Tax Deducted at Source (TDS)

Miscellaneous TDS Provisions:

193: TDS on interest on securities

Securities u/s 2(28B) of income tax act, 1961 which means securities of the central or a state government and debentures/other securities issued by or on behalf of a local authority/a company/a co-operative society established by Central or State or Provincial Act.
Payer is liable to pay tax
Rate of TDS: 10% but if payee fails to furnish his PAN, then payer deduct TDS@ maximum marginal rate.
Some securities which interest provisions of 193 does not apply:7 years NSC (IV issue)

National development bonds
4.25% National defense loan
Security of CG or SG provided the interest amount doesn’t exceed 10000.
6.5% or 7.5% Gold bonds and nominal value of bond didn’t exceed 10000 at any time during the period to which the interest relates
debenture issued by notified institution/authority/public sector company/ co-operative society
Interest on debenture to a resident individual or HUF aggregate amount of interest does not exceed 5000 and interest paid by cheque.
LIC/GIC/ any other insurer owned securities which has full beneficial interest
Any security issued through demat form and listed on recognized stock exchange

Exemption limit:

Debenture issued by listed companies limit is 5000 and such amount is given by account payee cheque8%
saving(taxable) bonds the limit is 10000.

194: TDS on dividend payment

Indian company or a company which has made payment of any dividend (including dividend on preference shares) to a shareholder, who is resident in India, is required to deduct TDS

Threshold limit: no TDS deduction up to 5000, if dividend is paid by any mode other than cash
This section is not apply to following

LIC/GIC/or any other connected insurer which has full beneficial interest
a business trust as defined in 2(13A), by special purpose vehicle referred in 10(23FC)
any other person notified by central govt in official Gazette
dividend payment to unit holders by mutual fund TDS deduct u/s 194k

Rate of TDS

TDS deduct at rate of 10% (7.5% from 14/05/2020 to 31/03/21), 20% in absence of PAN- Resident shareholders
Non resident shareholder (other than FPI)-20% plus applicable surcharge and cess or rates as per DTAA whichever is beneficial

FPI-20% plus applicable surcharge and cess

Compliance requirements:

filling TDS return and issuing TDS certificates
form 15CA in case of all payment to Non-Residents
Tax deducted at source(TDS)
CA certificate in form 15CB in case payment to Non-Residents exceeds 5 lakhs.

194G: TDS from commission on sale of lottery tickets

TDS on the purchase, distribution and other activities associated with lottery tickets.
Any income earned in the form of commission, remuneration or prize on lottery TDS will deduct at the rate of 5%, if PAN is not quoted than TDS will deduct 20%
Threshold limit: Tax cannot be deducted in the case of payment does not exceed 15000.

194K: TDS on dividend payment to unit holders

Asset management company or mutual fund business when distribution of dividend to unit holders than TDS @ 10% will deduct

Threshold limit: if dividend income is up to 5000 in a financial year than no TDS will deduct\

There is no TDS will deduct on capital gain part, only TDS will deduct on dividend part.

194d: TDS on insurance commission

The tax must be deducted by the entity who makes the payment to the resident person as remuneration/rewards for soliciting or obtaining insurance business or continuance, renewal, or revival of policy

Rate of TDS:

Person other than Company:5%
Domestic company:10%
If Pan is not quoted than rate is 20%

Threshold Limit:

Commission paid does not exceed 15000

194DA: TDS from payment of life insurance policy

If payment for a life insurance policy, including bonus amount on maturity, exceeds 1 lakh than TDS levied under 194da

Rate of TDS:

The tax must be deducted at the rate of 5% on only the ‘income part’ of the payment (3.75% from 14/05/2020 to 31/03/2021), this means TDS will be applicable only on the amount exceeding the total of the premiums paid by the insured suppose maturity amount is 200000 and aggregate premium is 150000 so here maturity amount is exceed 100000 but TDS will deduct only on income part i.e. 50000 only so TDS amount is 5% of 50000 i.e. 2500 so after deduction payee will get 197500.

Exemption u/s 194DA:

Any sum pursuant to 80DD (3) or 80DDA (3)
The LIC policy is purchased on or after 1/04/2003 but before 31/03/2012 and premium paid is no more than 20% of total guaranteed.
The LIC policy is purchased on or after 01/04/2012 and premium paid is no more than 10% of total guaranteed.
The LIC policy is purchased on or after 01/04/2013 and premium paid is no more than 15% of total guaranteed, it only applies if person additionally has a handicap as defined in 80U and 80DDB.

Any amount received under keyman insurance policy tds will deduct without checking year of purchased and premium paid limit.

194B: TDS on winning from lottery or crossword puzzles

Any income by way of winnings from any lottery or crossword puzzle, card game and other game of any sort
Threshold limit: winning from each lottery, crossword puzzle, card game Etc. does not exceed 10000
Even if winning is wholly or partly in kind & partly in cash and cash balance is not sufficient to meet TDS liabilities than Payer shall release such prize only if either collect the amount equivalent to TDS or insists the payee to make the payment of TDS on his own & submit the proof to the payer

Rate of TDS: 30%

If out of winning amount etc., any bonus or commission is paid/payable to lottery agent than TDS u/s 194b will deduct after reducing such amount.

194BB: TDS on winning from horse races:

Any bookmaker or person to whom Government has granted a license for horse racing in any race course than while payment to winning person liable to deduct TDS u/s 194bb

Threshold limit: aggregate amount exceeds 10000

Rate of TDS: 30%

Author

CA Ankita Bothra