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TDS
What is the TDS rate if the property being sold belongs to an NRI?
When a property is sold by an NRI, the buyer must deduct TDS on the transaction. The rates are:
- 20% on long-term capital gains (property held for more than 2 years).
- 30% on short-term capital gains (property held for 2 years or less). Additionally, applicable surcharge and health & education cess are added. If the NRI applies for and obtains a lower TDS certificate from the Income Tax Department, the rate specified in the certificate will apply.
What types of payments are subject to TDS, and what are the applicable rates?
Payments covered under TDS and their typical rates include:
- Salaries: As per income tax slab rates.
- Rent: 2% for plant & machinery, 10% for land/building exceeding ₹2.4 lakh annually.
- Interest on securities: 10%.
- Professional services: 10%.
- Commission/Brokerage: 5%.
- Payments to contractors/subcontractors: 1% (individuals), 2% (others).
Is there a minimum threshold amount below which TDS is not deducted?
Yes, TDS is deducted only if the payment exceeds specified thresholds:
- Salary: Applicable if taxable income exceeds the basic exemption limit.
- Rent: ₹2.4 lakh annually.
- Interest on fixed deposits: ₹40,000 annually (₹50,000 for senior citizens).
- Contract payments: ₹30,000 for a single payment or ₹1 lakh aggregate in a year.
Can a payee request the payer to avoid deducting TDS and receive the payment in full?
Yes, the payee can submit a Form 15G (for individuals below 60 years) or Form 15H (for senior citizens) to the payer, declaring that their total income is below the taxable limit. Alternatively, the payee can apply to the Income Tax Department for a certificate under Section 197 for nil or lower deduction of TDS.
How can I verify the amount of TDS deducted from my income?
You can check the TDS deducted from your income by accessing Form 26AS on the Income Tax Department’s website through your e-filing account. It reflects all TDS transactions reported to the department by the deductor.
What TDS rate will be applied if the taxpayer does not file a return of income?
If the taxpayer fails to file an income tax return for the last two years, and the TDS or TCS amount exceeds ₹50,000 in each of those years, a higher rate of TDS under Section 206AB is applied:
- Twice the specified TDS rate or 5%, whichever is higher.
What steps should be taken if TDS credits are not reflected in Form 26AS?
If TDS is not reflected in Form 26AS:
- 1. Confirm the TDS details with the deductor.
- 2. Verify if the deductor has filed their TDS return correctly and included your PAN.
- 3. Request the deductor to rectify their TDS return if errors are identified.
- 4. File a grievance with the Income Tax Department if the issue persists.
Can I submit Form 15G or 15H for non-deduction of TDS on interest income if I do not have a PAN?
No, Form 15G or 15H cannot be submitted without a PAN. Additionally, if PAN is not furnished, TDS is deducted at a higher rate of 20%.
What are the consequences of using TDS funds for personal needs instead of depositing them in the government account?
Using TDS funds for personal purposes is a serious offense:
- Interest is levied for late deposit under Section 201(1A).
- Penalty up to the TDS amount under Section 221.
- Prosecution under Section 276B with imprisonment (3 months to 7 years) and a fine.
If I do not receive a TDS certificate from the deductor, can I still claim the TDS in my tax return?
Yes, you can claim the TDS credit in your income tax return if it is reflected in Form 26AS. The TDS certificate (Form 16/16A) is not mandatory for claiming the credit but is useful for record-keeping.
Is there a requirement to deduct TDS when purchasing land or a building?
Yes, under Section 194-IA, TDS at 1% must be deducted by the buyer if the property value exceeds ₹50 lakh. The TDS must be deposited using Form 26QB, and the buyer should issue a TDS certificate (Form 16B) to the seller.
What is the TDS rate for remuneration paid to a company's director?
TDS on director’s remuneration, which is not in the nature of salary, is deducted at 10% under Section 194J (professional services).
Is TDS applicable on payments made to the government?
No, TDS is not required to be deducted on payments made to government entities, corporations established under a Central or State Act, or institutions wholly owned by the government, as per Section 196.
Can TCS be collected on an amount that includes GST?
Yes, TCS (Tax Collected at Source) can be collected on the total amount, including GST, if the seller charges GST in the invoice, as per a circular issued by the Income Tax Department.
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