Tax Deducted at Source (TDS)

TDS Section which applicable for all individual/HUF or any other person whether income from salary/capital gain or any other head i.e. even other than business/profession income

194IA: TDS on purchase of immovable property like plot

Any person (other than Government when compensation/enhanced compensation in compulsory acquisition, tds will deduct u/s 194LA) responsible for paying to resident transferor of any immovable property (other than agricultural land) shall at the payment or credited whichever is earlier tds will deduct.
Consideration for transfer of immovable property and stamp duty value of such property, both is less than 50lakh rupees

Rate of TDS: 1% of whole consideration

Deposit of Tax to credit of Central Government: Any sum deducted u/s 194IA shall be paid to the credit of Central Government within 30 days from end of month in which deduction is made and shall be accompanied by a challan-cum-statement in Form No.26QB, certificate can be issued within 15 days from the due date for furnishing challan cum statement after generating and downloading from DGIT web portal.

194IB: TDS on rent paid by certain individual/huf

These provisions are in addition to the existing provision for tax deduction on payment of rent u/s 194I, it is for “to widen the tax base” in 194I cover only those individual/HUF who are liable to get audited or turnover/receipts is upto some limits, now remaining individual/HUF will cover in this section.
Individual or HUF (other than who are covered under 194I) responsible of paying to a resident any income by way of rent exceeding 50000 for a month or part of a month during the previous year shall deduct 5% of such income.
Time limit of Tds deduction: TDS will deduct on income, for the last month of the previous year or last month of tenancy, if property is vacated during the year.
Such TDS deduction shall not exceed the amount of rent payable for the last month of financial year rent or last month of tenancy period rent as per section 206AA, generally rate is 5% so TDS deduction is within this limit but when landlord or payee does not provide PAN no. than TDS rate is 20% than TDS deduction limit is upto last month rent or last month tenancy period rent.
TDS will deposited to government within 30 days from the end of month in which the deduction is made through file form 26QC, there is no need of TAN(Tax deduction account number), the tenant is quote his/her Pan and Pan of landlord and proof of such TDS deducted will give to landlord by providing certificate form 16C download from www.tdscpc.gov.in .
In case of more than one landlord than different form 26QC will file for each landlord quoting each landlord PAN number.

194M: TDS on payment to resident contractors and professionals

These provisions are in addition to existing provision of 194C and 194J, it is widen base covers individual/huf non audited case (turnover below 1crore or receipts below 50lacs).
Any individual/Huf non audited case paying any sum to a resident, for carrying out any work (including supply of labour) under any contract or by way of fees for professional services during the financial year, exceeding 50 lacs in a year will have to deduct tds at 5% (3.75% for transaction from 14/05/2020 to 31/03/2021).
Payment is made by or behalf of government- The tds will have to be paid to the department on the day of payment
Payment is made by any other person tds shall paid through challan cum statement form 26QD, for month of march=April 30, other than march month=7th of next month.
Certificate under form no.16D to the payee within 15 days from due date.

TDS Sections which applicable for specially builder:

194IC: TDS on payment made under specified agreement

Any person responsible for paying to a resident any sum by way of consideration under specified agreement u/s 45(5A) i.e., under the Joint Development Agreement shall deduct TDS
Joint Development Agreement is an agreement between two people i.e., the owner of building/land and builder who has permission to real estate project and in return, he or she must give a share to the owner or the payment in cash must be done.
Rate of TDS: 10% (7.5% from 14/05/2020 to 31/03/21)
194IC has overriding effect of 194IA (scope is very wide) but 194IC is applicable where there is specified agreement referred u/s 45(5A) between two parties i.e owner and builder to build a real estate project.

Specially For Banking Business:

194N: TDS on cash withdrawal in excess of 1 crore

This section is applicable on more than 1 crore cash withdrawals from bank account during a financial year. It will apply to the withdrawals of all the sums of money or an aggregate of sums from a particular bank in a financial year, withdrawal made by individual/huf/company/partnership firm or LLP/AOP or BOI.
194N introduced to discourage cash transactions in the country and promote the digital economy.
Specially Excluded for tds deducted for payment to an authorised dealer or agent/sub agent of its franchise, business correspondents of a banking company, A co-operative society, any bank, post office, government, white label ATM operators of any bank, commission agent/specified trader under APMC, A Rbi licensed full-fledge money changer or any agent, any person notified by GOI.
Payment made through bearer cheque would not be allowed as an expenditure u/s 40(a)(3), payment exceeding 10000 per day in single transaction or aggregate of all transactions.
Payer is any bank/co-operative bank/post office
For co-operative societies, the threshold limit for annual cash withdrawals has been increased to 3 crores in budget 2023
If taxpayers who have not filed their income tax returns for past three years than threshold limit is reduced to 20 lakhs.

Rate of TDS

2% on cash payments/withdrawals of more than 1 crore in financial year
Tax Deducted at Source (TDS)
In case of non-filer of income tax return in past 3 years than rate of tds is 2% of cash payment/withdrawals of more than 20 lakh and upto 1 crore and 5% for withdrawal exceeding 1 crore.

Points to Remember:

The recipient of cash cannot furnish form 15G/15H to the bank and cannot apply for lower deduction.
While calculating three years immediately preceding 3 years, if the date of return u/s 139(1) has not expired, then that assessment year is not to be considered.

Author

CA Ankita Bothra