contents · page contents i-15 2.11-2 foreigners on tour 146 2.11-3 salary received by a ship’s...
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CONTENTS
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Chapter-heads I-7
BOOK ONE : DEDUCTION OF TAX AT SOURCE
1DEDUCTION OF TAX AT SOURCE FROM SALARY
1.1 Who is responsible to deduct tax at source in case ofincome from salary 41.1-1 Where salary is payable by other employers
also 41.2 When tax is to be deducted 5
1.2-1 Private arrangement of paying salary tax-freecannot discharge obligation of section 192 5
1.2-2 Tax deduction not required on judgment debt 51.2-3 Furlough pay received in foreign currency is
taxable as salary 51.2-4 Deduction of tax at source is mandatory from
salary 51.2-5 Correctness of investment 6
1.3 How to compute tax deductible at source 61.3-1 When tax payable on perquisites is paid by
employer 61.3-2 When relief under section 89 is available 61.3-3 When income other than salary income is
considered by employer 71.3-4 Statement of particulars in prescribed form 91.3-5 How to make adjustment of excess or deficiency 91.3-6 Deduction from provident fund payment 9
1.4 Tax deduction and collection account number (TAN) 91.5 Deposit of tax to the credit of Central Government 10
1.5-1 Where to deposit tax 10
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1.5-2 Time within which tax is to be deposited 111.5-3 Payment through challan 121.5-4 Claim for refund 13
1.6 Issue a certificate for tax deducted at source to employee 131.6-1 How to prepare Form No. 16 131.6-2 Form No. 16 with digital signature 141.6-3 Time limit within which the certificate should be
given 151.6-4 Issue of duplicate certificate 15
1.7 Statement or return of tax deduction to Government 151.7-1 Return of tax deduction from contribution paid
by the trustees of an approved superannuationfund 15
1.7-2 Annual filing of return 151.7-3 Quarterly return 151.7-4 By whom return is to be filed 24
1.8 Consequences of failure to deduct or pay tax, furnishreturn, etc. 261.8-1 Failure to deduct and/or pay tax 261.8-2 Failure to comply with provision of section 203A
regarding tax deduction account number 391.8-3 Failure to issue certificate, or submit return,
statement, etc. 391.8-4 Disallowance of deduction in respect of salary
payable to resident 441.8-5 Disallowance of deduction in respect of salary
payable to non-resident 45Illustration 45
2HOW TO WORK OUT ESTIMATED SALARY
AND QUANTUM OF TAX TO BEDEDUCTED THEREFROM
2.1 What is salary 462.1-1 Employer-employee relationship, a pre-requisite 462.1-2 Salary and wages are not conceptually different 492.1-3 Salary to former/present/prospective employee 492.1-4 Salary income must be real and not fictitious 492.1-5 When salary is forgone 502.1-6 Salary paid tax-free 50
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2.2 Basis for deduction of tax at source 502.3 Different forms of salary and its payment subject to tax
deduction at source 522.3-1 Advance salary 522.3-2 Arrears of salary 522.3-3 Leave salary 52
Illustration 552.3-4 Salary to a partner 562.3-5 Salary in lieu of notice period 562.3-6 Fees and commission 562.3-7 Bonus 562.3-8 Gratuity 57
Illustration 602.3-9 Pension 63
Illustrations 642.3-10 Annuity 672.3-11 Annual accretion to the credit balance in
provident fund 672.3-12 Amount transferred from unrecognised provident
fund to recognised provident fund 672.3-13 Retrenchment compensation 672.3-14 Profits in lieu of salary 692.3-15 Remuneration in addition to salary on the basis
of work done 712.3-16 Voluntary payments to employees 722.3-17 Compensation received at the time of voluntary
retirement or separation 732.3-18 Salary received by a teacher/professor from
SAARC Member States 762.3-19 Contribution to notified pension scheme by the
Central Government or any other employer 762.3-20 Decretal amount arising from suit for arrears of
salary and wrongful termination of appointment 762.3-21 Salary to non-resident seafarers 77
2.4 Allowances when subject to tax deduction at source 772.4-1 City compensatory allowance 772.4-2 House rent allowance 77
Illustrations 792.4-3 Entertainment allowance 80
Illustrations 812.4-4 Special allowance 81
Illustrations 94
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2.4-5 Allowance to Government employees outsideIndia 95
2.4-6 Tiffin allowance 952.4-7 Fixed medical allowance 952.4-8 Servant allowance 952.4-9 Allowance to High Court 952.4-10 Allowance received from United Nations
Organisation 952.4-11 Allowance to foreign technician 952.4-12 Allowance to other foreign citizen 952.4-13 Compensatory allowance under article 222(2) of
the Constitution 962.4-14 Sumptuary allowance 962.4-15 Allowances received by a teacher/professor from
SAARC Member States 962.4-16 Sumptuary allowance to serving chairman/
members of UPSC 962.4-17 Allowance to retired chairman/members of UPSC 96
2.5 Perquisites, amenability to tax deduction at source 962.5-1 What is “perquisite” 962.5-2 “Perquisite” as defined by the Act 982.5-3 Perquisites chargeable/Not chargeable to tax 992.5-4 Valuation of perquisites 102
Illustration 1032.6 Sums related to provident funds, amenability to deduction
of tax at source 1412.6-1 Types of employees’ provident funds 1412.6-2 Statutory provident fund 1412.6-3 Recognised provident fund 1412.6-4 Unrecognised provident fund 1422.6-5 Public provident fund 1422.6-6 Tax treatment 142
2.7 Contributions to and payment from approved superannua-tion fund, amenability to tax deduction at source 144
2.8 Approved gratuity fund - Tax treatment of the inflow andoutflow 145
2.9 Computation of salary 1452.9-1 Standard deduction 1452.9-2 Entertainment allowance 1452.9-3 Professional tax or tax on employment 145
2.10 Salaries of foreign technicians 1462.11 Salaries of foreign citizens 146
2.11-1 Diplomatic personnel 146
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2.11-2 Foreigners on tour 1462.11-3 Salary received by a ship’s crew 1462.11-4 Remuneration of a foreign trainee 147
2.12 Deductions granted under sections 80C to 80U 1472.13 Deduction in respect of life insurance premia, deferred
annuity, contributions to provident fund, subscriptionto certain equity shares or debentures, etc. 1472.13-1 Salient features of section 80C 1472.13-2 Computation of deduction under section 80C 148
Illustrations 1532.14 Deduction in respect of pension fund 1562.15 Deduction in respect of contribution to National Pension
System of Central Government (NPS) 1572.15-1 Conditions 1572.15-2 Consequences if the above conditions are satisfied 157
Illustration 1592.16 Deduction in respect of subscription to long-term
infrastructure bonds 1592.17 Deduction in respect of investment made under an equity
saving scheme 1602.18 Deduction under section 80D in respect of medical
insurance premia 1612.18-1 Conditions 1612.18-2 Maximum deductible amount 162
Illustrations 1632.19 Deduction under section 80DD in respect of medical
treatment of handicapped dependents 1632.19-1 Conditions 1632.19-2 Amount of deduction 1652.19-3 If dependent predeceases the taxpayer 165
Illustrations 1652.20 Deduction in respect of medical treatment under section
80DDB - To what extent available 1662.20-1 Conditions 1662.20-2 Amount of deduction 1662.20-3 Prescribed diseases and certificate from a doctor 166
2.21 Deduction in respect of interest on loan taken for highereducation 1672.21-1 Conditions 1682.21-2 Amount deductible 168
2.22 Deduction in respect of interest on loan taken forresidential house property 168Illustrations 169
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2.23 Deduction in respect of interest on loan taken for certainhouse property 170Illustration 171
2.24 Deduction in respect of interest on loan taken for purchaseof electric vehicle 173Illustration 173
2.25 Deduction under section 80G in respect of donation tonational funds 1742.25-1 Maximum limit 1762.25-2 Other points 177
2.26 Deduction under section 80GG in respect of rent paid 1772.26-1 Amount of deduction 1782.26-2 Meaning of total income for the purpose of
section 80GG 178Illustration 178
2.27 Deductions in respect of certain donations for scientificresearch or rural development 179
2.28 Deduction in respect of interest on deposits in savingsaccounts 1802.28-1 Post office savings bank interest exemption under
section 10(15)(i) 1812.29 Deduction under section 80TTB in respect of interest on
deposits in case of senior citizens 1822.29-1 Post Office Savings Bank interest exemption
under section 10(15)(i) 1822.30 Deduction under section 80U in case of a person with
disability 1832.30-1 Conditions 1832.30-2 Amount of deduction 184
Illustration 1842.30-3 Other points 185
2.31 When income other than salary income is considered fortax deduction under section 192 185
2.32 When salary received from other employer is considered 1852.33 Rate of exchange for deduction of tax at source on
income payable in foreign currency 1862.34 Rates of tax deduction at source during the financial
year 2019-20 1862.34-1 If PAN is not given by employer 187
2.35 Tax rebate under section 87A 188Illustrations 188
2.36 Tax rebate under sections 88B and 88C 1892.37 Relief under section 89 189
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2.37-1 Computation of relief when salary has been paidin arrears or in advance 189Illustration 190
2.37-2 Computation of relief in respect of gratuity 191Illustration 191
2.37-3 Computation of relief in respect of compensationon termination of employment 193
2.37-4 Computation of relief in respect of payment incommutation of pension 193
2.37-5 Computation of relief in respect of payment ofarrears of family pension 193
2.38 When can employee reduce the incidence of tax deduction -Certificate for deduction of tax at lower rates 1932.38-1 How lower rate is determined 1932.38-2 Validity of certificate 1942.38-3 Issued to the payer 1942.38-4 Retrospective certificate not possible 1942.38-5 Instruction issued by Board 1942.38-6 Other points 195
2.39 Rounding off of income 1952.40 Employee gets credit of tax deducted at source 195
2.40-1 Rules framed by Board 1952.41 Going through the real exercise - Examples on computation
of estimated salary and tax to be deducted therefrom undersection 192 196Illustrations 196
3TAX DEDUCTION FROM ACCUMULATED BALANCE
OF PROVIDENT FUND DUE TO AN EMPLOYEE
3.1 Person responsible for tax deduction from accumulatedbalance of provident fund 207
3.2 When tax has to be deducted 2073.2-1 No tax is deductible if payment is less than Rs. 50,000 2073.2-2 Private arrangement of paying accumulated balance
of provident fund tax-free is not relevant 2073.3 Tax deduction account number 2073.4 Deposit of tax to the credit of Central Government 207
3.4-1 Where to deposit 2073.4-2 Time of deposit 2083.4-3 Payment through challan 208
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3.4-4 Claim for refund 2083.5 Issue of certificate of tax deduction 208
3.5-1 Issue of duplicate certificate 2083.6 Quarterly return to the Government 2083.7 Consequences of failure to deduct or pay tax or furnish
return 2093.7-1 Failure to deduct and/or pay tax 2093.7-2 Failure to comply with the provisions of section 203A
regarding tax-deduction account number 2093.7-3 Failure to issue certificate or submit return 209
4HOW TO COMPUTE TAXABLE PREMATUREWITHDRAWAL OF PROVIDENT FUND AND
TAX TO BE DEDUCTED THEREFROM
4.1 When withdrawal from provident fund is subject to thetax deduction under section 192A 210
4.2 Rates of tax 2114.3 Payment without tax deduction or with deduction at lower
rates 2114.4 Tax credit 211
4.4-1 Rules framed by Board 211Illustration 212
5DEDUCTION OF TAX AT SOURCE FROM
INTEREST ON SECURITIES
5.1 Who is responsible to deduct tax at source in the case ofinterest on securities 217
5.2 When tax has to be deducted at source 2175.2-1 Relevance of identity of deductee under TDS
provisions 2175.2-2 Private arrangement of paying interest on
securities as tax-free cannot discharge obligationunder section 193 219
5.3 How to compute tax deduction at source 2195.4 Tax deduction account number 2195.5 Deposit of tax to the credit of the Central Government 219
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5.5-1 Where to deposit 2195.5-2 Time of deposit of TDS/TCS 2195.5-3 Challans for payment 2205.5-4 Claim for refund 220
5.6 Issue of certificate for tax deduction from interest onsecurities 2205.6-1 TDS certificate in Form No. 16A 220
5.6-2 Time limit within which the certificate shall beissued 221
5.6-3 Issue of duplicate certificate 2215.7 Return of tax deduction at source from interest on
securities 2215.7-1 Annual return 2215.7-2 Quarterly statement TDS deposited 221
5.8 Consequences of failure to deduct or pay tax, furnishreturns, etc. 2235.8-1 Failure to deduct and/or pay tax 2235.8-2 Failure to comply with the provision of section 203A
regarding tax deduction account number 2235.8-3 Failure to issue certificates, or submit returns 2235.8-4 Forfeiture of deduction in respect of interest on
securities 223Illustration 224
6HOW TO COMPUTE INTEREST ON
SECURITIES AND TAX DEDUCTIBLETHEREFROM AT SOURCE
6.1 Interest on securities - How defined 2296.2 Interest on securities not liable for tax deduction 229
6.2-1 Notified securities 2306.2-2 TDS on 8 per cent Savings (Taxable) Bonds, 2003
or 7.75 per cent Savings (Taxable) Bonds, 2018 2426.3 What happens when recipient is Government - Interest
on securities payable to the Government and certainCorporations 243
6.4 TDS on interest on securities - A few typical cases 2446.4-1 When interest is paid to oneself - Interest on own
debentures 244
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6.4-2 Interest payable to funds established for thebenefits of armed forces 244
6.4-3 Interest to provident funds 2446.4-4 Deep discount bond 244
6.5 Rates for tax deduction at source 2456.6 When can a security holder reduce the incidence of
tax deduction 2456.6-1 Certificate for tax deduction at lower rate or no
deduction 2456.6-2 Declaration under section 197A 2476.6-3 Payment to certain institution whose income is
exempt under section 10(23C) 2496.7 Tax credit to one who pays 249
6.7-1 Rules to be framed by Board 2506.7-2 Joint owners 2506.7-3 Beneficial owner 250
7DEDUCTION OF TAX AT SOURCE
FROM DIVIDEND
7.1 Who is responsible for tax deduction in the case of dividend 2537.1-1 Who is “principal officer” 2537.1-2 What makes one an Indian company 2537.1-3 What amounts to prescribed arrangements for
declaration and payment of dividends in India 2547.2 What is “dividend” for the purpose of tax deduction 2547.3 When tax is to be deducted 254
7.3-1 Private arrangement of paying dividend tax-freecannot discharge obligation under section 192 254
7.4 Tax deduction account number 2547.5 Deposit of tax to the credit of Central Government 255
7.5-1 Where to deposit 2557.5-2 Time within which tax is to be deposited 2557.5-3 Filing challan for payment 2557.5-4 Claim for refund 255
7.6 Issue a certificate for tax deducted at source toshareholders 2557.6-1 TDS certificate in Form No. 16A 2557.6-2 Time limit within which the certificate should be
given 256
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7.6-3 Issue of duplicate certificate 2567.7 Statement/returns to the Government 256
7.7-1 Annual return 2567.7-2 Quarterly return of TDS deposited 256
7.8 Consequences of failure to deduct or pay tax, furnishreturns, etc. 2567.8-1 Failure to deduct and/or pay tax 2567.8-2 Failure to comply with the provisions of section
203A regarding tax deduction account number 256
7.8-3 Failure to issue certificate, or submit return/statement 256
8HOW TO COMPUTE DIVIDENDS AND TAX
DEDUCTIBLE THEREFROM
8.1 Defining dividends 257
8.2 Deemed dividend under the Income-tax Act 257
8.2-1 Definition under section 2(22)(e) 257
8.2-2 Accumulated profits 257
8.2-3 Distribution of accumulated profits by way ofadvance or loan 259
8.3 Rates for tax deduction at source during the financialyear 2017-18 263
8.4 Dividends payable to Government or certain corporation 263
8.5 Deduction of tax at lower rates 263
8.5-1 Certificate for receiving dividend without taxdeduction 264
8.5-2 Declaration under section 197A 264
8.6 Who gets credit for tax deducted 265
8.6-1 Rules framed by Board 265
9DEDUCTION OF TAX AT SOURCE FROM INTEREST
OTHER THAN INTEREST ON SECURITIES
9.1 Who is to discharge the responsibility to make taxdeduction at source 267
9.2 Which interest qualifies for tax deduction at sourceunder section 194A 267
9.3 When tax has to be deducted at source 268
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9.3-1 When interest is credited to “Interest payableaccount” or “Suspense account” 268
9.3-2 Private arrangement of paying interest tax-freecannot discharge obligation under section 194A 269
9.4 How to compute tax deduction at source 269
9.5 Tax deduction account number 269
9.6 Deposit of tax to the credit of Central Government 269
9.6-1 Where to deposit 269
9.6-2 Time of deposit 269
9.6-3 Payment through challan 270
9.6-4 Claim for refund 270
9.7 Issue certificate of tax deduction from interest other thaninterest on securities 270
9.7-1 Certificates are issued by downloading from TINwebsite 270
9.7-2 Time limit within which certificate shall be issued 270
9.7-3 Issue of duplicate certificate 271
9.8 Return of tax deduction at source 271
9.8-1 Annual return 271
9.8-2 Quarterly return of TDS deposited 271
9.8-3 Quarterly return for payment without taxdeduction 272
9.9 Consequences of failure to deduct or pay tax, furnishreturn, etc. 273
9.9-1 Failure to deduct and/or pay tax 273
9.9-2 Failure to comply with the provisions ofsection 203A regarding tax deductionaccount number 273
9.9-3 Failure to issue certificate or submit return 273
9.9-4 Forfeiture of deduction in respect of interestother than interest on securities 273
10HOW TO COMPUTE INTEREST (OTHER THAN
INTEREST ON SECURITIES) AND TAXDEDUCTIBLE THEREFROM
10.1 When a payment can be regarded as “interest” 27410.1-1 Conditions 274
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10.1-2 When a payment is deemed to be payment ofinterest for the purpose of tax deduction 274
10.2 Rates for tax deduction at source during the financialyear 2019-20 27510.2-1 When adjustments are called for 276
10.3 Treatment of interest other than interest on securitiespayable to Government or certain corporation 276
10.4 Interest other than interest on securities not liable to taxdeduction under section 194A(3)/197A 27610.4-1 If interest does not exceed a specified amount 27610.4-2 Paid/credited to banks/financial institutions 27710.4-3 Interest by firm 27910.4-4 Co-operative society 27910.4-5 Interest under notified schemes 28010.4-6 Interest by bank 28110.4-7 Interest by co-operative society/bank 28110.4-8 Interest by Government 28110.4-9 Interest credited on compensation 28210.4-10 Interest paid on Compensation 28210.4-11 Zero coupon bonds 28210.4-12 Interest referred to in section 10(23FC) 28210.4-13 Interest by offshore banking unit 28210.4-14 Interest to Tirumala Tirupati Devasthanams 28210.4-15 Interest to securitisation trust 282
10.5 Interest without tax deduction or with deduction atlower rates 28210.5-1 Certificate for tax deduction at lower rate
under section 197(1) 28210.5-2 Declaration under section 197A 28310.5-3 Payment to certain institutions whose income is
exempt under section 10(23C) 28310.6 To deduct or not - Treatment of some typical cases 285
10.6-1 Interest on deposits in joint names - Manner oftax deduction 285
10.6-2 Interest payment under Land Acquisition Act 28610.6-3 Interest payable on hundi by buyer to supplier in
case of outstation sale of goods - Whether tax tobe deducted by the buyer 286
10.6-4 Interest payable by consignors to their commissionagent 286
10.6-5 Payment under a hire purchase agreement 286
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10.6-6 Who is an individual 28610.6-7 Interest payable by retail finance service company 28710.6-8 Cheque discounting charges 28710.6-9 Payment under a hire purchase agreement 28710.6-10 Interest on delayed payment of insurance
compensation 28710.6-11 Personal loan of directors routed through company 28710.6-12 Discounting charges 28710.6-13 Chit fund 28810.6-14 Judgment debtor 28810.6-15 Interest on overdue purchase bills is not ‘interest’ 28810.6-16 Loan processing fees 28810.6-17 Tax deduction on the deposits in banks in the name
of the registrar to the Supreme Court/High Courtduring pendency of litigation 288
10.6-18 Tax deductible even in the case of loss 28810.6-19 TDS on interest on deposits made under Capital
Gains Accounts Scheme where depositor hasdeceased 288
10.7 Giving credit for tax deducted 28910.7-1 Rules to be framed by Board 289
11TAX DEDUCTION FROM WINNINGS FROM
LOTTERY, CROSSWORD PUZZLE, CARDGAMES OR OTHER GAMES
11.1 Who is responsible for tax deduction in the case ofwinnings from lottery, crossword puzzle, card game orother game 291
11.2 Payments from which deduction is to be made 29111.3 When tax has to be deducted 291
11.3-1 Private arrangement of paying income-tax-freecannot discharge obligation under section 194B 291
11.4 Tax deduction account number 29111.5 Deposit of tax in the credit of Central Government 291
11.5-1 Where to deposit 29111.5-2 Time of deposit 29211.5-3 Payment through challan 29211.5-4 Claim for refund 292
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11.6 Issue a certificate for tax deducted at source 29211.6-1 Certificate is issued by downloading from TIN
website 29211.6-2 Time limit 29211.6-3 Issue of duplicate certificate 293
11.7 Annual/quarterly return to the Government 29311.7-1 Annual return 29311.7-2 Quarterly return 293
11.8 Consequences of failure to deduct or pay tax or furnishreturn, etc. 29411.8-1 Failure to deduct and/or pay tax 29411.8-2 Failure to comply with the provisions of
section 203A regarding tax deductionaccount number 294
11.8-3 Failure to issue certificate, or submit return 29411.8-4 Disallowance of expenditure 294
12WINNINGS FROM LOTTERY, CROSSWORD PUZZLE,
CARD GAME OR ANY OTHER GAME ANDTAX TO BE DEDUCTED THEREFROM
12.1 What can be termed as winnings from lottery, crosswordpuzzle and card game 29512.1-1 One has to fall back on dictionary meanings and
judicial pronouncement 29512.1-2 Preliminary conditions subject to which tax
deduction can be made 29712.1-3 Some typical situations - How to deal with them 298
12.2 Rates for deduction of tax at source during the financialyear 2019-20 299
12.3 No deduction at source from payments to Government orcertain corporation 300
12.4 Giving credit for tax deducted 30112.4-1 Rules framed by Board 301
13TAX DEDUCTION FROM WINNINGS
FROM HORSE RACE
13.1 Who is responsible for tax deduction 303
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13.1-1 Bookmaker - Meaning of 30313.2 When winnings from horse racing are subject to tax
deduction at source 30313.3 When tax has to be deducted 304
13.3-1 Private arrangement of making paymenttax-free cannot discharge the obligation 304
13.4 Tax deduction account number 30413.5 Deposit of tax to the credit of Central Government 304
13.5-1 Where to deposit 30413.5-2 Time of deposit 30413.5-3 Payment through challan 30513.5-4 Claim for refund 305
13.6 Issue of certificate for deduction from winning from horseraces 30513.6-1 Certificates are issued by downloading from TIN
website 30513.6-2 Time limit within which the certificate shall be
issued 30513.6-3 Issue of duplicate certificate 305
13.7 Annual/quarterly return of winning from horse race to theGovernment 30613.7-1 Annual return 30613.7-2 Quarterly return 306
13.8 Consequences of failure to deduct or pay tax, furnishreturn, etc. 30713.8-1 Failure to deduct and/or pay tax 30713.8-2 Failure to comply with the provisions of
section 203A regarding tax deductionaccount number 307
13.8-3 Failure to issue certificate or submit return 30713.8-4 Disallowance of expenditure 307
14WINNINGS FROM HORSE RACE AND
TAX TO BE DEDUCTED THEREON
14.1 Meaning of horse race 30814.1-1 When winnings from horse race are subject to
tax deduction 30814.2 Rates at which deduction of tax is to be made at source
during the financial year 2019-20 308
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14.3 No deduction of tax from winnings payable to theGovernment/certain corporation 309
14.4 Credit for tax deducted 30914.4-1 Rules framed by Board 309
15TAX DEDUCTION FROM PAYMENT TO
CONTRACTORS
15.1 Person responsible for making deduction at source undersection 194C 31115.1-1 Payment to a resident contractor 311
15.2 When tax has to be deducted at source 31315.2-1 When amount is transferred to “Suspense
account” 31315.2-2 Private arrangement of making payment to
contractor/sub-contractor without taxdeduction cannot discharge the obligationunder section 194C 313
15.3 How to compute the amount of tax deduction 31315.4 Tax deduction account number 31315.5 Deposit of tax to the credit of Central Government 313
15.5-1 Where to deposit 31315.5-2 Time of deposit 31415.5-3 Payment through challan 31415.5-4 Claim for refund 314
15.6 Issue of certificate of tax deduction 31415.6-1 Certificates are issued by downloading from TIN
website 31515.6-2 Time limit within which certificate shall be issued 31515.6-3 Issue of duplicate certificate 315
15.7 Annual and quarterly returns of tax deducted at source 31515.7-1 Annual return 31515.7-2 Quarterly return 315
15.8 Consequences of failure to deduct or pay tax, furnishreturn, etc. 31615.8-1 Failure to deduct and/or pay tax 31615.8-2 Failure to comply with the provisions of
section 203A regarding tax deductionaccount number 316
15.8-3 Failure to issue certificate or submit return 316
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15.8-4 Forfeiture of deduction in respect of payment tocontractors/sub-contractors 316
16WHAT CONSTITUTES A PAYMENT TO CONTRACTOR/
SUB-CONTRACTOR AND HOW MUCH TAX IS TOBE DEDUCTED THEREFROM
16.1 Payment to contractors/sub-contractors 31716.1-1 When such payments are subject to tax deduction 31716.1-2 When such payments to contractors are not
subject to tax deduction at source 31716.2 “Work contract” and “contract for supply of labour for
works contract” - Meaning of 319
16.2-1 “Work” as defined in section 194C 31916.2-2 Work contract or sale of goods 32016.2-3 Tests to determine whether a contract is work
contract 32016.2-4 Emerging conclusion 32216.2-5 Examples of “work contracts” and “contracts for
sale of goods” 32316.3 Judicial pronouncements 32916.4 Rates for tax deduction at source during the financial
year 2019-20 33216.4-1 Other points 332
16.5 Clarifications from the Board 33316.5-1 Advertising contract 33316.5-2 Broadcasting/telecasting contracts 33516.5-3 Payment made to travel agent/or an airline 33516.5-4 Does catering include serving food in restaurant 33616.5-5 Payment of hire charges 33616.5-6 Payment to an electrician 33716.5-7 Maintenance contracts 33716.5-8 Fixed deposit commission 33716.5-9 Procurement of orders 33716.5-10 Reimbursement 33716.5-11 Bidi manufacturing 33716.5-12 National Rural Employment Programme 33716.5-13 Bus contractor 33716.5-14 Road transporters 338
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16.5-15 Tax deduction when material is supplied tocontractor 338
16.5-16 Contract on piece rate basis 33916.6 Payment to Government and certain corporations 33916.7 Certificate for tax deduction at lower rates 340
16.7-1 Time limit for soliciting the favour 34016.8 Credit for tax deduction 340
16.8-1 Rules framed by Board 340
17TAX DEDUCTION FROM INSURANCE
COMMISSION
17.1 Person responsible for tax deduction from insurancecommission 342
17.2 When tax has to be deducted 34217.2-1 No tax is deductible if payment during a
financial year does not exceed Rs. 15,000 34217.2-2 Private arrangement of paying commission
tax-free is not relevant 34217.3 Tax deduction account number 34217.4 Deposit of tax to the credit of Central Government 342
17.4-1 Where to deposit 34217.4-2 Time of deposit 34317.4-3 Payment through challan 34317.4-4 Claim for refund 343
17.5 Issue of certificate of tax deduction 34317.5-1 Certificates are issued by downloading from TIN
website 34417.5-2 Time-limit within which certificate shall be issued 34417.5-3 Issue of duplicate certificate 344
17.6 Annual and quarterly returns of tax deducted at source 34417.6-1 Annual return 34417.6-2 Quarterly return 344
17.7 Consequences of failure to deduct or pay tax, furnishreturn, etc. 34517.7-1 Failure to deduct and/or pay tax 34517.7-2 Failure to comply with the provisions of
section 203A regarding tax deductionaccount number 345
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17.7-3 Failure to issue certificates or submit return 34517.7-4 Disallowance of expenditure 345
18HOW TO COMPUTE INSURANCE COMMISSION
AND TAX TO BE DEDUCTED THEREFROM
18.1 What qualifies as insurance commission for the purpose oftax deduction at source 346
18.1-1 Conditions to attract section 194D 346
18.2 Rates at which tax is to be deducted at source during thefinancial year 2019-20 34718.2-1 No tax deduction when payments are to
Government and certain corporation 34718.3 Circumstances in which no deduction or deduction at
lower rate is possible 34818.3-1 Certificate for tax deduction at lower rate under
section 197(1) 34818.3-2 Declaration under section 197A 348
18.4 Credit given to person on whose behalf tax is deducted 34918.4-1 Rules framed by Board 349
19TAX DEDUCTION FROM PAYMENT
IN RESPECT OF LIFE INSURANCE POLICY
19.1 Person responsible for tax deduction 35119.2 When tax has to be deducted 351
19.2-1 No tax is deductible if payment during a financialyear is less than Rs. 1,00,000 351
19.2-2 Private arrangement of paying commissiontax-free is not relevant 351
19.3 Tax deduction account number 35119.4 Deposit of tax to the credit of Central Government 351
19.4-1 Where to deposit 35119.4-2 Time of deposit 35219.4-3 Payment through challan 35219.4-4 Claim for refund 352
19.5 Issue of certificate of tax deduction 352
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19.5-1 Certificates are issued by downloading fromTIN website 352
19.5-2 Time-limit within which certificate shall be issued 35219.5-3 Issue of duplicate certificate 353
19.6 Annual and quarterly returns of tax deducted at source 35319.6-1 Annual return 35319.6-2 Quarterly return 353
19.7 Consequences of failure to deduct or pay tax, furnishreturn, etc. 35419.7-1 Failure to deduct and/or pay tax 35419.7-2 Failure to comply with the provisions of section
203A regarding tax-deduction account number 35419.7-3 Failure to issue certificates or submit return 35419.7-4 Disallowance of expenditure 354
20HOW TO COMPUTE TAX TO BE DEDUCTED
FROM PAYMENT IN RESPECT OF LIFEINSURANCE POLICY
20.1 What qualifies as payment in respect of life insurancepolicy for the purpose of tax deduction at source undersection 194DA 35520.1-1 When exemption is available under section 10(10D) 355
20.2 Rates at which tax is to be deducted at source during thefinancial year 2019-20 356Illustrations 356
20.3 Circumstances in which no deduction or deduction at lower 357rate is possible
20.4 Credit given to person on whose behalf tax is deducted 35720.4-1 Rules framed by Board 358
21DEDUCTION OF TAX AT SOURCE FROM
NATIONAL SAVINGS SCHEME
21.1 Who is responsible to deduct tax 36021.2 When tax is to be deducted 36021.3 How to compute amount of tax deducted at source 36021.4 Tax deduction account number 360
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21.5 Deposit of tax to the credit of Central Government 36021.5-1 Where to deposit 36021.5-2 Time of deposit 36021.5-3 Payment through challan 36121.5-4 Claim for refund 361
21.6 Issue of certificate for tax deduction 36121.6-1 Certificates are issued by downloading from TIN
website 36121.6-2 Time limit within which the certificate shall be
issued 36121.6-3 Issue of duplicate certificate 361
21.7 Annual and quarterly return to the Government 36121.7-1 Annual returns 36121.7-2 Quarterly return 361
21.8 Consequences of failure to deduct or pay tax or furnishreturn 36321.8-1 Failure to deduct and/or pay tax 36321.8-2 Failure to comply with the provisions of
section 203A regarding tax deductionaccount number 363
21.8-3 Failure to issue certificate or submit return 36321.8-4 Disallowance of expenditure 363
22HOW TO COMPUTE AMOUNT REFERRED TO
IN SECTION 80CCA(2)(a) AND TAX TO BEDEDUCTED THEREFROM
22.1 Payments referred to in section 80CCA(2)(a) 36422.1-1 What is the scheme of section 80CCA 36422.1-2 Payments subject to tax deduction under
section 194EE 36422.2 Rate of tax in force during the financial year 2019-20 36522.3 Payment without tax deduction under section 197A 365
22.3-1 Mode of submission of Form No. 15G/15H bypayer of income to income-tax authorities 366
22.4 Tax credit 36622.4-1 Rules framed by Board 366
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23DEDUCTION OF TAX AT SOURCE ON ACCOUNT
OF REPURCHASE OF UNITS BY MUTUALFUNDS OR UNIT TRUST OF INDIA
23.1 Who is responsible to deduct tax 36823.2 When tax is to be deducted 368
23.2-1 Private arrangement to pay income free of tax 36823.3 How to compute amount of tax deducted 36823.4 Tax deduction account number 36823.5 Deposit of tax to the credit of the Central Government 368
23.5-1 Where to deposit 36823.5-2 Time of deposit 36923.5-3 Payment through challan 36923.5-4 Claim for refund 369
23.6 Issue of certificate for tax deduction 36923.6-1 Certificates are issued by downloading from TIN
website 36923.6-2 Time-limit within which the certificate shall be
issued 36923.6-3 Issue of duplicate certificate 369
23.7 Annual and quarterly returns to the Government 37023.7-1 Annual return 37023.7-2 Quarterly returns 370
23.8 Consequences of failure to deduct or pay tax or furnishreturn 37123.8-1 Failure to deduct and/or pay tax 37123.8-2 Failure to comply with the provisions of
section 203A regarding tax deductionaccount number 371
23.8-3 Failure to issue certificate or submit return 37123.8-4 Disallowance of expenditure 371
24HOW TO COMPUTE AMOUNT REFERRED TO
IN SECTION 80CCB(2) AND TAX TO BEDEDUCTED THEREFROM
24.1 Payments affected by section 194F 37224.1-1 What is the scheme of section 80CCB 372
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24.1-2 Payments subject to tax deduction undersection 194F 372
24.1-3 Illustration 37224.2 Rate of tax in force during the financial year 2019-20 37324.3 Deduction of tax at lower rate 37324.4 Tax credit 373
24.4-1 Rules framed by Board 373
25DEDUCTION OF TAX AT SOURCE FROM
COMMISSION ON SALE OFLOTTERY TICKETS
25.1 Who is responsible to deduct tax at source 37525.2 When tax is deducted at source 375
25.2-1 When amount is credited to “suspense account” 375
25.2-2 Private arrangement to pay commission free oftax 375
25.3 How to compute tax deduction at source undersection 194G 375
25.4 Tax deduction account number 37525.5 Deposit of tax to the credit of Central Government 375
25.5-1 Where to deposit 37525.5-2 Time of deposit 37625.5-3 Payment through challan 37625.5-4 Claim for refund 376
25.6 Issue of certificate of tax deduction 37625.6-1 Certificates are issued by downloading from TIN
website 37625.6-2 Time-limit within which certificate shall be issued 37625.6-3 Issue of duplicate certificate 377
25.7 Annual and quarterly return to the Government 37725.7-1 Annual return 37725.7-2 Quarterly return 377
25.8 Consequences of failure to deduct or pay tax or furnishreturn 37825.8-1 Failure to deduct and/or pay tax 37825.8-2 Failure to comply with the provisions of
section 203A regarding tax deductionaccount number 378
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25.8-3 Failure to issue certificate or submit return 37825.8-4 Disallowance of expenditure 378
26HOW TO COMPUTE COMMISSION ON SALE OF
LOTTERY TICKETS AND TAX DEDUCTIBLETHEREFROM
26.1 When a payment is affected by section 194G 37926.2 Rates for tax deduction 37926.3 Deduction of tax at lower rate 38026.4 Tax credited 380
26.4-1 Rules framed by Board 380
27TAX DEDUCTION FROM COMMISSION
OR BROKERAGE
27.1 Person responsible for tax deduction from commission/brokerage 382
27.2 When tax has to be deducted 382
27.2-1 No tax is deductible if payment during afinancial year does not exceed Rs. 15,000 382
27.2-2 Private arrangement of paying commission tax-free is not relevant 383
27.3 Tax deduction account number 383
27.4 Deposit of tax to the credit of Central Government 383
27.4-1 Where to deposit 383
27.4-2 Time of deposit 383
27.4-3 Payment through challan 384
27.4-4 Claim for refund 384
27.5 Issue of certificate of tax deduction 384
27.5-1 Certificates are issued by downloading from TINwebsite 384
27.5-2 Time limit within which the certificate shall beissued 384
27.5-3 Issue of duplicate certificate 384
27.6 Annual and quarterly return to the Government 384
27.6-1 Annual return 384
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27.6-2 Quarterly return 384
27.7 Consequences of failure to deduct or pay tax or furnishreturn 386
27.7-1 Failure to deduct and/or pay tax 386
27.7-2 Failure to comply with the provisions ofsection 203A regarding tax deductionaccount number 386
27.7-3 Failure to issue certificate or submit return 386
27.7-4 Forfeiture of deduction in respect of commission/brokerage 386
28HOW TO COMPUTE COMMISSION OR
BROKERAGE AND TAX TO BEDEDUCTED THEREFROM
28.1 When commission/brokerage is subject to the taxdeduction under section 194H 387
28.2 Brokerage/commission covered by section 194H 38728.2-1 Professional services excluded 38728.2-2 “Commission” judicially defined 38828.2-3 Brokerage judicially defined 38928.2-4 Commission and service are two essential
elements 39028.2-5 Commission retained by consignee - Is it subject to
tax deduction 39328.2-6 Turnover commission by RBI 39328.2-7 Trade discount is different 39328.2-8 Discount on SIM offered by Cellular telephone net-
work provider to distributors 39428.2-9 Other judicial rulings 39428.2-10 Conclusions 396
28.3 Rates of tax 39628.4 No tax deduction when recipient is Government and certain
corporations 39728.5 Payment without tax deduction or with deduction at lower
rates 39728.5-1 Certificate for tax deduction at lower rate under
section 197(1) 39728.5-2 Turnover commission payable by Central
Government 398
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28.6 Tax credit 39828.6-1 Rules framed by Board 398
29TAX DEDUCTION FROM RENT
29.1 Person responsible for tax deduction from rent 400
29.2 When tax has to be deducted 400
29.2-1 No tax is deductible if payment during a financialyear does not exceed Rs. 2,40,000 401
29.2-2 Private arrangement of paying rent tax-free isnot relevant 401
29.3 Tax deduction account number 401
29.4 Deposit of tax to the credit of Central Government 401
29.4-1 Where to deposit 401
29.4-2 Time of deposit 401
29.4-3 Payment through Challan 402
29.4-4 Claim for refund 402
29.5 Issue of certificate of tax deduction 402
29.5-1 Certificates are issued by downloading from TINwebsite 402
29.5-2 Time limit within which the certificate shall beissued 402
29.5-3 Issue of duplicate certificate 402
29.6 Annual and quarterly return to the Government 402
29.6-1 Annual return 402
29.6-2 Quarterly return 402
29.7 Consequences of failure to deduct or pay tax or furnishreturn 404
29.7-1 Failure to deduct and/or pay tax 404
29.7-2 Failure to comply with the provisions ofsection 203A regarding tax-deductionaccount number 404
29.7-3 Failure to issue certificate or submit return 404
29.7-4 Forfeiture of deduction in respect of rent 404
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30HOW TO COMPUTE RENT AND TAX TO BE
DEDUCTED THEREFROM
30.1 When rent is subject to the tax deduction undersection 194-I 405
30.2 Rent covered by section 194-I 40530.2-1 Rent as defined in section 194-I 40530.2-2 Broad inferences 407
30.3 Rates of tax 41330.4 No tax deduction when recipient is Government and certain
corporations 413
30.4-1 No tax deduction if recipient is exempt undersection 10(23C) 414
30.4-2 No tax deduction if recipient is real estateinvestment trust 414
30.5 Deduction of tax at lower rates 414
30.5-1 Certificate for receiving rent without tax deduction 414
30.5-2 Declaration under section 197A 415
30.6 Tax credit 415
30.6-1 Rules framed by Board 415
31DEDUCTION OF TAX AT SOURCE FROM
CONSIDERATION PAYABLE FOR ACQUISITIONOF IMMOVABLE PROPERTY OTHER THAN
AGRICULTURAL LAND IN RURAL AREA
31.1 Who is responsible for tax deduction at source undersection 194-IA 417
31.2 When tax has to be deducted at source 417
31.3 Tax deduction account number 417
31.4 Deposit of tax to the credit of Central Government 417
31.4-1 Where to deposit 417
31.4-2 Time of deposit 417
31.4-3 Payment through challan 417
31.4-4 Claim for refund 418
31.5 Issue a certificate for tax deducted at source 418
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31.5-1 Certificates are issued by downloading fromTRACES Portal 418
31.5-2 Time limit within which the certificate should begiven 418
31.5-3 Issue of duplicate certificate 418
31.6 Annual and quarterly return to the Government 418
31.7 Consequences of failure to deduct or pay tax, furnishreturns, etc. 418
31.7-1 Failure to deduct and/or pay tax 418
31.7-2 Failure to issue certificate, or submit return/statement 418
31.7-3 Forfeiture of deduction 418
32HOW TO COMPUTE TAX DEDUCTIBLE FROM
PAYMENT OF CONSIDERATION FORACQUISITION OF ANY IMMOVABLE
PROPERTY
32.1 Income subject to tax deduction under section 194-IA 41932.1-1 Immovable property 41932.1-2 Agricultural land 41932.1-3 Rural area in India 420
32.2 Rate for tax deduction at source during the financial year2019-20 421
32.3 Consideration payable to Government or certaincorporation 423
32.4 Certificate of tax deduction at lower rate 42332.5 Who gets credit for tax deducted 423
32.5-1 Rules framed by Board 423
33TAX DEDUCTION FROM PAYMENT OF RENT BY
CERTAIN INDIVIDUALS AND HUFs33.1 Person responsible for tax deduction under section 194-IB 42533.2 When tax has to be deducted 425
33.2-1 No tax is deductible if rent does not exceedRs. 50,000 per month 425
33.2-2 Private arrangement of paying tax-free rent is notrelevant 425
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33.3 Tax deduction account number 42533.4 Deposit of tax to the credit of Central Government 425
33.4-1 Where to deposit 42533.4-2 Time of deposit 42633.4-3 Payment through challan 42633.4-4 Claim for refund 426
33.5 Issue of certificate of tax deduction 42633.5-1 Issue of duplicate certificate 426
33.6 Return to the Government 42633.7 Consequences of failure to deduct or pay tax or furnish
return 42633.7-1 Failure to deduct and/or pay tax 42633.7-2 Failure to issue certificate or submit return 42633.7-3 Forfeiture of deduction 426
34HOW TO COMPUTE TAX DEDUCTIBLE FROM
RENT UNDER SECTION 194-IB34.1 Rent subject to tax deduction under section 194-IB 42734.2 Rates of tax deduction during the financial year 2019-20 427
Illustrations 42734.3 Payment without tax deduction or with deduction at lower
rates 42834.4 Consideration payable to Government or certain corporation 42934.5 Tax credit 429
34.5-1 Rules framed by Board 429
35TAX DEDUCTION FROM PAYMENT UNDER
SPECIFIED AGREEMENT35.1 Person responsible for tax deduction from payment under
specified agreement 43135.2 When tax has to be deducted 431
35.2-1 Private arrangement to pay consideration free of tax 43135.3 Tax deduction account number 43135.4 Deposit of tax to the credit of Central Government 431
35.4-1 Where to deposit 43135.4-2 Time of deposit 431
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35.4-3 Payment through challan 43235.4-4 Claim for refund 432
35.5 Issue of certificate of tax deduction 43235.5-1 Issue of duplicate certificate 432
35.6 Quarterly return to the Government 43235.7 Consequences of failure to deduct or pay tax or furnish
return 43235.7-1 Failure to deduct and/or pay tax 43235.7-2 Failure to comply with the provisions of
section 203A regarding tax-deduction accountnumber 432
35.7-3 Failure to issue certificate or submit return 432
36HOW TO COMPUTE CONSIDERATION WHICH IS SUBJECT
TO TAX DEDUCTION UNDER SECTION 194-IC36.1 When payment under specified agreement is subject to tax
deduction under section 194-IC 43336.1-1 Specified agreement under section 45(5A) 433
36.2 Rates of tax 434Illustration 434
36.3 Payment without tax deduction or with deduction at lowerrates 435
36.4 Tax credit 43536.4-1 Rules framed by Board 435
37DEDUCTION OF TAX AT SOURCE FROM FEES
FOR TECHNICAL OR PROFESSIONALSERVICES OR ROYALTY
37.1 Who is responsible for tax deduction in the case of feesfor technical or professional services or royalty 43737.1-1 Director’s fees subject to TDS under section 194J
from July 1, 2012 43737.1-2 When payment/credit by an individual/HUF is
subject to TDS under section 194J 43737.2 When tax has to be deducted at source 438
37.2-1 When fees is credited to “suspense account” 438
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37.2-2 Private arrangement of paying fees for technicalor professional services or royalty tax-free cannotdischarge obligation under section 194J 438
37.3 Tax deduction account number 43937.4 Deposit of tax to the credit of Central Government 439
37.4-1 Where to deposit 43937.4-2 Time of deposit 43937.4-3 Payment through challan 43937.4-4 Claim for refund 439
37.5 Issue a certificate for tax deducted at source 44037.5-1 Certificates are issued by downloading from TIN
website 44037.5-2 Time limit within which the certificate should be
given 44037.5-3 Issue of duplicate certificate 440
37.6 Annual and quarterly return to the Government 44037.6-1 Annual return 44037.6-2 Quarterly return 440
37.7 Consequences of failure to deduct or pay tax, furnishreturns, etc. 44237.7-1 Failure to deduct and/or pay tax 44237.7-2 Failure to comply with the provisions of section
203A regarding tax-deduction account number 44237.7-3 Failure to issue certificate, or submit return/
statement 44237.7-4 Forfeiture of deduction in respect of technical/
professional fees/royalty 442
38HOW TO COMPUTE FEES FOR PROFESSIONAL
AND TECHNICAL SERVICES AND ROYALTYAND TAX DEDUCTIBLE THEREFROM
38.1 Professional/technical services 44338.1-1 What is professional services 44338.1-2 Technical services 44438.1-3 “Royalty” as defined in Explanation 2 to section
9(1)(vi) 44538.2 When payments for professional/technical fees, royalty,
director’s fees are covered by section 194J 448
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38.2-1 Other points 44938.3 Rates for tax deduction at source during the financial year
2019-20 45238.3-1 Reimbursement of expenditure - Whether subject
to TDS 45338.4 Fees for professional services/technical services or royalty
payable to Government or certain corporation 45338.5 Certificate of tax deduction at lower rate 454
38.5-1 Time limit for soliciting the favour 45438.6 Who gets credit for tax deducted 454
38.6-1 Rules framed by Board 454
39DEDUCTION OF TAX AT SOURCE FROM
PAYMENT OF COMPENSATION ON ACQUISITIONOF IMMOVABLE PROPERTY
39.1 Who is responsible for tax deduction at source undersection 194LA 456
39.2 When tax has to be deducted at source 45639.3 Tax deduction account number 45639.4 Deposit of tax to the credit of Central Government 456
39.4-1 Where to deposit 45639.4-2 Time within which tax has to be deposited 45639.4-3 Claim for refund 456
39.5 Issue a certificate for tax deducted at source 45639.5-1 Certificates are issued by downloading from TIN
website 45639.5-2 Time-limit 45639.5-3 Issue of duplicate certificate 457
39.6 Statement/return to the Government 45739.6-1 Annual return 45739.6-2 Quarterly return 457
39.7 Consequences of failure to deduct or pay tax, etc. 45839.7-1 Failure to deduct and/or pay tax 45839.7-2 Failure to comply with the provisions of section
203A regarding tax deduction account number 458
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40HOW TO COMPUTE TAX DEDUCTIBLE FROM
PAYMENT OF COMPENSATION ON ACQUISITIONOF IMMOVABLE PROPERTY
40.1 Income subject to tax deduction under section 194LA 45940.2 Rates for tax deduction at source during the financial year
2019-20 46040.3 Income is payable to Government or certain corporation 46040.4 Deduction of tax at lower rates 460
40.4-1 Certificate for receiving such without taxdeduction or with deduction at lower rate 460
40.5 Who get credit for tax deducted 46140.5-1 Rules framed by Board 461
41DEDUCTION OF TAX AT SOURCE FROMINCOME BY WAY OF INTEREST FROM
INFRASTRUCTURE DEBT FUND
41.1 Who is responsible for tax deduction at source undersection 194LB 463
41.2 When tax has to be deducted at source 46341.3 Tax deduction account number 46341.4 Deposit of tax to the credit of Central Government 463
41.4-1 Where to deposit 46341.4-2 Time within which tax has to be deposited 46341.4-3 Claim for refund 463
41.5 Issue a certificate for tax deducted at source 46341.5-1 Certificates are issued by downloading from TIN
website 46341.5-2 Time-limit 46341.5-3 Issue of duplicate certificate 464
41.6 Statement/return to the Government 46441.6-1 Annual return 46441.6-2 Quarterly return 464
41.7 Consequences of failure to deduct or pay tax, etc. 46541.7-1 Failure to deduct and/or pay tax 46541.7-2 Failure to comply with the provisions of section
203A regarding tax deduction account number 465
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42HOW TO COMPUTE TAX DEDUCTIBLE
FROM PAYMENT OF INTEREST ONINFRASTRUCTURE DEBT FUND
42.1 Income subject to tax deduction under section 194LB 46642.2 Rates for tax deduction at source during the financial year
2019-20 46642.3 Deduction of tax at lower rate 46642.4 Who get credit for tax deducted 467
42.4-1 Rules framed by Board 467
43DEDUCTION OF TAX AT SOURCE FROM INTEREST
ON UNITS OF BUSINESS TRUST
43.1 Who is responsible for tax deduction at source undersection 194LBA 469
43.2 When tax has to be deducted at source 46943.3 Tax deduction account number 46943.4 Deposit of tax to the credit of Central Government 469
43.4-1 Where to deposit 46943.4-2 Time within which tax has to be deposited 46943.4-3 Claim for refund 469
43.5 Issue a certificate for tax deducted at source 46943.5-1 Certificates are issued by downloading from TIN
website 46943.5-2 Time-limit 46943.5-3 Issue of duplicate certificate 470
43.6 Statement/return to the Government 47043.6-1 Annual return 47043.6-2 Quarterly return 470
43.7 Consequences of failure to deduct or pay tax, etc. 47143.7-1 Failure to deduct and/or pay tax 47143.7-2 Failure to comply with the provisions of section
203A regarding tax deduction account number 47143.7-3 Forfeiture of deduction in respect of payment of
interest 471
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44HOW TO COMPUTE TAX DEDUCTIBLE FROM
PAYMENT OF INTEREST ON UNITS OFBUSINESS TRUST
44.1 Income subject to tax deduction under section 194LBA 47244.2 Rates for tax deduction at source during the financial
year 2019-20 47244.3 Deduction of tax at lower rate 47344.4 Who get credit for tax deducted 473
40.4-1 Rules framed by Board 473
45DEDUCTION OF TAX AT SOURCE FROM INCOME
IN RESPECT OF UNITS OF INVESTMENTFUND/SECURITISATION TRUST
45.1 Who is responsible for tax deduction at source undersection 194LBB/194LBC 475
45.2 When tax has to be deducted at source 475
45.3 Tax deduction account number 475
45.4 Deposit of tax to the credit of Central Government 475
45.4-1 Where to deposit 475
45.4-2 Time within which tax has to be deposited 475
45.4-3 Claim for refund 475
45.5 Issue a certificate for tax deducted at source 475
45.5-1 Certificates are issued by downloading from TINwebsite 475
45.5-2 Time-limit 475
45.5-3 Issue of duplicate certificate 476
45.6 Statement/return to the Government 476
45.6-1 Annual return 476
45.6-2 Quarterly return 476
45.7 Consequences of failure to deduct or pay tax, etc. 47745.7-1 Failure to deduct and/or pay tax 47745.7-2 Failure to comply with the provisions of section 203A
regarding tax deduction account number 47745.7-3 Forfeiture of deduction in respect of payment of
interest 477
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46HOW TO COMPUTE TAX DEDUCTIBLE FROM INCOME
IN RESPECT OF UNITS OF INVESTMENTTRUST/SECURITISATION TRUST
46.1 Income subject to tax deduction under section 194LBB/194LBC 47846.2 Rates for tax deduction at source during the financial
year 2019-20 47846.3 Certificate for tax deduction at lower rate (applicable with
effect from June 1, 2016) 47946.3-1 Time-limit for soliciting the favour 47946.3-2 How lower rate is determined 47946.3-3 Other points 479
46.4 Who get credit for tax deducted 47946.4-1 Rules framed by Board 480
47DEDUCTION OF TAX AT SOURCE FROM INCOMEBY WAY OF INTEREST FROM INDIAN COMPANY
UNDER SECTION 194LC
47.1 Who is responsible for tax deduction at source undersection 194LC 482
47.2 When tax has to be deducted at source 48247.3 Tax deduction account number 48247.4 Deposit of tax to the credit of Central Government 482
47.4-1 Where to deposit 48247.4-2 Time within which tax has to be deposited 48247.4-3 Claim for refund 483
47.5 Issue a certificate for tax deducted at source 48347.5-1 Certificates are issued by downloading
from TIN website 48347.5-2 Time-limit 48347.5-3 Issue of duplicate certificate 483
47.6 Statement/return to the Government 48347.6-1 Annual return 48347.6-2 Quarterly return 483
47.7 Consequences of failure to deduct or pay tax, etc. 48447.7-1 Failure to deduct and/or pay tax 48447.7-2 Failure to comply with the provisions of section
203A regarding tax deduction account number 484
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48HOW TO COMPUTE TAX DEDUCTIBLE FROM
INTEREST PAYABLE TO NON-RESIDENT/FOREIGN COMPANY
48.1 Income subject to tax deduction under section 194LC 48548.1-1 Approval by Central Government 485
48.2 Time of tax deduction 48748.3 Rates for tax deduction at source during the financial year
2019-20 48748.4 Deduction of tax at lower rate 48748.5 Who get credit for tax deducted 487
48.5-1 Rules framed by Board 488
49DEDUCTION OF TAX AT SOURCE FROM
INTEREST ON CERTAIN BONDS ANDGOVERNMENT SECURITIES
UNDER SECTION 194LD
49.1 Who is responsible for tax deduction at source undersection 194LD 490
49.2 When tax has to be deducted at source 49049.3 Tax deduction account number 49049.4 Deposit of tax to the credit of Central Government 490
49.4-1 Where to deposit 49049.4-2 Time within which tax has to be deposited 49049.4-3 Claim for refund 490
49.5 Issue a certificate for tax deducted at source 49149.5-1 Certificates are issued by downloading from
TRACES Portal 49149.5-2 Time-limit 49149.5-3 Issue of duplicate certificate 491
49.6 Statement/return to the Government 49149.6-1 Annual return 49149.6-2 Quarterly return 491
49.7 Consequences of failure to deduct or pay tax, etc. 49249.7-1 Failure to deduct and/or pay tax 49249.7-2 Failure to comply with the provisions of section
203A regarding tax deduction account number 492
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50HOW TO COMPUTE TAX DEDUCTIBLE FROMINTEREST PAYABLE UNDER SECTION 194LD
50.1 Income subject to tax deduction under section 194LD 49350.2 Time of tax deduction 49350.3 Rates for tax deduction at source during the financial year
2019-20 49350.4 Deduction of tax at lower rate 49450.5 Who get credit for tax deducted 494
50.5-1 Rules framed by Board 494
51TAX DEDUCTION FROM PAYMENT TO RESIDENTCONTRACTOR, BROKER OR PROFESSIONAL BY
CERTAIN INDIVIDUALS AND HUFs
51.1 Person responsible for tax deduction under section 194M 496
51.2 When tax has to be deducted 496
51.2-1 No tax is deductible if payment/credit does notexceed Rs. 50 lakh in a financial year 496
51.2-2 Private arrangement of paying tax-free rent is notrelevant 496
51.3 Tax deduction account number 496
51.4 Deposit of tax to the credit of Central Government 496
51.4-1 Where to deposit 497
51.4-2 Time of deposit 497
51.4-3 Payment through challan 497
51.4-4 Claim for refund 497
51.5 Issue of certificate of tax deduction 497
51.5-1 Issue of duplicate certificate 497
51.6 Return to the Government 497
51.7 Consequences of failure to deduct or pay tax or furnishreturn 497
51.7-1 Failure to deduct and/or pay tax 497
51.7-2 Failure to issue certificate or submit return 497
51.7-3 Forfeiture of deduction 497
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52HOW TO COMPUTE TAX DEDUCTIBLE FROM
PAYMENT/CREDIT TO CONTRACTOR,PROFESSIONAL OR BROKER UNDER
SECTION 194M
52.1 Payment/credit subject to tax deduction under section194M 498
52.2 Work contract, commission or brokerage and professional -Meaning of 498
52.3 Rates of tax deduction during the financial year 2019-20 498
Illustration 499
52.4 Payment without tax deduction or with deduction at lowerrates 500
52.5 Consideration payable to Government or certain corporation 500
52.6 Tax credit 500
52.6-1 Rules framed by Board 500
53DEDUCTION OF TAX AT SOURCE FROM CASH
PAYMENT TO ACCOUNTHOLDERS UNDERSECTION 194N
53.1 Person responsible for tax deduction under section 194N 502
53.2 When tax has to be deducted 502
53.2-1 No tax is deductible if cash payment does notexceed Rs. 1 crore in a financial year 502
53.2-2 Private arrangement of paying tax-free rent is notrelevant 502
53.3 Tax deduction account number 502
53.4 Deposit of tax to the credit of Central Government 502
53.4-1 Where to deposit 502
53.4-2 Time of deposit 503
53.4-3 Payment through challan 503
53.4-4 Claim for refund 503
53.5 Issue of certificate of tax deduction 503
53.5-1 Issue of duplicate certificate 503
53.6 Return to the Government 503
53.7 Consequences of failure to deduct or pay tax or furnish return 503
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53.7-1 Failure to deduct and/or pay tax 503
53.7-2 Failure to issue certificate or submit return 503
54HOW TO COMPUTE TAX DEDUCTIBLE FROM
CASH PAYMENT TO ACCOUNTHOLDERSUNDER SECTION 194N
54.1 Cash payment subject to tax deduction under section 194N 50454.2 Rates of tax deduction during the financial year 2019-20 504
Illustration 50454.3 Payment without tax deduction or with deduction at lower
rates 50554.4 Consideration payable to Government or certain corporation 50554.5 Tax credit 505
54.5-1 Rules framed by Board 505
55TAX DEDUCTION FROM PAYMENTS
TO NON-RESIDENTS
55.1 Who is required to deduct tax under sections 194E and 195 507
55.1-1 Payer/Principal officer is person responsible fortax deduction 507
55.1-2 In case of consideration for transfer of foreignexchange amount 507
55.2 Payment from which deduction has to be made 508
55.3 When tax has to be deducted 508
55.3-1 Payments referred to section 115BBA 508
55.3-2 Any other payments 508
55.3-3 Private arrangement of paying income tax-freecannot discharge obligation under sections 194E,195 and 196A 509
55.4 Tax deduction account number 509
55.5 Deposit of tax to the credit of Central Government 509
55.5-1 Where to deposit 509
55.5-2 Time of deposit 509
55.5-3 Payment through challan 50955.5-4 Claim for refund 510
55.6 Issue of certificate for tax deducted at source 510
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55.6-1 Certificates are issued by downloading from TINwebsite 510
55.6-2 Time limit 51055.6-3 Issue of duplicate certificate 510
55.7 Quarterly return to the Government 51055.7-1 Quarterly return 510
55.8 Consequences of failure to deduct or pay tax or furnishreturn 51255.8-1 Failure to deduct and/or pay tax 51255.8-2 Failure to comply with the provisions of section
203A regarding tax-deduction account number 51255.8-3 Failure to issue certificate or submit return 51255.8-4 Forfeiture of deduction in respect of payment of
annual charge, interest, royalty, fees, etc. 512Illustration 513
56HOW TO COMPUTE AMOUNT PAYABLE
TO NON-RESIDENT AND TAX TO BEDEDUCTED THEREFROM
56.1 Payments subject to tax deduction under section 194E 51656.1-1 Payments covered by section 115BBA 51656.1-2 Other points pertaining to section 194E 517
56.2 Payment subject to tax deduction under section 196A 51756.3 “Other sum” subject to tax deduction under section 195 517
56.3-1 Meaning of non-resident 51856.3-2 Withdrawal of Circular Nos. 23, 163 and 786 and
its impact on taxability of export commission inIndia 518
56.3-3 Payment made to resident agent of a non-resident 51956.3-4 Advances to ship hirer adjustable against hire
charges 52056.3-5 Constructive payment of commission to non-resident
through another non-resident 52056.3-6 Money paid into Court under decree obtained by
non-resident 52056.3-7 Payment to non-resident for goods resold by it to
resident seller 52056.3-8 Interest on purchase price paid to non-resident in
instalments 520
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56.3-9 Customary, non-contractual payment to officers ofship by stevedores 521
56.3-10 Payment to foreign firm whose one of the partnersis managing firm’s affairs from India 521
56.3-11 Section 195 is applicable even in the case of regulartrading operation 521
56.3-12 Payment to foreign shipping companies 52156.3-13 Payments to non-resident at UAE 52256.3-14 Payments of interest by a branch office to head
office outside India 52356.3-15 Any other sum chargeable to tax 52356.3-16 Travelling expenses 52356.3-17 Payment for data transmission 52456.3-18 When payee is non-resident at the time of tax
deduction but becomes resident at the time ofpayment 524
56.3-19 Mere accrual of income is not sufficient 52456.3-20 Reimbursement of salary or other expenses 52456.3-21 When income is exempt under DTAA 52456.3-22 Lead manager of GDR 52556.3-23 Transfer of controlling interest in a foreign
company having assets in India 52556.3-24 Lease rent, roaming charges, telephone services,
uplinking charges, bandwidth network charges,interconnection/port access charges 527
56.3-25 Export contract 52756.3-26 Remittance from India 52756.3-27 Subscription charges 527
56.4 Tax deduction only on recipient’s chargeable income -Provisions for ascertaining recipient’s chargeable income 52756.4-1 Appropriation is not possible in the case of interest,
fees and royalty 52956.5 Grossing up of amount payable to non-resident stipulated to
be paid net of taxes 53256.5-1 Cases when grossing up is not required 532
56.6 Rates of tax deduction at source for the financial year 2019-20 53356.6-1 TDS when payment/credit is given to a person in
notified jurisdictional area 53456.6-2 TDS when PAN of deductee is not available 534
56.7 Payments to non-resident without tax deduction in certaincases 536
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56.7-1 Qualifying persons and qualifying incomes 53656.7-2 Conditions to be satisfied 53756.7-3 Procedure for issue of certificate 537
56.8 Certificate for deduction of tax at lower rate in the case ofrecipient other than a company 53856.8-1 Time limit for soliciting the favour 53856.8-2 How lower rate is determined 53856.8-3 Validity of the certificate 53856.8-4 Other points 538
56.9 Furnishing information regarding remittance 53856.9-1 Other Points 539
56.10 Credit for tax deducted 53956.10-1 Rules framed by Board 540
56.11 Procedure for refund of tax deducted at source undersection 195 to the person deducting tax at source 540
57DEDUCTION OF TAX AT SOURCE FROM INCOME
OF UNITS OF OFFSHORE FUND
57.1 Who is responsible to deduct tax 54457.2 When tax is to be deducted 54457.3 How to compute amount of tax deducted 54457.4 Tax deduction account number 54457.5 Deposit of tax to the credit of Central Government 544
57.5-1 Where to deposit 54457.5-2 Time of deposit 54457.5-3 Payment through Challan 54557.5-4 Claim for refund 545
57.6 Issue of certificate for tax deduction 54557.6-1 Certificates are issued by downloading from TIN
website 54557.6-2 Time-limit 545
57.7 Quarterly returns to the Government 54657.8 Consequences of failure to deduct or pay tax or furnish
return 54657.8-1 Failure to deduct and/or pay tax 54657.8-2 Failure to comply with the provisions of section
203A regarding tax deduction account number 54657.8-3 Failure to issue certificate or submit return 546
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58HOW TO COMPUTE AMOUNT OF TAXDEDUCTION UNDER SECTION 196B
58.1 Amount covered by section 196B 54758.1-1 Units referred to in section 115AB 54758.1-2 Overseas financial organisation 547
58.2 Rate for tax deduction 54858.3 When tax is deductible at lower rate 54858.4 Tax credit 548
58.4-1 Rules framed by Board 548
59DEDUCTION OF TAX AT SOURCE FROM
INCOME FROM FOREIGN CURRENCY BONDOR SHARES OF INDIAN COMPANY
59.1 Who is responsible to deduct tax 55059.2 When tax is to be deducted 55059.3 How to compute amount of tax deducted 55059.4 Tax deduction account number 55059.5 Deposit of tax to the credit of Central Government 550
59.5-1 Where to deposit 55059.5-2 Time of deposit 55059.5-3 Payment through challan 55159.5-4 Claim for refund 551
59.6 Issue of certificate for tax deduction 55159.6-1 Certificates are issued by downloading from TIN
website 55159.6-2 Time-limit 551
59.7 Quarterly returns to the Government 55259.8 Consequences of failure to deduct or pay tax or furnish
return 55259.8-1 Failure to deduct and/or pay tax 55259.8-2 Failure to comply with the provisions of section
203A regarding tax-deduction account number 55259.8-3 Failure to issue certificate or submit return 552
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60HOW TO COMPUTE AMOUNT OF TAX DEDUCTION
UNDER SECTION 196C
60.1 Amount covered by section 196C 55360.1-1 Bonds/shares referred to in section 115AC 553
60.2 Rate for tax deduction 55460.3 When tax is deductible at lower rate 55460.4 Tax credit 554
60.4-1 Rules framed by Board 554
61DEDUCTION OF TAX AT SOURCE FROMINCOME OF FOREIGN INSTITUTIONAL
INVESTORS FROM SECURITIES
61.1 Who is responsible to deduct tax 55661.2 When tax is to be deducted 55661.3 How to compute amount of tax deducted 55661.4 Tax deduction account number 55661.5 Deposit of tax to the credit of Central Government 556
61.5-1 Where to deposit 55661.5-2 Time of deposit 55661.5-3 Payment through challan 55761.5-4 Claim for refund 557
61.6 Issue of certificate for tax deduction 55761.6-1 Certificates are issued by downloading from TIN
website 55761.6-2 Time-limit 557
61.7 Quarterly returns to the Government 55861.8 Consequences of failure to deduct or pay tax or furnish
return 55861.8-1 Failure to deduct and/or pay tax 55861.8-2 Failure to comply with the provisions of section
203A regarding tax-deduction account number 55861.8-3 Failure to issue certificate or submit return 558
62HOW TO COMPUTE AMOUNT OF TAXDEDUCTION UNDER SECTION 196D
62.1 Amount covered by section 196D 559
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62.1-1 Securities referred to in section 115AD 55962.1-2 Who is a Foreign Institutional Investor 559
62.2 Rate for tax deduction 57962.3 When tax is deductible at lower rate 58062.4 Tax credit 580
62.4-1 Rules framed by Board 580
ANNEXURES TO BOOK ONE
Annexes 1.1 to 1.47 Relevant provisions of the Income-taxAct, 1961 581
Annexes 1.50 to 1.77 Relevant rules of the Income-taxRules, 1962 620
Annexes 1.80 to 1.115 Relevant forms 655Annexes 1.120 to 1.231 Relevant circulars on sections 191 to 206 758
Annex 1.120 Payment of direct taxes, other than taxdeducted at source, to be made at theplace where taxpayer is assessed to tax 758
Annex 1.121 Recording date of tender of cheque anddate of its realisation on challans for pay-ment of direct taxes is to be done bybranch of authorised public sector bankwhere it is tendered for payment 759
Annex 1.122 Facility of payment of direct taxes throughall branches of State Bank of India andother authorised banks by cash/cheque/draft 760
Annex 1.123 Section 192 of the Income-tax Act, 1961 -Deduction of Tax at Source - Salary -Income-tax Deduction from Salaries dur-ing the Financial Year 2018-19 undersection 192 764
Annex 1.124 Use of computerised challan forms fordeposit of tax deducted at source 812
Annex 1.125 Filing of returns relating to Tax Deduc-tion at Source on computer media 812
Annex 1.125A Issuance of certificate for tax deducted atsource in Form No.16 835
Annex 1.126 Clarification regarding deduction of taxfrom payments of additional pay, allow-ances and arrears to Central Governmentemployees following the Notificationbased on recommendations of the FifthPay Commission 836
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Annex 1.127 Clarifications regarding use of Form No.16 for pensioners where pensioners aredrawing their pensions through banks 837
Annex 1.128 Section 203 of the Income-tax Act, 1961,read with rule 31 of the Income-tax Rules,1962 - Deduction at source - Certificatefor tax deducted - Issuance of certificatefor tax deducted at source in Form No.16 838
Annex 1.129 100 per cent deduction to be grantedfrom total income while calculating taxfor the purpose of TDS for contributionsmade to A.P.C.M.’s Cyclone Relief Fund 839
Annex 1.130 Deduction of tax at source - Certificatefor deduction at lower rate - Whethercertificate issued under section 197(1)will be applicable only in respect of creditor payments, as the case may be, subjectto tax deduction at source, made on orafter date of such certificate 840
Annex 1.131 Deductions - In respect of medical treat-ment, etc., of handicapped dependants -Whether it would be sufficient if theemployee furnishes a medical certificatefrom a Government Hospital and a decla-ration in writing duly signed by the claim-ant certifying the actual amount ofexpenditure on account of medical treat-ment (including nursing) training andrehabilitation of the handicapped depen-dant and receipt/acknowledgement forthe amount paid or deposited in the speci-fied schemes of LIC or UTI 840
Annex 1.132 Deductions - In respect of donations tocertain funds, charitable institutions, etc.- Submission of certificate for claimingdeduction under section 80G in respect ofdonations made by an employee to theNational Defence Fund, the Army CentralWelfare Fund, the Indian Naval Benevo-lent Fund, the Air Force Central WelfareFund 841
Annex 1.133 Deduction - In respect of donations to cer-tain funds, charitable institutions, etc. -Submission of certificate for claimingdeductions in respect of donations madeby an employee to the Prime Minister’sNational Relief Fund, the Chief Minister’s
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Relief Fund and the Lieutenant Governor’sRelief Fund 842
Annex 1.134 Employee claiming that salary is notchargeable to tax and no income-taxshould be deducted at source - Employerto require employee to obtain certificateunder section 197(1) 842
Annex 1.135 Calculation of exempt amount of houserent allowance under section 10(13A) forthe purposes of deduction of tax at sourceunder the section - Salary whether in-cludes dearness pay 843
Annex 1.136 Procedure for regulating refund ofamounts paid in excess of tax deductedand/or deductible 843
Annex 1.137 Procedure for deducting tax at sourcefrom seamen’s wages 844
Annex 1.138 Deduction admissible for deposits madein National Savings Scheme to be allowedwhile computing income of employeesfor purpose of deduction of tax at source 845
Annex 1.139 Effect of insertion of sub-sections (2), (2A)and (2B) in section 192 by the Finance Act,1987 - Relevant rules amended to enabletax deduction at source in situationsenvisaged in the said sub-sections 846
Annex 1.140 Collection and recovery - Penalty payablewhen tax in default - Non-initiation ofpenalty and prosecution proceedings incases of default under section 192 847
Annex 1.141 Deduction of tax at source - Salary -Whether, where non-residents aredeputed to work in India and taxes areborne by employers, in certain cases if anemployee to whom refunds are due hasalready left India and has no bankaccount here by the time assessmentorders are passed, refund can be issued toemployer as tax has been borne by it 848
Annex 1.142 Deduction of tax at source - Personsdeducting tax to furnish prescribed re-turns - Clarification regarding filing ofreturns in respect of tax deducted atsource from salary of employees of com-pany working at its headquarters or inother branches 848
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Annex 1.143 Instructions regarding deduction ofdonations made to Chief Minister’s Earth-quake Relief Fund, Maharashtra undersection 80G 849
Annex 1.144 Option to certify TDS certificates by wayof Digital Signatures 850
Annex 1.145 Instructions for deduction of tax at sourcefrom interest on securities - Rate ofdeduction from interest on securitiesduring financial year 1994-95 851
Annex 1.146 Procedure for deduction of tax at sourcefrom interest on securities registered inthe name of bank on behalf of its consti-tuents 857
Annex 1.147 Clarifications regarding tax treatment ofdeep discount bonds and STRIPS(Separate Trading of Registered Interestand Principal of Securities) 861
Annex 1.147A Acknowledgement by banks at the timeof submission of Form 15G/15H 864
Annex 1.148 Sections 193, 194 and 194K, read withsection 10(23C)(iv) of the Income-tax Act- Deduction of tax at source - Interest onsecurities/Interest other than “Interest onsecurities”/Income in respect of units -Exemption from requirement of deduc-tion of income-tax at source on paymentof income to Ramakrishna Math andRamakrishna Mission whose income isexempt under section 10(23C)(iv) 865
Annex 1.149 Ramakrishna Math and RamakrishnaMission, Kolkata, whose income isexempt under section 10(23C)(iv) of theIncome-tax Act, 1961 865
Annex 1.150 Deduction of income-tax at source undersections 193, 194, 194A and 194K - Pay-ment to Shri Ram Chandra Mission, Chen-nai, whose income is exempt undersection 10(23C) 866
Annex 1.151 Deduction of income-tax at source undersections 193, 194A and 194K - Payment toWorld Renewal Spiritual Trust, Mumbai 866
Annex 1.152 Rates of tax for deduction at source fromdividends during the financial year1974-75 - Instructions regarding 867
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Annex 1.153 Threshold limits for deduction of tax atsource from income by way of dividendsand income from units 867
Annex 1.154 Rates of tax for deduction at source frominterest other than securities during thefinancial year 1975-76 - Instructionsregarding 868
Annex 1.155 Deduction of tax at source - Interest otherthan “Interest on securities” - Regardingextension of applicability to interest ontime deposits with banks 869
Annex 1.156 Section 194A of the Income-tax Act, 1961- Deduction of tax at source - Interestother than interest on securities - Taxdeduction at source on the deposits inbanks in the name of the Registrar/Pro-thonotary and Senior Master attached tothe Supreme Court/High Court etc.during the pendency of litigation of claim/compensation 873
Annex 1.157 Applicability of the provisions in respectof income paid or credited to a member ofco-operative bank 876
Annex 1.158 Exemption from requirement of deduc-tion of income-tax at source on paymentto Sri Sathya Sai Central Trust, Sri SathyaSai Medical Trust and Sri Sathya Sai Insti-tute of Higher Learning, Bangalore, whoseincomes are exempt under section 10(23C)of the Income-tax Act, 1961 876
Annex 1.159 Section 194A of the Income-tax Act, 1961- Deduction of tax at source - Interestother than interest on securities - Clarifica-tion regarding TDS on payment of inter-est on time deposits by banks followingCore-Branch Banking Solutions (CBS)software 877
Annex 1.160 Deduction of tax at source - Interest otherthan interest on securities - Clarificationregarding deduction from interest on timedeposits with banks 878
Annex 1.161 Instructions for deduction of tax at sourcefrom interest on deposits in joint names 878
Annex 1.162 General instructions for compliance ofrequirement of deducting tax at sourcefrom interest other than interest on secu-
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rities in terms of the section from October1, 1967 880
Annex 1.163 Supplier drawing hundi on buyer androuting it through his banker withinstructions to charge interest on amountof hundi from date of acceptance to dateof actual payment - Whether tax isdeductible at source by party retiringhundi from interest at the time of makingpayment to bank 882
Annex 1.164 Whether tax is to be deducted at sourcefrom interest paid by consignor to com-mission agent 883
Annex 1.165 Whether tax is to be deducted at sourcefrom interest payable to educational ins-titution/charitable trust whose income isexempt under section 10(22) and undersection 11, respectively 884
Annex 1.166 Whether interest payments under LandAcquisition Act are covered by section194A 884
Annex 1.167 Clarification regarding deduction frominterest on Cumulative Deposits/Deben-tures/Bonds 887
Annex 1.168 Clarification regarding applicability ofprovisions of section 194A to commercialpapers and certificates of deposits 888
Annex 1.169 Deduction from winnings from lottery,crossword puzzles, horse races or fromcommission, etc., paid on sale of lotterytickets - Rates of tax applicable during thefinancial year 1991-92 888
Annex 1.170 Prizes awarded to agents under “lucky dipdraws” scheme - Whether they are “lotter-ies” within the meaning of the sectionfrom which tax is required to be deductedat source 891
Annex 1.171 Applicability of TDS provisions of section194C on contract for fabrication of articleor thing as per specifications given by theassessee - Contradiction between twoCirculars of CBDT - Resolution thereof 892
Annex 1.172 Applicability of section 194C to servicecontracts - Clarification regardingSupreme Court judgment in AssociatedCement Co. Ltd. v. CIT [1993] 67 Taxman346/201 ITR 435 892
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Annex 1.173 Clarification regarding applicability ofsection 194C in view of Supreme Court’sdecision in Associated Cement Co. Ltd. v.CIT [1993] 201 ITR 435 896
Annex 1.174 Section 194C of the Income-tax Act, 1961 -Deduction of tax at source - Payments tocontractors & sub-contractors - Deduc-tion of tax at source on payment of gastransportation charges by the purchaserof natural gas to the seller of gas 899
Annex 1.175 Clarifications on various provisions relat-ing to tax deduction at source regardingchanges introduced through Finance Act,1995 900
Annex 1.176 Deduction of tax at source - Payments tocontractors and sub-contractors -Clarification regarding applicability ofsection 194C in case of tickets sold byairlines and travel agents to customers 905
Annex 1.177 Deduction of tax at source - Payments tocontractors and sub-contractors - Clarifi-cation regarding applicability of section194C/194J in case of advertising agency 905
Annex 1.178 Section 194C and section 194J - Doublededuction of tax not permissible 906
Annex 1.179 Decision of the Supreme Court in BrijBhushan’s case - Whether permits, inrespect of composite works contract,deduction of tax at source at 2 per cent onnet payment (after excluding cost ofmaterial supplied by Government) -Whether para 1(5) of Circular No. 86,dated 29-5-1972 requires modification 907
Annex 1.180 Scope of provisions of the section requir-ing deduction of tax at source from pay-ments to contractors and sub-contrac-tors explained 908
Annex 1.181 Tax deduction at source from paymentsto contractors and sub-contractors in bidimanufacturing industry - Whethermunshis are contractors 913
Annex 1.182 Whether provisions of section 194C areapplicable to work executed underNational Rural Employment Programme(NREP) and Rural Landless EmploymentGuarantee Programme (RLEGP) 914
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Annex 1.183 Clarification regarding hire charges paidto bus owners from the hire of buses 915
Annex 1.184 Deduction of tax at source - Insurancecommission, etc. - Rate of tax applicableduring financial year 1991-92 917
Annex 1.185 Whether, at the time of deducting taxfrom insurance commission credited toagent’s account, adjustment for debitsmade earlier is permissible 919
Annex 1.186 Deduction of tax at source - Payments inrespect of deposits under NSS, etc. -Instructions regarding 920
Annex 1.187 Deduction of tax at source - Rent - Clari-fication regarding deduction of tax atsource from payment of rent 922
Annex 1.188 Deduction of tax at source - Rent - Whetherrequirement of deduction of income-taxat source under section 194-I applies incase of payment by way of rent toGovernment, statutory authorities re-ferred to in section 10(20A) and localauthorities whose income under head“Income from house property” or “Incomefrom other sources” is exempt fromincome-tax 923
Annex 1.189 Clarification regarding scope of section194-I 924
Annex 1.190 Clarification regarding TDS underChapter XVII-B on GST service tax com-ponent comprised of payments made toresidents 926
Annex 1.191 Deduction of tax at source - Rent - Appli-cability of TDS provisions of section194-I on lump sum lease premium paidfor acquisition of long term lease 928
Annex 1.192 Payment on transfer of certain immov-able property other than agricultural land -Correction and statement-cum-challanrelating to TDS on sale of property undersection 194-IA - Withdrawal of StandardOperating Procedure (SOP) 929
Annex 1.193 Section 197A, read with section 194J ofthe Income-tax Act, 1961 - Deduction oftax at source - No deduction in certaincases - Specified payment under section197A(1F) 937
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Annex 1.194 Section 194J tax deduction in the case ofpayment by TPAs 937
Annex 1.194A Section 197A, read with section 194H, ofthe Income-tax Act, 1961 - Deduction oftax at source - No deduction in certaincases - Notified payments - Supersessionof notification No. SO 3069(E), dated31-12-2012 938
Annex 1.195 Clarification contained in CircularNo. 155, dated 21-12-1974 reiterated toensure proper computation of tax to bededucted at source in the case of non-resident whose tax liability is to be borneby payer 939
Annex 1.195A Section 195 of the Income-tax Act, 1961 -Deduction at source - Other sums - Proce-dure for submission of Form 15CC by anauthorised dealer in respect of remittancesunder section 195(6) 941
Annex 1.196 Section 194LC of the Income-tax Act,1961 - Income by way of interest fromIndian Company - Approval of loan agree-ments/long-term infrastructure bondsand rate of interest for the purpose ofsection 194LC 942
Annex 1.196A Notified rates of interest on rupee de-nominated bond of an Indian companyfor the purpose of section 194LD 945
Annex 1.197 Where whole payment would not beincome chargeable to tax in the hands ofrecipient non-resident person responsiblefor paying such sum may make applica-tion for determination of appropriate por-tion 946
Annex 1.198 Whether non-deduction of tax is only inrespect of interest credited to Non-resi-dent (External) Account and not to alltypes of non-resident accounts 946
Annex 1.199 Remittance to non-residents under sec-tion 195 947
Annex 1.199A Remittances to non-residents 950Annex 1.200 Remittances by Consular receipts to non-
residents 950Annex 1.201 Procedure for refund of tax deducted at
source under section 195 951
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Annex 1.201A Section 244A, read with section 195, of theIncome-tax Act, 1961 - Refunds - Intereston - Payment of interest on refund ofexcess TDS deposited under section 195 953
Annex 1.202 Section 239 of the Income-tax Act, 1961 -Refunds - Procedure for refund of taxdeducted at source under section 195 tothe person deducting the tax - Amend-ment in Circular No. 7/2007, datedOctober 23, 2007 954
Annex 1.203 Taxation of foreign telecasting compa-nies - Guidelines for computation ofincome-tax, etc. 955
Annex 1.204 Withdrawal of Circular Nos. 23, 163 and786 956
Annex 1.205 Guidelines regarding taxation of incomeof artists, entertainers, sportsmen, etc.,from international/national/local events 957
Annex 1.206 Income payable ‘net of tax’ - Issue ofcertificate for tax deducted at source inrespect of payment made ‘net of tax’ 960
Annex 1.207 Applicable rates of taxes under the DoubleTaxation Avoidance Agreement betweenIndia and the United Arab Emirates 961
Annex 1.208 Taxability of interest remitted by branchesof banks to the head office situated abroadunder the Foreign Currency PackingCredit Scheme of Reserve Bank of India 962
Annex 1.209 Effect of non-obstante clause in the sec-tion - Whether sections 193, 194 and 194Acontinue to be in force and facility pro-vided in the section is in addition to faci-lity under the said sections 962
Annex 1.210 Shares belong to one person but they areheld in somebody else’s name who is reg-istered as shareholder - Whether regis-tered shareholder can be given credit fortax deducted at source 964
Annex 1.211 Form of application for allotment of Tax-deduction Account Number prescribedin Form No. 49B 965
Annex 1.212 Tax deduction at source from paymentmade to foreign shipping companies 965
Annex 1.213 Clarification regarding payment of incomeby way of interest on securities and rentmade to Regimental Funds or Non-public
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Fund established by Armed Forces ofUnion for welfare of past and presentmembers of such forces or theirdependants, whose income is exemptunder section 10(23AA) 966
Annex 1.214 Clarification regarding applicability ofprovisions of section 194-I to film dis-tributors and exhibitors 966
Annex 1.215 Discontinuance of requirement of send-ing quarterly statements in case of pay-ments by foreign companies and law firmsto residents in India 967
Annex 1.216 Clarification regarding certificate fordeduction of tax made by Central Gov-ernment Departments who are makingpayments by book adjustments 967
Annex 1.217 Section 203 of the Income-tax Act, 1961 -Deduction of Tax at Source - Certificatefor tax deducted - Issuance of TDSCertificates in Form No. 16A downloadedfrom TIN website 968
Annex 1.218 Payment of income by way of interest onsecurities to Ramakrishna Math andRamakrishna Mission whose income isexempt under section 10(23C)(iv) 969
Annex 1.219 Whether in case of a provident fund, whoseincome is exempt under section 10(25)(ii),established under scheme under Emp-loyees’ Provident Funds and Miscella-neous Provisions Act, 1952, income byway of interest on securities of Centraland State Governments may be paid tosuch provident funds without deductionof income-tax at source 970
Annex 1.220 Clarification regarding payments to per-sons resident in India by foreign compa-nies or foreign law firms that have nopresence in India 970
Annex 1.221 Whether certificate issued under section197(1) will be applicable only in respect ofcredit or payments, as the case may be,subject to tax deduction at source, madeon or after date of such certificate 971
Annex 1.222 Section 197A of the Income-tax Act, 1961- No deduction to be made in certaincases 971
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Annex 1.223 Scheme for Furnishing of Paper Returnsof Tax Deducted at Source, 2005 972
Annex 1.224 Filing of returns of Tax Deduction atSource and Tax Collection at Source onComputer Media for deductions/collec-tions up to 31st March, 2005 974
Annex 1.225 Order under section 119(2)(a) of theIncome-tax Act, 1961 regarding exten-sion of due date for Electronic Filing ofAnnual Return for Tax Deduction atSource for Financial Year 2004-05 byGovernment Deductors 975
Annex 1.226 Issue of TDS Certificate in cases of Truck/Goods-carriage Operators 976
Annex 1.227 Ex-post facto extension of due date forfiling TDS/TCS statements for FYs 2012-13 and 2013-14 976
Annex 1.228 Certificate of lower deduction or non-deduction of tax at source under section197 977
Annex 1.229 Credit of TDS under section 199 to anassessee when the tax deducted has beendeposited with revenue by deductor –Direction of Hon’ble Delhi High Court inthe case Court on its Own Motion v. Unionof India [2013] 31 taxmann.com 31 978
Annex 1.230 Timely issue of TDS certificate to custo-mers 979
Annex 1.231 Guidelines for compounding of offencesunder Direct Tax Laws, 2014 979
Annex 1.232 Section 197A, read with section 10(15)(viii),of the Income-tax Act, 1961 -Deduction oftax at source - No deduction in certaincases - Clarifications on applicability ofsection 197A(1D) and section 10(15)(viii)to interest paid by IFSC Banking Units(IBUS) set up in Special Economic Zones 986
Annex 1.233 Section 201, read with section 119, of theIncome-tax Act, 1961 - Tax deduction atsource - Consequences of failure to de-duct or pay - Guidelines for waiver ofinterest charged under section 201(1A)(i)of said Act 987
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BOOK TWO : ADVANCE TAX
63INCOME LIABLE TO ADVANCE TAX
63.1 Provisions applicable up to the assessment year 1988-89 99263.2 All incomes are subject to advance tax from the assessment
year 1989-90 992
64LIABILITY TO ADVANCE TAX -
WHEN ARISES
64.1 Who is liable to pay advance tax 993Illustration 993
65DUE DATES OF PAYMENT
65.1 Instalments of advance tax 99565.2 Due dates 995
Illustration 99565.3 Tax paid after the due dates but within the financial year 99665.4 Due dates when advance tax is payable on notice issued
by Assessing Officer 996Illustrations 996
66COMPUTATION OF ADVANCE TAX LIABILITY
66.1 Payment of advance tax by the assessee on his own account 99866.1-1 No need to submit any estimate/statement 99866.1-2 Revision of second and subsequent instalment 99866.1-3 Computation of tax 99866.1-4 Tax rates 998
Illustration 99866.2 Payment of advance tax in pursuance of order of Assessing
Officer 100166.2-1 Lower/higher estimate by assessee 100166.2-2 Computation of tax by Assessing Officer 1001
Illustration 100266.3 Payment of advance tax in pursuance of revised order of
Assessing Officer 1003
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66.3-1 Lower/higher estimate by assessee 100366.3-2 Computation of tax 1003
Illustration 1003
67INTEREST PAYABLE BY THEASSESSEE/GOVERNMENT
67.1 Interest for default in payment of advance tax 100567.1-1 Assessed tax - Meaning of 100567.1-2 Adjustment when tax is paid before regular
assessment under section 140A 100667.1-3 Adjustment in the case of reassessment/recompu-
tation under section 147 or 153A 100667.1-4 Adjustment in the case of rectification/revision/
modification under sections 154, 155, 250, 254,260, 262, 263, 264, 245D(4) 1007
67.1-5 Where an application for settlement is madeunder section 245C(1) 1007
67.1-6 Interest under section 234B or 234C in case of MAT 100867.1-7 Shipping business of non-residents 100867.1-8 Payment by cheque 100867.1-9 Specific order 100867.1-10 If returned income and assessed income of latest
year is nil 100967.1-11 Collection of interest under sections 234A, 234B
and 234C is mandatory 100967.1-12 Cash seized during search 100967.1-13 Shortfall because of interpretation of law 101067.1-14 When advance tax liability arises because of a
subsequent court ruling 101067.1-15 Application of section 234B in the case of
settlement of cases 101067.1-16 Other points 1011
67.2 Interest for deferment of advance tax 101167.2-1 Category A 101167.2-2 Category B 101267.2-3 Category C 101367.2-4 Short payment of advance tax in case of capital
gains/casual income 101467.2-5 What is returned income 1014
67.3 Waiver or reduction of interest under sections 234A, 234Band 234C 101467.3-1 Conditions 101467.3-2 Period 1014
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67.3-3 Extent of interest to be reduced or waived 101567.3-4 Discretion should be exercised in judicial manner 1015
67.4 Chief Commissioner/Director General (Investigation) toreduce penal interest in certain cases 1015
67.5 Power of CBDT and Settlement Commission to reduce/waive interest 1016
67.6 Interest payable to assessee 101667.6-1 Provisions applicable after amendments by the
Finance Act, 2016 and Finance Act, 2017 101767.6-2 Other points 1018
67.7 Procedure to be followed in calculation of interest 1019Illustrations 1019
ANNEXURES TO BOOK TWO
Annexes 2.1 to 2.7 Relevant provisions of the Income-taxAct, 1961 1028
Annexes 2.8 to 2.13 Relevant Rule and Forms 1037Annex 2.11 Reduction or waiver of interest 1042Annex 2.12 Fringe benefit tax paid during 2009-10 to
be treated as advance income-tax forthe assessment year 2010-11 1043
Annex 2.13 Date of payment of December instalmentof advance tax extended from 15-12-2013to 17-12-2013 1044
BOOK THREE : TAX COLLECTIONAT SOURCE
68TAX COLLECTION AT SOURCE
68.1 In which case tax has to be collected at source 104868.2 Tax collection in Category A 1049
68.2-1 Who is seller in Category A 104968.2-2 Who is buyer in Category A 104968.2-3 Meaning of “scrap” 105068.2-4 When tax has to be collected in Category A 105268.2-5 Goods utilised for manufacturing/processing or
generation power of in Category A is not subjectto tax collection 1052
68.2-6 Other judicial rulings 105368.3 Tax collection in Category B 1054
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68.4 Tax collection in Category C 105468.5 Tax collection in Category D 105468.6 Requirement to furnish PAN by collectee 105568.7 Tax collection at lower rate 105568.8 Tax collection account number 105668.9 Deposit of tax 1056
68.9-1 e-Payment of tax 105668.10 Issue of certificate 1056
68.10-1 Due date of issuing certificate in Form No. 27D 105668.10-2 Duplicate certificate 1057
68.11 Return to the Government 105768.11-1 Annual return 105768.11-2 Quarterly return 105768.11-3 Mode of furnishing quarterly returns 105768.11-4 Quarterly return not possible before payment of
tax and interest 105868.11-5 PAN data of collectee 1058
68.12 Consequences of failure to collect or pay tax, furnishreturn, etc. 1058
68.13 Tax credit to one who pays 105868.13-1 Rules framed by Board 1058
68.14 Consequences if tax is not collected or paid 105868.15 There is no ambiguity in the provisions of section 206C 1059
ANNEXURES TO BOOK THREE
Annexes 3.1 & 3.2B Relevant provisions of the Income-taxAct, 1961 1062
Annexes 3.3 to 3.10 Relevant rules of the Income-tax Rules 1070
Annexes 3.11 to 3.19 Relevant forms 1078Annexes 3.20 to 3.27 Relevant circulars 1093
Annex 3.20 Section 206C of the Income-tax Act, 1961-Tax collected at source - Profits and gainsfrom the business of trading in alcoholicliquor, forest produce, scrap, etc. - Rate oftax for financial year 1993-94 1093
Annex 3.21 Deduction of tax at source - Profits andgains from the business of trading in alco-holic liquor, forest produce, etc. - Instruc-tions regarding 1095
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Annex 3.22 Section 206C of the Income-tax Act, 1961 -Deduction of tax at source - Profits andgains from the business of trading inalcoholic liquor, forest produce, scrap,etc. - Instruction regarding 1099
Annex 3.23 Section 206C of the Income-tax Act, 1961 -Collection of tax at source - Profits andgains from business of trading in alco-holic liquor, forest produce, scrap, etc. -Filing of half-yearly return 1100
Annex 3.24 Section 206C of the Income-tax Act, 1961 -Collection at source - Profits and gainsfrom business of trading in alcoholic li-quor, forest produce, scrap, etc. - Proce-dure for purpose of furnishing and verifi-cation of Form 27BA for removing ofdefault of short collection and/or non-collection of tax at source 1100
Annex 3.25 Section 206C of the Income-tax Act, 1961 -Collection at source - Profits and gainsfrom business of trading in alcoholic li-quor, forest produce, scrap, etc. - Clarifi-cations on amendment made in section206C by Finance Act, 2016 1104
Annex 3.26 Section 200, read with section 206C of theIncome-tax Act, 1961 - Collection of taxat source - Procedure for online submis-sion of statement of deduction of taxunder section 200(3) and statement ofcollection of tax under proviso to section206C(3) 1107
Annex 3.27 Section 197 read with section 206C of theIncome-tax Act, 1961 - Deduction of tax atsource - Certificate for deduction at lowerrate - No deduction of income-tax undercollection of the tax at any lower rate 1108
BOOK FOUR : REFUND
69REFUND FOR EXCESS PAYMENT
69.1 Right to claim refund - When arises 1116
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69.2 Who can claim refund 1116
69.3 How to claim refund 1116
69.3-1 Claim after the statutory time-limit 1116
69.4 Refund on appeal 1117
69.4-1 In case assessment is set aside or cancelled 1117
69.4-2 In case assessment is annulled 1118
69.5 Correctness of assessment not to be questioned 1118
69.6 Set off of refunds against the tax remaining payable 1118
70INTEREST ON REFUND
70.1 Interest on refund on excess payment of advance tax andtax deduction at source 1120
70.2 Interest on refund of tax other than advance tax/taxdeducted at source 1120
70.3 Refund which arises out of appeal effect 112070.4 Interest along with refund is a must 112070.5 Delay attributable to the assessee is not considered 112170.6 Automatic revision of interest in case of appeal,
reassessment, etc. 112270.7 Interest on excess refund 1122
70.7-1 Interest under section 234D(1) 112270.7-2 Computation of interest 1123
Illustration 1123
ANNEXURES TO BOOK FOUR
Annexes 4.1 to 4.11 Relevant provisions of the Income-taxAct, 1961 1125
Annex 4.12 Relevant rule of the Income-taxRules, 1962 1131
Annex 4.13 Relevant form 1132Annexes 4.14 to 4.20 Relevant circulars 1133
Annex 4.14 Instructions to subordinate authorities -Authorisation regarding condonation ofdelay in filing refund claim 1133
Annex 4.15 Facility of sending refund, at the requestof assessee, by means of money orderin case where amount does not exceedRs. 250 1135
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Annex 4.16 Whether Court fees/stamp duty payableon refund vouchers returned byCommissioners for cancellation 1135
Annex 4.17 Modification of procedure regardingdischarge by payee in case of income-taxrefund orders 1135
Annex 4.18 Payment of interest under section 244Awhen assessee is not at fault 1136
Annex 4.19 Set off of refunds against tax remainingpayable - Past adjustment of refundsagainst arrears where procedure undersection 245 was not followed 1137
Annex 4.20 Section 244A, read with section 195, ofthe Income-tax Act, 1961 - Refunds -Interest on - Payment of interest onrefund of excess TDS deposited undersection 195 1138
REFERENCER
Referencer 1 : Tax rates 1141� Tax deduction at source 1141
Referencer 2 : Withholding tax rates 1148Referencer 3 : Rates for tax collection at source 1154Referencer 4 : Advance tax rates 1156Referencer 5 : Calendar for tax deduction/Collection at source and
advance payment of tax 1163
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