Under Section 200(3) of the Income Tax Act, 1961, Form 26Q is applicable for the tax deducted at source for all payments except salary and payment to non -resident. The sections under this law provide the details of when TDS is applicable and the amount limit under which it is not applicable.
Section 192 – Tax is not deducted at source from salaries
Limit: The net income or the taxable income is below the taxable limit of 2.5 lakhs for individuals, 3 lakhs for citizens above 60 years, and 5 lakhs for citizens above 80 years.
Section 192A – Tax is not deducted at source from an employee’s Provident Fund
Limit: The paid amount is below Rs. 50000
Section 193 – Tds not deducted when interest on debenture recieved from public limited company by indvidual and huf through account payee cheque.
Limit: The amount should be lower than Rs. 5000.
Section 193 - No tax is deducted at source from the interest earned on 8% savings bonds 2003, which are taxable.
Limit: The amount, paid or to be paid, does not exceed Rs. 10,000.
Section 194 – No TDS is deducted if the dividend paid to a resident is through the a/c payee cheque.
Limit: The amount of the dividend should be lower than Rs. 5000
Section 194A – No TDS is deducted on the interest rewarded by a bank or co - operative society and post office. The interest paid should be on other than securities.
Limit: The amount of interest does not exceed Rs. 40000(Rs 50000 in case of senior citizen)
Section 194A – No TDS is deducted on interest earned on anything except securities
Limit: The amount of interest should be lower than Rs. 5000
Section 194A – No TDS is deducted on the interest awarded by Motor Accident Claims Tribunal
Limit: The amount of interest paid or to be paid should be lower than Rs. 50,000
Section 194B – No tax is deducted at source on the winnings of a crossword puzzle or a lottery
Limit: The amount earned does not exceed ten thousand rupees.
Section 194BB – Tax is not deducted at source on the winnings of a horse race
Limit: The amount earned does not exceed Rs. 10,000
Section 194C – No TDS is deducted on the amount paid or payable in this financial year to a contractor
Limit: The amount already paid or to be paid in a single payment does not exceed Rs. 30,000. The amount paid or to be paid to the contractor does not exceed Rs. 1,00,000 in aggregation.
Section 194D – No tax is deducted at source on the commission on insurance paid during the fiscal year
Limit: The amount has to be does not exceed Rs. 15,000
Section 194DA – No tax is deducted at source on the amount payable to the individual under the life insurance policy. It includes a bonus too.
Limit: The amount payable should be below Rs. 1,00,000
Section 194EE – No TDS is deducted on the payments made under NSS deposits
Limit: The amount should be below Rs. 2500
Section 194G – No tax is deducted at source on the commission earned from lottery tickets
Limit: The amount of commission earned does not exceed Rs. 15,000
Section 194H – No tax is deducted at source on the commission or brokerage earned.
Limit: The amount earned does not exceed Rs. 15,000. Also, no TDS is to be subtracted from the commission paid to the PCO franchisee by MTNL / BSNL.
Section 194-I – No tax is deducted at source on the rent paid on furniture and fittings, machinery and plant, land, and buildings.
Limit: The amount of rent paid during the fiscal year should be lower than Rs. 240000
Section 194-IA – No TDS is deducted on the amount to be paid for consideration for the acquisition of immovable property. The rule does not apply to agricultural land.
Limit: The amount of interest paid or to be paid should be lower than Rs. 5000000
Section 194-IB – No tax is deducted at source on the rent paid by an individual or HUF to an individual for building, land, or both. The books of both parties should not be required for audit below section 44AB.
Limit: The amount of rent to be paid per month or a part of a month should be below Rs. 50,000
Section 194J – No TDS on payment of technical fees, professional fees, royalty, or remuneration to the director.
Limit: The amount paid or to be paid does not exceed Rs. 30,000
Section 194LA – No tax is deducted at source on the payment of reimbursement made for compulsory procurement of land other than agricultural land.
Limit: The amount paid or to be paid in the fiscal year should be less than Rs. 2,50,000
Section 206A – No tax is deducted at source if the interest is paid on a quarterly return to the individual. Interest on securities is not included.
Limit: The amount of interest paid or to be paid is less than Rs. 10,000, where the payer is a bank or a cooperative society. The limit becomes Rs. 5000 in any other case.
All taxpayers are supposed to file the TDS return with form 26Q promptly and regularly. The form 26Q is filed quarterly, and the last dates for doing that are as follows:
- Quarter 1 31st July
- Quarter 2 31st Oct
- Quarter 3 31st Jan
- Quarter 4 31st May
While making the payment, the payer must deduct the TDS amount according to the applicable rate. This deducted amount should be deposited to the credit of the government exchequer through the challan ITNS 281 on time. It can also be filed online on the website of TIN. If the deduction and deposition process is not done on time, the penalty is levied, as mentioned below.
Also, if the TDS is deducted at a lower rate, then the payee needs to get a lower deduction certificate as per section 197 of the Income Tax Act, 1961. Suppose the payee obtains the certificate of lower deduction. In that case, the TDS is deducted according to the rate mentioned in the certificate, which will be reflected in the filing of the TDS via Form 26Q.
Late filing fees
If Form 26Q is not filed according to the due dates mentioned above, the taxpayer is liable to pay some penalties depending on the amount and how late the returns are filed. According to Section 234E, if form 26Q is not filed by the due date, a late filing fee of Rs. 200 per day is charged until the penalty becomes equal to the TDS amount.
Non-filing penalty
Similarly, if Form 26Q is not filed with in one year from due date and wrong filed then the penalty for such failure is minimun Rs. 10,000 but not more then Rs. 1,00,000 according to section 271H.
If the following conditions are met, no penalty will be levied under section 271H:
- The TDS is deposited to the government.
- The interest and penalty for late filing have also been deposited.
- The return has been filed before completion of 1 year from the due date.
Interest charged on late deduction and deposition
On top of that, the government may also charge interest for non-deduction and non-deposition of TDS returns. If the TDS is not deducted on time, then an interest of 1% per month or part of month is charged on the days spent between the due date of deduction and the actual date of the TDS deduction.
If the TDS is not deposited on time, then an interest of 1.5% per month or part of month is levied on the period spent between the actual date of deduction and the actual date of deposition.
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