ABOUT THE AUTHORS
Dr. Vinod K. Singhania got his Ph.D. from the Delhi School of Economics in 1976. His fields of special interest include all facets of corporate legislation and corporate economics especially the tax laws. Associated in different capacities with several professional institutes and business houses in India and abroad, Dr. Singhania is author of many popular books (some of which are also available on CDs) published by Taxmann. He has to his credit more than 300 research articles which have appeared in leading journals. He has been a resource person in over 800 seminars in India and abroad. He can be reached at vks@taxmann.com. Dr. Kapil Singhania, a Fellow of the Institute of Chartered Accountants of India and belonging to the alumni of Shri Ram College of Commerce, has got the Ph.D. for extensive research work done in the area of corporate taxation. His fields of involvement in research work in form of articles in various reputed journals and analytical studies span across from corporate laws to direct taxation. He has authored a variety of acclaimed books on direct taxes published by Taxmann. Dr. Singhania is providing tax consultancy to a number of business organizations, which include multinational and public sector companies.
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CONTENTS PAGE
CHAPTER-HEADS
PAGE
Contents
I-13
BOOK ONE : DEDUCTION OF TAX AT SOURCE CHAPTER 1
:
DEDUCTION OF TAX AT SOURCE FROM SALARY
CHAPTER 2
:
HOW TO WORK OUT ESTIMATED SALARY AND QUANTUM OF TAX TO BE DEDUCTED THEREFROM
CHAPTER 3
:
4 46
TAX DEDUCTION FROM ACCUMULATED BALANCE OF PROVIDENT FUND DUE TO AN EMPLOYEE
219
CHAPTER 4
:
HOW TO COMPUTE TAXABLE PREMATURE WITHDRAWAL OF PROVIDENT FUND AND TAX TO BE DEDUCTED THEREFROM
222
CHAPTER 5
:
DEDUCTION OF TAX AT SOURCE FROM INTEREST ON SECURITIES
229
HOW TO COMPUTE INTEREST ON SECURITIES AND TAX DEDUCTIBLE THEREFROM AT SOURCE
241
CHAPTER 6
:
CHAPTER 7
:
DEDUCTION OF TAX AT SOURCE FROM DIVIDEND
267
CHAPTER 8
:
HOW TO COMPUTE DIVIDENDS AND TAX DEDUCTIBLE THEREFROM
271
CHAPTER 9
:
DEDUCTION OF TAX AT SOURCE FROM INTEREST OTHER THAN INTEREST ON SECURITIES
281
CHAPTER 10
:
HOW TO COMPUTE INTEREST (OTHER THAN INTEREST ON SECURITIES) AND TAX DEDUCTIBLE THEREFROM
288
TAX DEDUCTION FROM WINNINGS FROM LOTTERY, CROSSWORD PUZZLE, CARD GAMES OR OTHER GAMES
305
CHAPTER 11
:
CHAPTER 12
:
WINNINGS FROM LOTTERY, CROSSWORD PUZZLE, CARD GAME OR ANY OTHER GAME AND TAX TO BE DEDUCTED THEREFROM
309
CHAPTER 13
:
TAX DEDUCTION FROM WINNINGS FROM HORSE RACE
317
CHAPTER 14
:
WINNINGS FROM HORSE RACE AND TAX TO BE DEDUCTED THEREON
322
CHAPTER 15
:
TAX DEDUCTION FROM PAYMENT TO CONTRACTORS
325
CHAPTER 16
:
WHAT CONSTITUTES A PAYMENT TO CONTRACTOR/ SUB-CONTRACTOR AND HOW MUCH TAX IS TO BE DEDUCTED THEREFROM
331
TAX DEDUCTION FROM INSURANCE COMMISSION
356
CHAPTER 17
:
I-7
CONTENTS CHAPTER-HEADS PAGE CHAPTER 18
:
HOW TO COMPUTE INSURANCE COMMISSION AND TAX TO BE DEDUCTED THEREFROM
361
CHAPTER 19
:
TAX DEDUCTION FROM PAYMENT IN RESPECT OF LIFE INSURANCE POLICY
366
CHAPTER 20
:
HOW TO COMPUTE TAX TO BE DEDUCTED FROM PAYMENT IN RESPECT OF LIFE INSURANCE POLICY
371
CHAPTER 21
:
DEDUCTION OF TAX AT SOURCE FROM NATIONAL SAVINGS SCHEME
376
CHAPTER 22
:
HOW TO COMPUTE AMOUNT REFERRED TO IN SECTION 80CCA(2)(a) AND TAX TO BE DEDUCTED THEREFROM
380
CHAPTER 23
:
DEDUCTION OF TAX AT SOURCE ON ACCOUNT OF REPURCHASE OF UNITS BY MUTUAL FUNDS OR UNIT TRUST OF INDIA
384
CHAPTER 24
:
HOW TO COMPUTE AMOUNT REFERRED TO IN SECTION 80CCB(2) AND TAX TO BE DEDUCTED THEREFROM
388
CHAPTER 25
:
DEDUCTION OF TAX AT SOURCE FROM COMMISSION ON SALE OF LOTTERY TICKETS
391
CHAPTER 26
:
HOW TO COMPUTE COMMISSION ON SALE OF LOTTERY TICKETS AND TAX DEDUCTIBLE THEREFROM
395
CHAPTER 27
:
TAX DEDUCTION FROM COMMISSION OR BROKERAGE
398
CHAPTER 28
:
HOW TO COMPUTE COMMISSION OR BROKERAGE AND TAX TO BE DEDUCTED THEREFROM
403
CHAPTER 29
:
TAX DEDUCTION FROM RENT
416
CHAPTER 30
:
HOW TO COMPUTE RENT AND TAX TO BE DEDUCTED THEREFROM
421
CHAPTER 31
:
DEDUCTION OF TAX AT SOURCE FROM CONSIDERATION PAYABLE FOR ACQUISITION OF IMMOVABLE PROPERTY OTHER THAN AGRICULTURAL LAND IN RURAL AREA
433
CHAPTER 32
:
HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF CONSIDERATION FOR ACQUISITION OF ANY IMMOVABLE PROPERTY
435
TAX DEDUCTION FROM PAYMENT OF RENT BY CERTAIN INDIVIDUALS AND HUFs
441
CHAPTER 33
:
CHAPTER 34
:
HOW TO COMPUTE TAX DEDUCTIBLE FROM RENT UNDER SECTION 194-IB
443
CHAPTER 35
:
TAX DEDUCTION FROM PAYMENT UNDER SPECIFIED AGREEMENT
447
CHAPTER 36
:
HOW TO COMPUTE CONSIDERATION WHICH IS SUBJECT TO TAX DEDUCTION UNDER SECTION 194-IC
449
DEDUCTION OF TAX AT SOURCE FROM FEES FOR TECHNICAL OR PROFESSIONAL SERVICES OR ROYALTY
453
CHAPTER 37
:
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CONTENTS CHAPTER-HEADS PAGE CHAPTER 38
CHAPTER 39 CHAPTER 40
:
: :
HOW TO COMPUTE FEES FOR PROFESSIONAL AND TECHNICAL SERVICES AND ROYALTY AND TAX DEDUCTIBLE THEREFROM
459
DEDUCTION OF TAX AT SOURCE FROM INCOME IN RESPECT OF UNITS
472
HOW TO COMPUTE INCOME IN RESPECT OF UNITS AND TAX DEDUCTIBLE THEREFROM
474
CHAPTER 41
:
DEDUCTION OF TAX AT SOURCE FROM PAYMENT OF COMPENSATION ON ACQUISITION OF IMMOVABLE PROPERTY
478
CHAPTER 42
:
HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF COMPENSATION ON ACQUISITION OF IMMOVABLE PROPERTY
481
CHAPTER 43
:
DEDUCTION OF TAX AT SOURCE FROM INCOME BY WAY OF INTEREST FROM INFRASTRUCTURE DEBT FUND
485
CHAPTER 44
:
HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF INTEREST ON INFRASTRUCTURE DEBT FUND
488
CHAPTER 45
:
DEDUCTION OF TAX AT SOURCE FROM INTEREST ON UNITS OF BUSINESS TRUST
491
HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF INTEREST ON UNITS OF BUSINESS TRUST
494
CHAPTER 46
:
CHAPTER 47
:
DEDUCTION OF TAX AT SOURCE FROM INCOME IN RESPECT OF UNITS OF INVESTMENT FUND/ SECURITISATION TRUST
497
CHAPTER 48
:
HOW TO COMPUTE TAX DEDUCTIBLE FROM INCOME IN RESPECT OF UNITS OF INVESTMENT TRUST/ SECURITISATION TRUST
500
CHAPTER 49
:
DEDUCTION OF TAX AT SOURCE FROM INCOME BY WAY OF INTEREST FROM INDIAN COMPANY UNDER SECTION 194LC
504
CHAPTER 50
:
HOW TO COMPUTE TAX DEDUCTIBLE FROM INTEREST PAYABLE TO NON-RESIDENT/FOREIGN COMPANY
508
CHAPTER 51
:
DEDUCTION OF TAX AT SOURCE FROM INTEREST ON CERTAIN BONDS AND GOVERNMENT SECURITIES UNDER SECTION 194LD
513
HOW TO COMPUTE TAX DEDUCTIBLE FROM INTEREST PAYABLE UNDER SECTION 194LD
517
CHAPTER 52
:
CHAPTER 53
:
TAX DEDUCTION FROM PAYMENT TO RESIDENT CONTRACTOR, BROKER OR PROFESSIONAL BY CERTAIN INDIVIDUALS AND HUFs
520
CHAPTER 54
:
HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT/ CREDIT TO CONTRACTOR, PROFESSIONAL OR BROKER UNDER SECTION 194M
522
DEDUCTION OF TAX AT SOURCE FROM CASH PAYMENT TO ACCOUNTHOLDERS UNDER SECTION 194N
526
CHAPTER 55
:
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CONTENTS CHAPTER-HEADS PAGE CHAPTER 56
:
HOW TO COMPUTE TAX DEDUCTIBLE FROM CASH PAYMENT TO ACCOUNTHOLDERS UNDER SECTION 194N
528
CHAPTER 57
:
DEDUCTION OF TAX AT SOURCE FROM PAYMENTS TO E-COMMERCE PARTICIPANTS
532
CHAPTER 58
:
HOW TO COMPUTE INCOME AND TAX DEDUCTIBLE THEREFROM
534
CHAPTER 59
:
DEDUCTION OF TAX AT SOURCE FROM INCOME OF SPECIFIED SENIOR CITIZEN
539
HOW TO COMPUTE INCOME OF SPECIFIED SENIOR CITIZEN AND TAX DEDUCTIBLE THEREFROM
540
DEDUCTION OF TAX AT SOURCE ON PAYMENT FOR PURCHASE OF GOODS
543
HOW TO COMPUTE TAX TO BE DEDUCTED UNDER SECTION 194Q
545
DEDUCTION OF TAX AT SOURCE ON BENEFIT OR PERQUISITE IN RESPECT OF BUSINESS OR PROFESSION
552
CHAPTER 60 CHAPTER 61 CHAPTER 62 CHAPTER 63
: : : :
CHAPTER 64
:
HOW TO COMPUTE VALUE OF BENEFIT OR PERQUISITE AND TAX DEDUCTIBLE THEREFROM
554
CHAPTER 65
:
DEDUCTION OF TAX AT SOURCE FROM PAYMENT ON TRANSFER OF VIRTUAL DIGITAL ASSET
558
CHAPTER 66
:
HOW TO COMPUTE TAX TO BE DEDUCTED UNDER SECTION 194S
560
CHAPTER 67
:
TAX DEDUCTION FROM PAYMENTS TO NONRESIDENTS
564
CHAPTER 68
:
HOW TO COMPUTE AMOUNT PAYABLE TO NONRESIDENT AND TAX TO BE DEDUCTED THEREFROM
573
CHAPTER 69
:
DEDUCTION OF TAX AT SOURCE FROM INCOME OF UNITS OF OFFSHORE FUND
600
HOW TO COMPUTE AMOUNT OF TAX DEDUCTION UNDER SECTION 196B
603
CHAPTER 70
:
CHAPTER 71
:
DEDUCTION OF TAX AT SOURCE FROM INCOME FROM FOREIGN CURRENCY BOND OR SHARES OF INDIAN COMPANY
606
CHAPTER 72
:
HOW TO COMPUTE AMOUNT OF TAX DEDUCTION UNDER SECTION 196C
609
CHAPTER 73
:
DEDUCTION OF TAX AT SOURCE FROM INCOME OF FOREIGN INSTITUTIONAL INVESTORS FROM SECURITIES
612
HOW TO COMPUTE AMOUNT OF TAX DEDUCTION UNDER SECTION 196D
615
CHAPTER 74
:
BOOK TWO : ADVANCE TAX CHAPTER 75
:
INCOME LIABLE TO ADVANCE TAX
I-10
640
CONTENTS CHAPTER-HEADS PAGE CHAPTER 76
:
LIABILITY TO ADVANCE TAX - WHEN ARISES
641
CHAPTER 77
:
DUE DATES OF PAYMENT
643
CHAPTER 78
:
COMPUTATION OF ADVANCE TAX LIABILITY
646
CHAPTER 79
:
INTEREST PAYABLE BY THE ASSESSEE/GOVERNMENT
653
BOOK THREE : TAX COLLECTION AT SOURCE CHAPTER 80
:
TAX COLLECTION AT SOURCE
680
BOOK FOUR : REFUND CHAPTER 81
:
REFUND FOR EXCESS PAYMENT
704
CHAPTER 82
:
INTEREST ON REFUND
708 713
REFERENCER
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CONTENTS PAGE
CONTENTS PAGE
Chapter-heads
I-7
BOOK ONE : DEDUCTION OF TAX AT SOURCE
1 DEDUCTION OF TAX AT SOURCE FROM SALARY 1.1
Who is responsible to deduct tax at source in case of income from salary 1.1-1
1.2
4 4 5
When tax is to be deducted Private arrangement of paying salary tax-free cannot discharge obligation of section 192
5
1.2-2
Tax deduction not required on judgment debt
5
1.2-3
Furlough pay received in foreign currency is taxable as salary
5
1.2-4
Deduction of tax at source is mandatory from salary
5
1.2-5
Correctness of investment
6
1.2-1
1.3
Where salary is payable by other employers also
How to compute tax deductible at source
6
When tax payable on perquisites is paid by employer
6
1.3-2
When relief under section 89 is available
6
1.3-3
When income other than salary income is considered by employer
7
1.3-4
Statement of particulars in prescribed form
9
1.3-5
How to make adjustment of excess or deficiency
9
1.3-6
Deduction from provident fund payment
9
1.3-1
1.4
Tax deduction and collection account number (TAN)
1.5
Deposit of tax to the credit of Central Government
9 10
1.5-1
Where to deposit tax
10
1.5-2
Time within which tax is to be deposited
11
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CONTENTS PAGE
1.6
1.5-3
Payment through challan
12
1.5-4
Claim for refund
13
Issue a certificate for tax deducted at source to employee
13
1.6-2
Form No. 16 with digital signature
14
1.6-3
Time limit within which the certificate should be given
15
Issue of duplicate certificate
15
1.6-4 1.7
1.8
13
How to prepare Form No. 16
1.6-1
Statement or return of tax deduction to Government
15
1.7-1
Return of tax deduction from contribution paid by the trustees of an approved superannuation fund
15
1.7-2
Annual filing of return
15
1.7-3
Quarterly return
15
1.7-4
By whom return is to be filed
24
Consequences of failure to deduct or pay tax, furnish return, etc.
26
1.8-1
Failure to deduct and/or pay tax
26
1.8-2
Failure to comply with provision of section 203A regarding tax-deduction account number
39
1.8-3
Failure to issue certificate, or submit return, statement, etc.
39
1.8-4
Disallowance of deduction in respect of salary payable to resident
44
Disallowance of deduction in respect of salary payable to non-resident
45
Illustration
45
1.8-5
2 HOW TO WORK OUT ESTIMATED SALARY AND QUANTUM OF TAX TO BE DEDUCTED THEREFROM 2.1
46
What is salary 2.1-1
Employer-employee relationship, a pre-requisite
46
2.1-2
Salary and wages are not conceptually different
49
2.1-3
Salary to former/present/prospective employee
49
2.1-4
Salary income must be real and not fictitious
49
2.1-5
When salary is forgone
50
2.1-6
Salary paid tax-free
50
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CONTENTS PAGE
2.2
Basis for deduction of tax at source
2.3
Different forms of salary and its payment subject to tax deduction at source
52
2.3-1
Advance salary
52
2.3-2
Arrears of salary
52
2.3-3
Leave salary
52
Illustration
55
2.3-4
Salary to a partner
56
2.3-5
Salary in lieu of notice period
56
2.3-6
Fees and commission
56
2.3-7
Bonus
56
2.3-8
Gratuity
57
Illustration
60
Pension
63
Illustrations
64
2.3-10
Annuity
67
2.3-11
Annual accretion to the credit balance in provident fund
67
2.3-9
2.4
50
2.3-12
Amount transferred from unrecognised provident fund to recognised provident fund
67
2.3-13
Retrenchment compensation
67
2.3-14
Profits in lieu of salary
69
2.3-15
Remuneration in addition to salary on the basis of work done
71
2.3-16
Voluntary payments to employees
72
2.3-17
Compensation received at the time of voluntary retirement or separation
73
2.3-18
Salary received by a teacher/professor from SAARC Member States
76
2.3-19
Contribution to notified pension scheme by the Central Government or any other employer
76
2.3-20
Decretal amount arising from suit for arrears of salary and wrongful termination of appointment
76
2.3-21
Salary to non-resident seafarers
77
Allowances when subject to tax deduction at source
77
2.4-1
City compensatory allowance
77
2.4-2
House rent allowance
77
Illustrations
79
Entertainment allowance
80
Illustrations
81
2.4-3
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CONTENTS PAGE
2.4-4
2.5
2.6
Special allowance
81
Illustrations
94
2.4-5
Allowance to Government employees outside India
95
2.4-6
Tiffin allowance
95
2.4-7
Fixed medical allowance
95
2.4-8
Servant allowance
95
2.4-9
Allowance to High Court
95
2.4-10
Allowance received from United Nations Organisation
95
2.4-11
Allowance to foreign technician
95
2.4-12
Allowance to other foreign citizen
96
2.4-13
Compensatory allowance under article 222(2) of the Constitution
96
2.4-14
Sumptuary allowance
96
2.4-15
Allowances received by a teacher/professor from SAARC Member States
96
Perquisites, amenability to tax deduction at source
96
2.5-1
What is “perquisite”
96
2.5-2
“Perquisite” as defined by the Act
98 99
2.5-3
Perquisites chargeable/not chargeable to tax
2.5-4
Valuation of perquisites
102
Illustration
104
Sums related to provident funds, amenability to deduction of tax at source
148
2.6-1
Types of employees’ provident funds
149
2.6-2
Statutory provident fund
149
2.6-3
Recognised provident fund
149
2.6-4
Unrecognised provident fund
149
2.6-5
Public provident fund
149
2.6-6
Tax treatment
150
Contributions to and payment from approved superannuation fund, amenability to tax deduction at source
154
2.8
Approved gratuity fund - Tax treatment of the inflow and outflow
155
2.9
Computation of salary
155
2.7
2.10
2.9-1
Standard deduction
155
2.9-2
Entertainment allowance
155
2.9-3
Professional tax or tax on employment
155
Salaries of foreign technicians
I-16
156
CONTENTS PAGE
2.11
156
Salaries of foreign citizens 2.11-1
Diplomatic personnel
156
2.11-2
Foreigners on tour
156
2.11-3
Salary received by a ship’s crew
156
2.11-4
Remuneration of a foreign trainee
156
2.12
Deductions granted under sections 80C to 80U
157
2.13
Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc.
157
2.13-1
Salient features of section 80C
157
2.13-2
Computation of deduction under section 80C
157
Illustrations
163
2.14
Deduction in respect of pension fund
166
2.15
Deduction in respect of contribution to National Pension System of Central Government (NPS)
167
2.15-1 2.15-2
167
Conditions Consequences if the above conditions are satisfied
167
Illustration
169
2.16
Deduction in respect of subscription to long-term infrastructure bonds
169
2.17
Deduction in respect of investment made under an equity saving scheme
170
Deduction under section 80D in respect of medical insurance premia
171
2.18
2.19
2.18-1
Conditions
171
2.18-2
Maximum deductible amount
171
Illustrations
172
Deduction under section 80DD in respect of medical treatment of handicapped dependents 2.19-1
Conditions
173
2.19-2
Amount of deduction
175
2.19-3 2.20
173
If dependent predeceases the taxpayer
175
Illustrations
175
Deduction in respect of medical treatment under section 80DDB - To what extent available
175
2.20-1
Conditions
175
2.20-2
Amount of deduction
176
2.20-3
Prescribed diseases and certificate from a doctor
176
I-17
CONTENTS PAGE
2.21
2.22 2.23
2.24
2.25
2.26
2.27 2.28
Deduction in respect of interest on loan taken for higher education 2.21-1
Conditions
177
2.21-2
Amount deductible
178
Deduction in respect of interest on loan taken for residential house property
178
Deduction in respect of interest on loan taken for certain house property
179
Illustration
179
Deduction in respect of interest on loan taken for purchase of electric vehicle
181
Illustration
182
Deduction under section 80G in respect of donation to national funds
183
2.25-1
Maximum limit
185
2.25-2
Other points
185
Deduction under section 80GG in respect of rent paid Amount of deduction
186
2.26-2
Meaning of total income for the purpose of section 80GG
186
Illustration
187
Deductions in respect of certain donations for scientific research or rural development
187
Deduction in respect of interest on deposits in savings accounts
188
2.30-2 2.30-3
2.32
Post Office Savings Bank interest exemption under section 10(15)(i)
Deduction under section 80U in case of a person with disability 2.30-1
2.31
Post office savings bank interest exemption under section 10(15)(i)
Deduction under section 80TTB in respect of interest on deposits in case of senior citizens 2.29-1
2.30
185
2.26-1
2.28-1 2.29
177
189 190 190 191 191
Conditions Amount of deduction
192
Illustration
193
Other points
193
When income other than salary income is considered for tax deduction under section 192
193
When salary received from other employer is considered
193
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CONTENTS PAGE
2.33 2.34
Rate of exchange for deduction of tax at source on income payable in foreign currency
194
Rates of tax deduction at source during the financial year 2022-23
194
2.34-1 2.34-2
Rate of income-tax under the alternative tax regime
195
If PAN is not given by employer
201
Tax rebate under section 87A
201
Illustrations
201
2.36
Tax rebate under sections 88B and 88C
202
2.37
Relief under section 89
202
2.35
2.37-1
202
Illustration
203
Computation of relief in respect of gratuity
203
Illustration
204
2.37-3
Computation of relief in respect of compensation on termination of employment
205
2.37-4
Computation of relief in respect of payment in commutation of pension
205
Computation of relief in respect of payment of arrears of family pension
205
2.37-2
2.37-5 2.38
Computation of relief when salary has been paid in arrears or in advance
When can employee reduce the incidence of tax deduction Certificate for deduction of tax at lower rates
206
2.38-1
How lower rate is determined
206
2.38-2
Validity of certificate
206
2.38-3
Issued to the payer
206
2.38-4
Retrospective certificate not possible
207
2.38-5
Instruction issued by Board
207
2.38-6
Concession by the Government due to outbreak of COVID-19 pandemic
207
2.38-7
Other points
207
2.39
Rounding off of income
208
2.40
Employee gets credit of tax deducted at source
208
2.40-1 2.41
Rules framed by Board
208
Going through the real exercise - Examples on computation of estimated salary and tax to be deducted therefrom under section 192
209
Illustrations
209
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CONTENTS PAGE
3 TAX DEDUCTION FROM ACCUMULATED BALANCE OF PROVIDENT FUND DUE TO AN EMPLOYEE 3.1 3.2
3.3 3.4
3.5
Person responsible for tax deduction from accumulated balance of provident fund
219
When tax has to be deducted
219
3.2-1
No tax is deductible if payment is less than Rs. 50,000
219
3.2-2
Private arrangement of paying accumulated balance of provident fund tax-free is not relevant
219
Tax deduction account number
219
Deposit of tax to the credit of Central Government
219
3.4-1
Where to deposit
219
3.4-2
Time of deposit
220
3.4-3
Payment through challan
220
3.4-4
Claim for refund
220
Issue of certificate of tax deduction
220
3.5-1
Issue of duplicate certificate
220
3.6
Quarterly return to the Government
220
3.7
Consequences of failure to deduct or pay tax or furnish return
220
3.7-1
Failure to deduct and/or pay tax
221
3.7-2
Failure to comply with the provisions of section 203A regarding tax-Deduction account number
221
3.7-3
Failure to issue certificate or submit return
221
4 HOW TO COMPUTE TAXABLE PREMATURE WITHDRAWAL OF PROVIDENT FUND AND TAX TO BE DEDUCTED THEREFROM When withdrawal from provident fund is subject to the tax deduction under section 192A
222
4.2
Rates of tax
223
4.3
Payment without tax deduction or with deduction at lower rates
223
Tax credit
223
4.1
4.4
4.4-1
Rules framed by Board
223
Illustration
224
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CONTENTS PAGE
5 DEDUCTION OF TAX AT SOURCE FROM INTEREST ON SECURITIES 5.1 5.2
Who is responsible to deduct tax at source in the case of interest on securities
229
When tax has to be deducted at source
229
5.2-1 5.2-2
Relevance of identity of deductee under TDS provisions
229
Private arrangement of paying interest on securities as tax-free cannot discharge obligation under section 193
231
5.3
How to compute tax deduction at source
231
5.4
Tax deduction account number
231
5.5
Deposit of tax to the credit of the Central Government
231
5.6
5.5-1
Where to deposit
231
5.5-2
Time of deposit of TDS/TCS
231
5.5-3
Challans for payment
232
5.5-4
Claim for refund
232
Issue of certificate for tax deduction from interest on securities 5.6-1
TDS certificate in Form No. 16A
232
5.6-2
Time limit within which the certificate shall be issued
233
Issue of duplicate certificate
233
5.6-3 5.7
5.8
232
Return of tax deduction at source from interest on securities
233
5.7-1
Annual return
233
5.7-2
Quarterly statement TDS deposited
233
Consequences of failure to deduct or pay tax, furnish returns, etc.
235
5.8-1
Failure to deduct and/or pay tax
235
5.8-2
Failure to comply with the provision of section 203A regarding tax deduction account number
235
5.8-3
Failure to issue certificates, or submit returns
235
5.8-4
Forfeiture of deduction in respect of interest on securities
235
Illustration
236
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CONTENTS PAGE
6 HOW TO COMPUTE INTEREST ON SECURITIES AND TAX DEDUCTIBLE THEREFROM AT SOURCE 6.1 6.2
6.3
6.4
6.5
6.6
6.7
Interest on securities - How defined Interest on securities not liable for tax deduction 6.2-1 Notified securities 6.2-2 TDS on 8 per cent Savings (Taxable) Bonds, 2003 or 7.75 per cent Savings (Taxable) Bonds, 2018 What happens when recipient is Government - Interest on securities payable to the Government and certain Corporations TDS on interest on securities - A few typical cases 6.4-1 When interest is paid to oneself - Interest on own debentures 6.4-2 Interest payable to funds established for the benefits of armed forces 6.4-3 Interest to provident funds 6.4-4 Deep discount bond Rates for tax deduction at source 6.5-1 PAN of recipient is not available 6.5-2 When recipient is a non-filer of Income-tax return When can a security holder reduce the incidence of tax deduction 6.6-1 Certificate for tax deduction at lower rate or no deduction 6.6-2 Declaration under section 197A 6.6-3 Payment to certain institution whose income is exempt under section 10(23C) Tax credit to one who pays 6.7-1 Rules to be framed by Board 6.7-2 Joint owners 6.7-3 Beneficial owner
241 241 242 254
255 256 256 256 256 256 257 257 257 258 258 261 263 263 264 264 264
7 DEDUCTION OF TAX AT SOURCE FROM DIVIDEND 7.1
Who is responsible for tax deduction in the case of dividend
267
7.1-1
Who is “principal officer”
267
7.1-2
What makes one an Indian company
267
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7.1-3
What amounts to prescribed arrangements for declaration and payment of dividends in India
268
7.2
What is “dividend” for the purpose of tax deduction
268
7.3
When tax is to be deducted
268
7.3-1
Private arrangement of paying dividend tax-free cannot discharge obligation under section 194
268
7.4
Tax deduction account number
268
7.5
Deposit of tax to the credit of Central Government
269
7.6
7.5-1
Where to deposit
269
7.5-2
Time within which tax is to be deposited
269
7.5-3
Filing challan for payment
269
7.5-4
Claim for refund
269
Issue a certificate for tax deducted at source to shareholders 7.6-1
TDS certificate in Form No. 16A
269
7.6-2
Time-limit within which the certificate should be given
270
Issue of duplicate certificate
270
Statement/returns to the Government
270
7.6-3 7.7
7.8
269
7.7-1
Annual return
270
7.7-2
Quarterly return of TDS deposited
270
Consequences of failure to deduct or pay tax, furnish returns, etc.
270
7.8-1
Failure to deduct and/or pay tax
270
7.8-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
270
Failure to issue certificate, or submit return/ statement
270
7.8-3
8 HOW TO COMPUTE DIVIDENDS AND TAX DEDUCTIBLE THEREFROM 8.1
Defining dividends
271
8.2
Deemed dividend under the Income-tax Act
271
8.3
8.2-1
Definition under section 2(22)(e)
271
8.2-2
Accumulated profits
271
8.2-3
Distribution of accumulated profits by way of advance or loan
273
Rates for tax deduction at source during the financial year 2022-23
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276
CONTENTS PAGE
8.4 8.5
8.6
8.3-1 PAN of recipient is not available 8.3-2 When recipient is a non-filer of Income-tax return Dividends payable to Government or certain corporation Deduction of tax at lower rates or at nil rate 8.5-1 Certificate for receiving dividend without tax deduction 8.5-2 Declaration under section 197A 8.5-3 No TDS if dividend is not more than Rs. 5,000 8.5-4 No TDS if dividend is paid or credited to an insurance company Who gets credit for tax deducted 8.6-1 Rules framed by Board
276 277 277 277 277 278 279 279 279 279
9 DEDUCTION OF TAX AT SOURCE FROM INTEREST OTHER THAN INTEREST ON SECURITIES 9.1 9.2 9.3
9.4 9.5 9.6
9.7
9.8
Who is to discharge the responsibility to make tax deduction at source Which interest qualifies for tax deduction at source under section 194A When tax has to be deducted at source 9.3-1 When interest is credited to “Interest payable account” or “Suspense account” 9.3-2 Private arrangement of paying interest tax-free cannot discharge obligation under section 194A How to compute tax deduction at source Tax deduction account number Deposit of tax to the credit of Central Government 9.6-1 Where to deposit 9.6-2 Time of deposit 9.6-3 Payment through challan 9.6-4 Claim for refund Issue certificate of tax deduction from interest other than interest on securities 9.7-1 Certificates are issued by downloading from TIN website 9.7-2 Time limit within which certificate shall be issued 9.7-3 Issue of duplicate certificate Return of tax deduction at source
281 281 282 282 282 283 283 283 283 283 284 284 284 284 284 285 285
9.8-1
Annual return
285
9.8-2
Quarterly return of TDS deposited
285
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9.9
9.8-3 Quarterly return for payment without tax deduction Consequences of failure to deduct or pay tax, furnish return, etc. 9.9-1 Failure to deduct and/or pay tax 9.9-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number 9.9-3 Failure to issue certificate or submit return 9.9-4 Forfeiture of deduction in respect of interest other than interest on securities
286 287 287 287 287 287
10 HOW TO COMPUTE INTEREST (OTHER THAN INTEREST ON SECURITIES) AND TAX DEDUCTIBLE THEREFROM 10.1
10.2
10.3 10.4
When a payment can be regarded as “interest” 10.1-1 Conditions 10.1-2 When a payment is deemed to be payment of interest for the purpose of tax deduction Rates for tax deduction at source during the financial year 2022-23 10.2-1 PAN of recipient is not available 10.2-2 When recipient is a non-filer of Income-tax return 10.2-3 When adjustment are called for Treatment of interest other than interest on securities payable to Government or certain corporation Interest other than interest on securities not liable to tax deduction under section 194A(3)/197A 10.4-1 If interest does not exceed a specified amount 10.4-2 Paid/credited to banks/financial institutions 10.4-3 Interest by firm 10.4-4 Co-operative society 10.4-5 Interest under notified schemes 10.4-6 Interest by bank 10.4-7 Interest by co-operative society/bank 10.4-8 Interest by Government 10.4-9 Interest credited on compensation 10.4-10 Interest paid on compensation 10.4-11 Zero coupon bonds 10.4-12 Interest referred to in section 10(23FC) 10.4-13 Interest by offshore banking unit
288 288
10.4-14 Interest to Tirumala Tirupati Devasthanams
297
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288 289 289 289 290 290 290 290 291 294 294 295 295 296 296 296 296 296 297 297
CONTENTS PAGE
10.5
10.4-15 Interest to securitisation trust
297
Interest without tax deduction or with deduction at lower rates
297
Certificate for tax deduction at lower rate under section 197(1)
297
10.5-2
Declaration under section 197A
297
10.5-3
Payment to certain institutions whose income is exempt under section 10(23C)
299
10.5-1
10.6
To deduct or not - Treatment of some typical cases Interest on deposits in joint names - Manner of tax deduction
299
10.6-2
Interest payment under Land Acquisition Act
300
10.6-3
Interest payable on hundi by buyer to supplier in case of outstation sale of goods - Whether tax to be deducted by the buyer
300
10.6-4
Interest payable by consignors to their commission agent
301
10.6-5
Payment under a hire purchase agreement
301
10.6-6
Who is an individual
301
10.6-7
Interest payable by retail finance service company
301
10.6-8
Cheque discounting charges
301
10.6-9
Payment under a hire purchase agreement
301
10.6-1
10.7
299
10.6-10 Interest on delayed payment of insurance compensation
301
10.6-11 Personal loan of directors routed through company
302
10.6-12 Discounting charges
302
10.6-13 Chit fund
302
10.6-14 Judgment debtor
302
10.6-15 Interest on overdue purchase bills is not ‘interest’
302
10.6-16 Loan processing fees
302
10.6-17 Tax deduction on the deposits in banks in the name of the registrar to the Supreme Court/High Court during pendency of litigation
302
10.6-18 Tax deductible even in the case of loss
303
10.6-19 TDS on interest on deposits made under Capital Gains Accounts Scheme where depositor has deceased
303
Giving credit for tax deducted
303
10.7-1
Rules to be framed by Board
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303
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11 TAX DEDUCTION FROM WINNINGS FROM LOTTERY, CROSSWORD PUZZLE, CARD GAMES OR OTHER GAMES Who is responsible for tax deduction in the case of winnings from lottery, crossword puzzle, card game or other game
305
11.2
Payments from which deduction is to be made
305
11.3
When tax has to be deducted
305
11.1
11.3-1 11.4 11.5
11.6
11.8
305
Tax deduction account number
305
Deposit of tax in the credit of Central Government
305
11.5-1
Where to deposit
305
11.5-2
Time of deposit
306
11.5-3
Payment through challan
306
11.5-4
Claim for refund
306
Issue a certificate for tax deducted at source
306
Certificate is issued by downloading from TIN website
306
11.6-2
Time limit
306
11.6-3
Issue of duplicate certificate
307
11.6-1
11.7
Private arrangement of paying income tax-free cannot discharge obligation under section 194B
Annual/quarterly return to the Government
307
11.7-1
Annual return
307
11.7-2
Quarterly return
307
Consequences of failure to deduct or pay tax or furnish return, etc.
308
11.8-1
Failure to deduct and/or pay tax
308
11.8-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
308
11.8-3
Failure to issue certificate, or submit return
308
11.8-4
Disallowance of expenditure
308
12 WINNINGS FROM LOTTERY, CROSSWORD PUZZLE, CARD GAME OR ANY OTHER GAME AND TAX TO BE DEDUCTED THEREFROM 12.1
What can be termed as winnings from lottery, crossword puzzle and card game
I-27
309
CONTENTS PAGE
One has to fall back on dictionary meanings and judicial pronouncement
309
12.1-2
Preliminary conditions subject to which tax deduction can be made
311
12.1-3
Some typical situations - How to deal with them
312
12.1-1
12.2
Rates for deduction of tax at source during the financial year 2022-23
313
12.3
No deduction at source from payments to Government or certain corporation
314
Giving credit for tax deducted
315
12.4
12.4-1
Rules framed by Board
315
13 TAX DEDUCTION FROM WINNINGS FROM HORSE RACE 13.1
Who is responsible for tax deduction 13.1-1
Bookmaker - Meaning of
317 317
13.2
When winnings from horse racing are subject to tax deduction at source
317
13.3
When tax has to be deducted
318
13.3-1
Private arrangement of making payment tax-free cannot discharge the obligation
318
13.4
Tax deduction account number
318
13.5
Deposit of tax to the credit of Central Government
318
13.6
13.5-1
Where to deposit
318
13.5-2
Time of deposit
318
13.5-3
Payment through challan
319
13.5-4
Claim for refund
319
Issue of certificate for deduction from winning from horse races
319
Certificates are issued by downloading from TIN website
319
13.6-2
Time limit within which the certificate shall be issued
319
13.6-3
Issue of duplicate certificate
320
13.6-1
13.7
Annual/quarterly return of winning from horse race to the Government
320
13.7-1
Annual return
320
13.7-2
Quarterly return
320
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13.8
Consequences of failure to deduct or pay tax, furnish return, etc.
321
13.8-1
Failure to deduct and/or pay tax
321
13.8-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
321
13.8-3
Failure to issue certificate or submit return
321
13.8-4
Disallowance of expenditure
321
14 WINNINGS FROM HORSE RACE AND TAX TO BE DEDUCTED THEREON 14.1
322
Meaning of horse race 14.1-1
When winnings from horse race are subject to tax deduction
322
14.2
Rates at which deduction of tax is to be made at source during the financial year 2022-23
322
14.3
No deduction of tax from winnings payable to the Government/certain corporation
323
Credit for tax deducted
323
14.4
14.4-1
Rules framed by Board
323
15 TAX DEDUCTION FROM PAYMENT TO CONTRACTORS 15.1
Person responsible for making deduction at source under section 194C 15.1-1
15.2
Payment to a resident contractor
When tax has to be deducted at source
325 325 326
15.2-1
When amount is transferred to “Suspense account”
327
15.2-2
Private arrangement of making payment to contractor/sub-contractor without tax deduction cannot discharge the obligation under section 194C
327
15.3
How to compute the amount of tax deduction
327
15.4
Tax deduction account number
327
15.5
Deposit of tax to the credit of Central Government
327
15.5-1
Where to deposit
327
15.5-2
Time of deposit
327
15.5-3
Payment through challan
328
15.5-4
Claim for refund
328
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15.6
15.7
15.8
Issue of certificate of tax deduction
328
15.6-1
Certificates are issued by downloading from TIN website
328
15.6-2
Time limit within which certificate shall be issued
328
15.6-3
Issue of duplicate certificate
329
Annual and quarterly returns of tax deducted at source
329
15.7-1
Annual return
329
15.7-2
Quarterly return
329
Consequences of failure to deduct or pay tax, furnish return, etc.
330
15.8-1
Failure to deduct and/or pay tax
330
15.8-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
330
15.8-3
Failure to issue certificate or submit return
330
15.8-4
Forfeiture of deduction in respect of payment to contractors/sub-contractors
330
16 WHAT CONSTITUTES A PAYMENT TO CONTRACTOR/ SUB-CONTRACTOR AND HOW MUCH TAX IS TO BE DEDUCTED THEREFROM 16.1
16.2
Payment to contractors/sub-contractors
331
16.1-1
When such payments are subject to tax deduction
331
16.1-2
When such payments to contractors are not subject to tax deduction at source
331
“Work contract” and “contract for supply of labour for works contract” - Meaning of
333
16.2-1
“Work” as defined in section 194C
333
16.2-2
Work contract or sale of goods
334
16.2-3
Tests to determine whether a contract is work contract
334
16.2-4
Emerging conclusion
336
16.2-5
Examples of “work contracts” and “contracts for sale of goods”
337
16.3
Judicial pronouncements
343
16.4
Rates for tax deduction at source during the financial year 2022-23
346
16.4-1 16.5
346
Other points
Clarifications from the Board
347
Advertising contract
347
16.5-1
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16.6 16.7
16.5-2
Broadcasting/telecasting contracts
349
16.5-3
Payment made to travel agent/or an airline
349
16.5-4
Does catering include serving food in restaurant
350
16.5-5
Payment of hire charges
350
16.5-6
Payment to an electrician
351
16.5-7
Maintenance contracts
351
16.5-8
Fixed deposit commission
351
16.5-9
Procurement of orders
351
16.5-10 Reimbursement
351
16.5-11 Bidi manufacturing
351
16.5-12 National Rural Employment Programme
351
16.5-13 Bus contractor
351
16.5-14 Road transporters
352
16.5-15 Tax deduction when material is supplied to contractor
352
16.5-16 Contract on piece rate basis
353
Payment to Government and certain corporations
353
Certificate for tax deduction at lower rates
354
16.7-1 16.8
Time limit for soliciting the favour
354
Credit for tax deduction 16.8-1
354
Rules framed by Board
354
17 TAX DEDUCTION FROM INSURANCE COMMISSION 17.1
Person responsible for tax deduction from insurance commission
356
17.2
When tax has to be deducted
356
17.2-1
No tax is deductible if payment during a financial year does not exceed Rs. 15,000
356
17.2-2
Private arrangement of paying commission taxfree is not relevant
356
17.3
Tax deduction account number
356
17.4
Deposit of tax to the credit of Central Government
356
17.4-1
Where to deposit
356
17.4-2
Time of deposit
357
17.4-3
Payment through challan
357
17.4-4
Claim for refund
357
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CONTENTS PAGE
17.5
17.6
17.7
Issue of certificate of tax deduction
358
17.5-1
Certificates are issued by downloading from TIN website
358
17.5-2
Time-limit within which certificate shall be issued
358
17.5-3
Issue of duplicate certificate
358
Annual and quarterly returns of tax deducted at source
358
17.6-1
Annual return
358
17.6-2
Quarterly return
358
Consequences of failure to deduct or pay tax, furnish return, etc.
360
17.7-1
Failure to deduct and/or pay tax
360
17.7-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
360
17.7-3
Failure to issue certificates or submit return
360
17.7-4
Disallowance of expenditure
360
18 HOW TO COMPUTE INSURANCE COMMISSION AND TAX TO BE DEDUCTED THEREFROM 18.1
What qualifies as insurance commission for the purpose of tax deduction at source 18.1-1
18.2
Rates at which tax is to be deducted at source during the financial year 2022-23 18.2-1
18.3
No tax deduction when payments are to Government and certain corporation
Circumstances in which no deduction or deduction at lower rate is possible 18.3-1 18.3-2
18.4
Conditions to attract section 194D
361 362 362 363
Certificate for tax deduction at lower rate under section 197(1)
363
Declaration under section 197A
363
Credit given to person on whose behalf tax is deducted 18.4-1
361
Rules framed by Board
364 364
19 TAX DEDUCTION FROM PAYMENT IN RESPECT OF LIFE INSURANCE POLICY 19.1
Person responsible for tax deduction
366
19.2
When tax has to be deducted
366
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19.2-1 19.2-2
No tax is deductible if payment during a financial year is less than Rs. 1,00,000
366
Private arrangement of paying commission tax-free is not relevant
366
19.3
Tax deduction account number
366
19.4
Deposit of tax to the credit of Central Government
366
19.5
19.4-1
Where to deposit
366
19.4-2
Time of deposit
367
19.4-3
Payment through challan
367
19.4-4
Claim for refund
367
Issue of certificate of tax deduction
367
Certificates are issued by downloading from TIN website
367
19.5-2
Time-limit within which certificate shall be issued
367
19.5-3
Issue of duplicate certificate
368
19.5-1
19.6
19.7
Annual and quarterly returns of tax deducted at source
368
19.6-1
Annual return
368
19.6-2
Quarterly return
368
Consequences of failure to deduct or pay tax, furnish return, etc.
369
19.7-1
Failure to deduct and/or pay tax
369
19.7-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
370
19.7-3
Failure to issue certificates or submit return
370
19.7-4
Disallowance of expenditure
370
20 HOW TO COMPUTE TAX TO BE DEDUCTED FROM PAYMENT IN RESPECT OF LIFE INSURANCE POLICY 20.1
What qualifies as payment in respect of life insurance policy for the purpose of tax deduction at source under section 194DA 20.1-1
20.2
20.3
When exemption is available under section 10(10D)
371 371
Rates at which tax is to be deducted at source during the financial year 2022-23
372
Illustrations
373
Circumstances in which no deduction or deduction at lower rate is possible
373
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20.4
Credit given to person on whose behalf tax is deducted 20.4-1
Rules framed by Board
374 374
21 DEDUCTION OF TAX AT SOURCE FROM NATIONAL SAVINGS SCHEME 21.1
Who is responsible to deduct tax
376
21.2
When tax is to be deducted
376
21.3
How to compute amount of tax deducted at source
376
21.4
Tax deduction account number
376
Deposit of tax to the credit of Central Government
376
21.5
21.6
21.5-1
Where to deposit
376
21.5-2
Time of deposit
376
21.5-3
Payment through challan
377
21.5-4
Claim for refund
377
Issue of certificate for tax deduction
377
Certificates are issued by downloading from TIN website
377
21.6-2
Time limit within which the certificate shall be issued
377
21.6-3
Issue of duplicate certificate
377
Annual and quarterly return to the Government
377
21.6-1
21.7
21.8
21.7-1
Annual returns
378
21.7-2
Quarterly return
378
Consequences of failure to deduct or pay tax or furnish return
379
21.8-1
Failure to deduct and/or pay tax
379
21.8-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
379
21.8-3
Failure to issue certificate or submit return
379
21.8-4
Disallowance of expenditure
379
22 HOW TO COMPUTE AMOUNT REFERRED TO IN SECTION 80CCA(2)(a) AND TAX TO BE DEDUCTED THEREFROM 22.1
Payments referred to in section 80CCA(2)(a) 22.1-1
What is the scheme of section 80CCA
I-34
380 380
CONTENTS PAGE
22.1-2
Payments subject to tax deduction under section 194EE
380
22.2
Rate of tax in force during the financial year 2022-23
381
22.3
Payment without tax deduction under section 197A
381
22.3-1 22.4
Mode of submission of Form No. 15G/15H by payer of income to income-tax authorities
382
Tax credit 22.4-1
382
Rules framed by Board
382
23 DEDUCTION OF TAX AT SOURCE ON ACCOUNT OF REPURCHASE OF UNITS BY MUTUAL FUNDS OR UNIT TRUST OF INDIA 23.1
Who is responsible to deduct tax
384
23.2
When tax is to be deducted
384
23.2-1
Private arrangement to pay income free of tax
384
23.3
How to compute amount of tax deducted
384
23.4
Tax deduction account number
384
23.5
Deposit of tax to the credit of the Central Government
384
23.6
23.5-1
Where to deposit
384
23.5-2
Time of deposit
385
23.5-3
Payment through challan
385
23.5-4
Claim for refund
385
Issue of certificate for tax deduction
385
23.6-1
Certificates are issued by downloading from TIN website
385
23.6-2
Time-limit within which the certificate shall be issued
385
Issue of duplicate certificate
386
23.6-3 23.7
23.8
Annual and quarterly returns to the Government
386
23.7-1
Annual return
386
23.7-2
Quarterly returns
386
Consequences of failure to deduct or pay tax or furnish return
387
23.8-1
Failure to deduct and/or pay tax
387
23.8-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
387
23.8-3
Failure to issue certificate or submit return
387
23.8-4
Disallowance of expenditure
387
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24 HOW TO COMPUTE AMOUNT REFERRED TO IN SECTION 80CCB(2) AND TAX TO BE DEDUCTED THEREFROM 24.1
Payments affected by section 194F
388
24.1-1
What is the scheme of section 80CCB
388
24.1-2
Payments subject to tax deduction under section 194F
388
Illustration
388
24.1-3 24.2
Rate of tax in force during the financial year 2022-23
389
24.3
Deduction of tax at lower rate
389
Tax credit
389
24.4
24.4-1
Rules framed by Board
389
25 DEDUCTION OF TAX AT SOURCE FROM COMMISSION ON SALE OF LOTTERY TICKETS 25.1
Who is responsible to deduct tax at source
391
25.2
When tax is deducted at source
391
25.2-1
When amount is credited to “suspense account”
391
25.2-2
Private arrangement to pay commission free of tax
391
25.3
How to compute tax deduction at source under section 194G
391
25.4
Tax deduction account number
391
25.5
Deposit of tax to the credit of Central Government
391
25.6
25.7
25.5-1
Where to deposit
391
25.5-2
Time of deposit
392
25.5-3
Payment through challan
392
25.5-4
Claim for refund
392
Issue of certificate of tax deduction
392
25.6-1
Certificates are issued by downloading from TIN website
392
25.6-2
Time-limit within which certificate shall be issued
392
25.6-3
Issue of duplicate certificate
393
Annual and quarterly return to the Government
393
25.7-1
Annual return
393
25.7-2
Quarterly return
393
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CONTENTS PAGE
25.8
Consequences of failure to deduct or pay tax or furnish return
394
25.8-1
Failure to deduct and/or pay tax
394
25.8-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
394
25.8-3
Failure to issue certificate or submit return
394
25.8-4
Disallowance of expenditure
394
26 HOW TO COMPUTE COMMISSION ON SALE OF LOTTERY TICKETS AND TAX DEDUCTIBLE THEREFROM 26.1
When a payment is affected by section 194G
395
26.2
Rates for tax deduction
395
26.3
Deduction of tax at lower rate
396
Tax credited
396
26.4
26.4-1
Rules framed by Board
396
27 TAX DEDUCTION FROM COMMISSION OR BROKERAGE 27.1 27.2
Person responsible for tax deduction from commission/ brokerage
398
When tax has to be deducted
398
27.2-1 27.2-2
No tax is deductible if payment during a financial year does not exceed Rs. 15,000
398
Private arrangement of paying commission taxfree is not relevant
398
27.3
Tax deduction account number
399
27.4
Deposit of tax to the credit of Central Government
399
27.5
27.4-1
Where to deposit
399
27.4-2
Time of deposit
399
27.4-3
Payment through challan
400
27.4-4
Claim for refund
400
Issue of certificate of tax deduction
400
27.5-1
Certificates are issued by downloading from TIN website
400
27.5-2
Time limit within which the certificate shall be issued
400
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Issue of duplicate certificate
400
Annual and quarterly return to the Government
400
27.5-3 27.6
27.7
27.6-1
Annual return
400
27.6-2
Quarterly return
400
Consequences of failure to deduct or pay tax or furnish return
402
27.7-1
Failure to deduct and/or pay tax
402
27.7-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
402
27.7-3
Failure to issue certificate or submit return
402
27.7-4
Forfeiture of deduction in respect of commission/ brokerage
402
28 HOW TO COMPUTE COMMISSION OR BROKERAGE AND TAX TO BE DEDUCTED THEREFROM 28.1
When commission/brokerage is subject to the tax deduction under section 194H
403
28.2
Brokerage/commission covered by section 194H
403
28.2-1
Professional services excluded
403
28.2-2
“Commission” judicially defined
404
28.2-3
Brokerage judicially defined
405
28.2-4
Commission and service are two essential elements
406
28.2-5
Commission retained by consignee - Is it subject to tax deduction
409
28.2-6
Turnover commission by RBI
409
28.2-7
Trade discount is different
409
28.2-8
Discount on SIM offered by cellular telephone network provider to distributors
410
Other judicial rulings
410
28.2-9
28.2-10 Conclusions
412
28.3
Rates of tax
412
28.4
No tax deduction when recipient is Government and certain corporations
413
Payment without tax deduction or with deduction at lower rates
413
28.5
28.5-1
Certificate for tax deduction at lower rate under section 197(1)
I-38
413
CONTENTS PAGE
28.5-2 28.6
Turnover commission payable by Central Government
414
Tax credit 28.6-1
414
Rules framed by Board
414
29 TAX DEDUCTION FROM RENT 29.1
Person responsible for tax deduction from rent
416
29.2
When tax has to be deducted
416
29.2-1
No tax is deductible if payment during a financial year does not exceed Rs. 2,40,000
417
29.2-2
Private arrangement of paying rent tax-free is not relevant
417
29.3
Tax deduction account number
417
29.4
Deposit of tax to the credit of Central Government
417
29.5
29.4-1
Where to deposit
417
29.4-2
Time of deposit
417
29.4-3
Payment through challan
418
29.4-4
Claim for refund
418
Issue of certificate of tax deduction
418
Certificates are issued by downloading from TIN website
418
Time limit within which the certificate shall be issued
418
Issue of duplicate certificate
418
Annual and quarterly return to the Government
418
29.5-1 29.5-2 29.5-3 29.6
29.7
29.6-1
Annual return
418
29.6-2
Quarterly return
419
Consequences of failure to deduct or pay tax or furnish return
420
29.7-1
Failure to deduct and/or pay tax
420
29.7-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
420
29.7-3
Failure to issue certificate or submit return
420
29.7-4
Forfeiture of deduction in respect of rent
420
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CONTENTS PAGE
30 HOW TO COMPUTE RENT AND TAX TO BE DEDUCTED THEREFROM 30.1 30.2
When rent is subject to the tax deduction under section 194-I
421
Rent covered by section 194-I
421
30.2-1
Rent as defined in section 194-I
421
30.2-2
Broad inferences
423
30.3
Rates of tax
429
30.4
No tax deduction when recipient is Government and certain corporations
429
30.4-1 30.4-2 30.5
30.6
No tax deduction if recipient is exempt under section 10(23C)
430
No tax deduction if recipient is real estate investment trust
430
Deduction of tax at lower rates
430
30.5-1
Certificate for receiving rent without tax deduction
430
30.5-2
Declaration under section 197A
431 431
Tax credit 30.6-1
Rules framed by Board
431
31 DEDUCTION OF TAX AT SOURCE FROM CONSIDERATION PAYABLE FOR ACQUISITION OF IMMOVABLE PROPERTY OTHER THAN AGRICULTURAL LAND IN RURAL AREA 31.1
Who is responsible for tax deduction at source under section 194-IA
433
31.2
When tax has to be deducted at source
433
31.3
Tax deduction account number
433
Deposit of tax to the credit of Central Government
433
31.4
31.5
31.4-1
Where to deposit
433
31.4-2
Time of deposit
433
31.4-3
Payment through challan
434
31.4-4
Claim for refund
434
Issue a certificate for tax deducted at source 31.5-1
Certificates are issued by downloading from TRACES Portal
I-40
434 434
CONTENTS PAGE
31.5-2
Time limit within which the certificate should be given
434
Issue of duplicate certificate
434
31.6
Annual and quarterly return to the Government
434
31.7
Consequences of failure to deduct or pay tax, furnish returns, etc.
434
31.5-3
31.7-1
Failure to deduct and/or pay tax
434
31.7-2
Failure to issue certificate, or submit return/ statement
434
Forfeiture of deduction
434
31.7-3
32 HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF CONSIDERATION FOR ACQUISITION OF ANY IMMOVABLE PROPERTY 32.1
Income subject to tax deduction under section 194-IA
435
32.1-1
Immovable property
435
32.1-2
Agricultural land
435
32.1-3
Rural area in India
436
Rate for tax deduction at source during the financial year 2022-23
437
32.3
Consideration payable to Government or certain corporation
439
32.4
Certificate of tax deduction at lower rate
439
32.5
Who gets credit for tax deducted
439
Rules framed by Board
439
32.2
32.5-1
33 TAX DEDUCTION FROM PAYMENT OF RENT BY CERTAIN INDIVIDUALS AND HUFs 33.1
Person responsible for tax deduction under section 194-IB
441
33.2
When tax has to be deducted
441
33.3 33.4
33.2-1
No tax is deductible if rent does not exceed Rs. 50,000 per month
441
33.2-2
Private arrangement of paying tax-free rent is not relevant
441
Tax deduction account number
441
Deposit of tax to the credit of Central Government
441
33.4-1
441
Where to deposit
I-41
CONTENTS PAGE
33.5
33.4-2
Time of deposit
442
33.4-3
Payment through challan
442
33.4-4
Claim for refund
442
Issue of certificate of tax deduction
442
33.5-1
Issue of duplicate certificate
442
33.6
Return to the Government
442
33.7
Consequences of failure to deduct or pay tax or furnish return
442
33.7-1
Failure to deduct and/or pay tax
442
33.7-2
Failure to issue certificate or submit return
442
33.7-3
Forfeiture of deduction
442
34 HOW TO COMPUTE TAX DEDUCTIBLE FROM RENT UNDER SECTION 194-IB 34.1
Rent subject to tax deduction under section 194-IB
443
Rates of tax deduction during the financial year 2022-23
443
Illustrations
443
34.3
Payment without tax deduction or with deduction at lower rates
445
34.4
Consideration payable to Government or certain corporation
445
Tax credit
445
34.2
34.5
34.5-1
Rules framed by Board
445
35 TAX DEDUCTION FROM PAYMENT UNDER SPECIFIED AGREEMENT 35.1
Person responsible for tax deduction from payment under specified agreement
447
35.2
When tax has to be deducted
447
35.2-1 35.3 35.4
Private arrangement to pay consideration free of tax
447
Tax deduction account number
447
Deposit of tax to the credit of Central Government
447
35.4-1
Where to deposit
447
35.4-2
Time of deposit
448
35.4-3
Payment through challan
448
35.4-4
Claim for refund
448
I-42
CONTENTS PAGE
35.5 35.6 35.7
Issue of certificate of tax deduction 35.5-1 Issue of duplicate certificate Quarterly return to the Government Consequences of failure to deduct or pay tax or furnish return 35.7-1 Failure to deduct and/or pay tax 35.7-2 Failure to comply with the provisions of section 203A regarding tax-deduction account number 35.7-3 Failure to issue certificate or submit return
448 448 448 448 448 448 448
36 HOW TO COMPUTE CONSIDERATION WHICH IS SUBJECT TO TAX DEDUCTION UNDER SECTION 194-IC 36.1
36.2 36.3 36.4
When payment under specified agreement is subject to tax deduction under section 194-IC 36.1-1 Specified agreement under section 45(5A) Rates of tax Illustration Payment without tax deduction or with deduction at lower rates Tax credit 36.4-1 Rules framed by Board
449 449 450 450 451 451 451
37 DEDUCTION OF TAX AT SOURCE FROM FEES FOR TECHNICAL OR PROFESSIONAL SERVICES OR ROYALTY 37.1
Who is responsible for tax deduction in the case of fees for technical or professional services or royalty 37.1-1 37.1-2
37.2
37.3
453
Director’s fees subject to TDS under section 194J from July 1, 2012
453
When payment/credit by an individual/HUF is subject to TDS under section 194J
453
When tax has to be deducted at source
454
37.2-1
When fees is credited to “suspense account”
454
37.2-2
Private arrangement of paying fees for technical or professional services or royalty tax-free cannot discharge obligation under section 194J
455
Tax deduction account number
I-43
455
CONTENTS PAGE
37.4
37.5
Deposit of tax to the credit of Central Government 37.4-1
Where to deposit
455
37.4-2
Time of deposit
455
37.4-3
Payment through challan
456
37.4-4
Claim for refund
456
Issue a certificate for tax deducted at source
37.7
456
37.5-1
Certificates are issued by downloading from TIN website
456
37.5-2
Time limit within which the certificate should be given
456
Issue of duplicate certificate
456
Annual and quarterly return to the Government
456
37.5-3 37.6
455
37.6-1
Annual return
456
37.6-2
Quarterly return
457
Consequences of failure to deduct or pay tax, furnish returns, etc.
458
37.7-1
Failure to deduct and/or pay tax
458
37.7-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
458
37.7-3
Failure to issue certificate, or submit return/ statement
458
37.7-4
Forfeiture of deduction in respect of technical/ professional fees/royalty
458
38 HOW TO COMPUTE FEES FOR PROFESSIONAL AND TECHNICAL SERVICES AND ROYALTY AND TAX DEDUCTIBLE THEREFROM 38.1
38.2
Professional/technical services 38.1-1
What is professional services
459
38.1-2
Technical services
460
38.1-3
“Royalty” as defined in Explanation 2 to section 9(1)(vi)
461
When payments for professional/technical fees, royalty, director’s fees are covered by section 194J 38.2-1
38.3
459
464 465
Other points
Rates for tax deduction at source during the financial year 2022-23
468
Reimbursement of expenditure - Whether subject to TDS
469
38.3-1
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CONTENTS PAGE
38.4 38.5
38.6
Fees for professional services/technical services or royalty payable to Government or certain corporation
469
Certificate of tax deduction at lower rate
470
38.5-1
Time limit for soliciting the favour
470
38.5-2
Concession by the Government due to outbreak of COVID-19 pandemic
470
Who gets credit for tax deducted
470
Rules framed by Board
470
38.6-1
39 DEDUCTION OF TAX AT SOURCE FROM INCOME IN RESPECT OF UNITS 39.1 39.2 39.3 39.4
39.5
39.6 39.7
Who is responsible for tax deduction at source under section 194K When tax has to be deducted at source 39.2-1 Credit of income to “suspense account” Tax deduction account number Deposit of tax to the credit of Central Government 39.4-1 Where to deposit 39.4-2 Time within which tax has to be deposited Issue a certificate for tax deducted at source to unitholders 39.5-1 Certificates are issued by downloading from TRACES Portal 39.5-2 Time limit within which the certificate should be given 39.5-3 Issue of duplicate certificate Statement/returns to the Government Consequences of failure to deduct or pay tax, furnish returns, etc. 39.7-1 Failure to deduct and/or pay tax 39.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number 39.7-3 Failure to issue certificates or submit return/ statement
472 472 472 472 472 472 472 472 472 473 473 473 473 473 473 473
40 HOW TO COMPUTE INCOME IN RESPECT OF UNITS AND TAX DEDUCTIBLE THEREFROM 40.1
Income subject to tax deduction under section 194K
I-45
474
CONTENTS PAGE
Rates for tax deduction at source during the financial year 2022-23
474
40.3
Income in respect of units payable to Government or certain corporation
475
40.4
Deduction of tax at lower rates
475
40.2
40.5
40.4-1
Certificate for receiving such sum without tax deduction or with deduction at lower rate
475
40.4-2
Declaration under section 197A
475
Who get credit for tax deducted
476
41 DEDUCTION OF TAX AT SOURCE FROM PAYMENT OF COMPENSATION ON ACQUISITION OF IMMOVABLE PROPERTY Who is responsible for tax deduction at source under section 194LA
478
41.2
When tax has to be deducted at source
478
41.3
Tax deduction account number
478
41.4
Deposit of tax to the credit of Central Government
478
41.1
41.5
41.6
41.7
41.4-1
Where to deposit
478
41.4-2
Time within which tax has to be deposited
478
41.4-3
Claim for refund
478
Issue a certificate for tax deducted at source
478
41.5-1
Certificates are issued by downloading from TIN website
478
41.5-2
Time-limit
478
41.5-3
Issue of duplicate certificate
479
Statement/return to the Government
479
41.6-1
Annual return
479
41.6-2
Quarterly return
479
Consequences of failure to deduct or pay tax, etc.
480
41.7-1
Failure to deduct and/or pay tax
480
41.7-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
480
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CONTENTS PAGE
42 HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF COMPENSATION ON ACQUISITION OF IMMOVABLE PROPERTY 42.1
Income subject to tax deduction under section 194LA
481
42.2
Rates for tax deduction at source during the financial year 2022-23
482
42.3
Income is payable to Government or certain corporation
482
Deduction of tax at lower rates
483
42.4
42.4-1 42.5
Certificate for receiving such without tax deduction or with deduction at lower rate
Who get credit for tax deducted 42.5-1
Rules framed by Board
483 483 483
43 DEDUCTION OF TAX AT SOURCE FROM INCOME BY WAY OF INTEREST FROM INFRASTRUCTURE DEBT FUND 43.1 43.2 43.3 43.4
43.5
43.6
43.7
Who is responsible for tax deduction at source under section 194LB When tax has to be deducted at source Tax deduction account number Deposit of tax to the credit of Central Government 43.4-1 Where to deposit 43.4-2 Time within which tax has to be deposited 43.4-3 Claim for refund Issue a certificate for tax deducted at source 43.5-1 Certificates are issued by downloading from TIN website 43.5-2 Time-limit 43.5-3 Issue of duplicate certificate Statement/return to the Government 43.6-1 Annual return 43.6-2 Quarterly return Consequences of failure to deduct or pay tax, etc. 43.7-1 Failure to deduct and/or pay tax 43.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number
I-47
485 485 485 485 485 485 485 485 485 485 486 486 486 486 487 487 487
CONTENTS PAGE
44 HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF INTEREST ON INFRASTRUCTURE DEBT FUND 44.1
Income subject to tax deduction under section 194LB
488
44.2
Rates for tax deduction at source during the financial year 2022-23
488
44.3
Deduction of tax at lower rate
489
Who get credit for tax deducted
489
44.4
44.4-1
Rules framed by Board
489
45 DEDUCTION OF TAX AT SOURCE FROM INTEREST ON UNITS OF BUSINESS TRUST 45.1
Who is responsible for tax deduction at source under section 194LBA
491
45.2
When tax has to be deducted at source
491
45.3
Tax deduction account number
491
45.4
Deposit of tax to the credit of Central Government
491
45.5
45.4-1
Where to deposit
491
45.4-2
Time within which tax has to be deposited
491
45.4-3
Claim for refund
491
Issue a certificate for tax deducted at source
45.6
45.7
491
Certificates are issued by downloading from TIN website
491
45.5-2
Time-limit
491
45.5-3
Issue of duplicate certificate
492
Statement/return to the Government
492
45.5-1
45.6-1
Annual return
492
45.6-2
Quarterly return
492
Consequences of failure to deduct or pay tax, etc.
493
45.7-1
Failure to deduct and/or pay tax
493
45.7-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
493
45.7-3
Forfeiture of deduction in respect of payment of interest
493
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CONTENTS PAGE
46 HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF INTEREST ON UNITS OF BUSINESS TRUST 46.1
Income subject to tax deduction under section 194LBA
494
46.2
Rates for tax deduction at source during the financial year 2022-23
494
46.3
Deduction of tax at lower rate
495
Who get credit for tax deducted
495
46.4
46.4-1
Rules framed by Board
495
47 DEDUCTION OF TAX AT SOURCE FROM INCOME IN RESPECT OF UNITS OF INVESTMENT FUND/SECURITISATION TRUST 47.1
Who is responsible for tax deduction at source under section 194LBB/194LBC
497
47.2
When tax has to be deducted at source
497
47.3
Tax deduction account number
497
47.4
Deposit of tax to the credit of Central Government
497
47.5
47.4-1
Where to deposit
497
47.4-2
Time within which tax has to be deposited
497
47.4-3
Claim for refund
497
Issue a certificate for tax deducted at source
47.6
47.7
497
Certificates are issued by downloading from TIN website
497
47.5-2
Time-limit
497
47.5-3
Issue of duplicate certificate
498
Statement/return to the Government
498
47.5-1
47.6-1
Annual return
498
47.6-2
Quarterly return
498
Consequences of failure to deduct or pay tax, etc.
499
47.7-1
Failure to deduct and/or pay tax
499
47.7-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
499
47.7-3
Forfeiture of deduction in respect of payment of interest
499
I-49
CONTENTS PAGE
48 HOW TO COMPUTE TAX DEDUCTIBLE FROM INCOME IN RESPECT OF UNITS OF INVESTMENT TRUST/SECURITISATION TRUST 48.1 48.2 48.3
Income subject to tax deduction under section 194LBB/ 194LBC
500
Rates for tax deduction at source during the financial year 2022-23
500
Certificate for tax deduction at lower rate (applicable with effect from June 1, 2016)
501
48.3-1
Time-limit for soliciting the favour
501
48.3-2
How lower rate is determined
501
48.3-3
Concession by the Government due to outbreak of COVID-19 pandemic
501
Other points
502
Who get credit for tax deducted
502
48.3-4 48.4
48.4-1
Rules framed by Board
502
49 DEDUCTION OF TAX AT SOURCE FROM INCOME BY WAY OF INTEREST FROM INDIAN COMPANY UNDER SECTION 194LC Who is responsible for tax deduction at source under section 194LC
504
49.2
When tax has to be deducted at source
504
49.3
Tax deduction account number
504
49.4
Deposit of tax to the credit of Central Government
505
49.1
49.5
49.4-1
Where to deposit
505
49.4-2
Time within which tax has to be deposited
505
49.4-3
Claim for refund
505
Issue a certificate for tax deducted at source
49.6
505
Certificates are issued by downloading from TIN website
505
49.5-2
Time-limit
505
49.5-3
Issue of duplicate certificate
505
Statement/return to the Government
505
49.5-1
49.6-1
Annual return
505
49.6-2
Quarterly return
505
I-50
CONTENTS PAGE
49.7
Consequences of failure to deduct or pay tax, etc.
507
49.7-1
Failure to deduct and/or pay tax
507
49.7-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
507
50 HOW TO COMPUTE TAX DEDUCTIBLE FROM INTEREST PAYABLE TO NON-RESIDENT/ FOREIGN COMPANY 50.1
Income subject to tax deduction under section 194LC 50.1-1
Approval by Central Government
508 508
50.2
Time of tax deduction
510
50.3
Rates for tax deduction at source during the financial year 2022-23
510
Deduction of tax at lower rate
511
Who get credit for tax deducted
511
50.4 50.5
50.5-1
Rules framed by Board
511
51 DEDUCTION OF TAX AT SOURCE FROM INTEREST ON CERTAIN BONDS AND GOVERNMENT SECURITIES UNDER SECTION 194LD Who is responsible for tax deduction at source under section 194LD
513
51.2
When tax has to be deducted at source
513
51.3
Tax deduction account number
513
51.4
Deposit of tax to the credit of Central Government
513
51.1
51.5
51.4-1
Where to deposit
513
51.4-2
Time within which tax has to be deposited
513
51.4-3
Claim for refund
513
Issue a certificate for tax deducted at source
51.6
514
Certificates are issued by downloading from TRACES Portal
514
51.5-2
Time-limit
514
51.5-3
Issue of duplicate certificate
514
Statement/return to the Government
514
51.5-1
51.6-1
Annual return
514
51.6-2
Quarterly return
514
I-51
CONTENTS PAGE
51.7
Consequences of failure to deduct or pay tax, etc.
516
51.7-1
Failure to deduct and/or pay tax
516
51.7-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
516
52 HOW TO COMPUTE TAX DEDUCTIBLE FROM INTEREST PAYABLE UNDER SECTION 194LD 52.1
Income subject to tax deduction under section 194LD
517
52.2
Time of tax deduction
517
52.3
Rates for tax deduction at source during the financial year 2022-23
517
52.4
Deduction of tax at lower rate
518
52.5
Who get credit for tax deducted
518
52.5-1
Rules framed by Board
518
53 TAX DEDUCTION FROM PAYMENT TO RESIDENT CONTRACTOR, BROKER OR PROFESSIONAL BY CERTAIN INDIVIDUALS AND HUFs 53.1 53.2
Person responsible for tax deduction under section 194M
520
When tax has to be deducted
520
53.2-1 53.2-2 53.3 53.4
53.5
No tax is deductible if payment/credit does not exceed Rs. 50 lakh in a financial year
520
Private arrangement of paying tax-free rent is not relevant
520
Tax deduction account number
520
Deposit of tax to the credit of Central Government
520
53.4-1
Where to deposit
521
53.4-2
Time of deposit
521
53.4-3
Payment through challan
521
53.4-4
Claim for refund
521
Issue of certificate of tax deduction
521
53.5-1
Issue of duplicate certificate
521
53.6
Return to the Government
521
53.7
Consequences of failure to deduct or pay tax or furnish return
521
53.7-1
Failure to deduct and/or pay tax
I-52
521
CONTENTS PAGE
53.7-2
Failure to issue certificate or submit return
521
53.7-3
Forfeiture of deduction
521
54 HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT/CREDIT TO CONTRACTOR, PROFESSIONAL OR BROKER UNDER SECTION 194M Payment/credit subject to tax deduction under section 194M
522
54.2
Work contract, commission or brokerage and professional Meaning of
522
54.3
Rates of tax deduction during the financial year 2022-23
522
Illustration
523
Payment without tax deduction or with deduction at lower rates
523
54.5
Consideration payable to Government or certain corporation
524
54.6
Tax credit
524
54.1
54.4
54.6-1
Rules framed by Board
524
55 DEDUCTION OF TAX AT SOURCE FROM CASH PAYMENT TO ACCOUNTHOLDERS UNDER SECTION 194N 55.1
Person responsible for tax deduction under section 194N
526
55.2
When tax has to be deducted
526
55.2-1 55.2-2
No tax is deductible if cash payment does not exceed Rs. 1 crore in a financial year
526
Private arrangement of paying tax-free rent is not relevant
526
55.3
Tax deduction account number
526
55.4
Deposit of tax to the credit of Central Government
526
55.5
55.4-1
Where to deposit
526
55.4-2
Time of deposit
527
55.4-3
Payment through challan
527
55.4-4
Claim for refund
527
Issue of certificate of tax deduction
527
55.5-1
Issue of duplicate certificate
I-53
527
CONTENTS PAGE
55.6
Return to the Government
527
55.7
Consequences of failure to deduct or pay tax or furnish return
527
55.7-1
Failure to deduct and/or pay tax
527
55.7-2
Failure to issue certificate or submit return
527
56 HOW TO COMPUTE TAX DEDUCTIBLE FROM CASH PAYMENT TO ACCOUNTHOLDERS UNDER SECTION 194N 56.1
Cash payment subject to tax deduction under section 194N
528
56.2
Rates of tax deduction during the financial year 2022-23
528
56.3
Payment without tax deduction or with deduction at lower rates
529
56.4
Consideration payable to Government or certain corporation
530
Tax credit
530
56.5
56.5-1
Rules framed by Board
530
57 DEDUCTION OF TAX AT SOURCE FROM PAYMENTS TO E-COMMERCE PARTICIPANTS 57.1
Who is responsible for tax deduction at source under section 194-O
532
57.2
When tax has to be deducted at source
532
57.3
Tax deduction account number
532
57.4
Deposit of tax to the credit of Central Government
532
57.5
57.4-1
Where to deposit
532
57.4-2
Time within which tax has to be deposited
532
Issue a certificate for tax deducted at source to unitholders
532
57.5-1
Certificates are issued by downloading from TRACES Portal
532
57.5-2
Time limit within which the certificate should be given
533
Issue of duplicate certificate
533
57.6
Statement/returns to the Government
533
57.7
Consequences of failure to deduct or pay tax, furnish returns, etc.
533
57.5-3
57.7-1
Failure to deduct and/or pay tax
533
57.7-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
533
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CONTENTS PAGE
57.7-3
Failure to issue certificates or submit return/ statement
533
58 HOW TO COMPUTE INCOME AND TAX DEDUCTIBLE THEREFROM 58.1
Income subject to tax deduction under section 194-O
534
58.1-1
When tax is not deductible
534
58.1-2
TDS under other sections
534
58.1-3
Removing any difficulty
534
Rates for tax deduction at source during the financial year 2022-23
535
Illustrations
535
58.3
Income in respect of units payable to Government or certain corporation
537
58.4
Deduction of tax at lower rates
537
58.2
58.5
58.4-1
Time-limit for soliciting the favour
537
58.4-2
How lower rate is determined
537
58.4-3
Validity of the certificate
537
58.4-4
Other points
537
Who get credit for tax deducted
537
59 DEDUCTION OF TAX AT SOURCE FROM INCOME OF SPECIFIED SENIOR CITIZEN 59.1
Who is responsible for tax deduction at source under section 194P
539
59.2
When tax has to be deducted at source
539
59.3
Tax deduction account number
539
59.4
Deposit of tax to the credit of Central Government
539
59.4-1
Where to deposit
539
59.4-2
Time within which tax has to be deposited
539
59.5
Statement/returns to the Government
539
59.6
Consequences of failure to deduct or pay tax, furnish returns, etc.
539
59.6-1
Failure to deduct and/or pay tax
539
59.6-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
539
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CONTENTS PAGE
59.6-3
Failure to issue certificates or submit return/ statement
539
60 HOW TO COMPUTE INCOME OF SPECIFIED SENIOR CITIZEN AND TAX DEDUCTIBLE THEREFROM 60.1
Income subject to tax deduction under section 194P
540
60.2
Rates for tax deduction at source during the financial year 2022-23
540
60.3
Deduction of tax at lower rates
540
60.4
Who get credit for tax deducted
540
60.5
Return under section 139(1) not required
541
61 DEDUCTION OF TAX AT SOURCE ON PAYMENT FOR PURCHASE OF GOODS Who is responsible for tax deduction at source under section 194Q
543
61.2
When tax has to be deducted at source
543
61.3
Tax deduction account number
543
Deposit of tax to the credit of Central Government
543
61.1
61.4
61.5
61.4-1
Where to deposit
543
61.4-2
Time within which tax has to be deposited
543
Issue a certificate for tax deducted at source to unitholders
544
Certificates are issued by downloading from TRACES Portal
544
Time limit within which the certificate should be given
544
Issue of duplicate certificate
544
61.6
Statement/returns to the Government
544
61.7
Consequences of failure to deduct or pay tax, furnish returns, etc.
544
61.5-1 61.5-2 61.5-3
61.7-1
Failure to deduct and/or pay tax
544
61.7-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
544
Failure to issue certificates or submit return/statement
544
61.7-3
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CONTENTS PAGE
62 HOW TO COMPUTE TAX TO BE DEDUCTED UNDER SECTION 194Q 62.1
62.2
Income subject to tax deduction under section 194Q
545
62.1-1
When tax is not deductible
545
62.1-2
Removing any difficulty
545
Rates for tax deduction at source during the financial year 2022-23 62.2-1
Clarifications by CBDT
546 546
62.3
Income in respect of amount payable to Government or certain corporation
550
62.4
Deduction of tax at lower rates
550
62.5
Who get credit for tax deducted
550
63 DEDUCTION OF TAX AT SOURCE ON BENEFIT OR PERQUISITE IN RESPECT OF BUSINESS OR PROFESSION Who is responsible for tax deduction at source under section 194R
552
63.2
When tax has to be deducted at source
552
63.3
Tax deduction account number
552
63.4
Deposit of tax to the credit of Central Government
552
63.1
63.4-1
Where to deposit
552
63.4-2
Time within which tax has to be deposited
552
63.5
Statement/returns to the Government
552
63.6
Consequences of failure to deduct or pay tax, furnish returns, etc.
552
63.6-1
Failure to deduct and/or pay tax
552
63.6-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
553
Failure to issue certificates or submit return/ statement
553
63.6-3
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64 HOW TO COMPUTE VALUE OF BENEFIT OR PERQUISITE AND TAX DEDUCTIBLE THEREFROM 64.1
Amount subject to tax deduction under section 194R
554
64.1-1
Benefit or perquisite covered by section 194R
554
64.1-2
Removing any difficulty
555
64.2
Rates for tax deduction at source during the financial year 2022-23
555
64.3
Deduction of tax at lower rates
556
64.4
Who get credit for tax deducted
556
65 DEDUCTION OF TAX AT SOURCE FROM PAYMENT ON TRANSFER OF VIRTUAL DIGITAL ASSET Who is responsible for tax deduction at source under section 194S
558
65.2
When tax has to be deducted at source
558
65.3
Tax deduction account number
558
65.4
Deposit of tax to the credit of Central Government
558
65.1
65.5
65.4-1
Where to deposit
558
65.4-2
Time within which tax has to be deposited
558
Issue a certificate for tax deducted at source to unitholders
558
Certificates are issued by downloading from TRACES Portal
558
65.5-2
Time limit within which the certificate should be given
558
65.5-3
Issue of duplicate certificate
558
65.6
Statement/returns to the Government
559
65.7
Consequences of failure to deduct or pay tax, furnish returns, etc.
559
65.5-1
65.7-1
Failure to deduct and/or pay tax
559
65.7-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
559
Failure to issue certificates or submit return/ statement
559
65.7-3
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CONTENTS PAGE
66 HOW TO COMPUTE TAX TO BE DEDUCTED UNDER SECTION 194S 66.1
Income subject to tax deduction under section 194S
560
66.1-1
Virtual digital asset
560
66.1-2
Threshold limit
560
66.1-3
Overlapping between sections 194-O and 194S
561
66.1-4
Removing difficulty
561
Rates for tax deduction at source during the financial year 2022-23
561
Income in respect of amount payable to Government or certain corporation
562
66.4
Deduction of tax at lower rates
562
66.5
Who get credit for tax deducted
562
66.2 66.3
67 TAX DEDUCTION FROM PAYMENTS TO NON-RESIDENTS 67.1
Who is required to deduct tax under sections 194E, 195 and 196A 67.1-1 67.1-2
67.2 67.3
564
Payer/Principal officer is person responsible for tax deduction
564
In case of consideration for transfer of foreign exchange amount
564
Payment from which deduction has to be made
565
When tax has to be deducted
565
67.3-1
Payments referred to section 115BBA
565
67.3-2
Interest of mutual fund payable to non-resident
565
67.3-3
Any other payments
565
67.3-4
Private arrangement of paying income tax-free cannot discharge obligation under sections 194E, 195 and 196A
566
67.4
Tax deduction account number
566
67.5
Deposit of tax to the credit of Central Government
566
67.5-1
Where to deposit
566
67.5-2
Time of deposit
566
67.5-3
Payment through challan
567
67.5-4
Claim for refund
567
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CONTENTS PAGE
67.6
67.7
Issue of certificate for tax deducted at source 67.6-1
Certificates are issued by downloading from TIN website
567
67.6-2
Time limit
567
67.6-3
Issue of duplicate certificate
567
Quarterly return to the Government
567
Quarterly return
567
67.7-1 67.8
567
Consequences of failure to deduct or pay tax or furnish return
569
67.8-1
Failure to deduct and/or pay tax
569
67.8-2
Failure to comply with the provisions of section 203A regarding tax deduction account number
569
67.8-3
Failure to issue certificate, or submit return
569
67.8-4
Forfeiture of deduction in respect of payment of annual charge, interest, royalty, fees, etc.
569
68 HOW TO COMPUTE AMOUNT PAYABLE TO NON-RESIDENT AND TAX TO BE DEDUCTED THEREFROM 68.1
68.2
Payments subject to tax deduction under section 194E 68.1-1
Payments covered by section 115BBA
573
68.1-2
Other points pertaining to section 194E
574
Payment subject to tax deduction under section 196A 68.2-1
68.3
573
No tax deduction if UTI’s units are purchased in foreign currency
“Other sum” subject to tax deduction under section 195
574 574 575
68.3-1
Meaning of non-resident
575
68.3-2
Withdrawal of Circular Nos. 23, 163 and 786 and its impact on taxability of export commission in India
575
68.3-3
Payment made to resident agent of a non-resident
577
68.3-4
Advances to ship hirer adjustable against hire charges
577
68.3-5
Constructive payment of commission to nonresident through another non-resident
577
68.3-6
Money paid into Court under decree obtained by non-resident
578
68.3-7
Payment to non-resident for goods resold by it to resident seller
578
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Interest on purchase price paid to non-resident in instalments
578
Customary, non-contractual payment to officers of ship by stevedores
578
68.3-10 Payment to foreign firm whose one of the partners is managing firm’s affairs from India
578
68.3-11 Section 195 is applicable even in the case of regular trading operation
579
68.3-12 Payment to foreign shipping companies
579
68.3-13 Payments to non-resident at UAE
580
68.3-14 Payments of interest by a branch office to head office outside India
580
68.3-15 Any other sum chargeable to tax
581
68.3-16 Travelling expenses
581
68.3-17 Payment for data transmission
581
68.3-18 When payee is non-resident at the time of tax deduction but becomes resident at the time of payment
581
68.3-19 Mere accrual of income is not sufficient
582
68.3-20 Reimbursement of salary or other expenses
582
68.3-21 When income is exempt under DTAA
582
68.3-22 Lead manager of GDR
582
68.3-23 Transfer of controlling interest in a foreign company having assets in India
582
68.3-24 Lease rent, roaming charges, telephone services, uplinking charges, bandwidth network charges, interconnection/port access charges
584
68.3-25 Export contract
584
68.3-26 Remittance from India
584
68.3-27 Subscription charges
584
Tax deduction only on recipient’s chargeable income Provisions for ascertaining recipient’s chargeable income
585
68.3-8 68.3-9
68.4
Appropriation is not possible in the case of interest, fees and royalty
587
Grossing up of amount payable to non-resident stipulated to be paid net of taxes
589
68.4-1 68.5
68.5-1 68.6
Cases when grossing up is not required
Rates of tax deduction at source for the financial year 2022-23 68.6-1
TDS when payment/credit is given to a person in notified jurisdictional area
I-61
590 591 591
CONTENTS PAGE
68.6-2 68.7
68.8
68.9
Payments to non-resident without tax deduction in certain cases
68.11
592 594
68.7-1
Qualifying persons and qualifying incomes
594
68.7-2
Conditions to be satisfied
594
68.7-3
Procedure for issue of certificate
595
Certificate for deduction of tax at lower rate in the case of recipient other than a company
595
68.8-1
Time limit for soliciting the favour
595
68.8-2
How lower rate is determined
596
68.8-3
Validity of the certificate
596
68.8-4
Other points
596
Furnishing information regarding remittance 68.9-1
68.10
TDS when PAN of deductee is not available
596 597
Other points
Credit for tax deducted
597
68.10-1 Rules framed by Board
597
Refund for denying liability to deduct tax in certain cases
598
69 DEDUCTION OF TAX AT SOURCE FROM INCOME OF UNITS OF OFFSHORE FUND 69.1
Who is responsible to deduct tax
600
69.2
When tax is to be deducted
600
69.3
How to compute amount of tax deducted
600
69.4
Tax-deduction account number
600
69.5
Deposit of tax to the credit of Central Government
600
69.6
69.5-1
Where to deposit
600
69.5-2
Time of deposit
600
69.5-3
Payment through challan
601
69.5-4
Claim for refund
601
Issue of certificate for tax deduction
601
69.6-1
Certificates are issued by downloading from TIN website
601
69.6-2
Time limit
601
69.7
Quarterly returns to the Government
602
69.8
Consequences of failure to deduct or pay tax or furnish return
602
69.8-1
Failure to deduct and/or pay tax
I-62
602
CONTENTS PAGE
69.8-2 69.8-3
Failure to comply with the provisions of section 203A regarding tax deduction account number
602
Failure to issue certificate or submit return
602
70 HOW TO COMPUTE AMOUNT OF TAX DEDUCTION UNDER SECTION 196B 70.1
Amount covered by section 196B
603
70.1-1
Units referred to in section 115AB
603
70.1-2
Overseas financial organisation
603
70.2
Rate for tax deduction
604
70.3
When tax is deductible at lower rate
604
70.4
Tax credit
604
70.4-1
Rules framed by Board
604
71 DEDUCTION OF TAX AT SOURCE FROM INCOME FROM FOREIGN CURRENCY BOND OR SHARES OF INDIAN COMPANY 71.1
Who is responsible to deduct tax
606
71.2
When tax is to be deducted
606
71.3
How to compute amount of tax deducted
606
71.4
Tax deduction account number
606
71.5
Deposit of tax to the credit of Central Government
606
71.6
71.5-1
Where to deposit
606
71.5-2
Time of deposit
606
71.5-3
Payment through challan
607
71.5-4
Claim for refund
607
Issue of certificate for tax deduction
607
71.6-1
Certificates are issued by downloading from TIN website
607
71.6-2
Time limit
607
71.7
Quarterly returns to the Government
608
71.8
Consequences of failure to deduct or pay tax or furnish return
608
71.8-1
Failure to deduct and/or pay tax
I-63
608
CONTENTS PAGE
71.8-2 71.8-3
Failure to comply with the provisions of section 203A regarding tax-deduction account number
608
Failure to issue certificate or submit return
608
72 HOW TO COMPUTE AMOUNT OF TAX DEDUCTION UNDER SECTION 196C 72.1
Amount covered by section 196C 72.1-1
Bonds/shares referred to in section 115AC
609 609
72.2
Rate for tax deduction
609
72.3
When tax is deductible at lower rate
610
Tax credit
610
72.4
72.4-1
Rules framed by Board
610
73 DEDUCTION OF TAX AT SOURCE FROM INCOME OF FOREIGN INSTITUTIONAL INVESTORS FROM SECURITIES 73.1
Who is responsible to deduct tax
612
73.2
When tax is to be deducted
612
73.3
How to compute amount of tax deducted
612
73.4
Tax deduction account number
612
Deposit of tax to the credit of Central Government
612
73.5
73.6
73.5-1
Where to deposit
612
73.5-2
Time of deposit
612
73.5-3
Payment through challan
613
73.5-4
Claim for refund
613
Issue of certificate for tax deduction
613
73.6-1 73.6-2
Certificates are issued by downloading from TIN website
613
Time limit
613
73.7
Quarterly returns to the Government
614
73.8
Consequences of failure to deduct or pay tax or furnish return
614
73.8-1
Failure to deduct and/or pay tax
614
73.8-2
Failure to comply with the provisions of section 203A regarding tax-deduction account number
614
Failure to issue certificate or submit return
614
73.8-3
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74 HOW TO COMPUTE AMOUNT OF TAX DEDUCTION UNDER SECTION 196D 74.1
Amount covered by section 196D
615
74.1-1
Securities referred to in section 115AD
615
74.1-2
Who is a Foreign Institutional Investor
615
74.2
Rate for tax deduction
635
74.3
When tax is deductible at lower rate
636
74.4
Tax credit
636
74.4-1
Rules framed by Board
636
BOOK TWO : ADVANCE TAX
75 INCOME LIABLE TO ADVANCE TAX 75.1
Provisions applicable up to the assessment year 1988-89
640
75.2
All incomes are subject to advance tax from the assessment year 1989-90
640
76 LIABILITY TO ADVANCE TAX - WHEN ARISES 76.1
Who is liable to pay advance tax
641
Illustration
641
77 DUE DATES OF PAYMENT 77.1
643
Instalments of advance tax Due dates
643
Illustration
643
77.3
Tax paid after the due dates but within the financial year
644
77.4
Due dates when advance tax is payable on notice issued by Assessing Officer
644
Illustrations
644
77.2
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78 COMPUTATION OF ADVANCE TAX LIABILITY 78.1
Payment of advance tax by the assessee on his own account 78.1-1
No need to submit any estimate/statement
646
78.1-2
Revision of second and subsequent instalment
646
78.1-3
Computation of tax
646
78.1-4 78.2
Tax rates
646
Illustration
646
Payment of advance tax in pursuance of order of Assessing Officer 78.2-1 78.2-2
78.3
646
Lower/higher estimate by assessee
649 649
Computation of tax by Assessing Officer
649
Illustration
650
Payment of advance tax in pursuance of revised order of Assessing Officer
651
78.3-1
Lower/higher estimate by assessee
651
78.3-2
Computation of tax
651
Illustration
651
79 INTEREST PAYABLE BY THE ASSESSEE/GOVERNMENT 79.1
Interest for default in payment of advance tax
653
79.1-1
Assessed tax - Meaning of
653
79.1-2
Adjustment when tax is paid before regular assessment under section 140A
654
Adjustment in the case of reassessment/recomputation under section 147 or 153A
654
79.1-4
Adjustment in the case of rectification/revision/ modification under sections 154, 155, 250, 254, 260, 262, 263, 264, 245D(4)
655
79.1-5
Where an application for settlement is made under section 245C(1)
655
79.1-6
Interest under section 234B or 234C in case of MAT
656
79.1-7
Shipping business of non-residents
656
79.1-8
Payment by cheque
656
79.1-9
Specific order
656
79.1-3
79.1-10 If returned income and assessed income of latest year is nil
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657
CONTENTS PAGE
79.2
79.3
79.1-11 Collection of interest under sections 234A, 234B and 234C is mandatory
657
79.1-12 Cash seized during search
657
79.1-13 Shortfall because of interpretation of law
658
79.1-14 When advance tax liability arises because of a subsequent court ruling
658
79.1-15 Application of section 234B in the case of settlement of cases
658
79.1-16 Other points
659
Interest for deferment of advance tax
659
79.2-1
Category A
659
79.2-2
Category B
660
79.2-3
Category C
661
79.2-4
Short payment of advance tax in case of capital gains/casual income
662
79.2-5
What is returned income
662
Waiver or reduction of interest under sections 234A, 234B and 234C
662
79.3-1
Conditions
662
79.3-2
Period
662
79.3-3
Extent of interest to be reduced or waived
663
79.3-4
Discretion should be exercised in judicial manner
663
79.4
Chief Commissioner/Director General (Investigation) to reduce penal interest in certain cases
663
79.5
Power of CBDT and Settlement Commission to reduce/ waive interest
664
Interest payable to assessee
664
79.6
79.6-1 79.6-2 79.7
Provisions applicable after amendments by the Finance Act, 2016 and Finance Act, 2017
665
Other points
666
Procedure to be followed in calculation of interest
667
Illustrations
667
BOOK THREE : TAX COLLECTION AT SOURCE
80 TAX COLLECTION AT SOURCE 80.1
In which case tax has to be collected at source
I-67
680
CONTENTS PAGE
80.2
Tax collection in Category A
681
80.2-1
Who is seller in Category A
681
80.2-2
Who is buyer in Category A
682
80.2-3
Meaning of “scrap”
683
80.2-4
When tax has to be collected in Category A
684
80.2-5
Goods utilised for manufacturing/processing or generation power of in Category A is not subject to tax collection
685
80.2-6
Other judicial rulings
686
80.3
Tax collection in Category B
686
80.4
Tax collection in Category C
686
80.5
Tax collection in Category D
687
80.6
Tax collection in Category E
687
Illustrations
688
Tax collection in Category F
690
80.7
80.7-1
Clarification given by the Board in Circular No. 17/2020
691
80.8
Requirement to furnish PAN by collectee
693
80.9
Special provision for TCS for non-Filers of Income-tax return
693
80.10
Tax collection at lower rate
694
80.11
Tax collection account number
694
80.12
Deposit of tax
695
80.12-1 e-Payment of tax
695
Issue of certificate
695
80.13-1 Due date of issuing certificate in Form No. 27D
695
80.13-2 Duplicate certificate
695
80.13
Return to the Government
696
80.14-1 Annual return
696
80.14-2 Quarterly return
696
80.14-3 Mode of furnishing quarterly returns
696
80.14-4 Quarterly return not possible before payment of tax and interest
697
80.14-5 PAN data of collectee
697
80.15
Consequences of failure to collect or pay tax, furnish return, etc.
697
80.16
Tax credit to one who pays
697
80.16-1 Rules framed by Board
697
80.14
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CONTENTS PAGE
80.17
Consequences if tax is not collected or paid
697
80.18
There is no ambiguity in the provisions of section 206C
698
BOOK FOUR : REFUND
81 REFUND FOR EXCESS PAYMENT 81.1
Right to claim refund - When arises
704
81.2
Who can claim refund
704
81.3
How to claim refund
704
81.3-1 81.4
Claim after the statutory time-limit
704 705
Refund on appeal 81.4-1
In case assessment is set aside or cancelled
705
81.4-2
In case assessment is annulled
706
81.5
Correctness of assessment not to be questioned
706
81.6
Set off of refunds against the tax remaining payable
706
82 INTEREST ON REFUND 82.1
Interest on refund on excess payment of advance tax and tax deduction at source
708
82.2
Interest on refund of tax other than advance tax/tax deducted at source
708
82.3
Refund which arises out of appeal effect
708
82.4
Interest along with refund is a must
708
82.5
Delay attributable to the assessee is not considered
709
82.6
Automatic revision of interest in case of appeal, reassessment, etc.
710
Interest on excess refund
710
82.7
82.7-1
Interest under section 234D(1)
710
82.7-2
Computation of interest
711
Illustration
711
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CONTENTS PAGE
REFERENCER Referencer 1 : Tax rates
715
u Tax deduction at source
715
Referencer 2 : Withholding tax rates
723
Referencer 3 : Rates for tax collection at source
729
Referencer 4 : Advance tax rates
733
Referencer 5 : Calendar for tax deduction/Collection at source and advance payment of tax
741
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61 Deduction of tax at source on payment for purchase of goods Who is responsible for tax deduction at source under section 194Q 61.1 Under section 194Q, tax is deductible by buyer of goods. “Buyer” for this purpose, means a person whose total sales, gross receipts or turnover from the business carried on by him exceed Rs. 10 crore during the financial year immediately preceding the financial year in which the purchase of goods is carried out. However, “buyer” does not include a person notified by the Central Government (subject to such conditions as may be specified therein)†. Any person (being a buyer) who is responsible for paying any sum to any resident seller for purchase of any goods of the value (or aggregate of such value) exceeding Rs. 50 lakh in any previous year, is required to deduct tax at source under section 194Q with effect from July 1, 2021. When tax has to be deducted at source 61.2 Tax should be deducted by the buyer, at the time of credit of such sum to the account of the seller or at the time of payment thereof by any mode, whichever is earlier. Where, however, the above sum is credited to any account (whether called “suspense account” or by any other name) in the books of account of the person liable to pay such income, such credit of income shall be deemed to be the credit of such income to the account of the payee and the provisions of this section shall apply accordingly. Tax deduction account number 61.3 See para 1.4. Deposit of tax to the credit of Central Government 61.4 Tax is to be deposited to the credit of the Central Government as follows – 61.4-1 Where to deposit - See para 1.5-1. 61.4-2 Time within which tax has to be deposited - See para 37.4-2. † In exercise of this power, the Central Government has specified that Air India Assets Holding Ltd. shall not be considered as “buyer” for this purpose in case of transfer of goods by Air India Ltd. to it under a plan approved by the Central Government – Notification No. S.O. 3680(E), dated September 10, 2021.
543
Para 61.7
DEDUCTION OF TAX AT SOURCE ON PAYMENT
Book One
Issue a certificate for tax deducted at source to unitholders 61.5 Every person deducting tax from income in respect of units is required to issue certificate in Form No. 16A. 61.5-1 Certificates are issued by downloading from TRACES Portal See para 7.6-1. 61.5-2 Time limit within which the certificate should be given - See para 7.6-2. 61.5-3 Issue of duplicate certificate - See para 1.6-4. Statement/returns to the Government 61.6 Quarterly return of income in respect of tax deducted under section 194Q is to be filed within the prescribed time-limit in Form No. 26Q [see para 37.6-2]. Consequences of failure to deduct or pay tax, furnish returns, etc. 61.7 The following are consequences of different defaults : 61.7-1 Failure to deduct and/or pay tax - See para 1.8-1. 61.7-2 Failure to comply with the provisions of section 203A regarding tax deduction account number - See para 1.8-2. 61.7-3 Failure to issue certificates or submit return/statement - See para 1.8-3.
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62 How to compute tax to be deducted under section 194Q Income subject to tax deduction under section 194Q 62.1 If the following conditions are satisfied, then tax is deductible under section 194Q – 1. Payer is “buyer” of goods. 2. Payment/credit is on or after July 1, 2021. 3. Payment/credit pertains to purchase of goods from seller. 4. Aggregate payment/credit during the financial year exceeds Rs. 50 lakh. If the above conditions are satisfied, the buyer is required to deduct tax at source under section 194Q. 62.1-1 When tax is not deductible - Tax is not deductible under section 194Q if the following cases – Cases when TDS under section 194Q not applicable
Comments
Case 1 - If tax is deductible under any other section
If tax is deductible under any other section, then tax shall be deducted under that section and not under section 194Q. Even when tax is deductible under any other section (but not actually deducted by the payer), TDS provisions of that section will apply and not TDS under section 194Q.
Case 2 - If tax is collectible under the provisions of section 206C [but other than sub-section (1H)]
If a particular transaction is covered by TCS provisions of section 206C [other than sub-section (1H)], then tax will be collected by the seller (and tax is not deductible by the buyer under section 194Q). If a particular transaction is covered by section 194Q as well as section 206C(1H), then TDS under section 194Q will apply and not TCS under section 206C(1H).
62.1-2 Removing any difficulty - If any difficulty arises in giving effect to the provisions of this section, the Board may, with the approval of the Central Government, issue guidelines for the purpose of removing the difficulty. These guidelines shall be laid before each House of Parliament 545
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HOW TO COMPUTE TAX TO BE DEDUCTED
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and shall be binding on the income-tax authorities and on the e-commerce operator. Rates for tax deduction at source during the financial year 2022-23 62.2 Tax is deductible under section 194Q with effect from July 1, 2021. Tax is deductible by buyer at the rate of 0.1 per cent of the amount paid or payable exceeding Rs. 50 lakh. ➢ If the recipient does not furnish his PAN to the deductor, tax will be deducted at the rate of 5 per cent by virtue of section 206AA. PAN of the deductee should be mentioned in any correspondence and document which is exchanged between the deductor and deductee. ➢ If recipient is a non-filer of income-tax return, tax is deductible (by virtue of section 206AB) at the rate of 5 per cent [for detailed discussion, see para 6.5-2].
62.2-1 Clarifications by CBDT - Vide Circular No. 13/2021, dated June 30, 2021 and Circular No. 20/2021, dated November 25, 2021, the following clarifications are given by the Board pertaining to section 194Q – ➢ Transactions in securities - Section 194Q shall not be applicable in
relation to, – a. transactions in securities and commodities which are traded through recognized exchanges; b. transactions in electricity, renewable energy certificates and energy saving certificates traded through power exchanges. ➢ Adjustment for GST and other State levies - When tax is deducted at the
time of credit of amount in the account of seller and in terms of the agreement or contract between the buyer and the seller, the component of GST comprised in the amount payable to the seller is indicated separately, tax shall be deducted under section 194Q on the amount credited without including such GST. If, however, the tax is deducted on payment basis (because the payment is earlier than the credit) the tax would be deducted on the whole amount as it is not possible to identify that payment with GST component of the amount to be invoiced in future. The above clarification will also be applicable in the case of purchase/sale of goods which are not covered by GST but covered by other State levies (i.e., VAT, excise duty, etc.). ➢ Purchase returns - Tax is required to be deducted at the time of payment
or credit, whichever is earlier. Thus, before purchase return happens, the tax must have already been deducted under section 194Q on that purchase. If that is the case and against this purchase return the money is refunded by the seller, then this tax deducted may be adjusted against the next purchase against the same seller. No adjustment is required if the 546
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Para 62.2
purchase return is replaced by the goods by the seller as in that case the purchase on which tax was deducted under section 194Q has been completed with goods replaced. ➢ Whether non-resident can be buyer under section 194Q - The provisions
of section 194Q shall not apply to a non-resident whose purchase of goods from seller resident in India is not effectively connected with the permanent establishment of such non-resident in India. ➢ Whether tax is to be deducted when the seller is a person whose income
is exempt - The provisions of section 194Q shall not apply on purchase of goods from a person (being a seller) who as a person is exempt from income tax under the Act (like person exempt under section 10) or under any other Act passed by the Parliament. However, this clarification would not apply if only part of the income of the seller is exempt. ➢ Whether tax is to be deducted on advance payment - Since the provisions
of section 194Q apply on payment or credit whichever is earlier, TDS shall apply to advance payment made by the buyer to the seller. ➢ Whether provisions of section 194Q shall apply to buyer in the year of
incorporation - Under section 194Q a buyer is required to have total sales or gross receipts or turnover from the business carried on by him exceeding Rs. 10 crore during the financial year immediately preceding the financial year in which the purchase of goods is carried out. Since this condition would not be satisfied in the year of incorporation, the provisions of section 194Q shall not apply in the year of incorporation. ➢ Whether provisions of section 194Q shall apply to buyer if the turnover
from business is Rs.10 crore or less - For the purposes of section 194Q, a buyer is required to have total sales or gross receipts or turnover from the business carried on by him exceeding Rs. 10 crore during the immediately preceding financial year. Consequently, the sales or gross receipts or turnover from business carried on by him must exceed Rs. 10 crore. His turnover or receipts from non-business activity is not to be counted for this purpose. ➢ Cross application of section 194-O, section 206C(1H) section 194Q -
Under section 194Q(5), the provision of this section shall not apply to a transaction on which – a. tax is deductible under any of the provisions of this Act; and b. tax is collectible under the provisions of section 206C [other than a transactions on which sub-section (1H)] applies. After conjoint reading of all these provisions the following clarifications are given by the Board – 1. If tax has been deducted by the e-commerce operator on a transaction under section 194-O [including transactions on which tax is not deducted 547
Para 62.2
HOW TO COMPUTE TAX TO BE DEDUCTED
Book One
on account of sub-section (2) of section 194-O], that transaction shall not be subjected to tax deduction under section 194Q. 2. Section 206C(1H) provides exemption from TCS if the buyer has deducted tax at source on goods purchased by him. To remove difficulties, it has been clarified that this exemption would also cover a situation where instead of the buyer, the e-commerce operator has deducted tax at source on that transaction of sale of goods by seller to buyer through e-commerce operator. 3. If a transaction is both within the purview of section 194-O as well as section 194Q, tax is required to be deducted under section 194-O and not under section 194Q. 4. Similarly, if a transaction is both within the purview of section 194-O as well as section 206C(1H), tax is required to be deducted under section 194-O. The transaction shall come out of the purview of section 206C(1H) after tax has been deducted by the e-commerce operator on that transaction. Once the e-commerce operator has deducted the tax on a transaction, the seller is not required to collect the tax under section 206C(1H) on the same transaction. Primary responsibility is on e-commerce operator to deduct the tax under section 194-O and that responsibility cannot be condoned if the seller has collected the tax under section 206C(1H). This is for the reason that the rate of TDS under section 194-O is higher than rate of TCS under section 206C(1H). 5. If a transaction is both within the purview of section 194Q as well as section 206C(1H), the tax is required to be deducted under section 194Q. The transaction shall come out of the purview of section 206C(1H) after tax has been deducted by the buyer on that transaction. Once the buyer has deducted the tax on a transaction, the seller is not required to collect the tax under section 206C(1H) on the same transaction. If, however, for any reason, tax has been collected by the seller under section 206C(1H), before the buyer could deduct tax under section 194Q on the same transaction, such transaction would not be subjected to tax deduction again by the buyer. ➢ E-auction services carried out through electronic portal - The provisions
of section 194-O shall not apply in relation to e-auction activities carried out by e-auctioneers if the following parameters are satisfying – a. the e-auctioneer conducts e-auction services for its clients in its electronic portal and is responsible for the price discovery only which is reported to the client; b. the price so discovered through e-auction process is not necessarily the price at which the transaction takes place and it is up to the discretion of the client to accept the price or to directly negotiate with the counter-party; 548
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RATES FOR TDS DURING FINANCIAL YEAR 2022-23
Para 62.2
c. the transaction of purchase/sale takes place directly between the buyer and the seller outside the electronic portal maintained by the e-auctioneer and price discovery only acts as the starting point for negotiation and conclusion of purchase/sale; d. the e-auctioneer is not responsible for facilitating the purchase and sale of goods for which e-auction was conducted on its electronic portal except to the extent of price discovery; e. payments for the transactions are carried out directly between the buyer and the seller outside the electronic portal and the e-auctioneer does not have any information about the quantum and the schedule of payment which is decided mutually by the client and the counterparty; f. for payment made to e-auctioneer for providing e-auction services, the client deducts tax under the relevant provisions of the Act other than section 194-O. This clarification shall not apply if any of the aforesaid parameters are not satisfied. Moreover, the buyer and seller would still be liable to deduct/ collect tax as per the provisions of sections 194Q and 206C(1H), as the case may be. ➢ Applicability of section 194Q in cases where exemption has been
provided under section 206C(1A) - Under section 206C(1A), tax is not collectible in case of a resident buyer, if the buyer furnishes to the person responsible for TCS a declaration to the effect that the goods [as referred to in section 206C(1)] are to be utilized for the purposes of manufacturing/ processing of articles or for the purposes of generation of power and not for trading purposes. Since by virtue of section 206C(1A), the tax is not required to be collected for goods covered under sub-section (1) of the said section, the Board has clarified that the provisions of section 194Q will apply and the buyer shall be liable to deduct tax under the said section if the conditions specified therein are fulfilled. ➢ Applicability of the provisions of section 194Q in case of Government department (not being a public sector undertaking/corporation) - In case of any Government department (which is not carrying out any business or commercial activity), the primary requirement for being considered as a “buyer” (i.e., turnover of the preceding year exceeding Rs. 10 crore) will not be fulfilled. Consequently, such an organization will not be subject to TDS provisions of section 194Q. If, however, the said department is carrying on a business/commercial activity (turnover of the preceding year exceeds Rs. 10 crore), the provision of section 194Q shall apply subject to the fulfilment of other conditions.
549
Para 62.5
HOW TO COMPUTE TAX TO BE DEDUCTED
Book One
It may be noted that for the purpose of section 194Q Central Government/ State Government (or any department of Government) shall not be considered as “seller” and no tax is to be deducted by the buyer, in cases where any department of Central or State Government are seller of goods. However, any other person (such as a public sector undertaking or corporation established under Central or State Act) shall be required to comply with the provisions of section 194Q. Income in respect of amount payable to Government or certain corporation 62.3 No tax is deductible at source from income in respect of units payable to the following – a. the Government [sec. 196(i)]; or b. the Reserve Bank of India [sec. 196(ii)]; or c. a corporation established by or under a Central Act which is, under any law for the time being in force, exempt from tax on its income [sec. 196(iii)]; or d. a mutual fund specified under section 10(23D) [sec. 196(iv)]. ➢ Section 197A(1F) - Tax is not deductible from a specified payment to a notified institution, association or body or class of institutions, associations or bodies [see para 6.3].
Deduction of tax at lower rates [Sec. 197(1)] 62.4 The provisions of section 197 (pertaining to lower/nil TDS certificate from the Assessing Officer) are not applicable in respect of tax deductible under section 194Q. Who get credit for tax deducted 62.5 Any tax deducted from income from units in accordance with the provision of section 194Q and paid to the Central Government is treated as a payment of tax on behalf of unitholder. Tax credit is, therefore, given to him for the amount so deducted at the time of assessment.
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CHAPTERS 63 & 64
Deduction of tax at source on benefit or perquisite in respect of business or profession under section 194R HOW TO PROCEED
➢ Ascertain whether you are a person responsible for making deduc-
tion at source on benefit or perquisite in respect of business or profession under section 194R – see para 63.1. ➢ Find out the rate of tax deduction – see para 64.3. ➢ Deposit the tax deducted to the credit of the Central Government,
for the place of payment, time of payment and the number of challan form for payment – see para 63.4. ➢ Issue a certificate of tax deduction at source to payee – see para
63.5. ➢ File returns of tax deducted at source to the concerned Assessing
Officer – see para 63.5. RELATED ISSUES
➢ Tax-deduction account number – see para 1.4. ➢ Consequences of failure to deduct or pay tax, furnish return, etc. –
see para 63.6.
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Deduction of Tax at Source with Advance Tax and Refunds AUTHOR PUBLISHER DATE OF PUBLICATION EDITION ISBN NO NO. OF PAGES BINDING TYPE
: : : : : : :
TAXMANN VINOD K. SINGHANIA APRIL 2022 35TH EDITION 9789356220867 816 PAPERBACK
Rs. : 2095 | USD : 66
Description This book provides legal analysis of the provisions relating to TDS, TCS, Advance Tax and Refunds under the Income-tax Act. It also includes guidance on all practical problems supported by illustrations and legal jurisprudence. The Present Publication is the 35 th Edition, authored by Dr Vinod K. Singhania. This book is amended by the Finance Act, 2022 and divided into four divisions, namely: u
Deduction of Tax at Source
u
Advance Tax
u
Tax Collection at Source
u
Refund
The key features of the book are as follows: u
[Detailed Analysis] of TDS and TCS provisions
u
[40+ Original Illustrations] for easy understanding of various complex provisions
u
[Case Laws] covering the ratio of all important Case Laws relating to TDS & TCS
u
[Complete Analysis of the Rules] prescribed for TDS and TCS provisions
u
[Guidance on the Controversial Issues] with supporting Case Laws
u
[Circulars and Notifications] are linked with the relevant provisions
u
[Referencer] for the following: n
Tax Rates w.r.t. to TDS
n
Withholding Tax Rates
n
Rates for TCS
n
Advance Tax Rates
n
Calendar for TDS, TCS & Advance Payment of Tax
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