TdsIncome Tax Act

Meaning of Tax Deduction at Source
Source means the place of origin of an income .the first place from where the income
arises, flows or originates is termed as the source of income .Income-tax is deducted at
source of the income as per provisions of the income-tax Act, 1961. It simply means that
the person, paying an income for the first time, is required to deduct income-tax from
such income at the prescribed rates. The amount of tax so
deducted should be rounded off to the nearest rupee by ignoring amounts less than fifty
paisa and increasing the amount of fifty paisa or more to one rupee. The tax
Is so deducted is deposited to the credit of the central government within the
Prescribed time in the name of the person from whom the tax has been deducted.
The person who deducts such tax issues a certificate to the person concerned
Specifying the amount so deducted and the rate at which the tax has been deducted.
This is called as deduction of tax at source. Tax deducted at source been deducted.
Such amount is adjusted from the final tax liability of the assesses ascertained on his
regular assessment.
Tax Deduction at Source for a Person

PERSON
An individual
A Hindu Undivided Family (HUF)
A company
A firm
An association of persons (AOP) or a body of individual (BOI), whether
incorporated or not, for example, a club, a co-operative society etc.;
A local authority such as Municipality, Cantonment Board, District Board, Port
Trust etc., and
Every artificial juridical person, not falling, within any of the above, for example,
a Hindu idol or a deity (Balaji etc.) or God or Allah. It also includes all artificial
persons with a juridical personality such as a corporation Bar council.
Explanation
For the purpose of this clause, an association of persons or a body of individual or
a local authority or an artificial juridical person shall be deemed to be a person in
all cases. It does not matter whether or not such AOP, or BOI or authority or
juridical person was formed or established or incorporated with the object of
deriving income, profits or gains
OTHER PROVISIONS
The following provisions are also worth consideration in respect of deduction of tax
At source
1. Income payable net of tax[Sec 195-A]
Net amount payable*100
100-rate of tax deduction at source
2. No deduction of tax at source [Sec 196]
If any sum is payable to any of the following persons, no deduction of tax shall be
made by the payer : The Government
The RBI or
A corporation established by or under a Central Act, which is exempt from
income-tax on its income, or
A MF specified u/s 10 (23-D). Such sum payable may be interest on
securities or dividend on shares or any other income accruing arising to it.
3. Income in respect of units of non-residents [Sec 196-A]
4. Deduction of tax on any income in respect of units purchased in foreign
Currency [Sec 196-B]
5. Deduction of tax on any income from foreign currency bonds or shares of
Indian company [Sec 196-C]
6. Deduction of tax on income of Foreign Institutional Investors from securities
[Sec 196-D]
7. Deduction at lower rate [Sec 197]
8. No deduction at source in certain cases [Sec 197-A]
9. Tax deducted is income received [Sec 198]
10. Credit for tax deducted [Sec 199]
11. Duty of person deducting tax [Sec 200]
12. Consequences of failure to deduct or pay tax [Sec 201]
13. Certificate for tax deducted [Sec -203]
14. Tax deduction account number TAN[Sec -203A]
15. Furnishing of statement of tax deducted [Sec -203AA]
16. Meaning of person responsible for paying[Sec -204]
17. No direct demand from assessee [Sec -205]
18. Persons deducting tax to furnish prescribed returns [Sec -206]
19. Furnishing of quarterly return in respect of payment of interest to residents
without deduction of tax [Sec -206A]
Income Tax Act
SOURCE DEDUCTION REGULATION

[Includes amendments up to B.C. Reg. 235/2007, July 1, 2007]
Contents
1. Interpretation
2. Deduction and remittance
3. Regular remuneration
4. Commissions and salary or wages combined
5. EVCC shares
6. Bonuses, retroactive increases and lump sum payments
7. When deductions are not required
8. Variations in deductions
9. Employees' returns
3
10. Application of other provisions of federal regulations
1.
Interpretation
1 (1) In this regulation:
"Act" means the Income Tax Act (British Columbia);
"appropriate percentage" for a year means the lowest percentage specified in

section 4.1 (1) of the Act that is applicable in determining tax payable under the Act for
that year;
"base credit amount" for a particular year means the greater of
(a) the amount referred to in section 4.3 (1) (c) of the Act [basic personal creditsingle status], and
(b) the sum of the amounts that the employee would be entitled to claim for that
year under
(i) sections 4.3 [personal credits], 4.31 [age credit] and 4.32 [pension credit] of the Act
if the description of A in those sections were read as "is equal to one",
(ii) section 4.51 of the Act [credit for mental or physical impairment] if the description
of A in that section were read as "is equal to one" and as if section 118.3 (1) (c) of the
federal Act were inapplicable in determining an individual's entitlement to a deduction
under section 4.51 (1) of the Act,
(iii) sections 4.6 [tuition credit] and 4.61 [education tax credit] of the Act, if
(A) in applying section 118.5 (1) of the federal Act for purposes of section 4.6 of the Act,
section 118.5 (1) of the federal Act were read without the expression "an amount equal to
the product obtained when the appropriate percentage for the year is multiplied by",
(B) the description of A in section 4.61 of the Act were read as "is equal to one", and
(C) the amount, if any, by which the total amount of all scholarships, fellowships and
bursaries that the employee claims to expect to receive in the year exceeds $3 000 were
subtracted from the total of the amounts determined under sections 4.6 and 4.61 of the
Act as modified by clauses A and B of this definition,
(iv) section 4.65 of the Act [transfer of unused credits to spouse or common law
partner], if the formula A + B ? C were read as
A+B
D
where
D is the appropriate percentage for the year, and
(v) section 4.67 of the Act [transfer of unused credits to parent or grandparent], if the
formula A-B in section 4.66 of the Act were read as
A
C
where
C is the appropriate percentage for the year;
"employee" means a person receiving remuneration who reports for work at an
employer's establishment in British Columbia;
"employer", "estimated deductions", "pay period", "remuneration" and
"total remuneration" each has the same meaning as in section 100 of the federal
regulations;
"federal regulations" means the Income Tax Regulations under section 221 (1)
of the federal Act, as amended from time to time;
"year" means a calendar year.
(2) Amounts expressed in dollars in the Act that are relevant to the definition in this
section of "base credit amount" and are subject to an annual adjustment under
section 4.52 of the Act [indexing] are subject to the same annual adjustment for the
purpose of that definition.
(3) For the purposes of this regulation, section 100 (3), (3.1), (3.2) and (4) of the federal
regulations applies.
(4) A reference in this regulation to a provision of the federal regulations referred to in
subsection (3) or in section 10 (1) is a reference to that provision of the federal
regulations as it applies for the purposes of this regulation.
2.
Deduction and remittance
Every person who makes a payment described in section 153 (1) of the federal Act, as
that section applies for the purposes of the Act, to an employee must deduct or withhold
from that payment, and remit to the Receiver General of Canada, the amount, if any, that
is determined under this regulation.
3.
Regular remuneration
(1) Subject to subsection (3) and sections 4 to 8 and to section 109 of the federal
regulations, the amount to be deducted or withheld under section 2 of this regulation for a
pay period in which the employer makes a payment of remuneration to an employee is
determined by the formula
A
B
where
A is the employee?s notional tax for the year in which the payment is made, and
B is the maximum number of such pay periods in that year.
(2) For the purposes of this section,
(a) an employee?s notional tax for the year is the amount determined by the formula
C?D
where
C is the amount of tax that would be determined under section 4.1 (1) of the Act for the
year if the employee?s notional remuneration for that year were the employee?s taxable
income for the year, and
D is the total of
(i) the employee?s BC tax credit amount, and
(ii) the amount that the employee would be entitled to claim under section
4.301 of the Act for the year if the employee?s notional remuneration for
that year were the employee?s income for the year,
(b) an employee?s notional remuneration for the year is the amount determined by the
formula
ExF
ExF
where
E is the amount that is the mid-point of the applicable range of remuneration specified in
Schedule 1 for the pay period in which the payment falls, and
F is the maximum number of such pay periods in that year, and
(c) the employee?s B.C. tax credit amount is the amount determined by the formula
G x [H + I + J]
where
G is the appropriate percentage for the year,
H is,
(i) if the employee is resident in Canada at the time of the payment, the amount specified
in Schedule 2 as the mid-point of the range of amounts within which the employee?s base
credit amount falls, and
(ii) if the employee is not resident in Canada at the time of the payment, nil.
I is the employee?s notional remuneration for the year multiplied by the employee?s
premium rate for that year under the Employment Insurance Act (Canada), not exceeding
the maximum amount of the premiums payable by the employee for the year under that
Act, and
J is the employee?s notional remuneration for the year less the amount for that year
determined under section 20 of the Canada Pension Plan multiplied by the employee?s
contribution rate for the year under that Act or under a provincial plan as defined in
section 3 of that Act, not exceeding the maximum amount of such contributions payable
by the employee for the year under the plan.
(3) The amount determined under subsection (1) must be rounded to the nearest multiple
of 5?, or, if that amount is equidistant from 2 such multiples, to the higher multiple.
(4) Amounts expressed in dollars in section 4.1 (1) of the Act that are subject to an annual
adjustment under section 4.52 of the Act [indexing], are subject to the same annual
adjustment in determining the employee?s notional tax for the purposes of this section.
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4.
Commissions and salary or wages combined
(1)
Subject to sections 5 to 8 of this regulation and to section 109 of the federal

regulations, if an employee has made an election under section 107 (2) of the
federal regulations and has not revoked that election, the amount to be deducted
or withheld under section 2 of this regulation by the employer from any payment
of remuneration to that employee is the amount determined by the formula
AxB
where
A is the amount of the payment, and
B is the employee's notional tax rate.
(2)
For the purposes of this section,
(a)
an employee?s notional tax rate is, subject to subsection (3), the amount
C
D
where
C is the employee's notional tax, and
D is the employee?s total remuneration for the year,
(b)
an employee?s notional tax is the amount determined by the formula

E?F
where
E is the amount of tax that would be determined under section 4.1 (1) of the Act for
the year if the employee?s net notional remuneration for that year were the
employee?s taxable income for the year, and
F is the total of
(i) the employee?s BC tax credit amount, and
(ii) the amount that the employee would be entitled to claim under section
4.301 of the Act for the year if the employee?s net notional remuneration
for that year were the employer?s income for the year,
(c)
an employee?s total remuneration for the year is the amount recorded as such by
the employee on the return filed under section 107 (2) of the federal regulations,
(d)
an employee?s net notional remuneration is the amount determined by the

formula
D?H
where
D is the employee?s total remuneration for the year, and
H is the employee?s expenses for the year as recorded by the employee on the return
filed under section 107 (2) of the federal regulations, and
(e)
an employee?s B.C. tax credit amount is the amount determined by the formula
I x [J + K + L]
where
I is the appropriate percentage for the year,
J is
(i) if the employee is resident in Canada at the time of the payment, the
employee?s base credit amount for the year as recorded by the employee
on the return filed under section 9, and
(ii) if the employee is not resident in Canada at the time of the payment,
nil,
K is the employee?s total remuneration for the year multiplied by the employee?s
premium rate for the year under the Employment Insurance Act (Canada), not
exceeding the maximum amount of the premiums payable by the employee for the
year under that Act, and
L is the employee?s total remuneration for the year less the amount for the year
determined under section 20 of the Canada Pension Plan multiplied by the
employee?s contribution rate for the year under that Act or under a provincial plan
as defined in section 3 of that Act, not exceeding the maximum amount of such
contributions payable by the employee for the year under the plan.
(3) For the purposes of this section, the amount determined under subsection (2) (a) is
to be rounded to 2 places after the decimal by
(a) adding .005 to the first 3 digits after the decimal, and
(b) dropping the third digit from the total obtained under paragraph (a).
(4)
5.
(1)
Amounts expressed in dollars in section 4.1 (1) of the Act that are subject to an
annual adjustment under section 4.52 of the Act [indexing], are subject to the
same annual adjustment in determining the employee?s notional tax for the
purposes of this section.
EVCC shares
If in a year an employer deducts from a payment of remuneration to an employee
an amount in respect of the acquisition by the employee of an EVCC share, there
must be deducted from the amount determined under section 3 (1) or 4 (1), as the
case may be, in respect of that payment the smaller of
(a) 15% of the amount deducted or withheld in respect of the acquisition of the
share, and
(b) the amount determined by the formula
A?B
where
A is $2 000, and
B is the total of all deductions made under this subsection in respect of prior pay
periods in that year.
(2) In this section, "EVCC share" means a share of a corporation registered under
Part 2 of the Employee Investment Act as an employee venture capital corporation.
6.
Bonuses, retroactive increases and lump sum payments
(1) If in any year a payment for a bonus or retroactive increase in remuneration is made
by an employer to an employee whose total remuneration from the employer,
including the bonus or retroactive increase, may reasonably be expected not to
exceed $5 000 in that year, the amount to be deducted or withheld under section 2 by
the employer from the payment is 5% of the payment.
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(2) If, in any pay period in a year, a payment for a bonus is made by an employer to an
employee whose total remuneration from the employer, including the bonus, may
reasonably be expected to exceed $5 000 in that year, the amount to be deducted or
withheld under section 2 by the employer from the payment is the amount
A x [B ? C]
where
A is the maximum number of such pay periods in that year,
B is the amount determined under section 3 for an assumed remuneration equal to
the sum of
(a) the amount of regular remuneration paid by the employer to the employee in
the pay period in which the bonus payment is made, and
(b) an amount equal to the bonus payment divided by the number of pay
periods in that year, and
C is the amount determined under section 3 in respect of the amount of regular
remuneration paid by the employer to the employee in the pay period in which the
payment is made.
(3) If in any year a payment for a retroactive increase in remuneration is made by an

employer to an employee whose total remuneration from the employer, including the
retroactive increase, may reasonably be expected to exceed $5 000 in that year, the
amount to be deducted or withheld under section 2 by the employer from the
payment is the amount determined by the formula
D x [E ? F]
where
D is the number of pay periods for which the increase in remuneration is retroactive,
E is the amount determined under section 3 for the new rate of remuneration, and
F is the amount determined under section 3 for the previous rate of remuneration.
(4) Subject to subsection (5), if a lump sum payment as defined in section 103 (6) of the
federal regulations is made by an employer to an employee who is a resident of
Canada, the amount to be deducted or withheld under section 2 of this regulation by
the employer from the payment is as follows:
11
(a) 3% of the payment, if the payment does not exceed $5 000;

(b) 7% of the payment, if the payment exceeds $5 000 but does not exceed
$15 000;
(c) 10% of the payment, if the payment exceeds $15 000.
(5)
If the lump sum payment referred to in subsection (4) is pension income or

qualified pension income of the employee to which section 4.32 of the Act would
apply if the definition "pension income" in subsection 118 (7) of the federal Act
were read without reference to paragraph (a) (ii) and (iii) of that definition, the
payment is deemed to be the amount of the payment minus,
(a) if the payment does not exceed $30 004, the smaller of $1 000 and the
amount of the payment,
(b) if the payment exceeds $30 004 and does not exceed $60 009, the amount
A
$1 000 x
B
where
A is the appropriate percentage, and
B is the percentage in section 4.1 (1) (b) (ii) of the Act that is applicable in
determining tax payable under the Act for the year in which the payment is made,
(c) if the payment exceeds $60 009 and does not exceed $70 000, the amount
A
$1 000 x
B
where
B is the percentage in section 4.1 (1) (c) (ii) of the Act that is applicable in
determining tax payable under the Act for the year in which the payment is made,
(d) if the payment exceeds $70 000 and does not exceed $85 000, the amount
12
A
$1 000 x
B
where
B is the percentage in section 4.1 (1) (d) (ii) of the Act that is applicable in
determining tax payable under the Act for the year in which the payment is made, or
(e) if the payment exceeds $85 000, the amount determined by the formula
A
$1 000 x
B
where
B is the percentage in section 4.1 (1) (e) (ii) of the Act that is applicable in
determining tax payable under the Act for the year in which the payment is made.
(6)
An amount that
(a) is expressed in dollars in subsection (5), and
(b) is the same as an amount in section 4.1 of the Act that is subject to
adjustment under section 4.52 of the Act [indexing],
is subject to the same annual adjustment for the purposes of subsection (5) of this
section.
(7) For the purposes of subsection (5) (b) to (e), the amount determined by the
formula must be rounded to the nearest multiple of one dollar, or, if that amount is
equidistant from 2 such multiples, to the higher multiple.
7.
When deductions are not required

No amount is required to be deducted or withheld under this regulation from a
payment in respect of an employee who was neither employed nor resident in
Canada at the time of the payment, except in respect of
13
(a) remuneration described in section 115 (2) (e) (i) of the federal Act that is
paid to a non-resident person who has in the year in which the payment is
made, or who had in any previous year, ceased to be a resident of Canada, or
(b) remuneration reasonably attributable to the duties of any office or
employment performed or to be performed in Canada by the non-resident
person.
8.
(1)
Variations in deductions
This section applies to a payment of remuneration by an employer to an employee
if
(a) the payment is made in respect of a period for which no provision is made
in Schedule 1, or
(b) the payment is made for a pay period referred to in Schedule 1, and the
amount of the payment is greater than any amount provided for in that schedule
for that pay period.
(2)
In the circumstances described in subsection (1), the amount to be deducted or

withheld under section 2 from the payment of remuneration is the amount
B
Ax
C
where
A is the amount of the payment,
B is the tax reasonably expected to be payable under the Act by the employee on the
total remuneration reasonably expected to be paid by the employer to the employee
for the year in which the payment is made, and
C is the total remuneration referred to in the description of B.
9.
Employees' returns
If an employee is required under section 227 (2) of the federal Act as it applies for
the purposes of this regulation to file a return with the employer,
14
(a) the return must be in the form authorized by the Minister of Finance and
Corporate Relations,
(b) the return must be filed with the employer when the employee commences
employment with that employer, and
(c) a new return in the same form must be filed within 7 days after the date of
any event that may reasonably be expected to change the employee's base credit
amount for the year.
10.
(1)
Application of other provisions of federal regulations

The following provisions of the federal regulations apply for the purposes of this
regulation:
(a) section 102 (5) [previously reported commissions];
(b) section 104 (3), (3.01), (3.1) and (4) [payments out of or under an RRSP
during lifetime of annuitant];
(c) section 104.1 [lifelong learning plan];
(d) section 107 (2) and (3) [election to file form relating to commissions and
revocation of election];
(e) section 108 [remittances to Receiver General];
(f) section 109 [election to increase deductions], except that, in addition to any
other necessary modifications, a reference in that section to "the form
prescribed by the Minister" is to be read as a reference to "the form authorized
by the Minister of Finance and Corporate Relations";
(g) section 110 (1) [prescribed persons for purposes of remittances].
(2)
Section 100 (2) and (5) of the federal regulations does not apply for the purposes
of this regulation.
e-TDS
Entities (both corporate and non-corporate deductors) making payments (specified under
Income Tax Act) to third parties (deductees) are required to deduct tax at source (Tax
Deducted at Source -TDS) from these payments and deposit the same at any of the
designated branches of banks authorised to collect taxes on behalf of Government of
15
India. They should also furnish TDS returns containing details of deductee(s) and challan
details relating to deposit of tax to ITD.
As a part of automation of collection, compilation and processing of TDS returns ITD has
notified an "Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003". It is
applicable to all deductors furnishing their TDS return in electronic form. As per this
scheme:
It is mandatory (w.e.f. June 1, 2003) for corporate deductors to furnish their TDS returns
in electronic form (e-TDS return).
From F.Y. 2004-2005 onwards furnishing TDS returns in electronic form is also mandatory
for government deductors in addition to corporate deductors.
Deductors (other than government and corporates) may file TDS return in electronic or
physical form.
National Securities Depository Ltd. (NSDL) as the e- TDS Intermediary (appointed by
ITD) receives, on behalf of ITD, the e-TDS returns from the deductors.
Deductors can submit e-TDS returns through TIN-Facilitation Centres (TIN-FC)

established by NSDL or directly upload through NSDL web-site.
e-TCS
TCS means collection of tax at source by the seller (collector) from the buyer
(collectee/payee) of the goods (specified u/s 206C of Income-tax Act, 1961, like timber
obtained under forest lease, scrap, any other forest produce not being timber or tendu
leaves etc.,). For e.g. if purchase value of goods is Rs.10,000/-, the buyer will pay an
amount of Rs.10,000/- + X (X being the value of TCS as prescribed under Income-tax
Act, 1961) to the seller. The seller will deposit the tax collected at source (TCS) at any of
the designated branches of the authorised banks.
Following the automation of TDS returns in 2003, ITD has now notified an "Electronic
Filing of Returns of Tax Collected at Source Scheme, 2005". It is applicable to all
deductors furnishing their TCS return in electronic form. As per this scheme:
It is mandatory for corporate and government deductors to furnish their TCS returns in
electronic form (e-TCS return) from F.Y. 2004-2005 onwards.
Deductors (other than government and corporates) may file TCS return in electronic or
physical form.
NSDL as the e-TCS Intermediary (appointed by ITD) receives, on behalf of ITD, the eTCS returns from the deductors.
REVISED FORMS AND FILE FORMATS FOR e-TDS/e-TCS RETURNS

Financial Year
Form
Periodicity
Remarks
2002-2003
2003-2004 24 - TDS
26 - TDS
27 - TDS Annual
Annual
Quarterly Corporates - mandatory to file
in electronic form
16
Other deductors - may file in

electronic form or in physical form
Form 27A to be filed in physical form with each return submitted through TIN-FC
2004-2005* Revised 24 - TDS
Revised 26 - TDS
Revised 27 - TDS
27E - TCS
Annual
Annual
Quarterly
Annual
Corporates, Government
Departments / Organisations mandatory to file in electronic form
Form 27A to be filed in physical form with each e-TDS return and Form 27B to be filed
in physical form with each e-TCS return submitted through TIN-FC
2005-2006**
24Q - TDS
26Q - TDS
27Q - TDS
27EQ - TCS Quarterly
Quarterly
Quarterly
Quarterly Corporates, Government
Departments / Organisations mandatory to file in electronic form
Form 27A to be filed in physical form with each return submitted through TIN-FC
*Forms for TDS/TCS returns have been revised by ITD. Corresponding file formats for eTDS (Form 24, 26, 27) and e-TCS (Form 27E) have been notified by ITD and have come
into effect from May 1, 2005.
**e-TDS/e-TCS returns will be filed quarterly for F.Y. 2005-2006. The file formats for
quarterly returns (Forms 24Q, 26Q, 27Q and 27EQ) have been notified by the ITD and have
been made available on NSDL web-site.
Deductors furnishing e-TDS/ e-TCS returns are required to furnish a control chart - Form
27A/ 27B in physical form along with the e-TDS/e-TCS return furnished in CD/floppy.
Form 27A is a summary of TDS return (Form 24, 26 or 27), which contains control totals
of 'Amount Paid' and 'Income tax deducted at source'.
Form 27B is a summary of e-TCS return (Form 27E) which contains 'Amount Paid' and
'Income Tax Collected at Source'. The control totals mentioned on Form 27A/ 27B should
match with the corresponding control totals in e-TDS/e-TCS return file. Form 27A is
required to be furnished separately for each TDS return (Form 24, 26 or 27). Form 27B is
required to be furnished separately for each TCS return (Form 27E)
Procedures and guidelines for preparing and furnishing e-TDS/e-TCS return are given in
Deductors Manual available at downloads section.
17
NSDL has developed a freely downloadable utility called File Validation Utility to verify
whether the e-TDS/e-TCS return files prepared by the deductors/ collectors conform to
the prescribed format.
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Nature of
Payment/
Section
Rate of
TDS
When to
deduct
1 Salary +
. Value of
perquisites
(Sec. 192)
2 Interest
. (Sec.
194A)
Average
tax rate
On payment
3 Contract/
. Sub
contract
(Sec.
194C)
Compan
y- 20%
Others 10%
Contract
-2%
Subcontract1%
Advert.
1%
10%
4 Insurance
. commissio
n
(Sec.
194D)
5 Rent
Individu
. payment
als/HUF
(Sec. 194I) s-15%
Others20%
6 Fees to
5%
. Profession
al
(Sec. 194J)
7 Payment
As per
. to nonPart-II
residents
1st
(Sec. 195) Schedul
e
8 Repaymen 20%
. t of NSS
etc.
(Sec. 194-
Time of
Deposit to
Central govt.
Grant of
TDS
certificate
Annual Returns
relating toTDS
Form
Time
No.
Limit
24
May-31
Person
responsible
for
deduction
Employer/P
rincipal
Officer/
Payer/ DDO
Employer/P
rincipal
Officer/
Payer/ DDO
By Govt. A/c
same day
By others
within 7 days
On payment One week
/ credit
from end of
whichever is month
earlier
Form 16
within 30th
April
Form 16A
within 1
month
26A
June-30
On payment One week

/ credit
from end of
whichever is month
earlier
Form 16A
within 1
month
26C
June-30
Employer/P
rincipal
Officer/
Payer/ DDO
On payment One week

/ credit
from end of
whichever is month
earlier
Form 16A
within 30th
April
26D
June-30
Employer/P
rincipal
Officer/
Payer/ DDO
On payment One week

/ credit
from end of
whichever is month
earlier
Form 16A
within 1
month
26J
June-30
Employer/P
rincipal
Officer/
Payer/ DDO
On payment
/ credit
whichever is
earlier
On payment
/ credit
whichever is
earlier
One week
from end of
month
Form 16A
within 1
month
26K
June-30
One week
from end of
month
Form 16A
within 1
month
27
On payment
On the day of
deduction
Form 16A
within 1
month
26F
Within
14 days
from
end of
quarter
June-30
Employer/P
rincipal
Officer/
Payer/ DDO
Employer/P
rincipal
Officer/
Payer/ DDO
Employer/P
rincipal
Officer/
Payer/ DDO
19
EE)
9 Int. on
. Securities
(Sec 193)
1 Dividend
0 (Sec. 194)
. up to 31-597
1 Lottery/
1 Crossword
.
(Sec.
194B)
1 Horse
2 Race
. (Sec.
194BB)
1 Re3 purchase
. of units by
mutual
funds or
UTI
(Sec.
80CCB/
194F)
1 Commissi
4 on on
. Lottery
tickets
(Sec.
194G)
1 Income
5 from units
. of mutual
funds
(Sec.
194K)
1 Non
6 resident
. Sportsman
/ Sports
asso./Inst.
(Sec.
10%
On
One week
payment/
credit
whichever is
earlier
Before
Within 7 days
payment or
distribution
Form 16A
within one
month
25
June 30
Form 16A
within one
month
26
April 30
40%
On
Payment
Within 7 days
Form 16A
within one
month
26B
May 31
Principal
Officer/
Payer
40%
On
Payment
Within 7 days
Form 16A
within one
month
26BB
May 31
Principal
Officer/
Payer
20%
On Payment
Within one
week of
deduction
Form 16A
within one
month
26G
June 30
Principal
Officer/
Payer
10%
On
Payment
By Govt.
same day, by
others within
7 days
Form 16A
within one
month
26H
June 30
Principal
Officer/
Payer
Compan
y-20%
Others15%
On
Payment
Within 7 days
Form 16A
within one
month
26
April 30
Principal
Officer/
Payer
10%
On
Payment/
credit
Govt. a/c
same day, by
others one
week from
end of month
Form 16A
within one
month
27
Within
14 days
from
end of
quarter
Principal
Officer/
Payer
20%
Govt. State/
Central/
Local Auth./
Corpn./ Co.
etc.
Principal
Officer/
Payer
20
194E)
1 Units of
7 Non. residents
except Co.
20%
On
Payment/
credit
Govt. a/c
same day, by
others one
week from
end of month
Form 16A
within one
month
27
Within
14 days
from
end of
quarter
Principal
Officer/
Payer
10%
On
Payment/
credit
Govt. a/c
same day, by
others one
week from
end of month
Form 16A
within one
month
27
Within
14 days
from
end of
quarter
Principal
Officer/
Payer
10%
On
Payment/
credit
Govt. a/c
same day, by
others one
week from
end of month
Form 16A
within one
month
27
Within
14 days
from
end of
quarter
Principal
Officer/
Payer
10%
On
Payment/
credit
Govt. a/c
same day, by
others one
week from
end of month
Form 16A
within one
month
27
Within
14 days
from
end of
quarter
Principal
Officer/
Payer
NIL
(Sec.
196A)
w.e.f. 1-795
(if
acquired
out of NRI
a/c by
Ind./HUF)
1 Income
8 from units
.
(As per
Sec.
115AB/
196B)
w.e.f. 1-692
1 Intt/Div/L
9 TCG
. income of
N.R.
(Sec.
115AC &
196C)
w.e.f.1-693
2 Income of
0 FII from
. securities
(Sec.
115AD &
196D)
w.e.f. 1-693
21
IMPORTANT NOTES :
1. Sec. 192 - Salary
A] Rate of Tax for F.Y. 200708 1,00,000 - 150,000 10%

60,001-1,50,000
- 20%
above 1,50,000 - 30%

2. Sec. 194A
A] Limit of interest in case of

term deposits exceeding Rs.
10,000/B] In other cases : Rs. 2,500/-
3. Sec. 194B- Horse Race
Payment exceeding Rs. 2,500/-
4. Sec. 194B- Lottery/ Puzzle
Payment exceeding Rs. 5,000/-
5. Sec. 194C - Contractors/ Subcontractors includes exceeding Rs. 20,000

Broadcasting, telecasting, carriage of goods and
passengers by any mode other than Rly. and
chartering a plane.Payment for advertisement
contracts
6. Sec. 194D - Insurance Commission
In excess of Rs. 5,000 in a F.Y.
7. Sec. 194E- Non Resident Sportsman/ Institution
Return within 45 days from end

of quarter/ within 2 months &
14 days from end of F.Y.
8. Sec. 194EE - Repayment of NSS
If exceeds Rs. 2,500 p.a.
9. Sec. 194G- Lottery ticket
Commission exceeding Rs.

1,000/-
10. Sec 194I - Rent Payment
Exceeding Rs.1,20,000 p.a.
11. Sec. 194J - Payment to professional/ technical

services
Exceeding Rs. 20,000 p.a.
12. Sec. 194K- as per section 10(23D)
exceeding Rs. 10,000/- w.e.f. 17-95.
13. Sec. 195 -
Any payment except interest on
22
security to non-resident.
14. Payee/ Principal Officer stands for any person responsible for payment of
disbursement to the fund.
15. Penal Provisions:
1] Failure to deduct tax at source on average rate/ Sec. 201(1) & Interest 15% p.a.
applicable rate
u/s. 201(1A) Penalty u/s. 221,
271C equal to amount of tax not
deducted.
2] Failure to deposit tax deducted
Interest u/s. 201(1A), Penalty

u/s. 221, Prosecution u/s. 276B,
RI 3 months to 7 years & fine.
3] Failure to issue TDS certificate
Sec. 272A(2)(g) Rs.200 per day

max. Rs. 100 per day minimum
per certificate
4] Failure to submit Returns/ Statement
Sec. 272A(2)(c) Rs.200 per day

per certificate
5] Failure to recover tax and pay u/s. 226(2)
Sec. 272A(2)(h) Rs.200 per day

per certificate
6] Failure to deliver declaration to CIT/ CCIT

u/s. 197A within 7th of next month
Sec. 272BB Rs.5000 maximum
16. The TDS provisions form Sec. 192 to 206B of Income-Tax Act may be referred.
17. Form No. 27 on payment of NRI to be filled within 14 days of end of the quarter,
in case of last day of Accounting year after expiry of 2 months and 14 days.
18. A consolidated certificate in form no. 16A for F.Y. may be issued within one month
from the end of F.Y. at the request of payee.
19. TDS out of actual payment on March 31 or on the last day of F.Y. is to be deposited
by 7th April or 7th of the first month of next financial year.
20. TDS out of amount credited only in books (excluding actual amount paid) is to be
deposited by 31 May or within two months from the end of F.Y. as the case may be.
21. Certificate to be issued in form No. 16/ 16A within 2 months and 7 days from end
of F.Y. in case of amount credited on last day of financial year.
OBLIGATION OF TAX DEDUCTORS AND PROCEDURES

TAN (TAX DEDUCTORS ACCOUNT NUMBER)
1. Compulsory for all those who are responsible for deduction of tax. (Refer TDS at a
Glance for nature of
23
payments requiring TDS)

2. Application to ITO, TDS for TAN - in form No.49-B in duplicate [See Rule 114(A)]
3. Only one TAN is required for different types of deductions.
4. TAN number must be quoted properly on all Challans, Returns, Form No.16/16A and
in all correspondences with Income-tax Department.
5. TAN number consists of 8 digits.
6. First Alphabet - denotes first alphabet of name which is followed by next Four/Five
numeric digits and One alphabet.
7. There is a bracket ( ) after last alphabet and bracket() should be fill-up in the following
manner. The alphabet in bracket indicates nature of payment and is very important.
Following alphabet should be used within bracket() while filing of different returns
under TDS.
(S)
for SALARY
(I)
for INTEREST
(N)
for INSURANCE COMMISSION
(T)
for INTEREST ON SECURITIES
(D)
for DIVIDEND
( L)
for LOTTERY
(H)
for WINNING FROM HORSE RACE
(C)
for CONTRACT
(F)
for OTHER TYPES OF PAYMENT
For example :
TAN No. for Bhonsle Brothers may be B-66167-A( )
( ) should be filed by (S) while filing salary return in Form No.24 u/s such as S-55867A(S)
In the return for interest u/s.194A the TAN No.will be quoted as S-55867-A(I)
In the return for contracts the TAN No. will be quoted as S-55867-A(C)
>> The alphabets shall be changed within the bracket for each return and for each type of
payments while the
remaining portion of TAN No. will be same.
>> Use correct alphabet in ( ) of TAN No. for different types of payments.
24
>> Use correct TAN No. on Challans and in all correspondences accordingly.
>> Do not change, after TAN Number in any circumstances which is out of bracket ( )
TAN NUMBER MUST BE QUOTED ON
1.
2.
3.
4.
All the Challans - payment for TDS (as per Sec.200)

All Certificates - Issue in form No.16/16A (Sec. 203 r.w.r.31)
All Returns - Required under TDS u/s.206
All other documents and correspondence with TDS range/ITO, TDS
CONSEQUENCES OF FAILURE TO APPLY OR QUOTE TAN NUMBER

Penalty up to Rs.5,000 for each defaults u/s.272BB
PROCEDURE FOR DEDUCTION OF TAX ON PAYMENTS OR CREDITS
Step:1
Deduction at Source is to be made on disbursement or credit whichever is earlier.

Identify the different heads under which the payments are liable to TDS on
disbursement/ payment or credit.
Deduct the taxes as per applicable rates.
Deposit the taxes deducted to Central Government Account within due dates.
Use correct challans for payment of TDS to the Government Account. Challans
are
i.
ii.
ITNS-269 (RED) for TDS on payments to Companies.

ITNS-271 (BLUE) for TDS on payments to other than companies.
Fill-up all the columns of the challans correctly specifying the designation of
jurisdictional ITO-TDS, TAN No.
Refer "TDS at a Glance" for assistance or any clarifications.
TDS CERTIFICATES & RETURNS

Step:2
Issue certificate to the payees in form No.16/16A within the stipulated time limit
(refer TDS at a Glance and Rule 31 of I.T. Rules, 1962 for assistance).
Do file the return of TDS in the prescribed form within the prescribed time limit.
(refer TDS at a Glance and 37A of I.T. Rules, 1962)
Use the correct form no. for each TDS return to be filed on different types of
payments.
Fill-up all the columns of the TDS returns positively specifying the full name and
designation of the person signing the return.
25
Do mention NOT APPLICABLE if a particular column is not relevant but do not

leave it blank.
Do enclose one counter part of original challan with the return of TDS for the
TDS paid.
Enclose one copy of form no. 16/16A with the TDS return (Refer Circular
No.632,654,666 & I.T. fourth amendment Rules, 1997 w.e.f. 19.03.97).
DEDUCTION OF TDS OUT OF SALARY PAYMENTS

Step:3
For TDS on salary payments - work out the anticipated salary of each employee
on the basis of previous years salary in the beginning of the year.
Take care of anticipated increase in salary of each employee during the current
year while forming the estimate of the salary payments to be made during the
year.
Work out the tax to be deducted at source on the anticipated salary at the
prescribed rates and divide the same by 12.
Deduct 1/12 of the tax in every month from the 1st month of the financial year i.e.
April.
Increase the amount of monthly TDS from the month in which any unforeseen
increase is made to the salary of any employee on account of any Bonus, Arrears
of Salary, Dearness Allowance, etc. which could not be foreseen in the beginning
of the year.
Reduce the TDS amount in the last quarter or month if any excess deduction made
in the earlier months.
Do obtain necessary evidences for savings/payments before allowing credit for
granting of rebate/ deductions.
Please write short note with the TDS return on variations of TDS made in
different months specifying the reasons for increased TDS deduction during the
close of the year,specially if TDS is not made in equal installments during the 12
months.
Pay interest @ 15% per annum u/s.201(1A) of the Income-tax Act on differed
payments i.e. on TDS amount which was deductible in the initial months of the
financial year from the month in which TDS was due to the date of payment of
such TDS amount.
Deductions / Rebates to be considered by DDOs for determining TDS liability on

salary payments to employees.
A.
DEDUCTION FROM GROSS TOTAL INCOME

1. Amount paid/deposited towards annuity plan of LIC for receiving pension from
the fund maximum Rs.10,000 in a year (Section 80CC)
2. Amount paid by cheque towards Mediclaim upto Rs.10,000 (80D)
26
3. Amount paid for medical treatment of handicapped dependent upto Rs.40,000

(See Section 80DD for details and Rule 11A).
4. Deduction for expenditure on medical treatment of certain disease or ailment for
assessee himself or dependent upto Rs.15,000. (Refer Section 80DDB Rule 11DD
for conditions, details, etc.)
5. Re-payment of loan taken for higher education upto Rs.25,000 (for conditions and
details refer Section 80E of I.T. Act, 1961)
6. No deduction for donations to be considered except, after verification of payments
to made to the followings @ 50%:
a.
b.
c.
d.
e.
f.
National Defence Fund

Jawaharlal Nehru Memorial Fund
The Prime Ministers Draught Relief Fund
The National Children's Fund
The Indira Gandhi Memorial Trust &
The Rajiv Gandhi Foundation
@ 100%
1. The Prime Ministers National Relief Fund
2. The Prime Ministers Armenia Earthquake Relief Fund
3. The Africa (Public Contributions - India) Fund
4. The National Foundation for Communal Harmony
5. Chief Minister's Earthquake Relief Fund, Maharashtra
6. National Blood Transfusion Council
7. State Blood Transfusion Council
8. Army Central Welfare Fund
9. Indian Naval Benevolent Fund
10. Air Force Central Welfare Fund
11. The Andhra Pradesh Chief Minister's Cyclone Relief Fund - 1996
12. The National Illness Assistance Fund
13. The Chief Minister's Relief Fund or Lieutenant Governor's Relief Fund, in respect
of any state or Union Territory as the case may be, Subject to certain conditions.
14. The University or educational Institution of national eminence approved by the
prescribed authority.
15. The National Sports Fund to be set up by Central Government.
16. The National Cultural Fund set up by the Central Government.
7. Deduction on account of rent paid by employee for his own residence (to the
extent and as per the conditions laid down in Section 80GG of the Act)
8. Deduction of Rs.40,000 u/s. 80U of the Act for handicapped/disabled persons
after satisfying the conditions laid down.
9. Interest payable on House building loan is allowable u/s.24(1)(VI) to the extent of
Rs.30,000 in a financial year under the head income from house property. The
loss under the head income from House Property due to payment of interest on
loan taken for House building is allowable upto Rs.30,000 in a year. The
27
deduction from salary on this account is to be granted after obtaining Form No.
12C from the employee (refer section 192 (2B) for details).
B.
REBATE FROM TAX (U/S. 88) (20% OF INVESTMENT/ CONTRIBUTION)

1. Contribution towards PPF, GPF, approved superannuation fund, LIC, PLI, etc.
2. Investment in NSC, VI, VII & VIIIth issue and accrued interest on VI & VIIIth
issue of NSCs.
3. Contribution to ULIP, 1971.
4. Deposits in 10 or 15 years A/c. under the Post Office Savings Bank (CTD) rules,
1959.
5. Repayment of HBA Loan not exceeding Rs.10,000 for purchase/construction of a
residential house.
6. Subscription to any units of any mutual fund referred to in Section 10(23) and
approved by CBDT.
7. National Saving Scheme notified by Government and other deductions. (for
details refer Sec.88)
Rebate on investment upto Rs.60,000/- @ 20% to be allowed.

Extra 10,000 for investment in debentures or equity shares of public companies engaged
in infrastructure and units of mutual fund as approved investing in eligible issue of any
company is to be considered for rebate @ 20%.
e.g. Tax Savings Bonds of ICICI
Note: The DDOs must ensure and obtain necessary proof/evidences required to satisfy
the genuineness of allowances before allowing above deductions from salary or rebate
from tax payable on account of above investments/deposits. The particular section and
relevant rule should be referred to ensure correct determination of TDS to be made.
REFUND ON EXCESS TDS BY DDOS
For excess TDS U/s.192 to 194D refer circular No.85 dt.21.10.80 and
For excess TDS U/s.195 refer circular No.769 dt. 6.8.98
28
Various Section of Tax Deduction at Source

Tax Deduction at Source from Salary [Sec.192]
Tax Deduction at Source from interest on securities[Sec.193
Tax Deduction at Source from Dividends [Sec.194]
Tax Deduction at Source from interest other than interest on securities [Sec.194A]
Tax Deduction at Source from winnings from lotteries or crossword puzzles [Sec.194B]
Tax Deduction at Source from winnings from horse races [Sec.194BB]
Tax Deduction at Source from payments to contactors or sub-contractors [Sec.194C]
Tax Deduction at Source from insurance commission [Sec.194D]
Tax Deduction at Source from payment to non-resident sportsmen or sports associations
[Sec.194E]
Tax Deduction at Source from payments in respect of National Saving Scheme
[Sec.194EE]
Tax Deduction at Source on payments on account of repurchase of units of Mutual Funds
or UTI [Sec.194F]
Tax Deduction at Source from commission,etc.,on sale of lottery tickets [Sec.194G]
Tax Deduction at Source from commission or brokerage [Sec.194H]
Tax Deduction at Source from rent[Sec.194-I]
Tax Deduction at Source on fees for professional or technical services [Sec.194J]
Tax Deduction at Source from payment of compensation on acquisition of certain
immovable property [Sec.194LA]
Tax Deduction at Source from other sums[Sec.195]
Tax Deduction at Source from units or long-term capital gain under section [Sec.196B]
29
Tax Deduction at Source from income or long-term capital gain from foreign currency
bonds/Global Depository Receipts [Sec.196C]
Tax Deduction at Source from income of foreign Institutional Investors from securities
[Sec.196D]
30
Tax Deduction at Source from Salary [Sec.192]
Who is payer
Who is the recipient
Payment covered
At what time tax has to be deducted at
source
Maximum amount which can be made
with out tax deduction
Rate of tax deduction at source
When the provision are not applicable
Is it possible to get the payment without
tax deduction or lower tax deduction
Employer
Employee
Taxable salary of the employee
At the time of payment
The amount of exemption limit (i.e. Rs.
1,45,000/Rs. 1,95,000/Rs.1,00,000 for the
assessment year 2008-2009)
Normal rate applicable to an individual
The employee can make an application

form no 13 to the assessing officer to get a
certificate of lower tax deduction or no
tax deduction
Tax Deduction at Source from interest on securities[Sec.193]

Who is payer
Payment covered
source

Payer of interest on securities

A resident person holding securities
Interest on securities
At the time of payment or at the time of
credit, whichever is earlier
10%+surcharge+education cess in case of
listed debentures and 20%+surcharge+
education cess in case of non listed
debentures, if the recipient is resident
corporate assessee.20% + surcharge
+education cess if the recipient is a
domestic company
Interest on Centr deductal/State
Government securities + a few more
given in first para
See. second para
31
Securities interest on which is not subject to tax deduction

When tax is not deductible at regular rates
Application to assessing officer in form no 13
Declaration to the payer in form no. 15 G
Debentures interest up to Rs. 2500
Regimental fund
Deep discount bond
Tax Deduction at Source from Dividends [Sec.194]
Who is payer
Payment covered
source
Domestic company
Resident shareholder
Deemed dividend under section 2(22)(e)
20%+surcharge+ education cess
Dividend covered by section 115-O
See. Below
When tax is not deductible at regular rates
Dividend covered by section 115-O

Application in form no 13
Declaration to the payer in form no. 15 G
Debentures interest up to Rs. 2500
Dividend to LIC /GIC
32
Tax Deduction at Source from interest other than interest on

securities [Sec.194A]
Who is payer

Payment covered
source

Any person Paying interest other than

interest on securities (not being an
individual or Hindu Undivided Family
whose books of account are not required
to be audited number section 44AB in the
immediately preceding financial year)
A resident person
Interest other than interest on securities
From June 1,2007 tax is not deductible if
payment/ credit does not exceed the
amount
10%* if the recipient is resident noncorporate assessee and 20%* if the
recipient is a corporate assesee*
For a few cases [see first para]
See. second para
When interest is not subject to tax deduction or subject to lower

tax deduction
Interest is not subject to tax deduction
Declaration to the payer in form no 15G
Application to the assessing officer in form no. 13
Adjustment in the case of short deduction

Payment under a hire purchase agreement
33
Tax Deduction at Source from winnings from lotteries or

crossword puzzles [Sec.194B]
Who is payer
Payment covered
source
Any person Paying winning from

lotteries/cross word puzzles/ card
games/other games
Any person
Winning from lotteries/cross word
puzzles/ card games/other games
If the amount of payment is Rs. 5,000 or
less than Rs. 5,000
30%

Not possible
Prize given partly in cash and partly in kind
34
Tax Deduction at Source from winnings from horse races

[Sec.194BB]
Who is payer
Payment covered
source
Any person Paying winning from lotteries

horse races
Any person
Winning from horse races
less than Rs. 2,500
30%

Not possible
35
Tax Deduction at Source from payments to contactors or subcontractors [Sec.194C

Who is payer


source
Case one
A specified person
see below
Case two
A resident contactor (not
being an individual or a
Hindu Undivided Family
whose books of account
are not required to the
audited under section
44AB in the immediately
preceding financial year)
A resident person
A resident sub-contactor
2% [1%+surcharge
1%
+ education cess in
case of advertising
contract]
At the time of payment or at the time of credit,
whichever is earlier [see below]

Tax is not deductable only if a single payment

does not exceed Rs. 20,000and the aggregate
payment during the financial year does not
exceed Rs. 50,000. Moreover, tax is not
deductable in respect of amount credited or paid
or payable by a resident contactor to an
individual (being a resident transporter sub
contractor) who does not own more than 2
trucks during the financial year [see below]
Payment covered
Consideration for any work contract

[See below]

The recipient can make an application in Form

No. 13 to the Assessing officer to get a
certificate of lower tax deduction or no tax
deduction
36
When section 194C is applicable

Case 1
when payment is made by a specified person to a resident

contractor [sec 194C (1)]
1. The central government or any State government ; or

2. Any local authority
3. Any corporation established by or under a central, State or Provincial Act; or
4. Any company; or
5. Any co-operate society; or
6. Any authority constituted in India by or under any law, engaged either for the
purpose of dealing with and satisfying the need for housing accommodation or for
the purpose of dealing with and satisfying the need for housing accommodation or
for the purpose of planning, development or improvement of cities, towns and
villages or for both; or
7. Any society registered under the societies Registration Act, 1860 or under any law
corresponding to that act in force in any part of any India; or
8. Any trust; or
9. any University established or incorporated by or under a central, State Provincial
Act and an Institution declared to be a university under Section 3 of the
university Grants Commission Act ,1956; or
10. any firm.
Case 2
when payment is made by a resident contractor to sub

contractor [sec 194C (2)]
37
When tax has to be deducted at source

o No tax deduction in small cases
o Who is contractor /sub contractor?
o Meaning of work contact
o Contract for supply of labor for work contact
1. Advertising,
2. Broadcasting and telecasting including production of a programmes for such
broadcasting or telecasting,
3. Carriage of goods and passengers by any mode of transport other than by railways,
and
4. Catering.
o Rate of tax deduction

Advertising contracts
Other contracts
Income-tax
Income-tax
Payment to contractor
1%
2%
Payment to sub-contractor
1%
1%
o Clarification from the board
Tax Deduction at Source from insurance commission

[Sec.194D]
Who is payer
Any person Paying insurance commission

A resident person
38
Payment covered
source

Insurance commission
If the amount of payment is Rs.5,000 or
less than Rs.5,000
10% if the recipient is resident nonresident assesse and 20%+surcharge+
education cess if the recipient is resident
corporate assessee
The recipient can make an application in
Form No. 13 to the Assessing Officer to
get a certificate of lower Tax deduction or
no tax deduction.
Adjustment not possible

When tax is not deductible or deductible at lower rate
39
Tax Deduction at Source from payment to non-resident

sportsmen or sports associations [Sec.194E]
Who is payer
Payment covered
source
Any person making Payment to non

resident sportsman/ sports association
Non-resident sportsman/ sports
association
Payment to non resident sportsman/
sports association
Nil
10%+surcharge*+education cess* +
Secondary and higher education cess*
No provision
A person responsible for paying the following income to the

following person shall deduct tax at source
Payee
1. Non-resident foreign
citizen sportsman
(including an athlete)
Nature of income
Income by way of1. Participation in India in any game
(other than card game or
gambling, etc.);
2. Advertisement; or
3. Contribution of articles relating to
any game or sports in India in
newspaper, magazine or journals
2. Non resident sports

association or institution
Any amount guaranteed to be paid or

payable in relation to any game (but
other than card game, etc.) or sport
played in India
40
Tax Deduction at Source from payments in respect of

National Saving Scheme [Sec.194EE]
Who is payer
Payment covered
source
Post office
Any person
Payment (principal + interest) out of
National Saving Scheme, 1987
less than Rs. 2,500
20%*
The payment is made to legal heirs of the
deceased depositor
See table below three conditions are
given
When tax is not deductible

Payment below Rs. 2,500
Payment to heirs
Declaration to the payer in Form No. 15G
Tax Deduction at Source on payments on account of

repurchase of units of Mutual Funds or UTI [Sec.194F]
Who is payer
Payment covered
source
Mutual fund or UTI

Unit holder under section 80CCB
Payment on account of repurchase of
units referred to in section 80CCB
20%*

No provision
41
42
Tax Deduction at Source from commission, etc., on sale of

lottery tickets [Sec.194G]
Who is payer
Payment covered
source
Any person Paying commission on sale of

lottery tickets
Any person
Commission on sale of lottery tickets
If the amount of payment is Rs.1,000 or
less than Rs.1,000
10%*


no tax deduction.
Tax Deduction at Source from commission or brokerage

[Sec.194H]
Who is payer

Payment covered
source
Any person Paying commission or

brokerage (not being an individual or
Hindu Undivided Family whose books of
account are not required to be audited
number section 44AB in the immediately
preceding financial year)
Any resident person
Commission or brokerage (not being
insurance commission)
less than Rs. 2,500
10%(up to may 31,2007:5%)*


no tax deduction.
When tax has to be deducted

43
Meaning of commission or brokerage

o Professional services
o Indirect payment when commission is retained by Agent
Tax Deduction at Source from rent[Sec.194-I]

Who is payer
Any person Paying rent (not being an

individual or Hindu Undivided Family
whose books of account are not required
to be audited number section 44AB in the
immediately preceding financial year)
A resident person
Rent
If the amount of payment during a
financial year is is Rs. 1,20,000 or less
than Rs.1,20,000
15%* (if the recipient is an individual or
HUF), 20%*(up to may 31,2007)
See below


Form No. 13 [see below]

Payment covered
source
When tax has to be deducted

o Rent as defined in section 194-I
o No tax deduction if payee is Government/ local authorities
o When tax is deducted at lower rate
o Clarifications from Board
44
Tax Deduction at Source on fees for professional or technical

services [Sec.194J]
Who is payer
Any person Paying fees for professional/

technical service (not being an individual
or Hindu Undivided Family whose books
of account are not required to be audited
number section 44AB in the immediately
preceding financial year or not being an
individual or HUF who makes payments
for personal purposes)
A resident person
Fees for professional/ technical service
If the amount of payment during a
financial year is Rs.20,000 or less than
Rs.20,000
10% (up to may 31,2007)

Payment covered
source


Form No. 13 [see below]
Time of tax deduction

Rate of tax deduction
When tax is not deductible
When tax is deductible at lower rate
professional/ technical service
45
Tax Deduction at Source from payment of compensation on

acquisition of certain immovable property [Sec.194LA]
Who is payer

Payment covered

source
Any person Paying compensation/enhanced

compensation/consideration/enhanced
consideration on account of compulsory
acquisition of any land (not being rural
agricultural land) or building
A resident person
Compensation/enhanced
compensation/consideration/enhanced
consideration on account of compulsory
acquisition of land (not being rural
agricultural land) or building
If the amount of payment during a financial
year is Rs.1,00,000 or less than Rs.1,00,000
10%*
Payment/credit before October 1, 2004


Form No. 13 to the Assessing Officer to get
a certificate of lower Tax deduction or no
tax deduction.
46
Tax Deduction at Source from other sums[Sec.195]

Who is payer
Payment covered
source
Any person responsible for making

payment to a non-resident
A non-resident person
Any person to non-resident other than
salary
-
If in the hands of the recipient, the

amount is not chargeable to tax in India


no tax deduction.
Tax Deduction at Source from units or long-term capital gain

under section [Sec.196B]
Where any income is payable in respect of units referred to in section 115AB or by way
of long term capital gain arising from the transfer of such units to an Offshore Fund, the
person responsible for making the payment shall, at the time of credit of such income to
the account of the payee or at the time of payment thereof in cash or by the issue of a
cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at
the rate of (10%+surcharge +education cess)
47
Tax Deduction at Source from income or long-term capital gain

from foreign currency bonds/Global Depository Receipts
[Sec.196C]
Who is payer
Payment covered
source
Any person responsible for paying

income/ long-term capital gain from
GDR/bonds
A non-resident person
Income/ long-term capital gain from
GDR/bonds
10%*
Dividend referred to in section 115-O
No provision
Tax Deduction at Source from income of foreign Institutional

Investors from securities [Sec.196D]
Who is payer
Payment covered
source

Any person responsible for paying

income in respect of securities referred to
in section 115AD
Foreign Institutional Investor
Income in respect of securities referred to
in section 115AD
20%*
Dividend referred to in section 115-O;
capital gain arising from transfer of
securities referred to in section 115AD
No provision
48
Other points for consideration

Amount payable to Government/ RBI/ certain corporation not subject to tax
deduction
Recipient gets credit
Issue of certificate of tax deduction to the recipient
o Dematerialization of TDS certificate
Time limit for payment of tax deduction at source to the Government
Annual Return to the Income Tax Department
o e-TDS Return
Tax Deduction Account Number [Sec.203A]
Obtaining a certificate of lower rate from the Assessing Officer [Sec.197]
o Additional Conditions for Charitable Trust, Scientific Research
Association, etc
o How lower rate is determine
Provision of section 197A
Furnishing of quarterly return regarding the detail of non-deduction of tax
by certain persons [section 206A]
49
The prescribed forms and the last date for furnishing these returns, as per rule 37, 37-A,
and 37-B are as under;S.No.
Nature of return i.e. Deduction of tax

form-
Section
Form No.
Last date in
the
financial
year
1.
2.
3.
4.
Salary
Interest on securities
Dividends
Interest other than interest on securities
192
193
194
194-A
24 &24Q
26 &26Q 26
&26Q
26 &26Q
5.
Winnings from lotteries or crossword

puzzles
Winnings from horse races
Payments to contactors or sub-contractors
Insurance commission
Insurance commission paid or credited
without tax deduction
Payment to non-resident sportsmen or sports
associations
Payments in respect of National Saving
Scheme
Payments on account of repurchase of units
of Mutual Funds or UTI
194-B
26 &26Q
194-BB
194-C
26 &26Q
26 &26Q
194-D
194-D
26 &26Q
26 &26Q
June
30& 15
days
after the
expiry
of each
quarter
194-E
27 &27Q
194-EE
26 &26Q
194-F
26 &26Q
194-G
26 &26Q
194-H
194-I
194-J
26 &26Q
26 &26Q
26 &26Q
195
196-A
27 &27Q
27 &27Q
196-B
27 &27Q
20.
196-C
27 &27Q
21.
196-D
27 &27Q
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Commission,etc.,on sale of lottery tickets

Commission or brokerage, etc.
Rent
Fees for professional or technical services
Payment to non-residents
Payment to foreign company being unit
holders of Mutual Funds
Units held by Overseas finance organization
Income from foreign currency bonds
Income of foreign Institutional Investors
from securities
Within 14 days
from the end of
quarter
June
30& 15
days
after the
expiry of
each
quarter
Within
15 days
from the
end of
quarter
50
Illustration
Mr. X is getting a salary of Rs.21, 500 p.m. form a concern. During the financial year,
2007-08 .He contributed Rs.20,000 to a recognized provident fund and Rs. 40,000 to
public provident fund. He also paid Rs.1,000 p.m. as life insurance premium and
contributed Rs.15,000 to the National Defence Fund.
Compute the amount of tax to be deducted at source during the financial year
2007-08 for the assessment year 2008-09
Solution:
Salary @ Rs.21, 500 p.m.
Estimated salaries being GTI.
Less: Deduction u/s 80-C:
Rs.
i. Contribution to RPF
20,000
ii. Contribution to PPF
40,000
iii.
Life insurance premium
12,000
(Not excluding Rs. 1,00,000)
72,000
Deduction u/s 80G:
100% of donation to NDF i.e. 100% of Rs.15, 000
Rs.
2, 58,000
2, 58,000
15, 000
Estimated total income

(For assessment year, 2008-09)
87,000
1, 71,000
Ta x on Rs. 1, 71,000 (Rs. Per normal rate)

Add: Education cess @2% on Rs.8,200
Secondary & higher education cess @ 1% on Rs. 8,200
82
Total tax- liability (Estimated)
Tax to be deduct at source 8,446/12
8,200
164
8,446
704 p.m.
51
These deductions in the total income of HUF

80-C
80-D
80-DD
80-DDB
80-G
80-GGA
80-GGC
80-IA
80-IAB
80-IB
80-IC
80-JJA
In respect of life insurance premium, provident fund contribution & other

investments, deposits etc. Subject to the maximum of Rs. 1,00,000
deduction in respect of medical insurance premium upto Rs. 10,000 or Rs. 15,000
(if the insured is a citizen )
Deduction in respect of maintenance including medical treatment of handicapped
dependents Rs. 50,000. Rs. 75,000 in case of severe disability.
medical treatment of specified disease or ailment Amount actually spent or Rs.
40,000 or Rs. 60,000 (in the case of a senior citizen) whichever is less
Deduction in respect of donations limited to 50% and 100% as the case may be.
Deduction in respect of certain donations for scientific research or rural
development programme upto 100%of such donations.
Deduction in respect of contribution to any political party to the extent of whole
of the contribution i.e. 100% of contribution.
Deduction in respect of profits and gains from enterprises engaged in
infrastructure development of special economic zone, power undertakings etc. @
100% for initial 5 years and 30% for next 5 years.
1005 of the profits and gains derived by undertaking/enterprise from business of
developing a special economic zone notified on or after 1-4-2005
Deduction in respect of profits and gains from industrial undertakings engaged
in cold storage plant, hotel scientific research and development, mineral oil,
housing projects cold chain facility, multiplex theaters, convention center and
ships etc.@100%,50%,30% and 25%under different cases, as the case may be
Deduction in respect of profits of certain undertakings or enterprises in certain
special category of states:
(a) Category @ 100% of profits for Ist 10 years
(b) 100% of profits for Ist 5 years & 20%next 5 years
(c) 100% of profits for Ist 5 years & 20%next 5 years
Deduction in respect of profits and gains from the business of collecting and
processing of bio-degradable waste being 100% of profits for initial 5
consecutive assessment years.
The deduction u/s 80 as discuss above shall not be allowed out of short-term
capital gain as referred in section 111A and long-term capital gains.
52
DEDUCTION OF TAX FROM SALARIES

Any person responsible for paying any income chargeable under
The head salaries shall, at the time of payment, deduct incometax at source on the
estimated income of the assessee under this head. Such tax shall be calculated at the rates
in force for the financial year in which the payment is made. The following points should
be kept in mind at the time of deducting tax at source from payment of salary during the
financial year 2007-08.
1. Tax shall not be deducted at source unless the estimated salaries exceed the
minimum exemption limit i.e. Rs. 1, 45,000 in case of a resident women below 65
years Rs. 1, 95,000 in case of a resident senior citizen of 65 year or more and in
any other case Rs. 1, 10,000
2. Where, during the financial year, an assessee is employed simultaneously under
more than one employer, he may require any one of the said employer to make
deduction of tax at source. For this the assessee shall furnish to the employer,
deducting tax, such details of income under the head salaries due received by him
from the other employer or employers and the tax deducted at source therefrom.
Thereupon, the employer responsible for making deduction of tax at source shall
take into account the details furnished and shall deduct tax at source accordingly.
3. Where the assessee, being a Government servant or an employee in a company,
co-operative Society, Local Authority, University, Institution, Association or body,
is entitle to the relief u/s 89(1), he may furnish its details to the person paying the
salaries under Form 10-E. The person making the payment shall take into account
the details so furnished and deduct tax at source accordingly.
4. Where, for the financial year, the assessee has, in addition to his salaries income,
any income chargeable under any other heads of income (not being a loss under
any such head except the loss under the head income from house property) for
the same financial year, he may submit the details of :o Such in come and the tax deducted theron in from of declaration.
o The loss, if any, under the head income from house property, to the
employer making deduction of tax at source.
The employer, upon receiving such details shall deduct tax after into
taking account such other income and the tax deducted thereon and the
loss, if any, under the head income from house property. But the tax
deducted at source from salaries must not be below the amount that
would have been deducted if the other income and the tax deducted
thereon except the loss, if any under the head income from house
property had not been taken into account.
5. A person responsible for paying any income chargeable under the head salaries
shall furnish to the person to whom such payment is made a statement giving
correct and complete particular of perquisites, other fringe benefits or amenities or
profits in lieu of salary provided to him and the value thereof in the prescribed
form (Form No. 12BA) and manner. This form is to be provided by the employer
to employee if salary exceeds Rs. 1, 50,000. In other cases the information shall
be provided in Form No. 16.
53
6. The person, deducting at source, may, at the time of any deduction, increase or
reduce the amount of deduction for adjusting any excess or deficiency arising due
to previous deduction of tax during the financial year.
7. When an employee is in receipt of payment of accumulated balances of a
recognized provident fund and such payment is not exempt from tax under rule 8
of part A of the Fourth Schedule, then, the trustees of a recognized provident fund
or any other person authorized to make such payment shall make there from the
deduction of tax.
8. Where an employers contributions and interest thereon in an approved
superannuation fund are paid to an employee during his life time but before his
retirement or before his becoming incapacitated prior to such retirement, such
before his shall be subject to deduction of tax at source. The tax shall be deducted
at the average rate at which the employee was liable to tax during the preceding
three years or less than three years if his membership in the fund was for such less
period.
9. Where salary is payable in foreign currency, the value in rupees of such salary
shall be calculated at telegraphic transfer buying rate of State Bank of India for
the purpose of deduction of tax on such salary.
54
Section 80C
INSERT (AY 2008-09)

Senior Citizens Savings Scheme 2004 and the Post Office Time Deposit Account added to
the basket of saving instruments under Section 80C of the Income Tax Act.
Section 80L used to allow deduction of interest earned on, say, a National Savings Certificate or a
bank deposit up to a limit of Rs 12,000. But now all these are gone .In their place has come
Section 80C -- "u/s 80CCC, & u/s 80CCD", as the Finance Bill puts it. Thus, the new Section 80C
of the Income Tax Act proposed in Union Budget gives you a bigger tax break than what the
current regime offers.
Deduction in respect of Life Insurance Premia, Contribution to Provident Fund, etc.
Rs 1 lakh can be invested under this section without any individual sub-limits except in
the case of Rs 10,000 in pension funds.
Sections 88, 80L, 80CCC and 80CCD is clubbed in.
INSERT (AY 2007-08)

It is proposed to insert clause (xxi) in sub-section (2) of this section in order to provide
that the investment in a term deposit for a fixed period of not less than five years with any
scheduled bank shall be eligible for a deduction under this section.
Schemes eligible for Section 80C benefits
PPF
ELSS - Mutual Funds
NSC
KVP
Life Insurance
Senior Citizen Saving Scheme 2004
Post Office Time Deposit Account
Note : - Section 80CCC is for deduction in respect of contribution to certain Pension Funds.
Section 80L is for deductions in respect to Interest on certain Securities, Dividends, etc
Sections abolished from Union Budget 2005-06
88 (Rebate on Life Insurance Premia, Contribution to Provident Fund, etc.)
80L (Deductions in respect to Interest on certain Securities, Dividends, etc.)
Note :Rebate of Rs 5,000 for women and Rs 20,000 for senior citizens have been wiped off.
The key features of the new provision
Exemption available to all taxpayers irrespective of income bracket -earlier Section 88 did
not provide benefit to those having income exceeding Rs 500,000.
No exemption/adjustment for interest income
All saving modes/options under Section 88 covered and also 80CCC and 80CCD
covered.
Following benefits will continue irrespective of changes
55
Interest paid on housing loan for self-occupied house property.

Medical insurance premium. (Additional deduction of Rs 15000 u/s 80D to an individual
paying medical insurance premium for his/her parent(s)
Specified expenditure on disabled dependant.
Expenses for medical treatment for self or dependant or member of an HUF.
Deduction in respect of interest on loans for pursuing higher studies - Section 80E.
Deduction to person with disability.
Section 10(33)
Dividends from mutual funds are fully exempt from income tax under Section 10(33). Equity funds
(schemes that invest 50 per cent of their funds in equity) are also exempt from dividend tax. This
means that unlike companies, they do not have to pay tax at the rate of 10.2 per cent on the
dividend that they distribute.
INSERT (AY 2008-09)

Coir Board included in Section 10(29A) and exempted from income tax.
Section 88
Upto 31 March 2005, rebates were available on the tax payable under three sections.
According to the section, 30 per cent or 20 per cent or 15 per cent of the amount invested in
certain schemes (schemes referred in Section 80C) was available as a rebate on the tax payable.
30 per cent of the amount invested was available as rebate only if the salary income of
the individual was less than Rs. 1 lakh and if it constituted 90 per cent or more of the
assessee's gross total income.
20 per cent of the amount invested was available as rebate if the gross total income of
the individual was less than Rs 1.5 lakh and the case did not fall under the above
mentioned case.
If gross total income was more than Rs. 1.5 lakh but less than Rs 5 lakh of the individual,
a rebate of 15 per cent of the amount invested was available.
If gross total income was more than Rs 5 lakh of the individual, then there is no rebate.
Section 88B
INSERT (AY 2008-09)

A new sub-section (11C) in Section 80-IB to grant a five year tax holiday to encourage
hospitals to be set up anywhere in India, except certain specified urban agglomerations,
and especially in tier-2 and tier-3 towns in order to serve the rural hinterland. This window
will be open for the period April 1, 2008 to March 31, 2013, during which the hospital must
commence operations.
Under this section, an individual resident in India and above the age of 65 years was allowed to a
maximum rebate of Rs. 20,000 on the tax payable.
Section 88C
Under this section a lady resident in India, aged below 65 years, was allowed a maximum rebate
on the tax payable of Rs 5,000.
Section 89 (1)
This is available to an employee when he receives salary in advance or in arrear or when in one
financial year, he receives salary of more than 12 months or receives 'profits in lieu of salary'
56
W.e.f. 1.6.89, relief u/s 89(1) can be granted at the time of TDS by employees of all companies
co-operative societies, universities or institutions as well as govt./public sector undertakings. The
relief should be claimed by the employee in Form No. 10E and should be worked out as
explained in Rule 21A of the Income Tax Rules. Look for INSERT for AY 2008-09
As per Assessment Year 2006-07

Section 80CCC
Any individual who makes a contribution for any annuity plan of the Life Insurance Corporation of
India or any other insurer is eligible for a deduction of the amount paid or Rs. 10,000, whichever
is less. When an individual or his nominee receives any amount under the following
circumstances it will be taxed as the income of the individual or his nominee, in the year of
withdrawal or the year in which the pension is received:
On the surrender of the annuity plan or
As pension received from the annuity plan.
INSERT (AY 2007-08)

The limit of investment is proposed to increase from Rs 10,000 to Rs 1,00,000 subject to
overall cap of Rs 1,00,000 provided under section 80CCE.
Section 80CCD
The deduction for contributions to a pension scheme of the Central Government is available only
to those individual who have been employed by the central government on or after 1st January
2004, and will be allowed for any amount deposited in such a pension scheme. But, in this case,
deduction of more than 10 per cent of the employee's salary shall not be allowed.
The contributions to the fund are also made by the Central Government. Deduction will be
available for any contribution which is made by the Central Government or 10 per cent of the
employee's salary, whichever is less.
When the individual or his nominee receives any amount out of the scheme which meets the
following descriptions, it shall be taxed in the hands of the recipient.
On closure/ opting out of the pension scheme; or
As pension received from the annuity plan.
The term 'salary' here includes Dearness Allowance (if considered for retirement benefits), but it
excludes other allowances and perquisites.
The aggregate deduction under the Sections 80C, 80CCC and 80CCD cannot exceed Rs 1 lakh
as whole.
Section 80D
INSERT (AY 2008-09)

Additional deduction of Rs 15,000 under Section 80D is allowed to an individual who pays
medical insurance premium for his/ her parent or parents.
Any Premium which is paid for medical insurance that has been taken on the health of the
assessee, his spouse, dependent parents or dependent children, is allowed as a deduction,
subject to a ceiling of Rs 10,000.
57
Where any premium is paid for medical insurance for a senior citizen, an enhanced deduction of
Rs 15,000 is allowed. The deduction is available only if the premium is paid by cheque.
INSERT (AY 2007-08)

Under section 80D, the deduction has been increased to Rs 15,000 and for senior citizen it
is now Rs 20,000.
Section 80DD
Deduction under this section is available to an individual who:
Incurs any expenditure for the medical treatment, training and rehabilitation of a disabled
dependant; or
Deposits any amount in schemes like Life Insurance Corporation for the maintenance of
a disabled dependant. An annuity or a lump sum amount is paid to the dependant or to a
nominee for the benefit of the dependant in the event of the death of the individual
depositing the money, from the said scheme,
A deduction of Rs 50,000 is available. Where the depandant is with a severe disability, a
deduction of Rs 75,000 is allowed.
If the death of the dependant occurs before that of the assessee, the amount in the scheme is
returned to the individual and is taxable in his hands in the year that it is received.
An individual should furnish a copy of the issued certificate by the medical board constituted
either by the Central government or a state government in the prescribed form, along with the
return of income of the year for which the deduction is claimed.
The term 'dependent' here refers to the spouse, children, parents and siblings of the assessee
who are dependant on him for maintenance and who themselves haven't claimed a deduction for
the disability in computing their total incomes.
This deduction is also available to Hindu Undivided Families (HUF).
Section 80DDB
An individual, resident in India spending any amount for the medical treatment of specified
diseases affecting him or his spouse, children, parents, brothers and sisters and who are
dependant on him, will be eligible for a deduction of the amount actually spent or Rs 40,000,
whichever is less.
Note:- For the complete list of disease specified, refer to Rule 11DD of the Income Tax Rules.
For any amount spent on the treatment of a dependent senior citizen an individual is eligible for a
deduction of the amount spent or Rs 60,000, whichever is less is available.
The individual should furnish a certificate in Form 10-I with the return of income issued by a
specialist working in a government hospital.
If any amount of medical expenditure is borne by the employer or is reimbursed under an
insurance scheme, the eligibility of the deduction is the reduction to that extent. This deduction is
also available to Hindu Undivided Families (HUF).
Section 80E
Under this section, deduction is available for payment of interest on a loan taken for higher
education from any financial institution or an approved charitable institution. The loan should be
taken for either pursuing a full-time graduate or post-graduate course in engineering, medicine or
58
management, or a post-graduate course in applied science or pure science.

The deduction is available for the first year when the interest is paid and for the subsequent
seven years. Up to March 2005, deduction was available for the repayment of principal and
interest aggregating to Rs 40,000 a year.
Section 80U
It is deduction in the case of a person with a disability. An individual who is suffering from a
permanent disability or mental retardation as specified in the persons with disabilities (Equal
Opportunities, Protection of Rights and Full Participation) Act, 1995 or the National Trust for
Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act,
1999, shall be allowed a deduction of Rs 50,000. In case of severe disability it is Rs. 75,000.
The assessee should furnish a certificate from a medical board constituted by either the Central
or the State Government, along with the return of income for the year for which the deduction is
claimed.
Permissible deductions from gross total income and tax

liability
Basic rules of governing deductions under sections 80C- 80U
1. Deduction in respect of Life Insurance Premia,deferred annuity, Contributions to
Provident Fund, subscription to certain equity shares or debentures,etc. [Sec. 80C]
2. Deduction in respect of National Saving Scheme To What extent available
[Sec.80CCA]
3. Equity Linked Saving Scheme- When deduction is available [Sec.80CCB]
4. Deduction in respect of pension fund when available [Sec. 80CCC]
5. Deduction in respect of contribution to pension scheme of Central Government
[Sec. 80CCD]
6. Deduction in respect of medical insurance premia- When and to what extent available
[Section 80D]
7. Deduction in respect of maintenance including medical treatment of a dependent being a
8.
9.
10.
11.
12.
13.
14.
15.
16.
person with disability- when and to what extent available [Sec- 80DD]
Deduction in respect of in respect of medical treatment,etc.To what extent available [Sec80DDB]
Deduction in respect of repayment of Loan taken for higher education-when and to what
extent available [Sec- 80E]
Deduction in respect of donations to certain funds, charitable institutions, etc. How
arrived at [Sec. 80G]
Deduction in respect of rent paid To whom and to what extent available [Sec. 80GG]
Deduction in respect of certain donations for scientific research or rural development
when eligible [Sec.80GGA]
Deduction in respect of contributions given to political parties To what extent deductible
[Sec. 80GGB 80GGC]
Deduction in respect of profits and gains from projects outside India To what extent
available [Sec. 80HHB]
Deduction in respect of profits and gains from housing projects aided by Word Bank - To
what extent available [Sec. 80HHBA]
Deduction in respect of export turnover - To what extent available [Sec. 80HHC]
59
17. Deduction in respect of earnings in convertible foreign exchange How to find out [Sec.
80HHD]
18. Deduction in respect of profits from export of computer software How to determine
[Sec. 80HHE]
19. Deduction in respect of profits and gains from export or transfer of films software- How to
find out [Sec. 80HHF]
20. Deduction in respect of profits and gains from industrial undertaking or enterprises
engaged in infrastructure development, etc.-How to find out [Sec. 80-IA]
21. Deduction in respect of profits and gains by an undertaking or enterprise engaged in
development of Special Economic Zone (SEZ) [Sec.80-IAB]
22. Deduction in respect of profits and gains from certain industrial undertakings other than
infrastructure development undertakings How to avail [Sec. 80.IB]
23. undertaking engaged in the business of processing, preservation and packaging of fruits
or vegetables or integrated handling, storage and transportation of food grains[Sec. 80IB(11A0)]
24. Deduction in respect of profits and gains from certain undertaking in certain special
category of States How to find out [SEC. 80-IC]
25. Deduction in respect of profits from the business of processing of bio-degradable wate
How to determine [Sec.80JJA]
26. deduction in respect employment of new workmen How to determine [ Sec. 80JJAA]
27. Deduction in respect of interest on certain securities, Investment, etc. To what
extent available [Sec. 80L]

28. Deduction in respect of certain income of Offshore Banking Units and International
29.
30.
31.
32.
33.
34.
Financial Services Centre T o what extent available [Sec. 80-LA]

Deduction in respect of royalties from certain foreign enterprises- To what extent available
[ Sec. 80-O]
Deduction in respect of income of a co-operative society - To what extent available [Sec.
80P]
Deduction in respect of royalty income of authors To what extent available [ sec.
80QQB]
Deduction in respect of remuneration from certain foreign sources in the case of
professors, teachers etc. To that extent available [80R]
Deduction in respect of professional income from foreign sources To that extent
available [80RR]
Deduction in respect of remuneration received for services rendered outside India To
that extent available [80RRA]
Deduction in respect of royalty on patents - To what extent available [ sec. 80RRB]
35.
36. Deduction in case of a person with disability To what extent available [Sec.
80U]
Sec 80C,CCA,CCB,,CCC,CCD
Sec 80D,DD,DDB
Sec 80E
Sec 80G,GG,GGA,GGC
Sec 80HHB,HHBA,HHC,HHD,HHE,HHF
Sec 80IA,IAB,IB,IB(11A),IC
60
Sec 80JJA,JJAA
Sec 80L,LA
Sec 80O
Sec 80P
Sec 80QQB
Sec 80R,RR,RRA,RRB
Sec 80U
61

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TdsIncome Tax Act

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Meaning of Tax Deduction at Source

Tax Deduction at Source for a Person

Income Tax Act

SOURCE DEDUCTION REGULATION

2. Deduction and remittance

4. Commissions and salary or wages combined

6. Bonuses, retroactive increases and lump sum payments

7. When deductions are not required

10. Application of other provisions of federal regulations

"appropriate percentage" for a year means the lowest percentage specified in

Deduction and remittance

Commissions and salary or wages combined

Subject to sections 5 to 8 of this regulation and to section 109 of the federal

For the purposes of this section,

an employee?s notional tax is the amount determined by the formula

an employee?s net notional remuneration is the amount determined by the

Bonuses, retroactive increases and lump sum payments

(3) If in any year a payment for a retroactive increase in remuneration is made by an

(a) 3% of the payment, if the payment does not exceed $5 000;

If the lump sum payment referred to in subsection (4) is pension income or

When deductions are not required

In the circumstances described in subsection (1), the amount to be deducted or

Application of other provisions of federal regulations

Deductors can submit e-TDS returns through TIN-Facilitation Centres (TIN-FC)

REVISED FORMS AND FILE FORMATS FOR e-TDS/e-TCS RETURNS

Other deductors - may file in

On payment One week

On payment One week

On payment One week

A] Rate of Tax for F.Y. 200708 1,00,000 - 150,000 10%

above 1,50,000 - 30%

A] Limit of interest in case of

3. Sec. 194B- Horse Race

Payment exceeding Rs. 2,500/-

4. Sec. 194B- Lottery/ Puzzle

Payment exceeding Rs. 5,000/-

5. Sec. 194C - Contractors/ Subcontractors includes exceeding Rs. 20,000

In excess of Rs. 5,000 in a F.Y.

7. Sec. 194E- Non Resident Sportsman/ Institution

Return within 45 days from end

8. Sec. 194EE - Repayment of NSS

If exceeds Rs. 2,500 p.a.

9. Sec. 194G- Lottery ticket

Commission exceeding Rs.

10. Sec 194I - Rent Payment

Exceeding Rs.1,20,000 p.a.

11. Sec. 194J - Payment to professional/ technical

Exceeding Rs. 20,000 p.a.

12. Sec. 194K- as per section 10(23D)

exceeding Rs. 10,000/- w.e.f. 17-95.

13. Sec. 195 -

Any payment except interest on

Interest u/s. 201(1A), Penalty

3] Failure to issue TDS certificate

Sec. 272A(2)(g) Rs.200 per day

4] Failure to submit Returns/ Statement

Sec. 272A(2)(c) Rs.200 per day

5] Failure to recover tax and pay u/s. 226(2)

Sec. 272A(2)(h) Rs.200 per day

6] Failure to deliver declaration to CIT/ CCIT

Sec. 272BB Rs.5000 maximum

OBLIGATION OF TAX DEDUCTORS AND PROCEDURES

payments requiring TDS)

for INSURANCE COMMISSION