Blog

2021

TDS under Section 194L (various sections) of the Income Tax Act, 1961

TDS under Section 194Lvarious sections

TDS on Payment of Compensation on Acquisition of Certain Immovable Property [Section 194LA]:

Nature of Income:

TDS under this section should be deducted on payment of a sum, being consideration/ compensation or enhanced consideration / compensation, on compulsory acquisition of any immovable property (other than agriculture land).

Liability to Deduct TDS: Any Person.

Rate of TDS:

  • TDS shall be deducted at the rate of 10% of the aforesaid payments.

Exemption/Threshold Limit:

  • When the amount (at once or in total for the whole financial year) does not exceed Rs. 2,50,000.
  • When any payment is made u/s 96 of the Right to Fair Compensation and Transparency in Land, Acquisition, Rehabilitation and Resettlement Act, 2013.

Payment ofInterest from Infrastructure Debt Fund to Non-Resident [Section 194LB]:

Applicability of Section 194LB:

Section 194LB shall be applicable if the following conditions are satisfied:

  • The interest income is paid by an infrastructure debt fund referred to in section 10 (47); and
  • The interest income is paid to a non-resident (not being a company) or to a foreign company.

Rate of TDS Deduction:

  • TDS under this section should be deducted at the rate of 5%.
  • Further SHE cessand surcharge, if applicable,should also be added.

TDS on Certain Income from Units of a Business Trust [Section 194LBA]:

Liability to deduct TDS:

  • Any person who makes payment of income [as per section 115UA] which is payable by a business trust to its unitholder is required to deduct tax at source.
  • Such unit holder can be a resident, non-resident (but not a company).

Rate of TDS:TDS rates applicable on this section as per below table:

Payer

Recipient/Payee

Nature of Income covered under section 194LBA

Rate of TDS deduction

Business Trust

Unit Holder being Resident.

Any distributed income referred to in section 115UA, being of a nature referred to in section 10 (23FC)(a) or section 10 (23FCA)

10%

Unit Holder being non-resident (not being a company) or the foreign company.

Any distributed income referred to in section 115UA, being of a nature referred to in section 10 (23FC)(a)

5%

Unit holders being a non-resident (not being a company) or the foreign company.

Any distributed income referred to in section 115UA, being of a nature referred to in section 10 (23FCA)

30%

 

Section 10 (23FC)(a):

  • Above section refers to any income of a business trust by way of interest received or receivable from a special purpose vehicle.

Section 10 (23FCA):

  • Above section refers to any income of a business trust (being a real estate investment trust) by way of renting / leasing / letting out any real estate asset owned directly by such business trust.

TDS on Income in Respect of Units of Investment Fund [Section 194LBB]:

Section 194LBB of the Income Tax Act, 1961 has been inserted with effect from 1st June 2015.

Liability to deduct TDS:

  • A person making payment to a unit holder in respect of units of an investment fund specified in Explanation 1 clause (a) to section 115UB shall be liable to deduct TDS.
  • However, the proportion of income, which is of the same nature as income referred to in section 10 (23FBB) shall be excluded from TDS deduction.

Meaning of Investment Fund:

  • Explanation 1 clause (a) to section 115UB states that ‘investment fund’ means any fund established / incorporated in India in the form of trust / a company / a limited liability partnership / a body corporate which has been granted a registration certificate as Category I / Category II Alternative Investment Fund and is regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012.

Rate of TDS:

 

Residential Status of the Payee

Rate of TDS

Resident

10%

Non-resident (not being a company) or a foreign company

30%

TDS on Income in Respect of Investment in Securitization Trust [Section 194LBC]:

  • Section 194LBC of the Income Tax Act, 1961 has been inserted with effect from 1st June 2016.

Liability to Deduct TDS:

  • A person making payment to an investor in respect of an investment in a securitization trust specified in Explanation (d) to section 115TCA is liable to deduct TDS.

Meaning of Securitization Trust:

Explanation (d) to section 115TCA provides a definition of ‘securitization trust’ which means trust, being a –

  • ‘Special purpose distinct entity’ as defined in regulation 2 (1) clause (ii) of the Securities and Exchange Board of India (Public Offer and Listing of Securitised Debt Instruments) Regulations 2008; or
  • ‘Special Purpose Vehicle’ as defined in and regulated by the guidelines on the securitization of standard assets issued by the Reserve Bank of India; or
  • Trust set up by a securitization company or a reconstruction company formed for the purpose of the Securitization and Reconstruction of the Financial Asset and Enforcement of Security Interest Act, 2002 or in pursuance of any guidelines / directions issued for the said purposes by the Reserve Bank of India.

Rate of TDS:

TDS shall be deducted at following rates:

Type of Person

TDS Rate

Individual or a HUF

25%

Any other person

30%

TDS on Income by way of Interest from Indian Company or Business trust [Section 194LC]:

Liability to Deduct TDS:

  • If an Indian company or a business trust pays income by way of interest to non-resident (not being a company) or foreign company, has to deduct TDS under this section.

Nature of Income:

  • The Interest must be in respect of money borrowed by the specified company or business trust from a source outside India by the way of issue of rupee-denominated bond.

Rate of TDS:

  • The rate of tax u/s 194LC is 5% (plus Health & Education Cess @ 4%).

TDS on Income by way of Interest on Certain Bonds and Government Securities [Section 194LD]:

Liability to Deduct TDS:

  • Liability to deduct TDS arises under this section if any person pays to FII (Foreign Institutional Investor) or QFB (Qualified Foreign Investor) income by way of interest has to deduct tax at source.

Nature of Income:

  • Interest must be in respect of investment made by the payee in a rupee-denominated bond of Indian Company or a government security.

Rate of TDS:

  • The rate of tax u/s 194LC is 5% (plus Health & Education Cess @ 4%).

Time of Deduction of TDS:

  • The Deductor who is liable to deduct TDS under provisions of this sectionis required to deduct TDS within earlier of the following dates:
  • At the time of credit of income to the account of the payee; or
  • At the time of payment in cash, cheque, draft, or by any other mode.
  • For this purpose credit to ― Expense Payable account‖ or Suspense account‖ or any other name shall be deemed to be a credit of such income to the account of the payee.
  • Payment may be made in cash or by issue of a cheque or draft of by any other mode.

Time Limit to deposit TDS:

  • TDS deducted is required to be deposited to the credit of the Government within given below timeline to avoid interest:

 

Month of Deduction

Due date of deposit of TDS

During any month from April to February

7th of Subsequent Month

During the month of March

30th April

TDS Return Filing Due Date:

 

Quarter

TDS Return Filing Due Date

Q1: April to June

31st July

Q2: July to September

31st October

Q3: October to December

31st January

Q4: January to March

31st May

Due Date of Issuance of TDS Certificate:

 

Quarter

TDS Return Filing Due Date

Q1: April to June

15th  August

Q2: July to September

15th  November

Q3: October to December

15th February

Q4: January to March

15th June

Interest on Late Filing:

 

Section

Nature of Default

Interest Payable

Period for which interest is to be paid

201A

Non deduction of tax at source, either in whole or in part

1% per month or part thereof

From the date on which tax deductible to the date on which tax is actually deducted.

After deduction of tax, Non-payment of tax either in whole or in part

1.5% per month or part thereof

From the date of deduction to the date of payment.

Notes:

  • The above interest should be paid before filing of TDS return. The deductor can make the payment of interest on such late payment of TDS before filing TDS returns or demand raised by TRACES.
  • The interest paid u/s 201A is not allowed as an expense under the Income Tax provisions.
  • Interest to be calculated on a monthly basis and not on the number of days i.e. part of a month is considered as a full month.

Penalty for late filing of TDS Returns:

  • Section 234E:
  • The deductor will be liable to pay by way of fees Rs.200 per day till the failure to pay TDS continues.
  • However, the penalty should not exceed the amount of TDS for which the statement was required to be filed.
  • Section 271H:
    • Also, a penalty from Rs.10,000 to Rs.1 lakh is leviable under Section 271H if a company provides incorrect information or fails to submit the returns within the specified due date.
    • This penalty will be charged in addition to the penalty under Section 234E.
    • No penalty under Section 271H will be charged in case of delay in filing the TDS/TCS return if the following conditions are satisfied:
  1. The tax deducted/collected at source is paid to the credit of the government.
  2. Late filing fees and interest (if any) is paid to the credit of the government.
  3. The TDS/TCS return is filed before the expiry of a period of one year from the due date specified in this behalf.

 

Blog Archive


Warning: mkdir(): No such file or directory in /home/bge9b4q3b1qk/public_html/munimji/academic/modules/mod_lca/cache.php on line 56

Warning: file_put_contents(/home/bge9b4q3b1qk/public_html/munimji/academic/cache/mod_lca/57e55f700d1772126b4bb8d207c1e29f.xml): failed to open stream: No such file or directory in /home/bge9b4q3b1qk/public_html/munimji/academic/modules/mod_lca/cache.php on line 57

Financial Management