1. WIZKID
CONSULTANCY AND FINANCIAL SERVICES
PVT. LTD.

2. AWARENESS WORKSHOP
ON TDS/TCS AT SKICC

3. TAX DEDUCTION AT
SOURCE
(TDS)

4. TDS : TAX DEDUCTION AT SOURCE
Persons responsible for making
payment of income are liable to
deduct tax at source from such
payment at specified rates and
deposit the same to income tax
department within stipulated
period of time.

5. TDS : TAX DEDUCTION AT SOURCE
The recipient of income, though he gets only the
balance amount (after deduction of tax), is liable to
be taxed on the gross amount (not the balance
amount) and the tax deducted at source is adjusted
against his tax liability.

6. OBJECTIVES OF TDS
Regular inflow of Revenue for
GOVERNMENT.
Checking of TAX EVASION.
Widening of TAX BASE.

7. OBJECTIVES OF TDS
Assesses pays tax in the assessment year on the
income earned in previous year. Due to this rule the
tax collection is delayed till the completion of the
previous year. Even sometimes people conceal their
Income and tax is not paid at all.

8. NATURE OF PAYMENTS
S.192
Salary
S.193
Int.-Sec.
S.194
Dividend
S.194A
Other Int.
194B
Lot/CW
194BB
Horse rac.
194C
Contract
194D
Ins. Com.
194E
NR Sports
194EE
NSS
194F
MF/UTI
194G
Com.Lot.
194H
Com/Brok
194I
Rent
194J
Prof/Tec.
194K,194L
A
Units/C.Ac
q

9. PERSONS RESPONSIBLE FOR DEDUCTIONS
(PAYER)
ALL PERSONS
(Except Individuals & HUF in certain cases)

10. Contd..
W.E.F. 01-06-2002, INDIVIDUAL & HUF have to
deduct tax at source if turnover exceeds :
Rs. 40 Lacs (Business)
Rs.10 Lacs (Profession)
While making Payment U/S :
194A (other Interest)
194C (Contract)
194H (Commission / Brokerage)
194I (Rent)
194J (Professional Fees)

11. SPECIFIED DEDUCTEE (PAYEE)
All Persons Except Quantum of payment is less than the prescribed
limit.
General exemption u/s.10 or specific exemption in
respective TDS provision.
Certificate issued by A.O. u/s.197.
Declaration in form 15G and 15H.

12. DEDUCTION OF TAX
Tax is to be deducted at the time of credit or at the time
of payment whichever is earlier, at the prescribed rate.
In the case of salary, TDS is on estimated income.
In the case of payments other than salary, the TDS is
on payments.
Tax to be Deducted at 20% if PAN is not quoted by
deductee.
Surcharge and Education Cess will be deductible only
upto 30.09.2009.

13. DEPOSIT OF TAX-1
In the case of SALARY–
Within One Week (7- days) from the end of the
Month.

14. DEPOSIT OF TAX-2
In case of Payments Other Than salary –
Within ONE WEEK from the end of the month.
Payments credited or paid on 31st March (last date
of Accounting Year), within two months.

15. DEPOSIT OF TAX-3
Quarterly Payments in Special Cases.
15th June, 15th Sept., 15th Dec., 15th Mar.
Prior approval of JCIT.

16. TAN:TAX DEDUCTION ACCOUNT NUMBER
The person responsible for deducting tax at
source has to apply for TAN in Form No.49B
within one month from the end of the month
in which tax is deducted for the first time.
The TAN should be quoted in all challans,
Certificates, Quarterly Returns, statements
and correspondence.
Reformatted TAN.

17. ISSUE OF TDS CERTIFICATES- (S 203 / R 31)
The
person
responsible
for
deducting tax at source has
to
issue
TDS
certificates
before the prescribed date –
Normally, within One Month
from the end of the month in
which the tax was deducted
at source.

18. Contd..
If the non-salary payment is credited or paid
on 31st March then the TDS will be deposited
by 31st May – in such cases certificate should
be issued by 7th of June.
In case of consolidated certificate, within One
Month from the end of the Financial Year.

19. ISSUE OF TDS CERTIFICATES -(S 203 / R 31)
FORM NO.
PARTICULARS
16
12BA
16A
Salary Perquisites
(Gross salary >1,50,000)
Non-Salary
16AA
Salary-cum-Return of income
(Gross salary <1,50,000)

20. FILING OF QUARTERLY TDS RETURN
Every Deductor has to file quarterly return of
TDS within stipulated time in prescribed format
giving details of name of the Deductee, type of
payment made, amount deducted and amount
deposited.

21. Contd..
e-Filing of TDS Returns is Mandatory for the
following:
An office of Government,
Company,
Person required to get his accounts
audited under section 44AB,
If number of deductees records in a
quarterly statement for any quarter of the
immediately preceding financial year is
equal to more than fifty.

22. QUARTERLY RETURN FORMS
Form No.
Particulars
24Q
Salary
26Q
Non-salary
27Q
Non-salary to
NRI

23. DUE DATES OF FILING OF QUARTERLY
RETURNS
Quarter Ending
30th June
30th Sept.
31st Dec.
Due Date
15th July
15th Oct.
15th Jan.
31st Mar.
15th June

24. FILING OF QUARTERLY RETURN BY BANKS
(206A/RULE 31 AC/FORM 26QA)
Banks are required to file Quarterly Returns in
respect of the payment of interest to the deposit
holders without TDS.
W.E.F 01-06-2005 Banks are required to file
Quarterly returns in FORM 26QA in respect of
payment of interest to its DEPOSIT-HOLDERS
even if the interest amount does not exceed
Rs.5000/- (i.e. on which no TAX has to
be deducted) .

25. NO DEDUCTION IS TO BE MADE IN CERTAIN
CASES
If a declaration is submitted u/s 197A by the
recipient (Deductee) to the payer (Deductor),
then no tax is deductible in few cases. Applicable
to tax deduction on :
Interest on securities
Dividend
Interest other than interest
on securities
National saving scheme.

26. Contd..
This benefit is available to specific recipient (not
open to all) on fulfillment of certain conditions
mention in section 197A. If these conditions are
satisfied no tax is deductible on submission of
declaration form in duplicate copy.
Form 15
H
Form 15
G
By Senior Citizen
By any other
Person

27. LOWER DEDUCTION CERTIFICATE U/S 197
Can be filed by any person.
Certificate will be issued by the TDS-AO.
Application to be made in Form No.13 to the
TDS-AO.

28. LOWER DEDUCTION CERTIFICATE U/S 197
Certificate for deduction at lower rate (Sec 197)
Where tax is to be deducted at source u/s
192,
193,194,194A,194C,194D,194G,194H,194I,19
4J, 194K, 194LA & 195.

29. Contd..
And if the Income Tax Officer/ Assessing Officer, on an
application
made on this behalf, after being satisfied
that the total income of the recipient
justifies the
deduction of income tax at lower rate/ or no deduction of
tax, the ITO/AO shall give to him such certificate as may
be appropriate.
On receipt of such certificate, the person responsible for
deducting tax at source (TDS) shall deduct the tax at the
rates specified in the certificate.

31. CONSEQUENCES OF FAILURE TO DEDUCT OR
DEPOSIT THE TAX AT SOURCE
The person responsible for deducting tax at
source will be held as assessee in default and
the tax he ought to have deducted at source or
he ought to have deposited will be collected from
such person.

32. CONSEQUENCES OF FAILURE TO DEDUCT OR
DEPOSIT THE TAX AT SOURCE
The tax along with interest shall be a charge
upon all the assets of the person / company,
responsible for deducting tax at source.

33. CONSEQUENCES OF FAILURE TO DEDUCT OR DEPOSIT THE
TAX AT SOURCE [S.40(A)(IA)]
W.E.F. 01.04.2004 ( AY 2005-06), if the deductor does not
deduct or deposit the tax at source, he shall not be allowed
deduction while computing his own total income :
Interest
Commission & brokerage
Fee for professional &
technical
services
and
contract
Rent
Payment to Contractors or
Sub-Contractors
Payment of Royalty to a
Resident

34. Contd..
IN OTHER WORDS : Non-deduction of tax
results in disallowance of such expenditure in
computing
the
taxable
income,
effectively
resulting in increase in the taxable income and
simultaneously the tax liability of the deductor.

36. INTEREST U/S 201 (1A)
If the person responsible for deducting tax at
source does not deduct tax at source (wholly or
partly) or after deducting fails to deposit the
same as required by the Act, he is liable to pay
interest @ 1% per month u/s 201(1A). Even if
the delay is by one day, you will have to pay one
month’s interest.

37. PENALTY U/S 271C
If any person fails to deduct
the whole or part of the tax,
then such person shall be
liable to pay, by way of
penalty,
a
sum
equal
to
amount of tax which such
person failed to deduct or
pay as aforesaid.

38. FAILURE TO FURNISH THE TDS RETURN272A(2)(c)
If
the
deductor
fails
to
furnish the TDS RETURN
within due date, he shall be
liable
for
penalty
of
Rs.100/- per day for the
period of default.

39. FAILURE TO FURNISH A COPY OF CERTIFICATE272A(2)(G)
If the deductor fails to furnish a certificate to
the payee within the prescribed time, he shall
be liable for penalty of Rs.100/- per day for
the period of default.

40. FAILURE TO APPLY FOR TAN- 272BB
If
the deductor fails to apply for TAN
the prescribed time, he shall
penalty of Rs.10000/-.
within
be liable for

41. PROSECUTION U/S 276B
If the deductor fails to deposit
the tax deducted
by him at
source, he shall be punishable
with
rigorous
imprisonment
for a term from three months
to seven
fine.
years along with

42. FOLLOW TDS PROVISIONS
Deduct TDS as per INCOME TAX norms and
deposit into the Government Treasury by due
date, obtain TAN, issue TDS CERTIFICATE and
file the return in time.
OR else face PENAL CONSEQUENCES by way of
Interest, Penalty and Prosecution and also
disallowance of Expenditure.

43. ON LINE TAX ACCOUNTING SYSTEM (OLTAS)-1
All India Data base of tax paid by the tax
payers.
It has a facility to check any payment made
by the tax payer in the Government Account.
Important resource in giving credit to the tax
payers while processing IT/TDS return.

44. ON LINE TAX ACCOUNTING SYSTEM (OLTAS)-2
Important FeaturesOnly 2 challans.
Only 1 copy with detachable counterfoil.
For Advance tax and Self- Assessment tax –
Challan No.280
For TDS Challan No.281.

45. ON LINE TAX ACCOUNTING SYSTEM (OLTAS)-3
The counterfoil has name of the branch – 7
digit BSR Code – date of deposit – Sl. No. of
challan (5 digits).
No need to attach copy of challan with the tax
return.
Mention CIN – combination of 7 digit BSR
Code –date of deposit – Sl. No. of challan (5
digits).
PAN/TAN must be mentioned correctly .

47. MANDATORY e-FILING
e-Filing of TDS Returns is
Mandatory for the followingAn office of Government,
Company, Person required to
get his accounts audited
under section 44AB, number
of deductees records in a
quarterly statement for any
quarter of the immediately
preceding financial year is
equal to more than fifty.

48. OBJECTIVE
The basic objectives of computerization of TDS
Returns is to cut down the compliance cost for
deductors, to correlate deduction of taxes made
by deductors with the deposit of the deducted
tax in the Government account in a designated
bank and correlate deduction of tax by the
deductors with the corresponding credits claimed
by the deductees.

49. SCHEME FOR ELECTRONIC FILING OF TDS
RETURNS
The scheme for electronic filing of TDS returns
was notified on 26.8.2003. The Board Circular
No.8 dated 19.9.2003 clarifies the procedure in
this regard. The procedure basically envisages
that corporate deductors will prepare their TDS
returns in the new TDS return Forms 24, 26 or
27, according to the data structure notified by eFiling Administrator.

50. Contd..
The e-TDS returns in the prescribed data
structure stored on CD ROM and supported by
a duly signed control chart in Form 27A in paper
format will be submitted to an e-TDS
Intermediary appointed by the Board .

51. e-TDS ADMINISTRATOR AND e-TDS
INTERMEDIARY
The CBDT has appointed Director General of
Income-tax (Systems) as e-TDS Administrator.
Separately, M/s National Securities Depository
Limited
(NSDL),
who
are
also
the
agency
hosting TIN, have been appointed as e-TDS
Intermediary.

52. PROCEDURE FOR ALLOTMENT OF TAN
NSDL
has
been
authorized
to
receive
applications (form 49B) for allotment of TAN
at their front offices for fee of Rs.50/- to be paid
by the applicant to them. The data in respect o f
such TAN applications will be entered by NSDL
and sent to National Computer Centre (NCC) of
Income-tax Department and the respective
computer centres on-line . The allotment of TAN
will be done by the IT department centres
and communicated online to NSDL who will
intimate the same to the applicant.

53. PREPARATION OF e -TDS RETURNS
While preparing the e-TDS returns, the deductor
has to ensure that FIVE mandatory requirements
listed in Circular No.8 of CBDT dated
19.9.2003, are complied with :

54. MANDATORY REQUIREMENTS FOR e-TDS RETURNS
1. Tax deduction Account Number (TAN) of the
deductor is clearly mentioned in the TDS
return as also on Form No.27A, as required
by sub-section (2) of section 203A of the
Income-tax Act. However, in cases where TAN
is not available the e-TDS returns will also be
accepted if the same is accompanied with an
application in Form 49B for
allotment or for reformatting.

55. Contd..
2. Full
particulars relating to deposit of tax
deducted at source, in the designated bank
are correctly and properly filled in the table at
item No.6 of Form No.24 or item No.5 of
Form No.26 or item No.5 of Form No.27, as
the case may be.

56. Contd..
3. The data in the e-TDS return is as per the data
structure
prescribed
by
the
e-Filing
Administrator. This is necessary so that the
data structure of e-TDS returns is compatible
with the departmental application software for
processing the same.

57. Contd..
4. The Control
Chart in Form 27A is duly filled in
all columns, signed and enclosed in paper form
with the return on computer media.

58. Contd..
5. The Control Totals of the amount paid and the
tax deducted at source as mentioned at item
No.3 of Form No. 27A tally with the
corresponding totals in the e-TDS return in
Form No. 24 or Form No. 26 or Form No.
27, as the case may be. In case any of these
mandatory requirements are not fulfilled, the e
-TDS return will not be received by the e -TDS
intermediary.

59. FILING OF e -TDS RETURNS
The deductors should prepare their e-TDS return
as per the above procedure, store the data on a
CD ROM, enclose the control chart (Form 27A
in paper format) and submit these at any of the
front offices of NSDL. Although the scheme
permits e-TDS returns to be prepared on a
floppy, it would be preferable that these are
prepared on a CD ROM to
avoid any loss of data, viruses
etc.

60. FILING OF e -TDS RETURNS
The e-TDS return can be filed at any of the TIN
Facilitaion Centres offices being opened by
NSDL at 42 cities. At the receipt stage, these
front offices will carryout validation checks on
the e -TDS returns to ensure compliance with
above five parameters, and a provisional receipt
will be issued on successful validation.

61. FILING OF e -TDS RETURNS
Section 139A(5B) requires that PAN of the
deductees should be mentioned in the TDS
returns. Wherever PAN of deductees is not
mentioned by a deductor in his e-TDS return, this
fact will be recorded on the provisional receipt as
deficiency, to be removed by the deductor.
However, in such cases, NSDL will accept the e TDS returns.

62. FILING OF e -TDS RETURNS
The deficiency can be removed by the deductor
within 7 days, failing which the e-TDS returns
will be sent by NSDL to the Department
indicating the deficiency therein for appropriate
action by the concerned A.O.

63. UPLOAD CHARGES
Since e-filing of TDS returns will reduce the
voluminous paper work involved in filing of paper
TDS returns and enclosures thereby significantly
reducing the compliance cost of deductors, the e
-intermediary i.e. NSDL have been authorized to
collect service charges in respect of the various
services being rendered by them to the
deductors for upload of e-TDS returns at some
rates.

64. Contd..
Category of e-TDS Return Upload charges:
Number of Records
Upload Fee (Rs.)*
Up to 100
25
101-1000
150
More than 1000
500
*Service tax if any will be payable by deductors in
addition to the above.

65. TAX COLLECTION AT
SOURCE
(TCS)

66. Introduction
Tax collection at source means collection of
tax from the buyer of goods specified in
section 206C (1) at the time of sale, and also
by a person who grants lease or a license in
respect of parking lot or toll plaza or mine or
quarry.
A tax credit is given to person from whom
tax is collected for amount collected

67. Nature of Collections
Sl.
No.
1.
2.
3.
4.
5.
Nature of Goods
Rate*
Alcoholic liquor for human
consumption
(other
than
Indian made foreign liquor)
Indian made foreign liquor
Tendu leaves
Timber obtained under a
forest lease
Timber obtained by any mode
other than under forest lease
1%
1%
5%
2.5%
2.5%
* Excluding Surcharge & cess

68. Contd…
Sl. No.
6.
7.
8.
Nature of Goods
Any other forest produce not
being timber or tendu leaves
Scrap
Parking lot, toll plaza, mining and
quarrying (other than mining &
quarrying of mineral oil, petroleum
& natural gas.)
Rate*
2.5%
1%
2%
* Excluding Surcharge & cess

69. SELLER
Seller means Every Person,
Except,
Individual or HUF whose books of accounts are
not audited u/s 44AB

70. BUYER
Buyer means any person other than;
a) a
public
sector
company,
Central
Government,
State
Government,
Embassy, High Commission, Consulate &
the trade representation, of a foreign
State and Club,
b) a buyer in retail sale of such goods
purchased goods for personal
consumption.

71. Collection of Tax
 Tax has to be collected at the time of debiting of
the amount payable or at time of receipt of such
amount from the buyer, whichever is earlier.
 Buyer is exempt from TCS, if his income is
exempt u/s 10(26)

72. Contd…
 Lower deduction can be allowed by Assessing
officer on an application made by buyer in Form 13,
in this behalf.
 No tax shall be collected at source, if resident buyer
purchases goods for the purpose of manufacturing,
processing or producing any article or thing,
provided he gives a declaration in duplicate in Form
No. 27C to seller.

73. TCS CERTIFICATE
Issue Form 27D
With in One Month from the end of the
month in which Tax is Collected

74. File TCS Return
Form No. 27EQ
Quarterly On or before the Due Date

75. DUE DATES OF FILING OF QUARTERLY
TCS RETURNS
Quarter Ending
30th June
30th Sept.
31st Dec.
Due Date
15th July
15th Oct.
15th Jan.
31st Mar.
30th April

76. Failure to Collect or Pay Tax
 Interest :-The amount of tax together with the
amount of simple interest at the rate of 1% p.m.,
or part thereof, shall be a charge upon all the
assets of seller.

77. Contd…
 Prosecution :-Section 276BB, provides for
prosecution of a person who fails to pay the tax
collected at source, for a period which shall not
be less than 3 months but may extend up to 7
years and with fine.

78. e-Filing of TCS Return
e-Filing of TCS Return is Mandatory for:1. Corporate and Government collectors,
2. Any collector covered under mandatory
tax
audit or having more than 49 tax
collection
transactions
during
previous
financial year.

79. Procedure for e-Filing of
TCS Return
The procedure for filing of e-TCS return is the
same as that of e-TDS, except the forms to be
used are different. The relevant forms for filing
the e-TCS return are: Quarterly- Form No 27EQ, 27B.

80. DISCLAIMER
Our views expressed herein are based on the
facts and assumptions indicated above. The
views cannot be considered as an authorized
representation, warranty or guarantee that the
revenue authorities or the courts will concur with
the same. The views are based on the existing
provisions of law and its interpretation, which
are subject to change from time to time. The
views contained may not be used or reproduced
in whole or in part or otherwise referred to in
any document or delivered to any one without
our prior written consent.