TDS

TDS on Commission or Brokerage Section 194H: The provision for a tax deduction on earnings as commission or brokerage by a resident individual is underlined in Section 194H of the Income Tax Act. However, the commission collected from insurance sales is not included in this section. A resident individual or HUF required to pay any commission or brokerage (excluding insurance commission) is eligible for a tax deduction under section 194H. TDS must be deducted at the time of payment, whether in cash, by cheque, or by draft. The current TDS rate that applies under section 1194H is 10%. On this page, let’s understand everything about TDS on commission and brokerage for FY 2021-22 in detail.

• What is Section 194H?
• TDS on Commission and Brokerage
• When TDS under Section 194H is Deducted?
• Commission and Brokerage Meaning
• What does TDS on Commission and Brokerage include?
• TDS on Commission and Brokerage Expectations
• Section 194H TDS Rate FY 2020-21
• When TDS under 194H is not Deducted?
• TDS Time Limit for Depositing
• How to Deduct TDS at Lower Rate?
• FAQs on TDS on Commission and Brokerage

What is Section 194H?

• Section 194H is concerned with income tax imposed on any income derived from a brokerage or commission by any person liable to pay a residence.
• Individuals and HUF are required to deduct TDS if they are covered by section 44AB.
• The insurance commission mentioned in section 194H does not exist.
• TDS under Section 194H will be deducted when such income is deposited in the payee’s account or any other provided account.
• It can be paid in cash, cheque, or DD, whether it’s called a suspense account or anything else at the moment of disbursement.

TDS on Commission and Brokerage

TDS on commission or brokerage must be deducted by all types of entities, including individuals and HUFs, that fall under the scope of tax audit under Section 44AB, i.e., whose turnover or annual revenue exceeds 25 lakh and exceeds 1 crore (as applicable according to the income tax slab).

• Over and above the TDS amount at a defined rate, no additional surcharge or education cess is necessary. Thus the TDS is taken at a flat rate of 10%, including service charges (if applicable).
• The number of TDS deducted under section 194H must be submitted with the government prior to the due date of the payment by the entity responsible for TDS deduction.

When TDS under Section 194H is Deducted?

TDS on Commission/Brokerage is needed to be deducted by the individual making the commission or brokerage payment under Section 194H. TDS on commission/broker must be deducted at a rate of 10% at the time of:-

• Making such a payment or
• Crediting such income to the payee’s account in the books of the person who is deducting TDS

whichever comes first.

Commission and Brokerage Meaning

Any payment is considered a commission or brokerage.

• directly or indirectly,
• received or receivable, OR
• by a person acting on behalf of another person

What does TDS on Commission and Brokerage include?

The TDS on commission and brokerage includes:

• For services performed which are not professional
• For services rendered in the process of purchasing or selling a product
• Connection with any transaction involving any asset, valuable article, or thing, except securities

TDS on Commission and Brokerage Expectations

TDS on commission and Brokerage will not be deducted under the following cases:

• During the financial year, the total amount paid or payable does not exceed Rs. 15000. (Limit increased from Rs. 5000 to Rs. 15000 in Budget 2016)
• An employer compensates his employees with a commission. Under Section 192, such commission is liable to be deducted as TDS on salary.
• TDS on the Insurance Commission will not be deducted under this provision because it is particularly addressed in Section 194D.

Section 194H TDS Rate FY 2020-21

TDS is present at a rate of 5%. For transactions between 14 May 2020 and 31 March 2021, the charge is 3.75%. There will be no surcharge, education cess, or SHEC added to the above rates. As a result, the basic rate of tax will be deducted at the source. If the deductee does not quote his or her PAN, TDS will be applied at a rate of 20% in all cases.

When TDS under 194H is not Deducted?

• If the amount or aggregate amounts of such income to be credited or paid during the financial year does not exceed INR 15,000, no deduction will be made under this clause.
• Under section 197, a person can apply to the assessing officer for a tax deduction at a rate of NIL or a lower rate.

TDS Time Limit for Depositing

Taxes deducted from April to February must be deposited on or before the 7th of the following month. Taxes deducted in March must be deposited on or before the 30th of April.

For example, tax deducted on April 25th must be deposited by May 7th, while tax deducted on March 15th must be deposited by April 30th.

How to Deduct TDS at Lower Rate?

The individual whose tax is deducted can apply to the assessing officer under section 197 for a NIL rate or a lower rate of tax deduction.

• Validate the deductee’s PAN by submitting a 197 certificate.
• The Certificate must be valid for the PAN, Section, Rate, and relevant financial year specified in the filed statement.
• Check that the certificate’s threshold limit has not been exceeded in previous quarters.
• The statement should include the correct certificate number. 3XXXAH7X is an example of a correct certificate number.

FAQs on TDS on Commission and Brokerage

Question 1.
What is the limit to deduct TDS u/s 194H?

Answer:
The threshold limit for TDS deduction for commission/brokerage is Rs.15,000 under Section 194H.

Question 2.
What is the TDS rate for brokerage?

Answer:
The TDS rate on commission or brokerage received except for Insurance Commission is 5%.

Question 3.
Who is liable for Tax Deduction At source under Section 194H?

Answer:
Individuals who make money from commissions or brokerage are required to deduct tax at the source under section 194H.

TDS Rates: Tax Deducted at Source, is known as TDS. It is a tax where one is responsible for the deduction of tax for certain rendered services. The tax gets deducted from the total payment amount that goes to the government for various activities like infrastructure development, defence, etc. Depending on the type of service, a specific tax (TDS) is imposed that the payee is expected to deduct.

• TDS Rate on Salary
• TDS Rate Chart

TDS Rate on Salary

An employer can deduct tax at the source while paying to the employee and deduct tax from salaries at the time of payment. TDS will get deducted if an individual’s total income is taxable. However, and not get deducted if the total income is 2,50,000. This amount will be applicable to men and women who are below 60 years.

TDS deduction rate on salary starts from 5% to 30%, which is equal to the applicable income tax slabs.

TDS Rate Chart

Section number	For the payment of	Individual	Others
192	Salary	Tax Rate	N/A
192A	The payment of the balance due to an employee under the Employees Provident Fund Scheme, 1952	10%	10%
193	Interest on Debentures	10%	10%
194	Deemed Dividend	10%	10%
194A	Interest other than on securities	10%	10%
194B	Winnings from lotteries/ games	30%	30%
194BB	Winnings from horse race	30	30
194C	Payment to contractor	1	2
194D	Payment of Insurance Commission	5	5
194DA	Payment under Life Insurance Policy	1	N/A
194E	Payment to non-resident sportsmen or sports association	20	20
194EE	Payment of NSS deposits	10	N/A
194F	Repurchase of units by Mutual funds or UTI	20	20
194G	Commission on sale of lottery tickets	5	5
194H	Commission or brokerage	5	5
194I	Rent of land, building and furniture	10	10
194I	Rent of plant and machinery	2	2
194IA	Purchase of immovable property	1	1
194IB	Rent payable by an individual	5	5
194IC	The payment of monetary consideration under Joint development agreement	10	10
194J	Professional services	10	10
194LA	Compensation on acquisition of immovable property	10	10
194LB	The payment of interest on infrastructure debt fund to non-resident	N/A	5
194LBA	Income from specific units of a business trust.	10	5
194LBB	Investment fund that pays an income to a unitholder (other than income which is exempt under section 10(23FBB)	10	10
194LBC	Investment income in securitization trust.	25	30
194LC	Payment of interest by an Indian company in respect of money borrowed in foreign currency under a loan agreement	N/A	5
194LD	Payment of interest on a rupee-denominated bond of an Indian company or Government securities to a foreign institutional investor	N/A	5
195	Others sums	Average rates	Average rates
196A	Income in respect of units of non-residents	N/A	10 for company, and 20 for person
196B	Income from units (including long term capital gains on transfer of such units) to an offshore fund	N/A	10
196C	Income which comes from foreign currency bonds or GDR (including long term capital gains on transfer of such bonds)	N/A	10
196D	Income of FIIs from securities	N/A	20

Notes: No surcharge or education cess is levied on payments made to residents (Individuals / HUF / Society / AOP / Firm / Domestic Company). However, education cess is charged in case of salary.

TDS at a higher rate of 20% or TDS rate, whichever is higher, must be deducted if the deductee fails to provide PAN to the deductor.

If any taxpayer does not comply with the TDS rules, they will be liable to pay penalties in the form of and interest will be imposed on the principle taxable amount.

How to Make Payment of TDS?: Tax Deduction at Source is the system where the tax or TDS gets deducted, and TDS payments happen online. The deduction of tax is during the time of making a few payments such as interest, rent, commission etc. The individual making such specified payments is responsible for deducting the TDS and making the TDS payment, as well as paying the balance amount to the individual entitled to receive such compensation.

The entire list of such specified payments, along with the TDS rate to be deducted, can be accessed in the TDS rate chart.

Steps for Making Online TDS Payment

The amount of TDS deducted must be deposited to the government within the due dates specified by the individual removing the TDS. The procedure for making TDS payments online is:

Step 1: Visit the NSDL’s website for the e-payment of taxes.

Step 2: Click on the option ‘CHALLAN NO./ITNS 281’ under the TDS/TCS section. One is going to be directed to the e-payment page.

1. Under ‘Tax Applicable,’ select the ‘Company Deductees’ if the TDS deducted by one is when making payment to a company. In any other scenario, select the option ‘Non-Company Deductees’.
2. Enter the TAN as well as the Assessment Year for which the payment has been made.
3. Enter ‘Pin Code’ and select the ‘State’ from the drop-down.
4. Select whether one has made the payment for the TDS deducted and payable by an individual or TDS on the regular assessment.
5. Select the ‘Nature of Payment’ also the ‘Mode of Payment’ from the drop-down menu.
6. Click on the ‘Submit’ option.

Step 3: On this page the following details have to be entered

Step 4: On submission, a confirmation screen is going to be displayed. If TAN is valid, the taxpayer’s full name as per the master is going to be displayed on this confirmation screen.

Step 5: On the confirmation of the data entered, one is going to be directed to the net banking site of their bank.

Step 6: The taxpayer must log in to the net banking site with the user id and password provided by the bank and make the payment.

Step 7: On the successful payment, a challan counterfoil is going to be displayed containing the CIN, the payment details and bank name via which e-payment has been made. This counterfoil is proof for the payment made. After payment of TDS, one has to file their TDS return.

 

TDS On Payment To Non-Resident Sec 195: In India, the Income Tax Act divides the taxpayers into two groups namely residents and non-residents of India. Thus the income tax rates and provisions vary from residents and non-residents of India. For the non-residents of India, the Income Tax Government India provides various provisions such as tax rates on royalties, interest, dividends, and capital gains earned in India. However, the officials of the income tax department also collect the Income Tax. The provisions of tax deduction at source (TDS) for any sum paid to non-residents come under Section 195 of the Income Tax Act.

In this article, let’s understand everything about TDS on payment to non-residents with & without PAN under Section 195 in detail.

• What Is Section 195?
• Who Is Liable To Deduct TDS Under Section 195?
• Payment Type On Which TDS Is Deducted
• Time Of TDS Deduction for Non-Residents
• How TDS Under Section 195 Is Deducted?
• Rate of TDS Under Section 195 For Non-Residents
• Section 206AA
• FAQs on TDS On Payment To Non-Resident Under Section 195

What Is Section 195?

The Income Tax Act of 1961, Section 195, is mainly concerned with Tax Deducted at Source (TDS) for non-resident Indians. This section focuses on the tax rates and deductions that apply to all types of company transactions.

The first method of collecting taxes is through tax deductions at the source. The TDS on non-resident payments is covered by Section 195 of the Income Tax Act. On a day-to-day basis, this section identifies the tax rates and deductions on business transactions with non-residents.

The income is taxable under Section 195 of the Income Tax Act. Any amount is charged, and a remittance certificate is required. Any amount paid that has the character of income and gross amount, the total of which may or may not represent income or profits, is referred to be a sum subject to tax.

The Act enables a provision to avoid a revenue loss due to a foreign resident’s tax liability by deducting the equivalent amount from payments given to them at the source.

Who Is Liable To Deduct TDS Under Section 195?

Any person who falls under the following category will have to liable to deduct TDS under Section 195:

• Non-Resident
• Foreign Country

Payment Type On Which TDS Is Deducted

Non-Residents or Foreign countries are liable to deduct TDS on the following payments:

• Interest excluding interest covered by sections 194LB, 194LC, or 194LD, or
• Royalties, or
• Any other sum chargeable under the provisions of the Income Tax Act

Time Of TDS Deduction for Non-Residents

The person responsible to deduct TDS must deduct TDS when one of the following scenarios happens:

• At the moment of payment in cash, cheque, drafts, or any other manner, or
• When income is credited to the deductee’s account

How TDS Under Section 195 Is Deducted?

The procedures for deducting TDS under Section 195 are as follows:

1. TAN: Before deducting TDS, the buyer must first get a TAN under section 203A of the Income Tax Act, 1961. A TAN can be obtained by submitting a Form 49B application. Also, the form can be downloaded from the official website of the Income Tax Department.  The buyer should also have his own PAN number as well as the NRI seller’s PAN number.
2. TDS must be deducted when making a payment to a non-resident. In the sales contract between the NRI seller and the buyer, the number of TDS deducted and the rate at which it was deducted should be mentioned.
3. The buyer’s TDS shall be deposited via Form number or challan for TDS payment on or before the 7th of the next month in which the TDS was deducted.
4. TDS can be deposited in banks that are authorised to collect Direct Taxes by the Indian government or the Income Tax Department. The buyer is responsible for the deposit.
5. The buyer must electronically file a TDS refund by completing Form 27Q after the TDS has been deposited.TDS returns are filed every three months.
   • TDS deducted in the first quarter, from April 1 to June 30, must be filed by July 15th.
   • TDS must be filed on the 15th of October for the second quarter, which covers from July 1 to September 30.
   • TDS deducted in the third quarter, from October 1 to December 31, must be filed by January 15th.
   • TDS deducted in the fourth quarter, from January 1 to March 31, must be filed by May 15th.
6. Buyer can offer TDS certificate or Certificate of Deduction of Tax (Form 16A) to NRI seller after TDS returns have been filed. Within 15 days of the due date for TDS returns for the quarter, this certificate should be issued to the seller.

Rate of TDS Under Section 195 For Non-Residents

Surcharge and education cess at the prescribed rate must be included in the rates prescribed by the Income Tax Act. There is no need to add a surcharge or education cess if the payment is done according to DTAA rates. The following are the TDS rate for Non Residents under section 195:

Details	TDS rates
Income from a non-resident Indian’s investment	20%
In the case of an NRI, income from long-term capital gains is taxed under Section 115E	10%
Long-term capital gains are a source of income	10%
Section 111A short-term capital gains	15%
Any other income from long-term capital gains	20%
Interest on money borrowed in a foreign currency is due	20%
Income from royalties paid by the government or an Indian company	10%
Income from royalties, but not the kind of royalties referred to as being payable by the government or an Indian enterprise	10%
Fees for technical services paid by the government or an Indian company	10%
Any other sources of income	30%

Section 206AA

The payee must provide his PAN to the payer under Section 206AA (deductor). The payer will be liable to deduct TDS at higher rates if the payee fails to provide the PAN. Non-residents and foreign corporations, on the other hand, were having difficulties since they lack a PAN in India.

The Finance Act of 2016 made section 206AA lesser applicable to payments to non-residents in the form of interest, royalties, fees for technical services, and payments on the transfer of any capital asset. If the following information is provided to the deductor, Section 206AA will not apply to such non-residents:

• Name, email address, and phone numbers must be provided by the payee (deductee).
• The deductee must provide the address of his residence in the country/specified territory outside of India.
• If the law of that nation or specified territory allows for the issuance of such a certificate, the deductee must present a Tax Residency Certificate stating that he is a resident of that country or specified territory.

FAQs on TDS On Payment To Non-Resident Under Section 195

Question 1.
Is TDS deducted on foreign payments?

Answer:
Yes, TDS is deducted on foreign payments.

Question 2.
What is the TDS on payment to non-resident for an immovable property?

Answer:
TDS is deducted at 1% at the time of depositing such sum to the transferor’s account or at the time of payment of such sum, whichever comes first, on the sale of immovable property.

Question 3.
How much TDS to be deducted on the purchase of property from NRI?

Answer:
When an NRI sells the property, the buyer must deduct TDS at a rate of 20%. A TDS of 30% will be applied if the property is sold within two years of purchase (reduced from the date of purchase).

Online Process for Submitting Form 26A or 27BA: According to the provisions of Section 201(1) for TDS, it provides that if any person fails to subtract any part or whole of the tax in accordance with the provisions of Chapter XVII-B on the amount credited to the account of a resident or on the amount of money paid to a resident shall not be deemed to be an ‘assessee in default’ in respect of such tax

• has furnished return of income under section 139 of the Act,
• for computing return of income, such sum has to be considered his/her return of income,
• has made a complete payment of tax due on the income declared by him/her in such income return and
• The person or the tax deductor furnishes a certificate from an accountant in Form 26A, which is prescribed under Rule 31ACB of the Income-tax Rules 1962.

There is a similar provision under section 206C (6A) applicable for Tax Collection at Source. In addition, the person (tax collector) is required to furnish a certificate from an accountant in Form 27BA, which is prescribed under Rule 27BA of the Income-tax Rules 1962.

• Guide For Online Process
• How To Upload The File For Non-Deduction/Collection
• Section Code For Non-Deduction
• Section Code For Non-Collection
• How To Record 20 PAN Records For Short Deduction/Collection
• How To Record More Than 20 PAN Records For Short Deduction/Collection
• Guide For Deductor or Collector
• While PAN Records Are Less Than 20
• While PAN Records Are More Than 20
• Guide For Assigned CA
• Guide To View Uploaded Annexure A
• Steps For Deductor or Collector
• Guide To View Submitted Form 26A or Form 27BA

Guide for Online Process

For Deductor/Collector

• Login to the official Traces website
• Under the ‘Statement/Payments’ menu, click on the option ‘Request for 26A/27BA’.
• A brief guideline of the complete process will appear. Click on the ‘Proceed’ button shown at the end of the guideline.
• Now Select the financial year, form type and transaction type from the dropdown menu and click on the ‘Proceed’ button

Financial year – Any year can be selected from 2007-08 until the last completed financial year.

Form Type – Either Form 24Q & 26Q (for TDS) or Form 27EQ (for TCS) can be selected.

Transaction Type – Either Short Deduction/Collection, Non-Deduction/Collection or Short and Non-Deduction/Collection can be selected.

Others:

• DSC is compulsory for submitting transaction requests of Short and/or Non-Deduction/Collection. However, if redirected from the bank website, then DSC is not compulsory.
• If the PAN number for Short and/or Non-Deduction/Collection is more than 20 digits, then it is required to upload the file in the format as suggested by TRACES.
• Request availability of Non-Deduction/Collection & Short and Non-Deduction/Collection is only from the financial year 2016-17 onwards.
• After the Request of 26A/27BA, a request number is generated. Then, click on ‘Go to Track Request for 26A/27BA.’
• The table shows all the requests for Form 26A/27BA.

Others:

• Only those requests with the status as Available or Upload File can be cancelled.
• Status of the request is given below:

Status	Details
Requested	When the user has commenced the request
Available	When the Request is accepted, click on the provided hyperlink on the status and it will take the user to a list of PAN screen.
Upload File	PANs along with 26A/27BA to be file has to be uploaded by the user.
Submitted	The request has been submitted to ITD by the user.
Sent to E-filing	The submitted data request has been sent to E-filing.
Pending for Processing at TDS CPC	The transactions from E-filing has been received by TDS CPC for further processing.
Processed	TDS CPC has processed the transactions.
Processed with Partial Rejection	26A/27BA effect has not been given on those rows on which user has filed correction
Processed with Rejection	26A/27BA effect has not been given because user has filed correction on all rows
Not Available	In Remarks column not available reason is to be provided.
Rejected	TDS CPC has rejected the request after processing and the reasons for rejection has to be provided in the Remarks column.
Cancelled	When the request is cancelled by the user.

If you raised a request for:

• Non-Deduction/Collection, an option will appear to upload the file.
• Short Deduction/Collection, an option will appear as follows: –
• Available – If the unique PAN number is less than 20 digits.
• Upload File – If the unique PAN number is more than 20 digits.

How To Upload The File for Non-Deduction/Collection?

• Under the ‘Download’ menu option, click on the ‘Requested Download’.
• Click on the option “Click here” to download the utility.
• After entering the ‘Verification Code’ and click on the Submit button.
• Download the TRACES Sample for Non-Collection or Non-Deduction along with the Utility.
• The ZIP files are to be extracted and add the records for Non-Collection or Non-Deduction in the extracted CSV files with the important details.

Section Code for Non-Deduction

Section under which tax is deductible	Form type	Section under which tax is deductible	Form type
192	24Q and 26Q	194BB	24Q and 26Q
192A	24Q and 26Q	194EE	24Q and 26Q
194IB	24Q and 26Q	194LA	24Q and 26Q
194	24Q and 26Q	194DA	24Q and 26Q
194A	24Q and 26Q	194LBA	24Q and 26Q
194B	24Q and 26Q	194IC	24Q and 26Q
194C	24Q and 26Q	194IA	24Q and 26Q
194D	24Q and 26Q	194LD	24Q and 26Q
194F	24Q and 26Q	194LBC	24Q and 26Q
194G	24Q and 26Q	194LBB	24Q and 26Q
194H	24Q and 26Q	196	24Q and 26Q
194J	24Q and 26Q	196B	24Q and 26Q
91A	24Q and 26Q	196D	24Q and 26Q

Non-Deduction Transactions under section	Form Type	Remarks
201(1)	24Q and 26Q	Please quote this when non-deduction is only for 201(1)
40(a)(ia)	24Q and 26Q	Please quote this when non-deduction is only for 40(a)(ia)
201(1) and 40(a)(ia)	24Q and 26Q	Please quote this when non-deduction is only for 201(1) and 40(a)(ia)

Section Code for Non-Collection

Section under which tax was collective	Form type	Section under which tax was collective	Form type
206CA	27EQ	206CH	27EQ
206CB	27EQ	206CI	27EQ
206CC	27EQ	206CJ	27EQ
206CD	27EQ	206CK	27EQ
206CE	27EQ	206CL	27EQ
206CF	27EQ	206CM	27EQ
206CG	27EQ	206CN	27EQ

• After extracting the file from the Utility then run the Java Application for validating the file.
• TAN – The TAN number of the Deductor/Collector to be entered.
• Financial Year – The financial year to be entered as 2019, 2020 etc.
• Form Type – Select 27EQ for Non-Collection or 24Q/26Q for Non-Deduction.
• Transaction Type – Select Non-Collection or Non-Deduction as applicable.
• Source File – The path of the CSV file to be specified with the records.
• Save to Folder – Specify the path where the output file shall be saved.

If all the records in the CSV file are correct, then the file will generate.

• Click on the option ‘Upload File’ available under the ‘Status’ for Non-Deduction/Non-Collection request.
• After entering the ‘Verification Code’, select the output file generated in Step 13 above and click on ‘Upload’.
• Once the ‘Upload’ button is clicked, the request will be verified using I-PIN or Digital Signature if redirected from the bank website.
• Confirmation will be received from TRACES once the verification is successful.
• Click on the option ‘Go to Track Request for 26A/27BA’ button where you get status as ‘Submitted.’
• When the request will be successfully validated, it will be sent for E-filing and further processing, and the status will be updated to ‘Sent to E-filing.’

How To Record 20 PAN Records For Short Deduction/Collection?

• Click on the hyperlink ‘Available’ as shown under the Status option for the request.
• There will be a list of all the unique PAN’s for Short Deduction/Collection. Select the PAN numbers for which is to be removed from the Short Deduction/Collection default and click on ‘Submit Request’.
• The request will be verified using I-PIN or Digital Signature if redirected from the bank website. Once the request is successfully validated and proceeds, it will be sent to E-filing for further processing, and the status will be updated to ‘Sent to E-filing’.

How To Record More Than 20 PAN Records For Short Deduction/Collection?

• If the unique PAN records are more than 20, they must upload the file to submit the request. The same steps to be followed as mentioned from Step 8 to Step 10 to open the available utility page of TRACES.
• Click on ‘TRACES-Sample-26A-27BA’ for downloading the sample format for uploading.
• The CSV file to be extracted and add all the unique PAN numbers for Short Deduction/Collection. Make sure to save the file in ZIP format for uploading.
• Follow the steps mentioned in Step 14 to Step 17 to upload the file along with all the unique PAN records.

In the first step, the request is to be filed on TRACES for Form 26A/27BA. Then, TDS CPC will generate a unique +DIN (3) for special Short deduction transactions. Similarly, a unique Alpha-Numeric String, which is a combination of TAN, PAN and financial year, will be generated for Non-deduction transactions. After successful processing by TRACES, both of these unique numbers and strings will be displayed. Finally, the deductor/Collector will communicate these unique Alpha-Numeric Strings and DINs electronically to the E-Filing Portal, and it is available for further Action by the Collector/Deductor.

The second step of the process is to certify these records by assigning a Chartered Accountant.

Guide for Deductor or Collector

• Login to the official Income Tax Portal as deductor or collector
• Under the ‘e-file’ menu, click on the option ‘Submit and View Form 26A/ 27BA’ available
• Now Select the request type, form name and financial year from the dropdown menu and click on the ‘Continue’ button

Request Type – Select ‘submit form’ for assigning a Chartered Accountant or ‘view form’ to view all the details of the request.

Form Name – Select either ‘Form 26A’ or ‘Form 27BA’ for which the request has been generated via the TRACES portal.

Financial Year – Now select the financial year for which the request has already been generated via the TRACES portal.

• It depends on the number of entries available, and the user can view the details like PAN, financial year, name, and status. Also, the download option for the details is available for Short Deduction/Collection and No Deduction/Collection records.
• The number of PAN records determine whether to appoint a CA.

While PAN Records Are Less Than 20

• Click on the option ‘Assign CA’ link that is showing against each record.
• The ‘Membership Number’ of the CA is to be entered, and the name will get auto-populated by the e-Filing portal.
• Then, the verification of the auto-populated name of the CA is required and click on ‘Submit’ to allocate.

While PAN Records Are More Than 20

• Click on the ‘Download CSV Template’ option.
• The .XLS format will be downloaded into the computer.
• Now add the membership number of the assigned CA in the downloaded records, and the file is to be saved in .CSV format.
• To upload the downloaded file and the CA’s membership number, click on the ‘Browse’ button.

Note: – For each unique Alpha-Numeric string/DIN, a single CA will be allocated to the Deductor/Collector. However, different CA can be assigned for additional unique records for a single request filed on the TRACES portal for Form 26A/Form 27BA.

The assigned CA will carry out the third step in the process. In this step, the CA will digitally sign the assigned unique DIN/ Alpha-Numeric Strings in Annexure A.

Guide for Assigned CA

• Login to the official Income Tax Portal as a CA user
• Under the ‘Worklist’ menu, click on the option ‘For Your Action’ available.
• Click on the option ‘Annexure-A (Form 26A/27BA/)’ from the given list on the page.
• From the dropdown, select the form name and financial year and click on ‘Search button

Form Name: Now select ‘Annexure-A of Form 26A’ or ‘Annexure-A of Form 27BA’ for which the Deductor/Collector has done the assignment.

Financial Year: Select the financial year for which the request has been generated via the TRACES portal.

• All the available requests matching your criteria will be shown. In the Action, column locate and click on the ‘Submit’ option.
• The file is required to be downloaded and then enter compulsory details for each Alpha-Numeric Strings/DIN for each payee like
• Income head under which the receipt is accounted for
• Under the head of income for which gross receipt is accounted for
• Amount of taxable income under the income head under which the receipt is accounted for
• To upload the ZIP file and Signature file, click on the ‘Upload ZIP File’ button.
• Once compulsory details are entered for every DIN/ Alpha-Numeric Strings, it is necessary to upload the ZIP format of the file. Click on the option ‘Attach the Form Annexure (.zip) File’ and the signature file using ‘Attach the Signature file’.
• After both the files are uploaded successfully, click on the Submit button.

• The assigned CA can view the uploaded Annexure A at any time.

Guide To View Uploaded Annexure A

• Login to the official Income Tax Portal as a CA user
• Under the ‘Worklist’ menu, click on the option ‘For Your Action’ available.
• Click on the option ‘Annexure-A (Form 26A/27BA/)’ from the given list on the page.
• Select the name of the form and financial year from the dropdown menu and click on ‘Search button

Form Name: Now Select ‘Annexure-A of Form 26A’ or ‘Annexure-A of Form 27BA’ for which the Deductor/Collector has done the assignment.

Financial Year: Select the financial year for which the request has been generated via the TRACES portal.

• All the available requests matching your criteria will be shown. Then, in the Action, column locate and click on the ‘View’ option to view the details.
• Now click on the ‘Transaction No’ to check the details against each Alpha-Numeric Strings/DIN.

• The final step in the process is required to be carried out by Deductor/Collector. In this step, the Deductor/Collector will digitally sign and approve Annexure A uploaded by the Assigned CA.

Steps for Deductor or Collector

• Login to the official Income Tax Portal as deductor or collector
• Under the ‘e-file’ menu, click on the option ‘Submit and View Form 26A/ 27BA’ available.
• Select the request type, name, form and financial year from the dropdown menu and click on the ‘Continue’ button

Request Type: Select the ‘submit form’ option to approve the form or the ‘view form’ option to view the form details.

Form Name: Select either ‘Form 26A’ or ‘Form 27BA’ for which The Assigned CA has submitted annexure A.

Financial Year: Now select the financial year for which The Assigned CA has submitted annexure A.

• Under TAN login, click on the Submit button. It will be enabled only when the Assigned CA has submitted Annexure A.
• Fill in the mandatory details like payee name, total amount and upload the signature file using the ‘Attach the Signature file’ button and click on the Submit button.

• Deductor/Collector can download the CA Certificate and submit Form 26A/ Form 27BA.

Guide To View Submitted Form 26A or Form 27BA

• Login to the official Income Tax Portal as a CA user.
• Under the ‘Worklist’ menu, click on the option ‘For Your Action’ available.
• Click on the options list ‘Annexure-A (Form 26A/27BA/)’ on the page.
• Select the request type, name of the form and financial year from the dropdown menu and click on ‘Search button.

Request Type: Select the option ‘view form’ to view/download the submitted form.

Form Name: Select either ‘Annexure-A of Form 26A’ or ‘Annexure-A of Form 27BA’, which is to be viewed or downloaded.

Financial Year: Select the financial year.

All the available requests matching your criteria will be shown. Click on the ‘View’ option located in the Action column to view the details.

Now, you can download Annexure A and Form 26A/Form 27BA in PDF format.

After the request for Form 26A/Form 27BA gets processed, there will be a recalculation of the short deduction. The request for the late deduction interest will be generated, which the deductor can view in the TRACES portal. The status of the statements can be checked by the Deductor/collector using the same steps which are required to be followed for generating statement request for Form 26A/Form 27BA.

Online Correction Facility to Add/Modify Deductee in TDS Return: TRACES or the TDS Reconciliation Analysis and Correction Enabling System of the Income Tax Department provides online correction of already filed TDS returns. If you need to modify your TDS returns after submission, this article will help you file revised TDS returns.

• The Provision of Online Correction to Modify or Add Deductee Details in TDS Return
• Advantages of Online Correction
• Step by Step Process to Add or Modify Deductee Details in TDS Return
• Status of Request or Process being showed during Online Correction

The Provision of Online Correction to Modify or Add Deductee Details in TDS Return

Filing for TDS returns is a necessary process that needs to be completed and submitted for each quarter in a fiscal year.

The following corrections can be made in an existing filed TDS return –

• PAN correction
• Challan correction
• Resolution for overbooks challan (move a deductee row from challan)
• Add a new challan to statement
• Addition or deletion of salary details
• Addition or modification of deductee details
• Any personal information

The online feature enables to add or modify any deductee details if the deductor –

1. Wants to make modifications in deductee details.
2. Intends to add a new deductee row against a challan with an available balance.

Note: This functionality is available from F.Y 2013-14 onwards with DSC.

Advantages of Online Correction

The online correction feature is handy as –

1. TRACES charges no fee for online correction.
2. One can instantly start working, and the correction is generally processed in 24 hours.
3. All the modifications can be done online, and no extra software is required.
4. A specific correction mechanism is available for each error that makes the process hassle-free for the users.

Step by Step Process to Add or Modify Deductee Details in TDS Return

Step 1: Login into the TRACES website.

Step 2: Select option Defaults followed by Request for correction.

Step 3: Choose the period for which you want to file the correction. Use the option of Online in the Correction Category and click on Submit.

Step 4: The system generates a request number. Select Go to Track Correction Request or select option Defaults, followed by Track Correction Request.

Step 5: A list of all the corrections along with their status get displayed. Click on the option of Available to work on the correction request.

Step 6: Choose the KYC option (digital signature or without digital signature).

Step 7: Once the validation is completed, you get an authentication code that will be used to validate the KYC again, and it will work only on the same day of the same financial year. Finally, click on Proceed with Transaction button.

Step 8: Select the option of Modify/Add Deductee Details under Type of Correction and click on the View Details button.

Step 9: There are three options on the top of the screen –

• Default Deductees
• All Deductees
• Add New Deductees

Step 10: Default deductees show those deductees who have any defaults. Select a specific row and click on Edit Deductee Row to make changes.

Step 11: All the details relevant to the row are shown below. Make the changes required in the record and click on the Save button. The following changes can be made in the deductee records –

• PAN of the deductee
• Date of payment or credit
• Amount paid or credited
• The section under which TDS deducted
• Date of deduction
• The TDS deduction rate
• Tax
• Surcharge
• Education Cess
• Reason for non-deduction, lower-deduction, grossing up or higher deduction

Step 12: In the All Deductee option, all the records which have been updated show in highlighted row colour.

Step 13: The Add New Deductee tab can be used to add a new deductee. Once you click on the New Deductee tab, it will display all the challan with the available balance. Select the challan (with available credit)

and click Add Deductee Row button.

Step 14: Enter the following details for the new deductee and click on the Save button.

• Deductee Code (01 for a company and 02 for apart from a company)
• Details of PAN
• Date of payment or credit
• Amount paid or credited
• Section
• Date of deduction
• Total tax deducted
• Total tax deposited
• The TDS deduction rate
• Reason for non-deduction, lower-deduction, grossing up or higher deduction

Step 15: Once all the modifications are done, click on Submit to Admin button.

Step 16: Admin can now submit the modified statement for processing from the option Defaults followed by Ready for Submission. Admin can select the option to cancel the statement as well.

Step 17: The user can then check the status of the statement submitted. To track the status, click on the Defaults option, followed by Track Correction Request.

Status of Request or Process Being Showed During Online Correction

• Requested: When a request for correction is submitted by the user.
• Initiated: The request is under processing by TRACES.
• Available: The request for correction is accepted, and the statement is now available for modifications.
• Failed: Request cannot be completed due to a technical error. However, the user can re-submit the request for the exact details.
• In Progress: The user is currently working on the statement.
• Submitted to Admin User: Sub-user or Admin User has submitted correction statement to Admin User.
• Submitted to ITD: When the Admin User submits the corrected statement to ITD for processing.
• Processed: Statement is being processed by TRACES (either for defaults or for Form 26AS).
• Rejected: Statement is rejected after processing by TRACES. Also, the rejection reasons are shown in the ‘Remarks’ column.

TDS Return Due Date, Penalty and Forms: The TDS Return is a quarterly statement submitted to the Income Tax Department by the deductor that includes PAN and other details.

• Due Date for TDS Return Filing
• Forms for the Submission of TDS Statements
• Late or Wrong Filing on TDS Return and its Consequences

Due Date for TDS Return Filing

(Valid from First Quarter Of 2016-2017)

• Quarter April 1st to June 30th June
• Last date of filing the return: July 31st
• Quarter July 1st to September 30th
• Last date of filing the return: October 31st
• Quarter October 1st to December 31st
• Last date of filing the return: January 31st
• Quarter January 1st to March 31st
• Last date of filing the return: May 31st

(Valid till the fourth Quarter Of 2015-2016)

• Quarter April 1st to June 30th June
• Last date of filing the return: July 15th
• Quarter July 1st to September 30th
• Last date of filing the return: October 15th
• Quarter October 1st to December 31st
• Last date of filing the return: January 15th
• Quarter January 1st to March 31st
• Last date of filing the return: May 15th

Forms for Submission of TDS Statements

Form 24Q: Tax deduction from salary under section 192

Form 27Q: Tax deduction when deductees are non-resident (not being a company), foreign company and persons who are not ordinarily resident

Form 26Q: Tax deduction in any other case

TDS return shall be filed electronically for the assessee below:

• Office of the Government.
• A Corporate assessee.
• Individual who must get his accounts audited under section 44AB in the previous financial year.
• Number of deductees’ records in quarterly statements for any quarter of the previous financial year is seen to be equal to or more than fifty.

Late or Wrong Filing on TDS Return and its Consequences

Section 234E: Late filing fee of Rs 200 per day 

1. Persons shall pay a penalty of Rs. 200 per day for any delay in producing the TDS statement. This penalty is also applicable in supplying form 26 QB, which is a challan cum statement in case of purchase of the immovable property.
2. The total of the late filing fees should not exceed the total amount of TDS made for the quarter.

Section 271H: A Penalty of Rs 10,000-Rs 1,00,000 

1. Delay in filing TDS statement for more than a year from the due date of filing of such TDS return. If the TDS statement is not filed under a year from the due date of producing the TDS return, then a minimum penalty of Rs 10,000 (can rise to Rs 1,00,000) can be levied. The liability under this section will be in addition to the late filing fee under section 234E.
2. Incorrect furnishing details in the statement filed like PAN, Challan and TDS Amount etc. Section 271H also covers filing faulty TDS/TCS return cases. Similarly, a minimum penalty of Rs 10,000 (can rise to Rs 1,00,0000) can be levied.

How to Check the TDS Credit in your Account?: When it concerns completing your taxes, Form 26AS, or your tax credit statement, is amongst the most crucially important documentation. It holds all the specifics about the tax deducted at the source (TDS).

What are the Steps to Determine TDS Credit?

Guide to getting Form 26AS using your income tax department account:

• Step 1: Visit the official portal of income tax, i.e.,  https://www.incometax.gov.in/iec/foportal/.
• Step 2: Press the ‘Login’ button.
  • Enter your Login Credentials. To complete the login procedure, you must provide your PAN’s Aadhaar number. You should firstly wrap up the registration prior you can log in.
• Step 3: Once you’ve entered your Login Credentials, click the ‘Continue’ option and the Select ‘e-file’ option.
  • After which, click ‘Income Tax Returns’ followed by ‘View Form 26AS’.
  • Next, press the ‘Confirm’ box.
• Step 4: On the subsequent tab, tap the ‘Proceed’ box.
  • Now, pick the ‘View Tax Credit (Form 26AS)’ option.
  • Next, click the ‘View Type’ and ‘Assessment Year’ for which you would like to check the TDS submitted by the deductor.
  • To eventually finish the procedure, click on the ‘View/Download’ option.

Form 15G and Form 15H: Form 15G is a declaration filed by the bank on behalf of fixed deposit holders who are less than 60 years of age. According to income tax rules, it is mandatory for banks to deduct TDS when the amount of interest for recurring deposit and fixed deposit is more than ₹10,000 in a financial year. The TDS limit has been increased to ₹40,000 from the financial year 2019-2020. The person also needs to furnish PAN while filing Form 15G. If Form 15G is not submitted initially, TDS deducted needs to be claimed while filing an Income Tax return.

Form 15H is a declaration by individuals aged 65 years or more to claim relief from TDS deductions for income from interest. It is to be submitted to the bank before the first interest is credited. It should be submitted when the amount of interest from one branch exceeds ₹10,000.

• Introduction To Form 15G And 15H
• Basic Differences Between Form 15G And 15H
• Example To Understand Who Can Submit Form 15G And Form 15H
• Validity Of Form 15G And 15H
• Steps To Be Taken If TDS Had Already Been Deducted
• How To Submit Form 15G And 15H Online?
• Penalty For Filing Form 15G And 15H

Introduction To Form 15G And Form 15H

According to Section 194A, TDS is deducted at the rate of 10% from income on interest from fixed deposit, recurring deposit etc., other than interest on securities. Failure to furnish PAN will attract a 20% tax rate. Therefore, banks deduct TDS at the rate of 10% on income from interest if the amount exceeds ₹10,000 in a financial year.

For assesses who are not liable for TDS deduction as their interest income is within the limit, Form 15G and 15H are introduced u/s 197A and Rule 29C.

For TDS on EPF withdrawal, post office deposits, income from corporate bonds and insurance commission, Form 15G or 15H can be filed under section 194D. For TDS on rent Form, 15G or 15H can also be filed from the financial year 2016-17.

Basic Differences Between Form 15G And Form 15H

Form 15G

• It can be submitted by a resident individual, HUF or trust.
• It can be submitted by an individual whose age is less than 60 years.
• It can be submitted while tax on estimated income for the current year is nil.
• It can be submitted only when the interest amount and other income from all sources do not exceed the basic exemption limit of ₹250,000 for the financial year.

Form 15H

• It can be submitted only by a resident individual and not by HUF, who is above the age of 60 years or completes the age of 60 years during the financial year.
• It can be submitted while tax on estimated income for the current year is nil.
• It can be submitted even when total income from all sources exceeds the basic exemption limit of ₹300,000 for senior citizens and ₹500,000 for super senior citizens for the financial year.

Example To Understand Who Can Submit Form 15G And Form 15H

Income Of	A	B	C	D
Age	20	25	65	68
Salary	170,000	90,000	180,000	0
Fixed Deposit Interest Income	60,000	270,000	70,000	340,000
Total Income before deductions	230,000	360,000	250,000	340,000
Section 80C deductions	0	120,000	0	100,000
Taxable Income	230,000	240,000	250,000	240,000
Minimum Exempt Income	250,000	250,000	300,000	300,000
Eligible to submit Form 15G	Yes	No	Yes	Yes
Eligible to submit Form 15H	No	No	Yes	Yes
Explanation	A can submit Form 15G as the taxable amount and income from all sources are below the exemption limit of ₹250,000	B cannot submit Form 15G as the income earned from interest is more than the exemption limit of ₹250,000	C can submit Form 15H as the tax calculated on total income is nil and the age is more than 60 years.	D can submit Form 15H as the tax computed on total income is nil and the age is more than 60 years. The person can fill the form even if the amount of income earned from interest is more than the basic exemption limit.

Validity Of Form 15G And 15H

Form 15G and 15H have a validity of one financial year and need to be submitted every year. If an individual submits these forms at the beginning of the financial year, then TDS will not be deducted bank on the income from interests.

Steps To Be Taken If TDS Had Already Been Deducted

If TDS has already been deducted before submitting the forms, an individual can claim such TDS while filing an income tax return. The deducted TDS will be provided in Form 16A through a TDS certificate. The interest earned on a fixed deposit is credited at the end of the year. The deducted TDS is to be claimed while filing the income tax return in the same year and cannot be carried forward.

How To Submit Form 15G And 15H Online?

There is no need to fill forms 15G and 15H manually. An individual can fill the forms online simply by logging in to his/her net banking account, then download the already pre-filled form, print it and submit the form to the bank after signature.

Penalty For Filing Form 15G And 15H

According to Section 277 of the Income Tax Act, a wrong or false declaration in form 15G or 15H will attract a penalty. The prosecution includes imprisonment, which can vary from three months to two years, along with a fine. The imprisonment term may be extended to seven years along with a fine if the tax evaded exceeds ₹25 lakh.

Cases When A Person Becomes Ineligible Afterwards

In such instances in which you meet all the criteria at the beginning of the year and submit form 15G or 15H. But afterward, you earn unexpected income and do not meet the specified criteria, then a 15G or 15H withdrawal application needs to be submitted. The bank will deduct TDS from the account on the next payment.

Other Points

• While submitting form 15G or 15H, an individual needs to submit PAN to the deductor or else the TDS to be deducted at the rate of 20%.
• Interest income is calculated on the basis of accrual and not on a due or payment basis.
• A written acknowledgement is to be taken while submitting such forms to avoid any inconveniences.
• A copy of such forms is to be submitted to the Commissioner of Income Tax on or before the 7th of next month by the payer of income.

TDS Payment Google Ads Facebook Advertisement: Google and Facebook are now the most popular platforms for digital advertising. Within a contract of advertisement between the payer and Google India or Facebook India, the advertisements are published on digital media and payments are made. As per present Indian Tax Laws, tax is deductible on such payments under section 194C of the Income Tax Act 1961, which will be discussed in this article.

• How TDS on payment to Google and Facebook advertisements work?
• Google India PAN Details
• How and when to send a TDS Certificate?

How TDS on Payment to Google and Facebook Advertisements Work?

Google or Facebook publishes advertisements on various digital modes with an agreement between the advertiser and Google or Facebook.

On every billing period, Google issues an invoice and deducts the total billed amount from the pre-set mode of payment by credit card or debit card followed by an invoice released to the customer. The amount so debited by Google or Facebook is not net of TDS but the gross amount of the bill; hence there is no way of deducting TDS from such auto payment.

Consequently, the advertisers are compelled to pay the TDS amount out of their own pockets to the government account. The advertisers then have to submit the TDS certificates to Google or Facebook, and then the amount will be credited back to the ad account as credit.

The TDS rate under section 149C of the ITA 1961 is 2%, with no service tax or education cess applicable.

Google India PAN Details

The Permanent Account Number (PAN) of Google is AACCG0527D, and the registered address for the TDS Certificate is:

Google India Pvt Ltd.

No.3, RMZ Infinity, Tower E,

Old Madras Road, 4th & 5th Floor,

Bangalore – 560 016

India

How and When to Send a TDS Certificate?

To send a TDS certificate, you can use the online Google platform or submit the certificate along with a letter that mentions the Google Ads Customer ID on it by courier to this address of Google India:

Google India Pvt Ltd.,

9th Floor, Building 8, Tower C,

DLF Cyber City, DLF Phase 2,

Gurgaon, Haryana

122002 India

After sending the TDS certificate, you will need to contact them through email and provide the following documents and details to get your credit to your ad account:

1. A digitally signed copy of the TDS certificate (electronically signed or a PDF scan).
2. Courier delivery receipt details.

Note: For Google, the TDS certificate for the previous FY should be sent before 30th April of the current FY, and no certificate would be accepted after the specified date for the same.

TDS On Rent: Provisions of this section are applicable from 1st June 2017. From 1st June 2017, a new division, 194IB, has been introduced. It deals with the tax deducted at the source of rent payment. This new section has mandated certain HUF or individuals that any rent paid under a Joint Development Agreement (JDA) to the landlord for the use of any building or land or both has to deduct TDS. When the asset owner and developer come into an agreement, it is known as a joint development agreement. The Government introduced the Provisions of TDS through section 194I, 194IB and 194IC to keep track of all the payment activities relating to assets or commercial spaces, personal spaces and equipment, etc., as transactions relating to such activities have increased considerably.

• Requirements to Deduct TDS Under Section 194IB
• Rate of TDS – TDS Deductible on Rent Paid or Payable is Fixed at the Rate of 5%
• Procedure to Fill Challan cum Statement in Form 26QC
• Required Details to Fill Form 26QC
• Furnishing The New Form: Form 16C
• Types of Penalties
• Interests for Late Payment of TDS
• Section 194I vs Section 194IB

Requirements to Deduct TDS Under Section 194IB

• HUF and individuals whose turnover or gross receipts are not exceeding ₹ 10 million or ₹ 50 Lakh in profession or business and are therefore not required to audit his books of accounts under section 44AB.
• HUF and Individual whose reporting profits are lower than the speculative profits and are required to audit their accounts under Points (c), (d), or (e) of section 44AB
• In other words, only HUF and Individuals whose accounts are audited because of turnover or gross receipts higher than the set-out limits are not covered under this section. All other HUFs and individuals are covered under this section.

Other Points:

• Under section 194IB, coverage is provided to the person who doesn’t have any income or salaried person.
• Partnership firm, company, BOI and AOP are not covered under this section and are therefore required to deduct TDS from rent under section 194I.

Rate of TDS – TDS Deductible on Rent Paid or Payable is Fixed at the Rate of 5%

Payment Covered

Payment exceeding ₹50,000 per month as rent to the landlord (who is a resident) for the use of any building or land or both are liable for a tax deduction.

Other Points:

• Under this section, any payment made under tenancy, lease, sublease or any arrangements or agreements for the use of any building or land or both are covered.
• Refundable security deposit made by tenant as rent to the landlord when taking property to be covered under this section.
• Under section 194I, rent payments made for furniture and fittings, equipment, plant and machinery are covered.
• TDS is deductible under section 195 if any payment is made to a non-resident.

Due Date of Payment:

Payment is to be made by the tenant within 30 days from the end of the month on which deduction is made using Form 26QC, which is a challan cum statement. For example, payment is to be made by 30th April if the deduction is made in March.

Other Points:

• If a person vacates one house and moves to another and the rent of both houses is more than ₹ 50,000, then Form 26QC is to be made twice a year for each property owner. In simpler words, Form 26QC is to be duly filled by each tenant for a unique tenant-landlord combination for the respective share. For example:-
• Only one Form is asked to be filled in the case of a single tenant and a single landlord.
• In the case of single-tenant and two landlords, they must fill two forms for respective shares.
• In the case of two tenants and two landlords, they must fill four forms for respective shares.
• As deduction is required once a year, payment is required to be deposited to Government only once a year. However, if the tenant must file more than one Form, separate payment should be made for each Form.

Time of Deduction:

TDS should be deducted only once a year and not every month. TDS is to be deducted earlier from the following:-

• At the time of credit of rent in the form of cash or cheque to the payee’s account for March or the last month of tenancy, if the property is vacated during the year as the case may be.
• At the time of payment of rent in the form of cash or cheque to the payee for March or the last month of tenancy, the property is vacated during the year, as the case may be.
• When the payment is made on the same day by or on behalf of the Government.

However, suppose the details of PAN is not furnished by the person receiving rent. In that case, TDS is deductible at the rate of 20%, which is again subjected to the maximum limit of the amount of rent payable for March or the tenant’s last month, as the case may be.

No Requirement of TAN Number:

Such a person does not require a TAN number to deduct and deposit TDS to Government.

Special Considerations:

• Warehouse charges are liable to TDS u/s 194I.
• Security deposit paid to an asset owner is not liable to TDS unless the amount is adjusted against rent which becomes susceptible to TDS u/s 194I.
• Under an agreement, if accommodation to any hotel is taken regularly, it becomes liable to TDS payment.

Procedure to Fill Challan cum Statement in Form 26QC

Rule 31A of Income-tax rules states that ‘a challan cum statement in Form 26QC is to be filed within 30 days from the end of the month in which deduction under this section is made.’

Required Details to Fill Form 26QC

• PAN of landlord and tenant’s PAN
• Address of both landlord and tenant
• Address of let out Property
• The total amount of rent payable
• Rent paid or payable for March or the last month of tenancy
• Period of Tenancy
• Date of tax deduction
• Interest or late fees payable
• Payment can be made through net banking when filing form 26QC or can be made afterwards using an e-payment gateway at a subsequent date or visit any Authorized bank branch after filing form 26QC.

Furnishing The New Form: Form 16C

A new certificate of TDS has been issued by the Government of India. This Form comes as the new 16C From, which shows the number of TDS that will be deducted from the rent. This reduction will be made at the rate of 5% by the individuals or HUF. This Form is to be given to the landlord by the tenant after generating it from the TRACES website. This Form is quite similar to Form 16, issued for salary, or Form 16A, which is issued for other payments.

The time frame that is allowed for the certificate issue is usually 15 days. This 15 days of time starts from the due date when a tenant files Form 26QC. This gives the tenant an entire window of 45 days from the month-end. If the landlord wishes to cross-examine the tax details, he can easily do so in his 26AS Form.

Example 1:

Let Mr. X be living in a 3BHK house. The rent payable for the penthouse is INR 75,000 every month. The financial institutions will deduct the TDS at the rate of 5% before the tenant pays rent to his landlord. Therefore, every month the TDS deducted will be INR 3750 on the rent INR 75,000. Thus, Mr. X will be spending a rent of INR 71,250, and the TDS that is deducted will go straight to the Government.

Example 2:

If the agreement of rent between tenant and landlord is spread across two financial years (FY):

The tenant, Mr. Y, has a tenancy agreement with his landlord for a total of 11 months. This period of 11 months is from 1st October 2017 to 31st August 2018. The rent that Mr. Y is supposed to pay is Rs. 60,000. In such a case, Mr. Y will file Form 26QC two times. He will first file it when the FY 2017-18 ends, i.e., 31st March 2018. He will file the second Form when his tenancy period ends, i.e., on 31st August 2018. The details are:

Particulars	First Return	Second Return
Financial Year	2017-18	2018-19
Tenancy Period	Months = 6	Months = 5
Total-Rent	3,60,000	Less than 3,00,000
Rent of Last Month	60,000	60,000
Amount Payable	3,60,000	3,00,000
Date of payment	31st March, 2018	31st August, 2018
TDS	18,000	15,000
TDS Deduction Date	31st March, 2018	31st August, 2018
Form 26QC Filing Date	On or before April 30, 2018	On or before September 30, 3018
Date to provide 16C to Landlord	On or before May 15, 2018	On or before October 15, 2018

Example 3:

If the agreement of rent between tenant and landlord is in the same financial year (FY):

The tenant Mr. A has a tenancy agreement with his landlord for six months. This period of 6 months is from 1st June 2017 to 30th November 2017. The rent that Mr. A is supposed to pay is Rs. 80,000. In this case, Mr. A will file his 26QC Form once. He will file it when his tenancy period ends, i.e., on 30th November 2017. The details are:

Particulars	By The End Of The Tenancy Period
Financial Year	2017-18
Tenancy Period	Months = 6
Total-Rent	4,80,000
Rent of Last Month	80,000
Amount Payable	4,80,000
Date of payment	30th November, 2017
TDS	24,000
TDS Deduction Date	30th November, 2017
Form 26QC Filing Date	On or before 30th December 2017
Date to provide 16C to Landlord	On or before 15th January 2018

Note:

If the landlord misses providing his PAN details, then the TDS on rent will be subjected to a rate of 20%.

Types of Penalties

There are various types of penalties that are charged. These are:

• Any delay in the filing of the 26QC Form is subjected to a late fine. This late fine amounts to 200 rupees a day. It would be best if you kept in mind that the number of late filing fees should not cross the total amount of TDS.
• Any delay in the filing of the 16C Form is also subjected to a late fine. This fine amounts to 100 rupees a day. In this case, too, the total amount of late fees should not exceed the total amount of TDS.
• In some instances, the amount of penalty charged can go up to 1,00,000 rupees. In case of late filing of the TDS statement (especially if it goes later than a year from the due date), then the late fine can be charged at 10,000 rupees, which can go up to 1,00,000 rupees. If the case is of filing incorrect details (giving false information like PAN or amount of TDS), the penalty can also be the same.

Interests for Late Payment of TDS

For any short payment or late payment of TDS, interests are charged.

• Interest would be charged at 1% every month in case TDS has not been deducted. This period will continue from when the TDS is deductible to the actual date when it is deducted.
• The banks would charge the interest rate at 1.5% per month if the TDS has been deducted, but the payment is made late. In this case, too, the period of interest will continue when the TDS is deductible to the actual date when it is deducted.

Section 194I vs Section 194IB

Basis of difference	Section 194I	Section 194IB
Eligibility for deduction of TDS	In the case of business, if the total turnover crosses Rs. 1 Crore. In the case of professionals, if the turnover crosses 50 Lakhs.	There is no limit as such.
Rent Limit for deducting TDS	Rs 2.4 lakhs per year	Rs. 50,000 every month
Asset on which it is applicable	Buildings, Land, Machinery or Plants	Buildings, Land
The rate at which TDS is deducted	On plant and machinery, the rate is 2% On land, furniture, building, etc. the rate is 10%	5% is charged if the landowner provides PAN details. 20% is charged if the landowner fails to provide PAN details
Requirement of TAN	Yes	No
The form that is required to be submitted	26Q	26QC
Payment	Monthly	Once every year
Return	Quarterly	Once every year