The Income-tax Law has incorporated a system of deduction of tax at the point of generation of income for quick and efficient collection of taxes. This system is called Tax Deducted at Source, or commonly known as TDS. Under this system, the tax is deducted at the origin of the income. Tax is deducted by the payer and is remitted to the Government by the payer on behalf of the payee.  

COMMERCIAL BREAK
SCROLL TO CONTINUE READING

The provisions of deduction of tax at source are applicable to several payments such as salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. In respect of payments to which the TDS provisions apply, the payer must deduct tax at source on the payments made by him and he must deposit the tax deducted by him to the credit of the Government. 

If the PAN card of the deductee is not intimated to the deductor, the tax will be deducted at source by virtue of section ​206AA e​ither at the rate or rates in force, or at the rate of 20 per cent, whichever is higher. Further, under section 94A(5), if payment or credit is made or given to a deductee who is located in a notified jurisdictional area, tax is deductible at the rate given in the table or at the rate of 30 per cent, whichever is higher.  

Under section 192​ tax is deductible from salary. The payer shall calculate salary taxable in the hands of the recipient. The amount so determined is subject to tax deduction under section 192. Under section 192A, tax is deductible on the taxable accumulated balance of the provident fund. Under section 195, tax is deductible only if income is taxable in the hands of the recipient in India. In any other case, gross payment or credit (without GST, if GST is shown separately) is subject to the tax deduction. 

Tax is deductible at the above rates or the rates specified in ADT agreements entered into by the Central Government under section 90 (whichever is lower). 

Tax is not deductible under section 192A, section 193, 194, 194A, with effect from 1/6/2017 194D, 194DA, 194-I, or 194EE if the recipient makes a declaration in Form No. 15G/15H under the provisions of section 197A. 

Under section 197 the recipient can apply the Assessing Officer in Form No. 13 to get a certificate of lower/no tax deduction. This benefit is, however, not available if tax is deductible under section 192A, section 194B, 194BB, 194E, 194EE, 194F, 194-IA, 194LBA, 194LB, 194LC, 196B, 196C or​196D​. 

The royalty payable by the Government or an Indian concern in pursuance of an agreement made by a non-resident with the Government or the Indian concern after March 31, 1976, where such royalty is in consideration for the transfer of all or any rights (including the granting of a licence) in respect of the copyright in any book on a subject referred to in the first proviso to​section 115A(1A) to the Indian concern or in respect of computer software referred to in the second proviso to​section 115A(1A), to a person resident in India.

See Zee Business Live TV Streaming Below:

Not being royalty of the nature referred to above, payable by the Government or an Indian concern in pursuance of an agreement made by a non-resident with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to matter included in the industrial policy, the agreement is in accordance with that policy. 

Fees for technical services payable by the Government or an Indian concern in pursuance of an agreement made by a non-resident with the Government or the Indian concern and where such agreement is with an Indian concern, the agreement is approved by the Central Government or where it relates to matter included in the industrial policy, the agreement is in accordance with that policy.​