Tax Deducted at Source (TDS) is a system introduced by Income Tax Department, where the person responsible for making specified payments such as salary, commission, professional fees, interest, rent, etc. is liable to deduct a certain percentage of tax before making payment in full to the receiver of the payment.
On July 1, 2021, under the Income Tax Act, the Central Board of Direct Taxes introduced Section 194Q. It provides the framework for buyers purchasing goods from sellers in India that exceed INR 50 Lakhs and with a 0.1% as TDS rate. The income tax is deducted based on the buyer’s total sales, gross receipts, and turnover.
Section 194J governs the TDS provisions related to specified services. Any person paying fees to any resident person for these specified services (professional, technical, etc.) is required to deduct TDS under Section 194J.
The Finance Act 2019 introduced Section 194JB of the Income Tax Act 1961, which came into effect from September 1, 2019. It covers the TDS upon the payment of fees for availing professional services, such as medical, architectural or legal services, or technical services that include consultancy and managerial works. The rate of TDS deducted as per Section 194JB is 10 percent.
Under Section 191 of the Income Tax Act, any person or entity that is responsible for making rent payments to a landlord is required to deduct tax at source (TDS) if the annual rent exceeds a specified threshold.
Section 194A of ITA is responsible for the tax deduction at sources on interests that are earned on investment options other than securities.
Form 15G is a declaration that can be filled out by bank fixed deposit holders (individuals less than 60 years of age and HUF) to ensure that no TDS (tax deduction at source) is deducted from their interest income for the fiscal.
Form 15H is a self-declaration that may be submitted by senior citizen aged 60 years or above to reduce TDS (tax deducted at source) burden on interest earned from fixed deposits (FD) and recurring deposits (RD) investments.