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Ramesh Sharma
Enlightened
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  1. CA Vishnu Ram Enlightened

    Tax Collected at Source (TCS) and Its Applicability What is TCS? Tax Collected at Source (TCS) is a tax that a seller collects from the buyer at the time of sale of specified goods or services. The seller is required to collect TCS at a prescribed rate and deposit it with the government. Where is TCRead more

    Tax Collected at Source (TCS) and Its Applicability

    What is TCS?

    Tax Collected at Source (TCS) is a tax that a seller collects from the buyer at the time of sale of specified goods or services. The seller is required to collect TCS at a prescribed rate and deposit it with the government.

    Where is TCS Applicable?

    TCS is applicable under Section 206C of the Income Tax Act, 1961 on the sale of certain specified goods and services. Some key transactions where TCS is levied include:

    1. Sale of Specified Goods:

      • Alcoholic liquor for human consumption
      • Tendu leaves
      • Timber and other forest produce
      • Scrap
      • Minerals like coal, lignite, iron ore

    2. Sale of Motor Vehicles:

      • If the value of the car exceeds ₹10 lakh, the seller must collect TCS at 1% from the buyer.

    3. Foreign Remittances under LRS:

      • 5% TCS on remittances above ₹7 lakh under the Liberalized Remittance Scheme (LRS).
      • 20% TCS on foreign tour packages without PAN/Aadhaar.

    4. Sale of Goods (Section 206C(1H)):

      • If the seller’s total turnover exceeds ₹10 crore in the previous financial year, then TCS at 0.1% is applicable if a buyer purchases goods worth more than ₹50 lakh.

    5. E-Commerce Transactions (Section 206C(1G)):

      • E-commerce operators must collect 1% TCS on transactions made through their platform.

    Key Points to Remember:

    ✅ TCS is collected by the seller and deposited with the government.
    ✅ The buyer can claim a credit of TCS while filing their Income Tax Return (ITR).
    ✅ TCS must be deposited by the seller before the 7th of the next month.
    ✅ Exemptions: TCS is not applicable if the buyer is a government entity, a recognized buyer, or purchases for manufacturing and resale purposes.

    Read:Who is required to pay TCS?

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Ramesh Sharma
Enlightened
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  1. CA Sanjiv Kumar Enlightened Chartered Accountant
    This answer was edited.

    TDS on Purchase of Property from an NRI – Rate & Process If you are buying a property from a Non-Resident Indian (NRI), you are required to deduct TDS under Section 195 of the Income Tax Act. The process is different from buying a property from a resident Indian. 🔹 TDS Rate on Property PurchaseRead more

    TDS on Purchase of Property from an NRI – Rate & Process

    If you are buying a property from a Non-Resident Indian (NRI), you are required to deduct TDS under Section 195 of the Income Tax Act. The process is different from buying a property from a resident Indian.

    🔹 TDS Rate on Property Purchase from an NRI

     

    Type of Capital Gain Holding Period TDS Rate (if transfer took place before 23.07.2024  TDS Rate (if transfer took place on or after 23.07.2024 
    Short-Term Capital Gain Property held ≤ 2 years As per NRI’s income tax slab rates As per NRI’s income tax slab rates
    Long-Term Capital Gain Property held > 2 years 20% (plus surcharge & cess) 12.5% (plus surcharge & cess)

     

    📌 Additional Charges:

    • Surcharge: 10% (if sale consideration is between 50 Lakhs to 1 Cr), 15% (if > sale consideration is more than ₹1 crore)
    • Health & Education Cess: 4% on tax & surcharge

    🚨 Key Point: Unlike resident sellers (where TDS is 1% under Section 194-IA), TDS for an NRI seller is deducted on the entire sale value, NOT just on profit.

    🔹 TDS Deduction & Payment Process

    ✅ Step 1: Obtain TAN (Tax Deduction Account Number)

    • Buyers must obtain TAN (Tax Deduction Account Number) before deducting TDS.
    • TAN can be applied online via the NSDL website.

    ✅ Step 2: Deduct TDS & Pay to the Government

    • Deduct TDS before making payment to the NRI seller.
    • Deposit the TDS with the government using Challan ITNS 281.
    • Payment is made via the NSDL portal within 7 days of the following month.

    ✅ Step 3: File TDS Return (Form 27Q)

    • TDS return must be filed quarterly using Form 27Q (TDS on Non-Residents).
    • Due dates:
      • Q1 (Apr-Jun): 31st July
      • Q2 (Jul-Sep): 31st October
      • Q3 (Oct-Dec): 31st January
      • Q4 (Jan-Mar): 31st May

    ✅ Step 4: Issue TDS Certificate (Form 16A)

    • After filing Form 27Q, generate Form 16A (TDS Certificate).
    • Provide Form 16A to the NRI seller as proof of tax deduction.

    🔹 Lower TDS Deduction Option

    If the NRI seller’s total tax liability is lower than the deducted TDS, they can:
    ✔ Apply for a Lower TDS Certificate (Form 13) from the Income Tax Department.
    ✔ Submit the certificate to the buyer to deduct TDS at the reduced rate.

    🔹 Key Points to Remember

    ✔ TAN is mandatory for buyers deducting TDS from an NRI seller.
    ✔ TDS is deducted on the entire sale value, not just profit.
    ✔ File TDS returns (Form 27Q) on time to avoid penalties.
    ✔ NRI sellers can claim a refund of excess TDS while filing their ITR.

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Ramesh Sharma
Enlightened
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  1. CA Vishnu Ram Enlightened

    Yes, when purchasing a flat from an individual or entity (other than under a development agreement), you may be required to deduct TDS under Section 194IA of the Income Tax Act if the transaction meets certain conditions. TDS on Purchase of Property: Key Provisions Threshold Limit: If the sale consiRead more

    Yes, when purchasing a flat from an individual or entity (other than under a development agreement), you may be required to deduct TDS under Section 194IA of the Income Tax Act if the transaction meets certain conditions.

    TDS on Purchase of Property: Key Provisions

    1. Threshold Limit:

      • If the sale consideration of the property is ₹50 lakh or more, TDS is applicable.
      • If the amount is below ₹50 lakh, no TDS deduction is required.

    2. TDS Rate:

      • The buyer must deduct 1% TDS on the total transaction value if the seller is a resident Indian.
      • If the seller is a Non-Resident Indian (NRI), then TDS under Section 195 applies at a higher rate (generally 20% plus surcharge and cess, depending on the capital gain).

    3. When to Deduct TDS:

      • TDS should be deducted at the time of payment to the seller (whether full payment or installment).

    4. Deposit of TDS:

      • The deducted TDS should be deposited with the government using Form 26QB within 30 days from the end of the month in which TDS is deducted.
      • The buyer must issue a TDS certificate (Form 16B) to the seller after payment.

    TDS on Property Purchase from an NRI

    • If you are buying a property from an NRI, TDS is deducted under Section 195 instead of 194IA.
    • The TDS rate varies based on the nature of the capital gains (long-term or short-term) and is usually 20% (plus surcharge and cess) on long-term gains.

    Important Points to Note

    ✅ TDS is deducted by the buyer, not the seller.
    ✅ TDS applies on the entire sale consideration, not just the amount exceeding ₹50 lakh.
    ✅ Ensure to collect the seller’s PAN before deducting TDS to avoid higher tax deduction (20% in case of no PAN).
    ✅ If the seller applies for a lower TDS certificate under Section 197, TDS may be deducted at a lower rate.

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CA Vishnu Ram
Enlightened
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  1. CA Vishnu Ram Enlightened

    TDS Rates and Threshold Limits for FY 2025-26 TDS (Tax Deducted at Source) is applicable on various payments such as salary, rent, professional fees, and purchase of goods. Below is a simplified table showing applicable TDS rates and their threshold limits. Section Nature of Payment TDS Rate (%) ThrRead more

    TDS Rates and Threshold Limits for FY 2025-26

    TDS (Tax Deducted at Source) is applicable on various payments such as salary, rent, professional fees, and purchase of goods. Below is a simplified table showing applicable TDS rates and their threshold limits.

    Section Nature of Payment TDS Rate (%) Threshold Limit (₹) Remarks
    192 Salary As per slab rates Basic exemption limit TDS deducted as per applicable income tax slab rates.
    193 Interest on Securities 10 10,000 Threshold introduced; previously, there was no threshold.
    194 Dividend Payments 10 10,000 Threshold increased from ₹5,000 to ₹10,000.
    194A Interest other than on Securities 10 50,000 (General)
    1,00,000 (Senior Citizens)    		 Thresholds increased from ₹40,000 and ₹50,000 respectively.
    194C Payment to Contractors 1 (Individual/HUF)
    2 (Others)    		 30,000 (Single Payment)
    1,00,000 (Aggregate Annual)    		 No change in thresholds.
    194H Commission or Brokerage 5 15,000 No change in threshold.
    194I Rent 10 (Land/Building)
    2 (Plant/Machinery)    		 6,00,000 Threshold increased from ₹2,40,000 to ₹6,00,000.
    194J Professional Fees 10 50,000 Threshold increased from ₹30,000 to ₹50,000.
    194N Cash Withdrawals 2 1,00,00,000 No change in threshold.
    194Q Purchase of Goods 0.1 50,00,000 Applicable if buyer’s turnover exceeds ₹10 crore.
    206C(1H) Sale of Goods (TCS) 0.1 50,00,000 Applicable if seller’s turnover exceeds ₹10 crore.

    Key Points to Remember:

    ✅ If PAN is not provided, a higher TDS rate (usually 20%) is applicable.
    ✅ Some sections have lower TDS rates for certain payments made to individuals.
    ✅ TDS must be deducted at the time of payment or credit, whichever is earlier.

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CA Vishnu Ram
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    Interest on Default in Payment of Advance Tax – Sections 234B & 234C Paying Advance Tax on time is crucial to avoid interest penalties under the Income Tax Act, 1961. If you miss the deadline or pay an insufficient amount, interest is levied under Sections 234B and 234C. 1. When is Interest PayaRead more

    Interest on Default in Payment of Advance Tax – Sections 234B & 234C

    Paying Advance Tax on time is crucial to avoid interest penalties under the Income Tax Act, 1961. If you miss the deadline or pay an insufficient amount, interest is levied under Sections 234B and 234C.

    1. When is Interest Payable Under Section 234B?

    Interest under Section 234B is applicable when:
    ✅ You have paid less than 90% of your total tax liability before the end of the financial year.
    ✅ The remaining tax liability is ₹10,000 or more after deducting TDS/TCS and advance tax.

    📌 Interest Calculation (Sec 234B)

    • Interest @ 1% per month or part of the month is charged on the unpaid tax amount.
    • It is calculated from April 1 of the assessment year till the date of actual payment.

    📌 Example:

    • Total Tax Liability: ₹1,50,000
    • Advance Tax Paid: ₹1,20,000 (80%) → Less than 90% paid
    • Unpaid Tax: ₹30,000
    • Interest: 1% per month from April till payment date

    2. When is Interest Charged Under Section 234C?

    Interest under Section 234C applies when advance tax is not paid as per the prescribed due dates:

    Due Date Advance Tax to be Paid Applicable Interest
    15th June 15% of total tax liability 1% per month on shortfall
    15th September 45% of total tax liability 1% per month on shortfall
    15th December 75% of total tax liability 1% per month on shortfall
    15th March 100% of total tax liability 1% per month on shortfall

    📌 Example:

    • Total Tax Liability: ₹2,00,000
    • Paid by 15th June: ₹20,000 (instead of ₹30,000) → Shortfall of ₹10,000
    • Interest: 1% on ₹10,000 for 1 month

    How to Avoid Interest on Advance Tax?

    ✔ Plan your tax payments based on estimated income.
    ✔ Use TDS/TCS credits to reduce advance tax liability.
    ✔ Pay any shortfall before due dates to avoid interest.
    ✔ Use a tax calculator to check advance tax obligations

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CA Vishnu Ram
Enlightened
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  1. CA Vishnu Ram Enlightened

    Interest on Failure to Deduct, Collect, or Pay TDS Under the Income Tax Act If you fail to deduct, collect, or deposit TDS/TCS on time, the Income Tax Act, 1961 imposes interest penalties under Sections 201(1A) and 206C(7). Interest for Failure to Deduct TDS – Section 201(1A) If a person responsibleRead more

    Interest on Failure to Deduct, Collect, or Pay TDS Under the Income Tax Act

    If you fail to deduct, collect, or deposit TDS/TCS on time, the Income Tax Act, 1961 imposes interest penalties under Sections 201(1A) and 206C(7).

    Interest for Failure to Deduct TDS – Section 201(1A)

    If a person responsible for deducting TDS fails to deduct or deducts a lower amount, the following interest is charged:

    Scenario Interest Rate Period of Interest Calculation
    TDS not deducted 1% per month From due date of deduction till actual deduction
    TDS deducted but not deposited 1.5% per month From deduction date till actual payment to the government

    📌 Example:

    • TDS Due: ₹50,000 (to be deducted on 10th July)
    • Actual Deduction: 10th September → 1% per month for 2 months = ₹1,000
    • Deposit Date: 10th October → 1.5% per month for 1 month = ₹750
    • Total Interest: ₹1,750

    Read:What is the penalty for non filing of quarterly TDS return?

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. Advocate Dr Amit Dua Explainer

    There is not any direct interest on Late filling of ITR. (this may Impose Penalties) But, If you do not file income tax returns on or before the due date, you would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per sectionRead more

    There is not any direct interest on Late filling of ITR. (this may Impose Penalties)

    But, If you do not file income tax returns on or before the due date, you would be required to pay interest at the rate of 1% for every month, or part of a month, on the amount of tax remaining unpaid as per section 234A.

    It’s important to note that one’s ITR cannot be filed if one hasn’t paid the taxes.

     

    Penalties :

    Late Filing Fees u/s 234F

    Effective from the FY 2017-28, a late filing fee will be applicable for filing your returns after the due date under section 234F. For instance after due date for FY 2020-21  which is 31st Dec 2021.

    The maximum penalty is Rs. 10,000. If you file your ITR after the due date (30th Sep) but before 31 December, a penalty of Rs 5000 will be levied.

    For returns filed later than 31 December of the relevant assessment year, the penalty levied will be increased to Rs.10,000.

    There is a relief given to small taxpayers – the IT department has stated that if the total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1000.

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    Yes, there are certain ways to avoid or minimize the penalty imposed for failure to furnish a TDS return under the Income Tax Act. The penalties are primarily covered under Sections 234E and 271H of the Act. 1. Understanding the Penalty for Late Filing of TDS Return Late Fee under Section 234E: A fiRead more

    Yes, there are certain ways to avoid or minimize the penalty imposed for failure to furnish a TDS return under the Income Tax Act. The penalties are primarily covered under Sections 234E and 271H of the Act.

    1. Understanding the Penalty for Late Filing of TDS Return

    • Late Fee under Section 234E:

      • A fine of ₹200 per day is levied until the TDS return is filed.
      • The total penalty cannot exceed the amount of TDS deducted.

    • Penalty under Section 271H:

      • A minimum penalty of ₹10,000 and a maximum of ₹1,00,000 may be imposed for failure to file the return within one year.
      • This penalty is in addition to the late fee under Section 234E.

    2. Ways to Avoid or Reduce the Penalty

    ✅ File the TDS Return at the Earliest

    • If you have missed the deadline, file the TDS return as soon as possible to minimize the late filing fee under Section 234E.

    ✅ Request for Waiver of Penalty under Section 271H

    • Under certain circumstances, the Assessing Officer (AO) may waive the penalty under Section 271H if:
      • TDS is deposited to the government account.
      • Late filing fees under Section 234E are paid.
      • TDS return is filed before the expiry of one year from the due date.

    ✅ File an Appeal to the Commissioner of Income Tax (CIT) (Appeals)

    • If a penalty is levied, you can challenge the order before the CIT(A) by providing a reasonable cause for delay (e.g., technical issues, natural calamities, unavoidable business disruptions).

    ✅ Apply for Condonation of Delay

    • In some genuine cases, the Income Tax Department may consider a condonation request if the delay was beyond your control.

    ✅ Ensure Correct Filing of Returns to Avoid Additional Penalties

    • Incorrect filing of TDS returns may increase penalties. Always verify:
      • PAN details of deductees.
      • TDS amount credited.
      • Quarterly return deadlines (31st July, 31st October, 31st January, and 31st May).

    Final Advice

    If you have missed filing a TDS return, do not delay further. File it immediately and pay the late fees to minimize the financial burden. If there is a reasonable cause for the delay, you may approach the IT department for penalty relief under Section 271H.

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    Penalty for Non-Filing of Quarterly TDS Return Failure to file a quarterly TDS return within the due date attracts late fees and penalties under the Income Tax Act. The penalties are primarily covered under Section 234E and Section 271H. 1. Late Fee Under Section 234E If the quarterly TDS return isRead more

    Penalty for Non-Filing of Quarterly TDS Return

    Failure to file a quarterly TDS return within the due date attracts late fees and penalties under the Income Tax Act. The penalties are primarily covered under Section 234E and Section 271H.

    1. Late Fee Under Section 234E

    If the quarterly TDS return is not filed within the due date, a late fee of ₹200 per day is applicable until the return is filed. However, this fee:
    ✔️ Cannot exceed the total amount of TDS deducted.
    ✔️ Must be paid before filing the return.

    Example:

    • If TDS return is delayed by 20 days, the late fee = ₹200 × 20 = ₹4,000.
    • However, if the total TDS deducted is ₹3,500, the maximum late fee will be ₹3,500 (not ₹4,000).

    2. Penalty Under Section 271H

    Apart from the late filing fee under Section 234E, an additional penalty under Section 271H may be imposed if the TDS return is not filed within one year from the due date.

    📌 Penalty Amount: ₹10,000 to ₹1,00,000.
    📌 Applicable for:
    ✔️ Non-filing of TDS return.
    ✔️ Filing an incorrect TDS return (if not corrected in time).

    🔹 When is the penalty under Section 271H NOT levied?
    If the taxpayer meets all the following conditions:
    ✔️ TDS has been deposited to the government account.
    ✔️ Late fee under Section 234E has been paid.
    ✔️ TDS return is filed before the expiry of one year from the due date.

    3. Interest on Late Deposit of TDS (Section 201(1A))

    If TDS is deducted but not deposited to the government, interest is charged:
    🔹 1% per month from the due date of deduction to the actual deduction date.
    🔹 1.5% per month from the deduction date to the date of payment to the government.

    4. How to Avoid Penalty?

    ✔️ File TDS returns within the due dates:

    • Q1 (April – June) → 31st July
    • Q2 (July – September) → 31st October
    • Q3 (October – December) → 31st January
    • Q4 (January – March) → 31st May
      ✔️ Ensure timely payment of TDS to the government.
      ✔️ If delayed, file at the earliest to minimize penalties.
      ✔️ Apply for a waiver under Section 271H if eligible.

    Final Thought

    Failure to file a TDS return attracts late fees, penalties, and interest. If you have missed the deadline, file the return immediately to minimize the financial impact. If required, you can appeal for waiver of the penalty under Section 271H by showing a genuine reason.

    Please refer to the link on how to avoid late fees and penalties on the TDS return.

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    Penalty on Concealment of Income in Search Cases Under the Income Tax Act, 1961, if undisclosed income is found during an Income Tax Search (Raid) conducted under Section 132, penalties are levied under Section 271AAB. 1. What is "Undisclosed Income" in Search Cases? As per Section 271AAB, "undiscloRead more

    Penalty on Concealment of Income in Search Cases

    Under the Income Tax Act, 1961, if undisclosed income is found during an Income Tax Search (Raid) conducted under Section 132, penalties are levied under Section 271AAB.

    1. What is “Undisclosed Income” in Search Cases?

    As per Section 271AAB, “undisclosed income” refers to:
    ✔️ Unaccounted money, assets, or documents found during the search.
    ✔️ Income that is not recorded in books of accounts and not disclosed before the search.
    ✔️ False entries or suppression of income detected during the search.

    2. Penalty Provisions Under Section 271AAB

    The penalty for concealment of income in search cases depends on the circumstances under which the disclosure is made.

    Situation Penalty Rate
    Assessee admits the undisclosed income during the search, files return & pays tax before the due date 30% of undisclosed income
    Assessee does NOT admit undisclosed income but cooperates in search & files return on time 60% of undisclosed income
    Assessee does NOT admit income, does NOT cooperate, or does NOT file the return on time Up to 90% of undisclosed income

    📌 Note: If the case falls under Section 271(1)(c) (general penalty for concealment of income) instead of Section 271AAB, the penalty can be 100% to 300% of the tax evaded.

    3. Important Considerations

    ✔️ The penalty is mandatory if undisclosed income is detected in a search.
    ✔️ If the taxpayer voluntarily discloses the income before the search begins, no penalty is levied.
    ✔️ If the taxpayer fails to cooperate, the penalty can go up to 90% of the concealed income.

    4. How to Avoid Maximum Penalty?

    ✔️ Voluntarily disclose any unreported income before a search happens.
    ✔️ Cooperate with tax authorities during the search proceedings.
    ✔️ File the return on time and pay taxes on undisclosed income.

    Final Thought

    The penalties under Section 271AAB are severe. If you anticipate any undisclosed income, it’s always better to voluntarily disclose and pay taxes rather than face high penalties and legal action in search cases.

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