ALL ABOUT TAX DEDUCTED AT SOURCE (TDS) FROM SALARIES DURING THE FINANCIAL YEAR 2014-15 UNDER SECTION 192 OF THE INCOME TAX ACT, 1961

TDS

What is TDS or Tax Deducted at Source?

Tax deducted at source (TDS), as the very name implies aims at collection of revenue at the very source of income. It is essentially an indirect method of collecting tax which combines the concepts of “pay as you earn” and “collect as it is being earned.” Its significance to the government lies in the fact that it prepones the collection of tax, ensures a regular source of revenue, provides for a greater reach and wider base for tax. At the same time, to the tax payer, it distributes the incidence of tax and provides for a simple and convenient mode of payment.

The concept of TDS requires that the person on whom responsibility has been cast, is to deduct tax at the appropriate rates, from payments of specific nature which are being made to a specified recipient. The deducted sum is required to be deposited to the credit of the Central Government. The recipient from whose income tax has been deducted at source, gets the credit of the amount deducted in his personal assessment on the basis of the certificate issued by the deductor.

Who is to deduct TDS?

The statute requires deduction of tax at source from the income under the head salary. As such the existence of “employer-employee” relationship is the “sine-qua-non” for taxing a particular receipt under the head salaries. Such a relationship is said to exist when the employee not only works under the direct control and supervision of his employer but also is subject to the right of the employer to control the manner in which he carries out the instructions. Thus the law essentially requires the deduction of tax when;

(a) Payment is made by the employer to the employee.

(b) The payment is in the nature of salary and

(c) The income under the head salaries is above the maximum amount not chargeable to tax.

In Simple words, in case of payments other than payments by the Central Government or the State Government, the “persons responsible for paying” for the purpose of Section 192 means the employer himself or if the employer is a Company, the Company itself including the Principal Officer thereof. In case the credit, or as the case may be, the payment is made by or on behalf of Central Government or State Government, the DDO or any other person by whatever name called, responsible for crediting, or as the case may be, paying such sum is the -persons responsible for paying” for the purpose of Section 192.

Duties of Deductor:

Following are the basic duties of the person who is liable to deduct tax at source.

  • He shall obtain Tax Deduction Account Number and quote the same in all the documents pertaining to TDS.
  • He shall deduct the tax at source at the applicable rate.
  • He shall pay the tax deducted by him at source to the credit of the Government (by the due date specified in this regard).
  • He shall file the periodic TDS statements, i.e., TDS return (by the due date specified in this regard).
  • He shall issue the TDS certificate to the payee in respect of tax deducted by him (by the due date specified in this regard).​

 

Method of Tax Deduction:

Every person who is responsible for paying any income chargeable under the head “Salaries” shall deduct income-tax on the estimated income of the assessee under the head “Salaries” for the financial year 2014-15. The income-tax is required to be calculated on the basis of the Income Tax Rate Slab, subject to the provisions related to requirement to furnish PAN as per sec 206AA of the Act, and shall be deducted at the time of each payment. No tax, however, will be required to be deducted at source in any case unless the estimated salary income including the value of perquisites, for the financial year exceeds Rs. 2,50,000/- or Rs. 3,00,000/- or Rs. 5,00,000/-, as the case may be, depending upon the age of the employee.

Information From Employee : Salary From More Than One Employer:

Section 192(2) deals with situations where an individual is working under more than one employer or has changed from one employer to another. It provides for deduction of tax at source by such employer (as the tax payer may choose) from the aggregate salary of the employee, who is or has been in receipt of salary from more than one employer. The employee is now required to furnish to the present/chosen employer details of the income under the head “Salaries” due or received from the former/other employer and also tax deducted at source therefrom, in writing and duly verified by him and by the former/other employer. The present/chosen employer will be required to deduct tax at source on the aggregate amount of salary (including salary received from the former or other employer).

TDS Payment Online: Due Date & Interest on Late Payment

Prescribed time of payment/deposit of TDS to the credit of Central Government account is as under:

  1. a) In case of an Office of Government:
Sl No. Description Time up to which to be deposited.
1 Tax deposited without Challan [Book Entry] SAME DAY
2 Tax deposited with Challan 7TH DAY NEXT MONTH
3 Tax on perquisites opt to be deposited by the employer. 7TH DAY NEXT MONTH
  1. b) In any case other than an Office of Government
Sl No. Description Time up to which to be deposited.
1 Tax deducted in March 30th APRIL OF NEXT FINANCIAL YEAR
2 Tax deducted in any other month 7TH DAY NEXT MONTH
3 Tax on perquisites opted to be deposited by the employer 7TH DAY NEXT MONTH

However, if a DDO applies before the jurisdictional Additional/Joint Commissioner of Income Tax to permit quarterly payments of TDS under section 192, the Rule 30(3) allows for payments on quarterly basis and as per time given in Table below:

Sl. No. Quarter of the financial year ended on Date for quarterly payment
1 30th June 7th July
2 30th September 7th October
3 31st December 7th January
4 31st March 30th April next Financial Year

 

 Failure to Deposit Tax Deducted On Time: Consequences

If a person fails to deduct the whole or any part of the tax at source, or, after deducting, fails to pay the whole or any part of the tax to the credit of the Central Government within the prescribed time, he shall be liable to action in accordance with the provisions of section 201 and shall be deemed to be an assessee-in-default in respect of such tax and liable for penal action u/s 221 of the Act. Further Section 201(1A) provides that such person shall be liable to pay simple interest

(i) at the rate of 1% for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and

(ii) at the rate of one and one-half percent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.

Such interest, if chargeable, is mandatory in nature and has to be paid before furnishing of quarterly statement of TDS for respective quarter.

Section 271C inter alia lays down that if any person fails to deduct whole or any part of tax at source or fails to pay the whole or part of tax under the second proviso to section 194B, he shall be liable to pay, by way of penalty, a sum equal to the amount of tax not deducted or paid by him.

Further, section 276B lays down that if a person fails to pay to the credit of the Central Government within the prescribed time, as above, the tax deducted at source by him or tax payable by him under the second proviso to section 194B, he shall be punishable with rigorous imprisonment for a term which shall be between 3 months and 7 years, along with fine.

Due Dates For Filing Quarterly TDS Returns?

The person deducting the tax (employer in case of salary income), is required to file duly verified Quarterly Statements of TDS in Form 24Q for the periods [details in Table below] of each financial year, to the TIN/facilitation Centres authorized by DGIT (System‘s) which is currently managed by M/s National Securities Depository Ltd (NSDL). Particulars of e-TDS Intermediary at any of the TIN Facilitation Centres are available at http://www.incometaxindia.gov.in and http://tin-nsdl.com portals. The requirement of filing an annual return of TDS has been done away with w.e.f. 1.4.2006. The quarterly statement for the last quarter filed in Form 24Q (as amended by Notification No. S.O.704(E) dated 12.5.2006) shall be treated as the annual return of TDS. Due dates of filing this statement quarterwise is as in the Table below:

l No Return for Quarter ending Due date for Government Offices Due date for Other Deductors
1 30th June 31st July 15th July
2 30th September 31st October 15th October
3 31st December 31st January 15th January
4 31st March 15th May 15th May

Fee for default in furnishing statements (Section 234E):

If a person fails to deliver or caused to be delivered a statement within the time prescribed in section 200(3) in respect of tax deducted at source on or after 1.07.2012 he shall be liable to pay, by way of fee a sum of Rs. 200 for every day during which the failure continues. However, the amount of such fee shall not exceed the amount of tax which was deductible at source. This fee is mandatory in nature and to be paid before furnishing of such statement.

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