on the TDS on Transport services and what is the position as on date about the Transportation services?