TAX DEDUCT AT SOURCE

TDS or best known as Tax Deducted at Source of collecting income tax from assesses in India. This is governed under Indian Income Tax Act, 1961, by the Central Board for Direct Taxes (CBDT) and is part of the Department of Revenue managed by Indian Revenue Service (IRS), Ministry of Finance, Govt. of India. In simple terms, TDS is amount of tax getting deducted from the person (employee/deductee's) salary/income by the person (employer/deductor) paying salary/payments. National Securities Depository Ltd. (NSDL) after having modernized the settlement system in the Indian Capital Market by pioneering scripless settlement is now in the process of establishing a nationwide Tax Information Network (TIN) on behalf of the Income Tax Department (ITD). This is designed to make the tax administration more effective, furnishing of returns convenient, reduce compliance cost and bring greater transparency.

A. SCHEME OF TAX DEDUCTION AT SOURCE

Under Section 152, the scheme of tax deduct at source, persons responsible for making payment of income, covered by the scheme, are responsible to deduct tax at source and deposit the same to the Governments treasury within the stipulated time. The recipient of income though he gets only the net amount (after deduction of tax at source) is liable to tax on the gross amount and the amount deducted at source is adjusted against his final tax liability.

B. RATES FOR TAX DEDUCTION AT SOURCE

Tax is deductible at source at the rates given in table. If PAN of the deductee is not intimated to the deductor, tax will be deducted at source either at the rate given in table or at the rate of 20 percent, whichever is higher. Further, under section 94A(5), if payment or credit is made or given to a deductee who is located in a notified jurisdictional area, tax is deductible at the rate given in the table or at the rate 30 percent, whichever is higher. TDS rates for the financial year 2013-2014 are as followsWhen recipient is resident Nature of payment TDS (SC:Nil,EC:Nil,SHEC: Nil)

Sec. 192 Payment of Salary (normal tax rates are applicable SC: 10% (If net income exceeds Rs. 1crore), EC: 2% and SHEC: 3% -

Sec. 193 Interest on Securities a. interest on (a) debentures/ securities for money issued by or behalf of any local authority/statutory corporation, (b) listed debentures of a company, (c) any security of the Central or State Government b. any other interest on securities (including interest on non-listed debentures) 10 10

Sec. 194 Dividend a. deemed dividend under section 2(22)(e) b. any other dividend 10 Nil 10 30 30

Sec. 194A- Interest other than interest on securities Sec.194B- Winnings from lottery or crossword puzzle or card game or other game of any sort Sec. 194BB- Winning from horse races Sec.194C- Payment or credit to a resident contractor/sub contractor a. payment/credit to an individual or a Hindu undivided family b. payment/credit to any person other than an individual or a Hindu undivided family

1 2 10 20

Sec.194D- Insurance Commission Sec.194EE- Payment in respect of deposits under National Savings Scheme, 1987 Sec.194F- Payment on account of repurchase of units of MF or UTI Sec.194G- Commission on sale of lottery tickets Sec.194H- Commission or brokerage

20 20 10

Sec.194I- Renta. rent of plant and machinery b. rent of land or building or furniture or fitting

2 10

Sec.194IA- Payment/credit of consideration to a resident transferor for transfer of any immovable property (other than rural agriculture land)

(applicable from June1,2013) Sec.194J- Professional fees, technical fees, royalty or remuneration to a director Sec.194LAPayment of compensation on

10 10

acquisition of certain immovable property