Who is Liable to Deduct Tax at Source (TDS)

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Who is  Liable to Deduct Tax at Source (TDS):

TAN or Tax Deduction and Collection Account Number is a 10 digit alpha numeric number required to be obtained by all persons Who are  Liable to Deduct Tax at Source (TDS) or collecting tax. It is compulsory to quote TAN in TDS/TCS return (including any e-TDS/TCS return), any TDS/TCS payment challan and TDS/TCS certificates.

TDS is treated as pre-paid taxes as it is paid in advance to the government. It is the duty of the person who paid to someone for his service, goods etc. These payments are specified by the act like salary payment, interest on securities, contract payment, dividends etc. Who deduct TDS of payee is called deductor and whose tax is deducted called deductee. The following persons are liable to deduct TDS and deposit to government on behalf of deductee.

Income Tax Act require specified persons to deduct tax on particular types of payments being made by them. The list of such persons requiring to make TDS is contained in TDS provision listed here.

The following are the specified person who are liable to deduct TDS.

An Individuals or an H.U.F. is not liable to deduct TDS on such payment except where the individual or H.U.F. is carrying on a business/profession where accounts are required to be audited u/s 44AB, in the immediately preceding financial year.

A person is liable to get its accounts audited u/s 44AB if during the relevant financial year its gross sales, turnover or gross receipts exceeds Rs. 1 Crore applicable form A.y 2013-14 (Rs.60 lacs for A.Y.2012-13) in case of a business, or Rs. 50 lacs from Assessment year 2017-18 (Rs. 25 lacs from A.Y. 2013-2014 to 2016-17) in case of a profession.

Persons who are liable to deduct TDS as per above stated conditions must apply for allotment of ‘TAX DEDUCTION AND COLLECTION ACCOUNT NUMBER’ (TAN) in form No. 49B within one month from the end of the month in which tax was deducted. TAN is mandatory to mention on all transaction related to TDS like TDS certificate, TDS Returns and other related documents. There is penalty of Rs. 10,000 on failure to apply TAN.

There are also some conditions where is no liability of deductor to deduct TDS as follows.

1.) On declaration furnished by payee on Form 15G or 15H as the case may be

2.) On certificate issued by ITO

3.) Payment to Government/RBI/Statutory Corporation etc.

4.) Exempt Incomes

5.) Interest Payment by Offshore Banking Unites

6.) Payment to New Pension System Trust

7.) Notified payment to Notified Institutions/Associations

Updated as on 10th January 2019

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6 Comments

  1. 1

    In my Apartment Association TDS is not deducted from the contractors and remitted to Government.
    Is it necessary to deduct tax from the contractors and remit it to Government.
    Our auditor says it is not necessary to deduct tax

    • 2

      Yes, TDS have to be deducted and paid to government, in case if he falls under the person who’s accounts have to be audited u/s 44 AB as per income tax act.
      But your auditor may consider it fit to not deduct TDS, because of the your apartment association income does’t increase the limit u/s 44 AB.

  2. 3

    Under what section of the Act are the specified persons named. Section 204 talks about person responsible for paying. But I can’t find the crietria for the individuals and HUF anywhere.

    Kindly provide advice.

  3. 4

    My take home salary is 16000. Travelling and daily allowance varies and adds upto 15000. TDS has been deducting from my salary. Esi is also deducted from my salary as my monthly salary is less than 21000. Shouldn’t I be exempted from TDS? Pls hel0

  4. 6

    Hello Sir,
    i have one small query. I am a religious trust not registered u/s 12AA or 80 G of income tax. I am just a normal trust.
    While making a rent payment of Rs.70,000 per month am I suppose to deduct TDS ??
    My total donation per annum is Rs.8 lacs only.

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