2. Meaning:
Means that the person responsible for making
payment of certain incomes to the income earners
deduct income tax at the prescribed rates on such
incomes before payment is made to them.
Amount so deducted at source shall be deposited by
the deductor in the Govt. Treasury with in the
prescribed limit.
3. Deductor:
It is a person/company who is liable to deduct the TAX
at source, from the payment being made to the party.
Deductor is also termed as Employer in cases where
the payments are under Salaries.
4. Deductee:
It is the person, from whom the tax is being
deducted or accrued for deduction.
5. Payments subject to deduction of
tax at source:
Salaries- Section 192
Interest on securities- Section 193
Dividends - Section 194
Interest other than interest on securities- Section 194A
Winnings from lotteries or crossword puzzles- Section
194B
6. Winnings from horse races- Section 194BB.
Payments to resident contractors- Section 194C.
Payment to insurance commission- Section 194D.
Payment to non-resident sportsman or Sports
Association-Section 194E
Payment of commission etc. on sale of lottery tickets-
Section 194G
7. Salaries:
Compute the income salary as discussed under the
head “Income from Salaries”.
Rates of Tax: The following rates of Income Tax for
deduction of tax at source from salaries and
computing advance tax during the year.
8. Rules for deduction of tax at source from salaries:
Who will deduct the tax?
When tax will be deducted?
Salary from more than one employer?
Payment of salary in foreign currency?
Exemption regarding house rent allowances.
9. Interest on Securities:
The person responsible for paying income by way of
“Interest on Securities” to a resident or a domestic
company shall, at the time of payment thereof or at the
time of credit of such interest in the books of
account, whichever is earlier.
Rate of Tax: 10%
10. Tax shall not be deducted at source from any interest
payable on:
National Saving Certificate.
Debentures issued by a co-operative society or any
public sector company and which are notified by the
CG.
National Development Bond
11. Dividend:
Who will deduct tax at source? - The principle officer
of company.
On which income deduction is to be made?- On
dividends u/s 2(22)(e)
Rate of TDS: 10%
12. Interest other than “interest on
securities”
Who will deduct the tax at source?
An individual or HUF, who is required to get his
account audited u/S44ab
A company, firm, co-operative society, AOP, BOI etc
Payment made to whom? A resident of India or
domestic company
Rate of tax-10%
13. Winnings from lotteries or
crossword puzzles etc.:
The person responsible for paying any income to any
resident or domestic company by way of winnings
from lottery or crossword puzzles or card game or any
other game of any sort of an amount, exceeding
Rs.10000 at the time of payment, deduct income tax
thereon at the rates in force.
Rate of tax: 30%
14. Important points:
When the prize is given partly in cash and partly in
kind income tax will be deducted with reference to the
aggregate amount of the cash prize and the value of
the prize in kind.
When the prize is given in installments, the tax will be
deducted only at the time of actual payment of each
installment.
15. Winnings from horse races:
Tax will be deducted at source by bookmakers race
clubs from winnings from horse races where the
payments exceed Rs 5000.
Rate of Tax- 30%
16. Payments to Contractors:
Income tax will be deductible at source from payments
made by the following to any resident contractor for
carrying out any work in pursuance of a contract
between the contractor and:
The Central Govt. or any State Govt.
Any local authority.
Any company
17. Any statutory corporation.
Any co-operative society.
Any trust.
Any registered society.
Any firm.
18. Insurance commission:
Any person responsible for paying to a resident or
domestic company any income by way of insurance
commission will be required to deduct income tax
from such income at the rate of 10% during the
financial year.
No TDS shall be deducted at source if such incomes
does not exceed Rs 20,000 in the financial year.
19. Payment to non-resident
sportsman or Sports Association:
The person who is responsible for paying any one of
the following incomes to a non residential sportsman
who is not a citizen of India or to a non resident sport
association or institution, shall, at the time of credit of
such incomes to the account of the payee or at the time
of payment thereof, whichever is earlier, deduct
income tax thereon @10plus educational cess@3%.
20. If he is a sportsman, any income received or receivable
by him by way of:
Participation in India in any game,
Advertisement.
If it is a sports association or institution, amount
guaranteed to be paid or payable to it in relation to any
game or sport played in India.
21. Payment of commission etc. on
sale of lottery tickets:
The person who is responsible for paying, any
commission, remuneration or prize exceeding Rs 1,000
to a person who is stocking, distributing, purchasing or
selling of lottery tickets shall deduct tax at source
thereon @10%.
