TDS Compliances in Brief - Financial Year 2023-24 and 2024-25

 

TDS COMPLIANCES FOR THE FINANCIAL YEAR 2023-24 and 2024-25 ASSESSMENT YEARS 2024-25 and 2025-26

 

Nature of Payment		Threshold Limit (Rs.)	Company / Firm / Co-operative Society / Local Authority	Individual / HUF	If No PAN / Invalid PAN (Sec 206AA)
Section	Description		IT Rate (%)	IT Rate (%)	IT Rate (%)
192	Salaries (Refer Note: 1)	-	NA	12 Equal Instalments	20 (Also refer Note 11)
194	Payments towards Dividend	5,000	10	10	20 (Also refer Note 11)
194A	Interest other than interest on securities (Refer Note: 2)	5,000	10	10	20 (Also refer Note 11)
194C	Payment to Contractor - Single Trans action (Refer Note. No.3)	30,000	2	1	20 (Also refer Note 11)
	Payment to Contractor – Aggregate during the Financial Year	1,00,000	2	1	20 (Also refer Note 11)
194H	Commission / Brokerage (Refer Note: 2)	15,000	5	5	20 (Also refer Note 11)
194I	Rent - Land and Building including Furniture and Fittings (Applicable to all other than Individuals/HUF) (Refer Note: 4)	2,40,000	10	10	20 (Also refer Note 11)
	Rent - Plant / Machinery / Equipment (Applicable to all other than Individuals/HUF) (Refer Note 4)	2,40,000	2	2	20 (Also refer Note 11)
194IB	Rent  payable by an Individual or HUF not covered U/s 194I  (Not liable to Tax Audit U/s 44AB) (Refer Note 5)	50,001 Per month	5	5	20 (Also refer Note 11)
194J	Professional services (Refer Note 6)	30,000	10	10	20 (Also refer Note 11)
	Technical services not being professional services	30,000	2	2	20 (Also refer Note 11)
	Other Technical services	30,000	10	10	20 (Also refer Note 11)
	Director fees	30,000	10	-	20 (Also refer Note 11)
194M	Payment to Contractors, agents/brokers and professionals by Individuals and HUF (other than those required to deduct U/s 194C, 194H & 194J) (Refer Note 7)	50,00,000	5	5	20 (Also refer Note 11)
194Q	Purchases of goods (Refer note 8)	50,00,000	0.1%	0.1%	5 (Also Refer Note 11)
194R	Benefit/Perquisite given for Business/Profession (Refer note 9)	20,000	10	10	20 (Also refer Note 11)
195	Payment to Non-Residents excluding Salary and Dividends to Non-Residents	Refer Note No.10

 

 

 

 

 

NOTES:

 

1.    192 for Salaries:

 

Two options i.e., Old Tax Regime and New Tax Regime, have been given to Individuals to calculate and pay taxes. Under First Option, Individual can take all Deductions and Exemptions available under present Income Tax Law and pay taxes at Old Rates i.e., Taxable slabs under 5%, 20%, 30%. Under Second Option, Individual is not entitled to any Exemptions and Deductions, but he can pay taxes at New Concessional Rates U/s 115BAC i.e., Slabs under 5%, 10%, 15%, 20%, 25%, etc.  From F. Y:2023-24 onwards new tax regime shall be default tax regime and shall be considered by employer for calculation of TDS unless employee specifically opts for old tax regime. Employee can choose what is best for him and he can change the option at any time but before due date of filing his Return of Income i.e., 31.07.2024 for the year 2023-24. Concessional Rates and Existing Rates are given hereunder:

 

Old Tax Regime		New Tax Regime
Taxable Income	Tax Rate	Taxable Income	Tax Rate
Up to Rs.2,50,000	Nil	Up to Rs.3,00,000	Nil
Rs.2,50,001 to Rs.5,00,000	5%	Rs.3,00,001 to Rs.6,00,000	5%
Rs.5,00,001 to Rs. 10,00,000	20%	Rs.6,00,001 to Rs.9,00,000	10%
Rs.10,00,001 and above	30%	Rs.9,00,001 to Rs. 12,00,000	15%
		Rs.12,00,001 to Rs.15,00,000	20%
		Rs.15,00,001 and above	30%

 

 

2.      194A, 194H: Tax is to be deducted if amount paid in either single transaction or aggregate (i.e., total of all payments made to a single person) in the financial year exceeds or likely to exceed: Rs.5,000 U/s  Sec.194A and Rs.15,000 U/s  Sec.194H

 

3.      194C for Goods Transporters: Tax need not be deducted if the Transporter does not own more than 10 vehicles at anytime during the FY 2023-24 and a Declaration is received for the same along with PAN of the Transporter.  If PAN is provided but declaration is not provided, then tax is to be deducted.  If Declaration is provided, but PAN is not provided, then tax at 20% is to be deducted.  A Draft Declaration Form is attached for your convenience.

 

4.      194I Rent (other than Individuals/HUF): Threshold limit of Rs 2,40,000 is inclusive of Rent to be paid for Land and building, Plant and machinery and furniture and fittings together, for each Co-owner.

 

 

5.      194IB: Rent:   With effect from 01-06-17, if Rent payable by an Individual or HUF who is not covered U/s 194I, exceeds Rs. 50,000/- per month or part of the month, then Tax is to be deducted @ 5%. Tax shall be deducted at the time of credit of such rent, for the last month of PY (2023-24) or last month of tenancy (if the property is vacated during the PY 2023-24), as the case may be, to the account of payee (or) at the time of payment thereof whichever is earlier.

(Note: TDS to be deducted under this section shall not exceed the Rent payable for last month of PY or last month of Tenancy)

 

6.      194J: All persons except Individual/HUF are required to deduct TDS u/s 194J. However, if Individual or HUF, whose business turnover is more than Rs.1.00 Crore or Rs.50.00 lacs in case of Profession are also liable to deduct TDS.

 

7.      194M Payments to Contractors and Professionals: With effect from 01.09.2019, any sum paid by Individual or HUF to any resident for carrying out any work under a contract or by way of fees for professional services in a financial year, tax shall be deducted at 5% if the aggregate of such payments or credits during a financial year exceeds Rs.50.00 lacs.  Please note this is applicable for Individuals/HUF only and for personal use.

 

8.      194Q for purchases made from Resident seller: With effect from July 1, 2021, Person who purchased goods worth more than Rs 50.00 lacs from Resident Seller is required to deduct TDS @0.1% on sum exceeding Rs 50 Lakh.

 

·        TDS is to be deducted at the time of credit in books or payment made whichever is earlier.

 

·        The threshold limit of Rs 50, 00,000 shall be considered from 01^st April 2023.

 

·        For advance if any, received tax is to be deducted on the entire amount (i.e., inclusive of GST), otherwise tax is to be deducted on amount of Purchase Value, excluding GST.

 

·        If on a transaction, both TCS u/s 206C (1H) and TDS u/s 194Q are applicable, then TDS u/s 194Q shall only prevail. However, if on a transaction if seller has collected tax u/s 206c (1H) then buyer need not deduct tax again on the same transaction u/s 194Q.

 

9.      194R: If an Individual/HUF whose Total Sales/Gross Receipts/Turnover does not exceed Rs.1 crore in case of business or Rs.50 lacs in case of Profession during the Immediately

preceding Financial Year, such person need not deduct tax during the Financial Year in which such Benefit/Perquisite is provided.

 

10.  195 for Non-Residents:  TDS on Payments to Non-Residents has to be made as per Rates in force, detailed in Finance Act, 2023.  Hence, we advise to consult us before making any payment to Non-Residents.  However, the section is not applicable for payment of Salaries. Tax on Salary paid to Non-Resident is to be deducted as per section 192.

 

11.  Sec 206AB Special provisions for deducting Tax at source for Non-filers of Income tax:

With effect from 01^st April 2022, if total of tax deducted at source and tax collected at source  is Rs.50,000/- or more,  tax is to be deducted at higher of the following rates on amount paid or payable to all Assesses (excluding NRI, TDS deductible U/s 192), who have not filed Return of income for the previous year immediately preceding the Financial Year in which tax is required to be deducted:

(i)               Twice the rate specified under respective sections (or)

(ii)              Twice the rates in force (or)

            (iii)        At 5%.

 

NOTE:  If PAN is not available or Inoperative, TDS is deducted at 20%, as per Section 206AA

 

12.  Timing of deduction: Tax is to be deducted at the time of payment or credit whichever is earlier except for Salaries u/s 192 and Provision of Benefit/Perquisite of Business/Profession U/s 194R, for which tax has to be deducted at the time of payment.

 

13.  OTHER IMPORTANT POINTS:

 

·        Certificate for NO or Lower Deduction- Section 197

As per sec 197, If the Recipient deriving his income covered U/s 192 / 194A / 194C / 194H / 194I / 194IB/ 194J/ 194M /195 may make an application in FORM 13 to Income Tax Officer to issue a certificate for NIL/Lower deduction. Thereupon, the payer of such income shall deduct tax at rates specified in such certificate for the period given in the Certificate.

 

·        Self-Declaration for NO TDS- Section 197A

 If Payee derives Income as specified U/s 193/194A/194DA/194I above and tax on his estimated Total Income is Nil, then he/she may give a Self-declaration in Form 15G/H to Payer for Non deduction of TDS.

 

Further, Payer of such sums shall deliver such Forms to Income Tax Officer on or before 7^th day of next month following the month in which the declaration is furnished to him.

 

·        Due dates for depositing tax deducted:

 

Tax Deducted in the month of	To be Deposited on or before
April’2022 – February’2023	7th of the subsequent month
March’2023	30th April 2023

 

• Due dates for filing E-TDS Returns in the year 2023-24:

Filing of Return in Electronic Form i.e., E TDS Return is mandatory. Due dates for filing such Return are:

Quarter	To be filed on or before
Q1: April to June 2023	31st July 2023
Q2: July to September 2023	31st October 2023
Q3: October to December 2023	31st January 2024
Q4: January to March 2024	31st May 2024

 

               Sec 201(1A): Late deduction, Late payment of TDS

For Late deduction- Interest @1% per month or part of the month on amount of TDS from the date when tax was deductible till the date when tax was actually deducted.

For Late Payment- Interest @1.5% per month or part of the month from the date when tax was deducted till the date when tax was actually paid to government.

 

• Sec 234E: Default in filing TDS/TCS returns

Delay in Filing of e-TDS Return attracts a fee of Rs. 200/- per day from the due date to the date of filing, subject to maximum of amount of tax deducted.

 

• Disallowances U/s 40(a)(ia):

Note that the above said Expenses will not be allowable as Expenditure, if tax has not been deducted at source or having deducted tax but not remitted to Government before due date of filing Return of Income.  30% of such Expense, will be disallowed and accordingly Assessee has to pay tax on such amount.  However, such expenditure can be claimed as expense in the year in which tax has been paid.  Similar disallowance shall be made in case of Non-Resident U/s 40(a) (i), but 100% of such expenditure shall be disallowed instead of 30%).