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Source means the place of origin of an income .the first place from where the income
arises, flows or originates is termed as the source of income .Income-tax is deducted at
source of the income as per provisions of the income-tax Act, 1961. It simply means that
the person, paying an income for the first time, is required to deduct income-tax from
such income at the prescribed rates. The amount of tax so
deducted should be rounded off to the nearest rupee by ignoring amounts less than fifty
paisa and increasing the amount of fifty paisa or more to one rupee. The tax
Is so deducted is deposited to the credit of the central government within the
Prescribed time in the name of the person from whom the tax has been deducted.
The person who deducts such tax issues a certificate to the person concerned
Specifying the amount so deducted and the rate at which the tax has been deducted.
This is called as deduction of tax at source. Tax deducted at source been deducted.
Such amount is adjusted from the final tax liability of the assesses ascertained on his
regular assessment.
Explanation
For the purpose of this clause, an association of persons or a body of individual or
a local authority or an artificial juridical person shall be deemed to be a person in
all cases. It does not matter whether or not such AOP, or BOI or authority or
juridical person was formed or established or incorporated with the object of
deriving income, profits or gains
OTHER PROVISIONS
The following provisions are also worth consideration in respect of deduction of tax
At source
1. Income payable net of tax[Sec 195-A]
Net amount payable*100
100-rate of tax deduction at source
2. No deduction of tax at source [Sec 196]
If any sum is payable to any of the following persons, no deduction of tax shall be
made by the payer : The Government
The RBI or
A corporation established by or under a Central Act, which is exempt from
income-tax on its income, or
A MF specified u/s 10 (23-D). Such sum payable may be interest on
securities or dividend on shares or any other income accruing arising to it.
3. Income in respect of units of non-residents [Sec 196-A]
4. Deduction of tax on any income in respect of units purchased in foreign
Currency [Sec 196-B]
5. Deduction of tax on any income from foreign currency bonds or shares of
Indian company [Sec 196-C]
6. Deduction of tax on income of Foreign Institutional Investors from securities
[Sec 196-D]
7. Deduction at lower rate [Sec 197]
8. No deduction at source in certain cases [Sec 197-A]
9. Tax deducted is income received [Sec 198]
10. Credit for tax deducted [Sec 199]
11. Duty of person deducting tax [Sec 200]
12. Consequences of failure to deduct or pay tax [Sec 201]
13. Certificate for tax deducted [Sec -203]
14. Tax deduction account number TAN[Sec -203A]
15. Furnishing of statement of tax deducted [Sec -203AA]
16. Meaning of person responsible for paying[Sec -204]
17. No direct demand from assessee [Sec -205]
18. Persons deducting tax to furnish prescribed returns [Sec -206]
19. Furnishing of quarterly return in respect of payment of interest to residents
without deduction of tax [Sec -206A]
Contents
1. Interpretation
3. Regular remuneration
5. EVCC shares
8. Variations in deductions
9. Employees' returns
3
1.
Interpretation
1 (1) In this regulation:
"Act" means the Income Tax Act (British Columbia);
(iv) section 4.65 of the Act [transfer of unused credits to spouse or common law
partner], if the formula A + B ? C were read as
A+B
D
where
D is the appropriate percentage for the year, and
(v) section 4.67 of the Act [transfer of unused credits to parent or grandparent], if the
formula A-B in section 4.66 of the Act were read as
A
C
where
C is the appropriate percentage for the year;
"employee" means a person receiving remuneration who reports for work at an
employer's establishment in British Columbia;
"employer", "estimated deductions", "pay period", "remuneration" and
"total remuneration" each has the same meaning as in section 100 of the federal
regulations;
"federal regulations" means the Income Tax Regulations under section 221 (1)
of the federal Act, as amended from time to time;
"year" means a calendar year.
(2) Amounts expressed in dollars in the Act that are relevant to the definition in this
section of "base credit amount" and are subject to an annual adjustment under
section 4.52 of the Act [indexing] are subject to the same annual adjustment for the
purpose of that definition.
(3) For the purposes of this regulation, section 100 (3), (3.1), (3.2) and (4) of the federal
regulations applies.
(4) A reference in this regulation to a provision of the federal regulations referred to in
subsection (3) or in section 10 (1) is a reference to that provision of the federal
regulations as it applies for the purposes of this regulation.
2.
Every person who makes a payment described in section 153 (1) of the federal Act, as
that section applies for the purposes of the Act, to an employee must deduct or withhold
from that payment, and remit to the Receiver General of Canada, the amount, if any, that
is determined under this regulation.
3.
Regular remuneration
(1) Subject to subsection (3) and sections 4 to 8 and to section 109 of the federal
regulations, the amount to be deducted or withheld under section 2 of this regulation for a
pay period in which the employer makes a payment of remuneration to an employee is
determined by the formula
A
B
where
A is the employee?s notional tax for the year in which the payment is made, and
B is the maximum number of such pay periods in that year.
(2) For the purposes of this section,
(a) an employee?s notional tax for the year is the amount determined by the formula
C?D
where
C is the amount of tax that would be determined under section 4.1 (1) of the Act for the
year if the employee?s notional remuneration for that year were the employee?s taxable
income for the year, and
D is the total of
(i) the employee?s BC tax credit amount, and
(ii) the amount that the employee would be entitled to claim under section
4.301 of the Act for the year if the employee?s notional remuneration for
that year were the employee?s income for the year,
(b) an employee?s notional remuneration for the year is the amount determined by the
formula
ExF
ExF
where
E is the amount that is the mid-point of the applicable range of remuneration specified in
Schedule 1 for the pay period in which the payment falls, and
F is the maximum number of such pay periods in that year, and
(c) the employee?s B.C. tax credit amount is the amount determined by the formula
G x [H + I + J]
where
G is the appropriate percentage for the year,
H is,
(i) if the employee is resident in Canada at the time of the payment, the amount specified
in Schedule 2 as the mid-point of the range of amounts within which the employee?s base
credit amount falls, and
(ii) if the employee is not resident in Canada at the time of the payment, nil.
I is the employee?s notional remuneration for the year multiplied by the employee?s
premium rate for that year under the Employment Insurance Act (Canada), not exceeding
the maximum amount of the premiums payable by the employee for the year under that
Act, and
J is the employee?s notional remuneration for the year less the amount for that year
determined under section 20 of the Canada Pension Plan multiplied by the employee?s
contribution rate for the year under that Act or under a provincial plan as defined in
section 3 of that Act, not exceeding the maximum amount of such contributions payable
by the employee for the year under the plan.
(3) The amount determined under subsection (1) must be rounded to the nearest multiple
of 5?, or, if that amount is equidistant from 2 such multiples, to the higher multiple.
(4) Amounts expressed in dollars in section 4.1 (1) of the Act that are subject to an annual
adjustment under section 4.52 of the Act [indexing], are subject to the same annual
adjustment in determining the employee?s notional tax for the purposes of this section.
7
4.
(1)
where
A is the amount of the payment, and
B is the employee's notional tax rate.
(2)
(a)
an employee?s notional tax rate is, subject to subsection (3), the amount
determined by the formula
C
D
where
C is the employee's notional tax, and
D is the employee?s total remuneration for the year,
(b)
where
E is the amount of tax that would be determined under section 4.1 (1) of the Act for
the year if the employee?s net notional remuneration for that year were the
employee?s taxable income for the year, and
F is the total of
(i) the employee?s BC tax credit amount, and
(ii) the amount that the employee would be entitled to claim under section
4.301 of the Act for the year if the employee?s net notional remuneration
for that year were the employer?s income for the year,
(c)
an employee?s total remuneration for the year is the amount recorded as such by
the employee on the return filed under section 107 (2) of the federal regulations,
(d)
where
D is the employee?s total remuneration for the year, and
H is the employee?s expenses for the year as recorded by the employee on the return
filed under section 107 (2) of the federal regulations, and
(e)
an employee?s B.C. tax credit amount is the amount determined by the formula
I x [J + K + L]
where
I is the appropriate percentage for the year,
J is
(i) if the employee is resident in Canada at the time of the payment, the
employee?s base credit amount for the year as recorded by the employee
on the return filed under section 9, and
(ii) if the employee is not resident in Canada at the time of the payment,
nil,
K is the employee?s total remuneration for the year multiplied by the employee?s
premium rate for the year under the Employment Insurance Act (Canada), not
exceeding the maximum amount of the premiums payable by the employee for the
year under that Act, and
L is the employee?s total remuneration for the year less the amount for the year
determined under section 20 of the Canada Pension Plan multiplied by the
employee?s contribution rate for the year under that Act or under a provincial plan
as defined in section 3 of that Act, not exceeding the maximum amount of such
contributions payable by the employee for the year under the plan.
(3) For the purposes of this section, the amount determined under subsection (2) (a) is
to be rounded to 2 places after the decimal by
(a) adding .005 to the first 3 digits after the decimal, and
(b) dropping the third digit from the total obtained under paragraph (a).
(4)
5.
(1)
Amounts expressed in dollars in section 4.1 (1) of the Act that are subject to an
annual adjustment under section 4.52 of the Act [indexing], are subject to the
same annual adjustment in determining the employee?s notional tax for the
purposes of this section.
EVCC shares
If in a year an employer deducts from a payment of remuneration to an employee
an amount in respect of the acquisition by the employee of an EVCC share, there
must be deducted from the amount determined under section 3 (1) or 4 (1), as the
case may be, in respect of that payment the smaller of
(a) 15% of the amount deducted or withheld in respect of the acquisition of the
share, and
(b) the amount determined by the formula
A?B
where
A is $2 000, and
B is the total of all deductions made under this subsection in respect of prior pay
periods in that year.
(2) In this section, "EVCC share" means a share of a corporation registered under
Part 2 of the Employee Investment Act as an employee venture capital corporation.
6.
(1) If in any year a payment for a bonus or retroactive increase in remuneration is made
by an employer to an employee whose total remuneration from the employer,
including the bonus or retroactive increase, may reasonably be expected not to
exceed $5 000 in that year, the amount to be deducted or withheld under section 2 by
the employer from the payment is 5% of the payment.
10
(2) If, in any pay period in a year, a payment for a bonus is made by an employer to an
employee whose total remuneration from the employer, including the bonus, may
reasonably be expected to exceed $5 000 in that year, the amount to be deducted or
withheld under section 2 by the employer from the payment is the amount
determined by the formula
A x [B ? C]
where
A is the maximum number of such pay periods in that year,
B is the amount determined under section 3 for an assumed remuneration equal to
the sum of
(a) the amount of regular remuneration paid by the employer to the employee in
the pay period in which the bonus payment is made, and
(b) an amount equal to the bonus payment divided by the number of pay
periods in that year, and
C is the amount determined under section 3 in respect of the amount of regular
remuneration paid by the employer to the employee in the pay period in which the
payment is made.
(4) Subject to subsection (5), if a lump sum payment as defined in section 103 (6) of the
federal regulations is made by an employer to an employee who is a resident of
Canada, the amount to be deducted or withheld under section 2 of this regulation by
the employer from the payment is as follows:
11
(5)
12
A
$1 000 x
B
where
A is the appropriate percentage, and
B is the percentage in section 4.1 (1) (d) (ii) of the Act that is applicable in
determining tax payable under the Act for the year in which the payment is made, or
(e) if the payment exceeds $85 000, the amount determined by the formula
A
$1 000 x
B
where
A is the appropriate percentage, and
B is the percentage in section 4.1 (1) (e) (ii) of the Act that is applicable in
determining tax payable under the Act for the year in which the payment is made.
(6)
An amount that
(a) is expressed in dollars in subsection (5), and
(b) is the same as an amount in section 4.1 of the Act that is subject to
adjustment under section 4.52 of the Act [indexing],
is subject to the same annual adjustment for the purposes of subsection (5) of this
section.
(7) For the purposes of subsection (5) (b) to (e), the amount determined by the
formula must be rounded to the nearest multiple of one dollar, or, if that amount is
equidistant from 2 such multiples, to the higher multiple.
7.
13
(a) remuneration described in section 115 (2) (e) (i) of the federal Act that is
paid to a non-resident person who has in the year in which the payment is
made, or who had in any previous year, ceased to be a resident of Canada, or
(b) remuneration reasonably attributable to the duties of any office or
employment performed or to be performed in Canada by the non-resident
person.
8.
(1)
Variations in deductions
This section applies to a payment of remuneration by an employer to an employee
if
(a) the payment is made in respect of a period for which no provision is made
in Schedule 1, or
(b) the payment is made for a pay period referred to in Schedule 1, and the
amount of the payment is greater than any amount provided for in that schedule
for that pay period.
(2)
9.
Employees' returns
If an employee is required under section 227 (2) of the federal Act as it applies for
the purposes of this regulation to file a return with the employer,
14
(a) the return must be in the form authorized by the Minister of Finance and
Corporate Relations,
(b) the return must be filed with the employer when the employee commences
employment with that employer, and
(c) a new return in the same form must be filed within 7 days after the date of
any event that may reasonably be expected to change the employee's base credit
amount for the year.
10.
(1)
(2)
Section 100 (2) and (5) of the federal regulations does not apply for the purposes
of this regulation.
e-TDS
Entities (both corporate and non-corporate deductors) making payments (specified under
Income Tax Act) to third parties (deductees) are required to deduct tax at source (Tax
Deducted at Source -TDS) from these payments and deposit the same at any of the
designated branches of banks authorised to collect taxes on behalf of Government of
15
India. They should also furnish TDS returns containing details of deductee(s) and challan
details relating to deposit of tax to ITD.
As a part of automation of collection, compilation and processing of TDS returns ITD has
notified an "Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003". It is
applicable to all deductors furnishing their TDS return in electronic form. As per this
scheme:
It is mandatory (w.e.f. June 1, 2003) for corporate deductors to furnish their TDS returns
in electronic form (e-TDS return).
From F.Y. 2004-2005 onwards furnishing TDS returns in electronic form is also mandatory
for government deductors in addition to corporate deductors.
Deductors (other than government and corporates) may file TDS return in electronic or
physical form.
National Securities Depository Ltd. (NSDL) as the e- TDS Intermediary (appointed by
ITD) receives, on behalf of ITD, the e-TDS returns from the deductors.
It is mandatory for corporate and government deductors to furnish their TCS returns in
electronic form (e-TCS return) from F.Y. 2004-2005 onwards.
Deductors (other than government and corporates) may file TCS return in electronic or
physical form.
NSDL as the e-TCS Intermediary (appointed by ITD) receives, on behalf of ITD, the eTCS returns from the deductors.
16
Annual
Quarterly
Annual
Corporates, Government
Departments / Organisations mandatory to file in electronic form
Other deductors - may file in
electronic form or in physical form
Form 27A to be filed in physical form with each e-TDS return and Form 27B to be filed
in physical form with each e-TCS return submitted through TIN-FC
2005-2006**
24Q - TDS
26Q - TDS
27Q - TDS
27EQ - TCS Quarterly
Quarterly
Quarterly
Quarterly Corporates, Government
Departments / Organisations mandatory to file in electronic form
Other deductors - may file in
electronic form or in physical form
Form 27A to be filed in physical form with each return submitted through TIN-FC
*Forms for TDS/TCS returns have been revised by ITD. Corresponding file formats for eTDS (Form 24, 26, 27) and e-TCS (Form 27E) have been notified by ITD and have come
into effect from May 1, 2005.
**e-TDS/e-TCS returns will be filed quarterly for F.Y. 2005-2006. The file formats for
quarterly returns (Forms 24Q, 26Q, 27Q and 27EQ) have been notified by the ITD and have
been made available on NSDL web-site.
Deductors furnishing e-TDS/ e-TCS returns are required to furnish a control chart - Form
27A/ 27B in physical form along with the e-TDS/e-TCS return furnished in CD/floppy.
Form 27A is a summary of TDS return (Form 24, 26 or 27), which contains control totals
of 'Amount Paid' and 'Income tax deducted at source'.
Form 27B is a summary of e-TCS return (Form 27E) which contains 'Amount Paid' and
'Income Tax Collected at Source'. The control totals mentioned on Form 27A/ 27B should
match with the corresponding control totals in e-TDS/e-TCS return file. Form 27A is
required to be furnished separately for each TDS return (Form 24, 26 or 27). Form 27B is
required to be furnished separately for each TCS return (Form 27E)
Procedures and guidelines for preparing and furnishing e-TDS/e-TCS return are given in
Deductors Manual available at downloads section.
17
NSDL has developed a freely downloadable utility called File Validation Utility to verify
whether the e-TDS/e-TCS return files prepared by the deductors/ collectors conform to
the prescribed format.
18
Nature of
Payment/
Section
Rate of
TDS
When to
deduct
1 Salary +
. Value of
perquisites
(Sec. 192)
2 Interest
. (Sec.
194A)
Average
tax rate
On payment
3 Contract/
. Sub
contract
(Sec.
194C)
Compan
y- 20%
Others 10%
Contract
-2%
Subcontract1%
Advert.
1%
10%
4 Insurance
. commissio
n
(Sec.
194D)
5 Rent
Individu
. payment
als/HUF
(Sec. 194I) s-15%
Others20%
6 Fees to
5%
. Profession
al
(Sec. 194J)
7 Payment
As per
. to nonPart-II
residents
1st
(Sec. 195) Schedul
e
8 Repaymen 20%
. t of NSS
etc.
(Sec. 194-
Time of
Deposit to
Central govt.
Grant of
TDS
certificate
Annual Returns
relating toTDS
Form
Time
No.
Limit
24
May-31
Person
responsible
for
deduction
Employer/P
rincipal
Officer/
Payer/ DDO
Employer/P
rincipal
Officer/
Payer/ DDO
By Govt. A/c
same day
By others
within 7 days
On payment One week
/ credit
from end of
whichever is month
earlier
Form 16
within 30th
April
Form 16A
within 1
month
26A
June-30
Form 16A
within 1
month
26C
June-30
Employer/P
rincipal
Officer/
Payer/ DDO
Form 16A
within 30th
April
26D
June-30
Employer/P
rincipal
Officer/
Payer/ DDO
Form 16A
within 1
month
26J
June-30
Employer/P
rincipal
Officer/
Payer/ DDO
On payment
/ credit
whichever is
earlier
On payment
/ credit
whichever is
earlier
One week
from end of
month
Form 16A
within 1
month
26K
June-30
One week
from end of
month
Form 16A
within 1
month
27
On payment
On the day of
deduction
Form 16A
within 1
month
26F
Within
14 days
from
end of
quarter
June-30
Employer/P
rincipal
Officer/
Payer/ DDO
Employer/P
rincipal
Officer/
Payer/ DDO
Employer/P
rincipal
Officer/
Payer/ DDO
19
EE)
9 Int. on
. Securities
(Sec 193)
1 Dividend
0 (Sec. 194)
. up to 31-597
1 Lottery/
1 Crossword
.
(Sec.
194B)
1 Horse
2 Race
. (Sec.
194BB)
1 Re3 purchase
. of units by
mutual
funds or
UTI
(Sec.
80CCB/
194F)
1 Commissi
4 on on
. Lottery
tickets
(Sec.
194G)
1 Income
5 from units
. of mutual
funds
(Sec.
194K)
1 Non
6 resident
. Sportsman
/ Sports
asso./Inst.
(Sec.
10%
On
One week
payment/
credit
whichever is
earlier
Before
Within 7 days
payment or
distribution
Form 16A
within one
month
25
June 30
Form 16A
within one
month
26
April 30
40%
On
Payment
Within 7 days
Form 16A
within one
month
26B
May 31
Principal
Officer/
Payer
40%
On
Payment
Within 7 days
Form 16A
within one
month
26BB
May 31
Principal
Officer/
Payer
20%
On Payment
Within one
week of
deduction
Form 16A
within one
month
26G
June 30
Principal
Officer/
Payer
10%
On
Payment
By Govt.
same day, by
others within
7 days
Form 16A
within one
month
26H
June 30
Principal
Officer/
Payer
Compan
y-20%
Others15%
On
Payment
Within 7 days
Form 16A
within one
month
26
April 30
Principal
Officer/
Payer
10%
On
Payment/
credit
Govt. a/c
same day, by
others one
week from
end of month
Form 16A
within one
month
27
Within
14 days
from
end of
quarter
Principal
Officer/
Payer
20%
Govt. State/
Central/
Local Auth./
Corpn./ Co.
etc.
Principal
Officer/
Payer
20
194E)
1 Units of
7 Non. residents
except Co.
20%
On
Payment/
credit
Govt. a/c
same day, by
others one
week from
end of month
Form 16A
within one
month
27
Within
14 days
from
end of
quarter
Principal
Officer/
Payer
10%
On
Payment/
credit
Govt. a/c
same day, by
others one
week from
end of month
Form 16A
within one
month
27
Within
14 days
from
end of
quarter
Principal
Officer/
Payer
10%
On
Payment/
credit
Govt. a/c
same day, by
others one
week from
end of month
Form 16A
within one
month
27
Within
14 days
from
end of
quarter
Principal
Officer/
Payer
10%
On
Payment/
credit
Govt. a/c
same day, by
others one
week from
end of month
Form 16A
within one
month
27
Within
14 days
from
end of
quarter
Principal
Officer/
Payer
NIL
(Sec.
196A)
w.e.f. 1-795
(if
acquired
out of NRI
a/c by
Ind./HUF)
1 Income
8 from units
.
(As per
Sec.
115AB/
196B)
w.e.f. 1-692
1 Intt/Div/L
9 TCG
. income of
N.R.
(Sec.
115AC &
196C)
w.e.f.1-693
2 Income of
0 FII from
. securities
(Sec.
115AD &
196D)
w.e.f. 1-693
21
IMPORTANT NOTES :
1. Sec. 192 - Salary
- 20%
22
security to non-resident.
14. Payee/ Principal Officer stands for any person responsible for payment of
disbursement to the fund.
15. Penal Provisions:
1] Failure to deduct tax at source on average rate/ Sec. 201(1) & Interest 15% p.a.
applicable rate
u/s. 201(1A) Penalty u/s. 221,
271C equal to amount of tax not
deducted.
2] Failure to deposit tax deducted
16. The TDS provisions form Sec. 192 to 206B of Income-Tax Act may be referred.
17. Form No. 27 on payment of NRI to be filled within 14 days of end of the quarter,
in case of last day of Accounting year after expiry of 2 months and 14 days.
18. A consolidated certificate in form no. 16A for F.Y. may be issued within one month
from the end of F.Y. at the request of payee.
19. TDS out of actual payment on March 31 or on the last day of F.Y. is to be deposited
by 7th April or 7th of the first month of next financial year.
20. TDS out of amount credited only in books (excluding actual amount paid) is to be
deposited by 31 May or within two months from the end of F.Y. as the case may be.
21. Certificate to be issued in form No. 16/ 16A within 2 months and 7 days from end
of F.Y. in case of amount credited on last day of financial year.
for SALARY
(I)
for INTEREST
(N)
(T)
(D)
for DIVIDEND
( L)
for LOTTERY
(H)
(C)
for CONTRACT
(F)
For example :
TAN No. for Bhonsle Brothers may be B-66167-A( )
( ) should be filed by (S) while filing salary return in Form No.24 u/s such as S-55867A(S)
In the return for interest u/s.194A the TAN No.will be quoted as S-55867-A(I)
In the return for contracts the TAN No. will be quoted as S-55867-A(C)
>> The alphabets shall be changed within the bracket for each return and for each type of
payments while the
remaining portion of TAN No. will be same.
>> Use correct alphabet in ( ) of TAN No. for different types of payments.
24
>> Use correct TAN No. on Challans and in all correspondences accordingly.
>> Do not change, after TAN Number in any circumstances which is out of bracket ( )
TAN NUMBER MUST BE QUOTED ON
1.
2.
3.
4.
i.
ii.
Fill-up all the columns of the challans correctly specifying the designation of
jurisdictional ITO-TDS, TAN No.
Refer "TDS at a Glance" for assistance or any clarifications.
Issue certificate to the payees in form No.16/16A within the stipulated time limit
(refer TDS at a Glance and Rule 31 of I.T. Rules, 1962 for assistance).
Do file the return of TDS in the prescribed form within the prescribed time limit.
(refer TDS at a Glance and 37A of I.T. Rules, 1962)
Use the correct form no. for each TDS return to be filed on different types of
payments.
Fill-up all the columns of the TDS returns positively specifying the full name and
designation of the person signing the return.
25
For TDS on salary payments - work out the anticipated salary of each employee
on the basis of previous years salary in the beginning of the year.
Take care of anticipated increase in salary of each employee during the current
year while forming the estimate of the salary payments to be made during the
year.
Work out the tax to be deducted at source on the anticipated salary at the
prescribed rates and divide the same by 12.
Deduct 1/12 of the tax in every month from the 1st month of the financial year i.e.
April.
Increase the amount of monthly TDS from the month in which any unforeseen
increase is made to the salary of any employee on account of any Bonus, Arrears
of Salary, Dearness Allowance, etc. which could not be foreseen in the beginning
of the year.
Reduce the TDS amount in the last quarter or month if any excess deduction made
in the earlier months.
Do obtain necessary evidences for savings/payments before allowing credit for
granting of rebate/ deductions.
Please write short note with the TDS return on variations of TDS made in
different months specifying the reasons for increased TDS deduction during the
close of the year,specially if TDS is not made in equal installments during the 12
months.
Pay interest @ 15% per annum u/s.201(1A) of the Income-tax Act on differed
payments i.e. on TDS amount which was deductible in the initial months of the
financial year from the month in which TDS was due to the date of payment of
such TDS amount.
26
@ 100%
1. The Prime Ministers National Relief Fund
2. The Prime Ministers Armenia Earthquake Relief Fund
3. The Africa (Public Contributions - India) Fund
4. The National Foundation for Communal Harmony
5. Chief Minister's Earthquake Relief Fund, Maharashtra
6. National Blood Transfusion Council
7. State Blood Transfusion Council
8. Army Central Welfare Fund
9. Indian Naval Benevolent Fund
10. Air Force Central Welfare Fund
11. The Andhra Pradesh Chief Minister's Cyclone Relief Fund - 1996
12. The National Illness Assistance Fund
13. The Chief Minister's Relief Fund or Lieutenant Governor's Relief Fund, in respect
of any state or Union Territory as the case may be, Subject to certain conditions.
14. The University or educational Institution of national eminence approved by the
prescribed authority.
15. The National Sports Fund to be set up by Central Government.
16. The National Cultural Fund set up by the Central Government.
7. Deduction on account of rent paid by employee for his own residence (to the
extent and as per the conditions laid down in Section 80GG of the Act)
8. Deduction of Rs.40,000 u/s. 80U of the Act for handicapped/disabled persons
after satisfying the conditions laid down.
9. Interest payable on House building loan is allowable u/s.24(1)(VI) to the extent of
Rs.30,000 in a financial year under the head income from house property. The
loss under the head income from House Property due to payment of interest on
loan taken for House building is allowable upto Rs.30,000 in a year. The
27
deduction from salary on this account is to be granted after obtaining Form No.
12C from the employee (refer section 192 (2B) for details).
B.
For excess TDS U/s.192 to 194D refer circular No.85 dt.21.10.80 and
For excess TDS U/s.195 refer circular No.769 dt. 6.8.98
28
29
Tax Deduction at Source from income or long-term capital gain from foreign currency
bonds/Global Depository Receipts [Sec.196C]
Tax Deduction at Source from income of foreign Institutional Investors from securities
[Sec.196D]
30
Who is payer
Who is the recipient
Payment covered
At what time tax has to be deducted at
source
Maximum amount which can be made
with out tax deduction
Rate of tax deduction at source
When the provision are not applicable
Is it possible to get the payment without
tax deduction or lower tax deduction
Employer
Employee
Taxable salary of the employee
At the time of payment
The amount of exemption limit (i.e. Rs.
1,45,000/Rs. 1,95,000/Rs.1,00,000 for the
assessment year 2008-2009)
Normal rate applicable to an individual
31
Who is payer
Who is the recipient
Payment covered
At what time tax has to be deducted at
source
Maximum amount which can be made
with out tax deduction
Rate of tax deduction at source
When the provision are not applicable
Is it possible to get the payment without
tax deduction or lower tax deduction
Domestic company
Resident shareholder
Deemed dividend under section 2(22)(e)
At the time of payment
20%+surcharge+ education cess
Dividend covered by section 115-O
See. Below
32
Who is payer
33
Who is payer
Who is the recipient
Payment covered
At what time tax has to be deducted at
source
Maximum amount which can be made
with out tax deduction
Rate of tax deduction at source
Not possible
34
Who is payer
Who is the recipient
Payment covered
At what time tax has to be deducted at
source
Maximum amount which can be made
with out tax deduction
Rate of tax deduction at source
Not possible
35
Case one
A specified person
see below
Case two
A resident contactor (not
being an individual or a
Hindu Undivided Family
whose books of account
are not required to the
audited under section
44AB in the immediately
preceding financial year)
A resident person
A resident sub-contactor
2% [1%+surcharge
1%
+ education cess in
case of advertising
contract]
At the time of payment or at the time of credit,
whichever is earlier [see below]
Payment covered
36
Case 2
37
Other contracts
Income-tax
Income-tax
Payment to contractor
1%
2%
Payment to sub-contractor
1%
1%
Payment covered
At what time tax has to be deducted at
source
Maximum amount which can be made
with out tax deduction
Rate of tax deduction at source
Insurance commission
At the time of payment or at the time of
credit, whichever is earlier
If the amount of payment is Rs.5,000 or
less than Rs.5,000
10% if the recipient is resident nonresident assesse and 20%+surcharge+
education cess if the recipient is resident
corporate assessee
The recipient can make an application in
Form No. 13 to the Assessing Officer to
get a certificate of lower Tax deduction or
no tax deduction.
39
Who is payer
Who is the recipient
Payment covered
At what time tax has to be deducted at
source
Maximum amount which can be made
with out tax deduction
Rate of tax deduction at source
When the provision are not applicable
Is it possible to get the payment without
tax deduction or lower tax deduction
Nature of income
Income by way of1. Participation in India in any game
(other than card game or
gambling, etc.);
2. Advertisement; or
3. Contribution of articles relating to
any game or sports in India in
newspaper, magazine or journals
40
Post office
Any person
Payment (principal + interest) out of
National Saving Scheme, 1987
At the time of payment
If the amount of payment is Rs. 2,500 or
less than Rs. 2,500
20%*
The payment is made to legal heirs of the
deceased depositor
See table below three conditions are
given
Who is payer
Who is the recipient
Payment covered
At what time tax has to be deducted at
source
Maximum amount which can be made
with out tax deduction
Rate of tax deduction at source
No provision
41
42
44
45
Who is payer
46
47
48
49
The prescribed forms and the last date for furnishing these returns, as per rule 37, 37-A,
and 37-B are as under;S.No.
Section
Form No.
Last date in
the
financial
year
1.
2.
3.
4.
Salary
Interest on securities
Dividends
Interest other than interest on securities
192
193
194
194-A
24 &24Q
26 &26Q 26
&26Q
26 &26Q
5.
194-B
26 &26Q
194-BB
194-C
26 &26Q
26 &26Q
194-D
194-D
26 &26Q
26 &26Q
June
30& 15
days
after the
expiry
of each
quarter
194-E
27 &27Q
194-EE
26 &26Q
194-F
26 &26Q
194-G
26 &26Q
194-H
194-I
194-J
26 &26Q
26 &26Q
26 &26Q
195
196-A
27 &27Q
27 &27Q
196-B
27 &27Q
20.
196-C
27 &27Q
21.
196-D
27 &27Q
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Within 14 days
from the end of
quarter
June
30& 15
days
after the
expiry of
each
quarter
Within
15 days
from the
end of
quarter
50
Illustration
Mr. X is getting a salary of Rs.21, 500 p.m. form a concern. During the financial year,
2007-08 .He contributed Rs.20,000 to a recognized provident fund and Rs. 40,000 to
public provident fund. He also paid Rs.1,000 p.m. as life insurance premium and
contributed Rs.15,000 to the National Defence Fund.
Compute the amount of tax to be deducted at source during the financial year
2007-08 for the assessment year 2008-09
Solution:
Salary @ Rs.21, 500 p.m.
Estimated salaries being GTI.
Less: Deduction u/s 80-C:
Rs.
i. Contribution to RPF
20,000
ii. Contribution to PPF
40,000
iii.
Life insurance premium
12,000
(Not excluding Rs. 1,00,000)
72,000
Deduction u/s 80G:
100% of donation to NDF i.e. 100% of Rs.15, 000
Rs.
2, 58,000
2, 58,000
15, 000
87,000
1, 71,000
8,200
164
8,446
704 p.m.
51
80-IC
80-JJA
52
53
6. The person, deducting at source, may, at the time of any deduction, increase or
reduce the amount of deduction for adjusting any excess or deficiency arising due
to previous deduction of tax during the financial year.
7. When an employee is in receipt of payment of accumulated balances of a
recognized provident fund and such payment is not exempt from tax under rule 8
of part A of the Fourth Schedule, then, the trustees of a recognized provident fund
or any other person authorized to make such payment shall make there from the
deduction of tax.
8. Where an employers contributions and interest thereon in an approved
superannuation fund are paid to an employee during his life time but before his
retirement or before his becoming incapacitated prior to such retirement, such
before his shall be subject to deduction of tax at source. The tax shall be deducted
at the average rate at which the employee was liable to tax during the preceding
three years or less than three years if his membership in the fund was for such less
period.
9. Where salary is payable in foreign currency, the value in rupees of such salary
shall be calculated at telegraphic transfer buying rate of State Bank of India for
the purpose of deduction of tax on such salary.
54
Section 80C
Life Insurance
Senior Citizen Saving Scheme 2004
Post Office Time Deposit Account
Note : - Section 80CCC is for deduction in respect of contribution to certain Pension Funds.
Section 80L is for deductions in respect to Interest on certain Securities, Dividends, etc
Sections abolished from Union Budget 2005-06
88 (Rebate on Life Insurance Premia, Contribution to Provident Fund, etc.)
80L (Deductions in respect to Interest on certain Securities, Dividends, etc.)
Note :Rebate of Rs 5,000 for women and Rs 20,000 for senior citizens have been wiped off.
The key features of the new provision
Exemption available to all taxpayers irrespective of income bracket -earlier Section 88 did
not provide benefit to those having income exceeding Rs 500,000.
No exemption/adjustment for interest income
All saving modes/options under Section 88 covered and also 80CCC and 80CCD
covered.
Following benefits will continue irrespective of changes
55
Section 10(33)
Dividends from mutual funds are fully exempt from income tax under Section 10(33). Equity funds
(schemes that invest 50 per cent of their funds in equity) are also exempt from dividend tax. This
means that unlike companies, they do not have to pay tax at the rate of 10.2 per cent on the
dividend that they distribute.
56
W.e.f. 1.6.89, relief u/s 89(1) can be granted at the time of TDS by employees of all companies
co-operative societies, universities or institutions as well as govt./public sector undertakings. The
relief should be claimed by the employee in Form No. 10E and should be worked out as
explained in Rule 21A of the Income Tax Rules. Look for INSERT for AY 2008-09
57
Where any premium is paid for medical insurance for a senior citizen, an enhanced deduction of
Rs 15,000 is allowed. The deduction is available only if the premium is paid by cheque.
58
person with disability- when and to what extent available [Sec- 80DD]
Deduction in respect of in respect of medical treatment,etc.To what extent available [Sec80DDB]
Deduction in respect of repayment of Loan taken for higher education-when and to what
extent available [Sec- 80E]
Deduction in respect of donations to certain funds, charitable institutions, etc. How
arrived at [Sec. 80G]
Deduction in respect of rent paid To whom and to what extent available [Sec. 80GG]
Deduction in respect of certain donations for scientific research or rural development
when eligible [Sec.80GGA]
Deduction in respect of contributions given to political parties To what extent deductible
[Sec. 80GGB 80GGC]
Deduction in respect of profits and gains from projects outside India To what extent
available [Sec. 80HHB]
Deduction in respect of profits and gains from housing projects aided by Word Bank - To
what extent available [Sec. 80HHBA]
Deduction in respect of export turnover - To what extent available [Sec. 80HHC]
59
17. Deduction in respect of earnings in convertible foreign exchange How to find out [Sec.
80HHD]
18. Deduction in respect of profits from export of computer software How to determine
[Sec. 80HHE]
19. Deduction in respect of profits and gains from export or transfer of films software- How to
find out [Sec. 80HHF]
20. Deduction in respect of profits and gains from industrial undertaking or enterprises
engaged in infrastructure development, etc.-How to find out [Sec. 80-IA]
21. Deduction in respect of profits and gains by an undertaking or enterprise engaged in
development of Special Economic Zone (SEZ) [Sec.80-IAB]
22. Deduction in respect of profits and gains from certain industrial undertakings other than
infrastructure development undertakings How to avail [Sec. 80.IB]
23. undertaking engaged in the business of processing, preservation and packaging of fruits
or vegetables or integrated handling, storage and transportation of food grains[Sec. 80IB(11A0)]
24. Deduction in respect of profits and gains from certain undertaking in certain special
category of States How to find out [SEC. 80-IC]
25. Deduction in respect of profits from the business of processing of bio-degradable wate
How to determine [Sec.80JJA]
26. deduction in respect employment of new workmen How to determine [ Sec. 80JJAA]
27. Deduction in respect of interest on certain securities, Investment, etc. To what
35.
36. Deduction in case of a person with disability To what extent available [Sec.
80U]
Sec 80C,CCA,CCB,,CCC,CCD
Sec 80D,DD,DDB
Sec 80E
Sec 80G,GG,GGA,GGC
Sec 80HHB,HHBA,HHC,HHD,HHE,HHF
Sec 80IA,IAB,IB,IB(11A),IC
60
Sec 80JJA,JJAA
Sec 80L,LA
Sec 80O
Sec 80P
Sec 80QQB
Sec 80R,RR,RRA,RRB
Sec 80U
61