Who Is Liable to Deduct and Pay TDS Under Income Tax Act?


Who Is liable to Deduct and Pay TDS under Income Tax Act?

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TDS (Tax deducted at source) is a concept which was introduced to collect taxes straight from the origin of income. It works on the principle that anyone who is obligated to make a payment of specified nature to another person, should first deduct tax at source, and then transfer this amount into the Central Government's account.

The deductor from whom the tax has been deposited can then claim a refund for this amount based on the details mentioned in their Form 26AS for TDS certificate issued by the deductor.

There are certain types of payments which are taxable under TDS, and each type has its own rate. Below we list down some of the most common ones:

Rent Payments: Individuals or HUFs who receive any kind of rent payments on a residential property are liable to deduct TDS as per section 194I. The TDS rate for these kinds of rent payments is 5%. However, the TDS is not applicable if the land and building rent is less than Rs 1.8 lakhs in a financial year.

Contractors: Anyone who is undertaking various types of construction projects for the government at any level, local bodies, or co-operative societies is liable to deduct TDS as per Section 194 C of the Income Tax Act. This is a mandatory requirement.

For those buying goods that are above Rs 50 lakhs, a deductor will need to deduct 0.1% tax and deposit the same online. If the deductor doesn't do this, he will be liable to pay interest at the rate of 1.5% every month from the date on which the tax should have been deducted until the time it is deposited.

 

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