Law, Practice & Procedure on Tax Deduction & Collection at Source including Advance Tax & Refunds

Preface to the Twenty-third Edition ........................................................................................................ v About the Authors.................................................................................................................................. vii Detailed Contents................................................................................................................................... xi List of Circulars..................................................................................................................................... xli Table of Cases.....................................................................................................................................xliii DIVISION I Part A: Interplay of TDS/TCS provisions under Income-tax Act, 1961 and Income-tax Act, 2025 CR-1 Comparative Sections, Rules and Forms of TDS/TCS Provisions...............................................4 CR-2 Comparative Legislative Changes in TDS/TCS Provisions....................................................... 20 Part B: General CR-3 Amendment brought in TDS & TCS provisions by the Finance Act, 2026............................... 48 CR-4 TDS & TCS at a glance.............................................................................................................. 51 CR-5 Time & Mode of Payment of TDS & TCS at a glance .............................................................. 59 CR-6 Declaration & Certificates..........................................................................................................62 CR-7 Statement of TDS & TCS at a glance ........................................................................................ 64 CR-8 Withholding Tax Rates Applicable in the Treaties that India has entered into with Various Countries....................................................................................................................................66 Part A: GeneralCR-9 Section Codes and list of Nature of Remittances.......................................................................73 DIVISION II Chapter 1: System of Collection of Tax [Sections 390 and 391]................................................... 100 Chapter 2: Overview of Provisions relating to TDS/TCS .............................................................. 106 Part B: TDS on Salary and Accumulated Balance Chapter 3: TDS on Salary and accumulated balance due to an employee......................................116 Chapter 4: How to estimate income under the head "Salaries" for purpose of TDS ...................... 165 [Sections 15 to 19] Part C: TDS on Payments to Residents Only Chapter 5: TDS on Commission or Brokerage............................................................................... 226 [Section 393(1) (Table Sl. No. 1(i) and (ii) (erstwhile Sections 194D and 194H)] Chapter 6: TDS on Payment of Rent.............................................................................................. 253 [Section 393(1) (Table: Sl. No. 2) (erstwhile Section 194-IB & 194-I)] Chapter 7: TDS on payment on Transfer of certain immovable property other than Agricultural land........................................................................................................... 282 [Section 393(1) (Table: Sl. No. 3) (erstwhile sections 194-IA, 194-IC and 194LA)] Chapter 8: TDS on Income from Capital Market........................................................................... 303 [Section 393(1) (Table Sl. No. 4) (erstwhile Sections 194K, 194LBA(1), 194LBB, 194LBC(1))] Chapter 9: TDS on Interest Income................................................................................................ 327 [Section 393(1) (Table Sl. No. 5) (erstwhile Section 193 and 194A)] Chapter 10: TDS on Payments to Contractors, Fees for professional and technical services ..........378 [Section 393(1) (Table Sl. No. 6) (erstwhile Section 194C, 194M and 194J)] , x Law, Practice & Procedure on Tax Deduction & Collection at Source... Chapter 11: TDS on Dividends........................................................................................................444 [Section 393(1) (Table: Sl. No. 7) (erstwhile section 194)] Chapter 12: TDS in Other Cases......................................................................................................451 [Section 393(1) Table Sl. No. 8 (erstwhile Sections 194DA, 194Q, 194P, 194R, 194O and 194S)] Part D: TDS on Payments to Non Residents only Chapter 13: TDS on Payments to Non-Residents ............................................................................ 520 [Section 393(2) (Table: Sl. No. 1 to 17) (erstwhile 194E, 194LC, 194LB, 194LBA(2) &(3), 194LBB, 194LBC(2), 196A, 196B, 196C, 196D and 195)]] Part E: TDS on Payments to Any Person Chapter 14: TDS on Payments to Any Person (Whether Resident or Non-Resident deductees) .....628 [Section 393(3) (Table: Sl. No. 1 to 7) (erstwhile 194B, 194BA, 194BB, 194G, 194N, 194EE and 194T)] Part F: Collection of Tax at Source Chapter 15: TCS on Certain Receipts .............................................................................................. 684 [Section 394] DIVISION III Chapter 16: Declaration and Certificates ......................................................................................... 715 [Section 393(6), (7), 394(2) & (3) and 395] Chapter 17: Compliances & Reporting and Processing of Statements............................................. 748 Chapter 18: Consequences of Defaults............................................................................................. 775 [Sections 35(b), 35(c); 398; 412; 427; 448; 449; 461; 465; 468, 471; 476; 477; 485 and 486 (erstwhile sections 40(a); 201 & 206C(6A) to (8); 221; 234E; 271C; 271CA; 271H; 271-I; 272A; 272BB; 274; 276B; 276BB; 278A; 278AA)] Chapter 19: Provisions relating to Relaxation from TDS/TCS ........................................................ 807 Chapter 20: Other Important Provisions relating to TDS/TCS ........................................................ 813 DIVISION IV Chapter 21: Advance Payment of Tax.............................................................................................. 817 [Sections 403 to 410 (erstwhile sections 207-211, 218 and 219)] Chapter 22: Refunds......................................................................................................................... 839 [Sections 431 to 438 (erstwhile sections 237 to 241 & 245)] DIVISION V Appendix 1 [Relevant Rules (Income Tax Rules, 2026 vis-à-vis Income Tax Rules, 1962)] ...........851 Appendix 2 [Relevant Forms (Forms under Income-tax Rules, 1962 vis-à-vis Income-tax Rules, 2026)] ................................................................................................................877 Appendix 3 [Recent Judicial Decisions]........................................................................................1080 Appendix 4 [Relevant Circulars and Notifications] ......................................................................1058 , Contents xi Detailed Contents Preface to the Twenty-third Edition ........................................................................................................ v About the Authors.................................................................................................................................. vii Contents.................................................................................................................................................. ix List of Circulars..................................................................................................................................... xli Table of Cases.....................................................................................................................................xliii DIVISION I Part A: Interplay of TDS/TCS provisions under Income-tax Act, 1961and Income-tax Act, 2025 CR-1 Comparative Sections, Rules and Forms of TDS/TCS Provisions...............................................4 CR-2 Comparative Legislative Changes in TDS/TCS Provisions....................................................... 20 Part B: General CR-3 Amendment brought in TDS & TCS provisions by the Finance Act, 2026 ............................... 48 CR-4 TDS & TCS at a glance.............................................................................................................. 51 CR-5 Time & Mode of Payment of TDS & TCS at a glance .............................................................. 59 CR-6 Declaration & Certificates..........................................................................................................62 CR-7 Statement of TDS & TCS at a glance ........................................................................................ 64 CR-8 Withholding Tax Rates Applicable in the Treaties that India has entered into with Various Countries....................................................................................................................................66 CR-9 Section Codes and list of Nature of Remittances.......................................................................73 DIVISION II Part A: General (A) Pre-Paid Taxes Chapter 1: System of Collection of Tax [Sections 390 and 391]................................................. 100 1.1 Deduction or collection at source and advance payment [Section 390 (erstwhile Sections 190, 199, 202 and 206C(2) & (4) of ITA 1961)] ......101 1.1-a Credit for tax deducted or collected at source. [Rule 203 (erstwhile Rule 37BA/37-I)].........................................................................102 1.2 Gist of Relevant Circular..............................................................................................103 1.3 Important Judicial Decisions ........................................................................................103 (B) Direct Payment of Tax 1.4 Direct payment. [Section 391 (erstwhile Section 191 of ITA 1961)] ......................................................104 Chapter 2: Overview of Provisions relating to TDS/TCS........................................................... 106 2.1 Introduction ..................................................................................................................106 2.2 Incomes/sums/receipts from which tax is required to be deducted or collected at source............................................................................................................................106 2.3 Procedure and scheme of TDS/TCS .............................................................................112 , xii Law, Practice & Procedure on Tax Deduction & Collection at Source... Part B: TDS on Salary and Accumulated Balance Chapter 3: TDS on Salary and accumulated balance due to an employee................................ 116 (A) TDS on income chargeable under the "Salaries" [Sections 392(1) to 392(6) & 392(8) (erstwhile Section 192)] 3.1 Who is liable for deduction of tax at source? ...............................................................119 3.2 When does the liability to deduct tax at source arise? ..................................................119 3.3 Tax to be deducted at average rate of income-tax on estimated salary [Section 392(1) (erstwhile Section 192(1))].................................................................120 3.4 Tax on non-monetary perquisites can be paid by employer [Section 392(2)(a) & (b) (erstwhile Section 192(1A) and (1B))] .................................125 3.5 TDS on ESOP issued by an eligible startup referred in section 140 (erstwhile section 80-IAC) [Section 392(3) (erstwhile Section 192(1C))]...............................................................126 3.6 Furnishing of particulars by the employee at his option [Section 392(4) and Rule 73, 204(1) (erstwhile Section 192(2A) & 192(2B) and Rule 21AA, 26A(1) & 26B)]..................................................................................................126 3.6-a Furnishing of particulars relating to income/losses and tax deducted or collected at source for making deduction under section 392(1) from income under head "Salaries". [Section 392(4)(a)(i)/(iii)/(iv)/(v) read with Rule 204(1) (erstwhile Rule 26A(1) and 26B merged)]....................................................................................................................... 127 3.6-b Furnishing of particulars relating to relief under section 157 read with Rule 73 (erstwhile Section 89 read with Rule 21AA) for making deduction under section 392(1) from income under head "Salaries" [Section 392(4)(a)(ii)]..................................................................................................127 3.7 Employer’s Obligations for Salary Reporting, Evidence Collection, and Tax Deduction Adjustments [Section 392(5)]............................................................................................................131 3.7-a Deductor to furnish statement to employee giving correct and complete particulars of perquisites or profit in lieu of salary and the value thereof. [Section 392(5)(a) read with Rule 26A(2)]...................................................................131 3.7-b Employer to obtain evidence or proof or particulars or prescribed claims (including claim for set off of loss) for the purpose of deduction of tax under section 392(1) [Section 392(5)(b) (erstwhile Section 192(2D))].......................................................... 131 3.7-c Adjustment in the amount of tax to be deducted [Section 392(5)(c) (erstwhile Section 192(3))]............................................................. 134 3.8 Deduction at source of tax payable on accumulated balance of recognised provident fund by trustees of such Fund [Section 392(6)(a) (Erstwhile Section 192(4))]............................................................135 3.9 Deduction of tax on contributions paid to an employee out of Approved superannuation fund by trustees of such Fund [Section 392(6)(b) (Erstwhile Section 192(5))]............................................................136 3.10 CBDT Rules to be followed for deduction of tax at source..........................................137 3.11 Tax on income of an employee if he does not opt to be taxed under old regime. [Section 202 (erstwhile Section 115BAC)]...................................................................137 3.12 Can self declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................139 , Contents xiii 3.13 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)].........139 3.14 Other provisions relating to TDS on salaries................................................................139 3.15 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........143 3.16 Gist of Relevant Circulars ............................................................................................143 3.17 Judicial Decisions.........................................................................................................145 (B) TDS on payment of accumulated balance in recognized provident fund by the trustees of EPF Scheme, 1952 (This payment is not chargeable under the head "Salaries") [Section 392(7) (erstwhile Section 192A)] 3.18 Who is liable for deduction of tax at source? ...............................................................159 3.19 When does liability to deduct tax at source arise? ........................................................159 3.20 Rate of TDS..................................................................................................................161 3.21 When is no tax to be deducted at source.......................................................................161 3.22 Can self declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................161 3.23 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........162 3.24 Other provision relating to TDS on payment of accumulated balance .........................163 3.25 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........164 Chapter 4: How to estimate income under the head "Salaries" for purpose of TDS .............. 165 [Sections 15 to 19] 4.1 Computation of income under the head "Income from Salaries"..................................165 4.2 Basis of Charge [Section 15 (erstwhile Section 15 of ITA 1961)] ..........................................................165 4.2-a Arrears of Salary........................................................................................................... 166 4.3 Meaning of Salary ........................................................................................................166 4.4 Wages...........................................................................................................................167 4.5 Annuity.........................................................................................................................167 4.6 Retirement benefits.......................................................................................................167 4.7 Treatment of Bonus......................................................................................................167 4.8 Salary in lieu of notice period.......................................................................................167 4.9 Fee and Commission ....................................................................................................167 4.10 Overtime Payments.......................................................................................................167 4.11 Meaning and Type of Allowances................................................................................168 4.12 Any special allowance from employer i.e., House Rent Allowance — Section 11(1) read with Schedule III (Table: Sl. No. 11) and Rule 279 (erstwhile Section 10(13A) and Rule 2A) (Exemption under this Section shall be allowed only if the employee opts to be taxed under old regime) ...............................................................................168 4.12-a Limits for the purposes of Schedule III (Table: Sl. No. 11) (Rule 279) (Erstwhile Rule 2A)................................................................................................................................ 168 4.13 Any special allowance or benefit to the extent to which such expenses are actually incurred for that purpose [Section 11(1) read with Schedule III (Table: Sl. No. 12) (erstwhile Section 10(14)(i))] ......................................................................................................................................171 , xiv Law, Practice & Procedure on Tax Deduction & Collection at Source... 4.13-a Prescribed allowances for the purposes of Schedule III (Table: Sl No. 12) (Rule 280) (Erstwhile Rule 2BB) ...................................................................................................172 4.14 Any allowance granted to the employee to meet his personal expenses or to remunerate or compensate him for performing duties of a special nature. [Section 11(1) read with Schedule III (Table: Sl. No. 13)] (erstwhile Section 10(14)(ii))]......................................................................................172 4.14-a Prescribed allowances for the purposes of Schedule III (Table: Sl No. 12 & 13) (Rule 280) (Erstwhile Rule 2BB)........................................................................................... 172 4.15 Allowances which are exempt in case of certain persons.............................................174 4.16 Allowances which are fully taxable under both the regimes ........................................175 4.17 Definition of "Perquisite" as per Section 17 (erstwhile Section 17(2)).........................175 4.18 Perquisites which are taxable in the hands of all categories of employees...................177 4.19 Perquisites which are taxable only in the case of specified employees (Section 17(1)(c)) .........................................................................................................178 4.19-a Who is a specified employee [Section 17(1)(c) (erstwhile Section 17(2)(iii))]........................................................... 178 4.20 Rent free accommodation or accommodation provided at concessional rate [(Section 17(1)(a)) and Rule 15]..................................................................................179 4.21 Valuation of monetary obligation of the employee discharged by the employer [Section 17(1)(f)]..........................................................................................................183 4.22 Valuation of Life Insurance premium/deferred annuity premium paid/ payable by the employer [Section 17(1)(g)].........................................................................................................183 4.23 Value of any specified security or sweat equity shares [Section 17(1)(d)].........................................................................................................184 4.23-a Valuation of specified security or sweat equity share being a share in the company [Rule 15(6) (Erstwhile Rule 3(8))] ............................................................................... 184 4.24 Contribution made by the employer in a recognised provident fund, in the pension scheme referred to in section 124(1); and in an approved superannuation fund exceeding ₹7,50,000 [Section 17(1)(h) (erstwhile Section 17(2)(vii))]..........................................................185 4.25 Annual Accretion to the balance at the credit of the fund or scheme referred to in section 17(1)(h) [Section 17(1)(i) (erstwhile Section 17(2)(viia))].........................................................186 4.25-a Annual accretion referred to in in section 17(1)(i) of the Act. [Rule 16]....................................................................................................................... 186 4.26 Any other benefit or amenity shall be taxable perquisites in the hands of all employees [Section 17(1)(e) (erstwhile Section 17(2)(viii)) and Rule 15(5) (Erstwhile Rule 3(7)]..............................................................................................................................189 4.27 Valuation of motor car/other vehicles [Rule 15(3) (erstwhile Rule 3(2))]................................................................................194 4.27-a Where more than one motor car is provided (Rule 15(3)(b)) .......................................197 4.27-b Specific documents to be maintained for S. No. (1)(a) or S. Nos. (2) and (3) of the above table .............................................................................................................................. 197 4.28 Provision by the employer of services of a sweeper, a gardener, a watchman or personal attendant [Sl. No. 1 to Table III under Rule 15(4) (Erstwhile Rule 3(3))] ...................................197 , Contents xv 4.29 Value of benefit to the employee resulting from the supply of gas, electric energy or water for household consumption [Sl. No. 2(a) and (b) to Table III under Rule 15(4) (Erstwhile Rule 3(4))]..................197 4.30 Valuation in respect of free or concessional educational facilities to any member of employees' household [Sl. No. 3(a), (b) and (c) to Table III under Rule 15(4) (Erstwhile Rule 3(5))]............198 4.31 Personal or Private journey at free or concessional rate given to the transport employees and members of their household [Sl. No. 4 to Table III under Rule 15(4) (Erstwhile Rule 3(6))] ...................................198 4.32 Tax-free Perquisites (for all employees).......................................................................199 4.33 Treatment of medical facilities/reimbursement [Section 17(2) (erstwhile Proviso to Section 17(2))]....................................................200 4.33-a Prescribed diseases or ailments [Rule 18(3) (Erstwhile Rule 3A(2))]............................................................................. 202 4.34 Treatment of Leave Travel Concession (LTC) [Schedule III (Table: Sl. No. 8) (erstwhile Section 10(5) and Rule 278)] ....................203 4.34-a Conditions for the purpose of Schedule III (Table: Sl. No. 8) [Rule 278 (Erstwhile Rule 2B)].................................................................................... 203 4.34-b How many times can exemption be claimed?............................................................... 203 4.34-c Exemption available only in respect of two children (Rule 278(5) and (6).................. 204 4.35 Definition of “Profits in lieu of salary” [Section 18 (erstwhile Section 17(3))]..........................................................................204 4.36 Gratuity.........................................................................................................................206 4.37 Treatment of Pension....................................................................................................206 4.38 Treatment of Leave Salary............................................................................................206 4.39 Retrenchment Compensation........................................................................................207 4.40 Compensation received on Voluntary Retirement........................................................207 4.41 Deductions from salaries. [Section 19 (Erstwhile Sections 16 and exemption which was allowed under erstwhile sections 10(10), 10(10A), 10(10AA), 10(10B) & 10(10C) of ITA 1961 now allowed as deduction after including the entire amount received in the meaning of salary)].........................................................................................................................207 4.41-a Tax on employment [Sl. No. 1 of table under section 19 (erstwhile section 16(iii))]....................................207 4.41-b Standard deduction [Sl. No. 2 of table under section 19 (erstwhile section 16(ia))]. ...................................207 4.41-c Deduction on account of gratuity received [Section 19(1)].............................................................................................................. 207 4.41-d Deduction on account of Commuted pension [Section 19(1)].............................................................................................................. 210 4.41-e Retrenchment Compensation [Section 19(1) read with Sl. No. 10 & 11 of Table under this section (erstwhile Section 10(10B))]...................................................................................................................... 212 4.41-f Compensation received on Voluntary Retirement [Section 19(1) read with Sl. No. 12 of table under this section (erstwhile Section 10(10C))]...................................................................................................................... 214 4.41-g Treatment of Leave Salary............................................................................................ 214 4.42 Contribution by the employer to recognised provident fund ........................................216 4.43 Interest credited to recognised provident fund..............................................................216 4.44 Amount comprised in the transferred balance ..............................................................217 , xvi Law, Practice & Procedure on Tax Deduction & Collection at Source... 4.45 Treatment of Provident Fund........................................................................................217 4.45-a Kinds of Provident Funds............................................................................................. 217 4.45-b Treatment of Provident Fund for Income-tax Purposes................................................ 218 4.45-c Amount comprised in the transferred balance of Unrecognised Provident Fund (URPF) when it is converted into recognised provident fund .................................................... 220 4.46 Relief when salary is paid in arrears or in advance, etc. [Section 157 (erstwhile Section 89)/Rule 73 (Erstwhile Rule 21A)].............................221 4.46-a Relief under section 157(1) when salary is paid in arrears or in advance, gratuity, etc. [Rule 73 (Erstwhile Rule 21A and 21AA)] ...................................................................221 4.46-b Whether relief under Section 157(1) (Erstwhile section 89) is available for the compensation under voluntary retirement scheme (Section 157(2) (Erstwhile Proviso to Section 89).................................................................................................................... 224 Part C: TDS on Payments to Residents Only [Section 393(1)] Chapter 5: TDS on Commission or Brokerage............................................................................ 226 [Section 393(1) (Table Sl. No. 1(i) and (ii) (erstwhile Sections 194D and 194H)] (A) TDS on Insurance Commission [Section 393(1) (Table: Sl. No. 1(i)) (erstwhile 194D)] 5.1 Who is liable for deduction of tax at source? ...............................................................227 5.2 When does the liability to deduct tax at source arise? ..................................................227 5.3 Rate of TDS..................................................................................................................228 5.4 When is no tax to be deducted at source? .....................................................................228 5.5 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................229 5.6 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........230 5.7 Other provisions relating to TDS on insurance commission ........................................231 5.8 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........234 5.9 Gist of Relevant Circulars ............................................................................................234 5.10 Judicial decisions..........................................................................................................235 (B) TDS on Commission and Brokerage [Section 393(1) (Table: Sl. No. 1(ii)) (erstwhile section 194H)] 5.11 Who is liable for deduction of tax at source? ...............................................................237 5.12 Meaning of commission or brokerage ..........................................................................237 5.13 When does the liability to deduct tax at source arise? ..................................................238 5.14 Rate of TDS..................................................................................................................238 5.15 When is no tax to be deducted at source?.....................................................................238 5.16 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................240 5.17 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........240 5.18 Other provisions relation to TDS on commission or brokerage ...................................240 5.19 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........244 , Contents xvii 5.20 Gist of relevant circulars...............................................................................................244 5.21 Judicial decisions..........................................................................................................245 Chapter 6: TDS on Payment of Rent............................................................................................ 253[Section 393(1) (Table: Sl. No. 2) (erstwhile Section 194-IB & 194-I)] (A) TDS on Rent paid by person other than Specified Person [Section 393(1) (Table: Sl. No. 2(i)) (erstwhile Section 194-IB)] 6.1 Who is liable for deduction of tax at source? ...............................................................254 6.2 When does the liability to deduct tax at source arise? ..................................................255 6.3 Rate of TDS..................................................................................................................255 6.4 When is no tax to be deducted at source? .....................................................................255 6.5 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................256 6.6 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........256 6.7 Other provisions relating to TDS on Payment of rent by certain individuals or Hindu undivided family...........................................................................................................257 6.8 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........258 (B) TDS on Rent paid by a Specified Person [Section 393(1) (Table: Sl. No. 2(ii)) (erstwhile Section 194-I)] 6.9 Who is liable for deduction of tax at source? ...............................................................259 6.10 Meaning of rent ............................................................................................................259 6.11 When does the liability to deduct tax at source arise? ..................................................260 6.12 Rate of TDS..................................................................................................................260 6.13 Where no tax is to be deducted at source......................................................................260 6.14 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................262 6.15 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........264 6.16 Other provisions relating to TDS on rent......................................................................264 6.17 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........267 6.18 Important FAQs by CBDT ...........................................................................................267 6.19 Gist of Relevant Circulars ............................................................................................268 6.20 Judicial decisions..........................................................................................................271 Chapter 7: TDS on payment on Transfer of certain immovable property other than Agricultural land ........................................................................................................282 [Section 393(1) (Table: Sl. No. 3) (erstwhile sections 194-IA, 194-IC and 194LA)] (A) TDS on payment on Transfer of certain immovable property other than Agricultural land (not covered under (B) & (C)) [Section 393(1) (Table: Sl. No. 3(i)) (erstwhile Section 194-IA)] 7.1 Who is liable for deduction of tax at source? ...............................................................283 7.2 Meaning of “Immovable Property” ..............................................................................283 , xviii Law, Practice & Procedure on Tax Deduction & Collection at Source... 7.3 When does the liability to deduct tax at source arise? ..................................................284 7.4 Rate of TDS..................................................................................................................284 7.5 When is no tax to be deducted at source? .....................................................................285 7.6 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................286 7.7 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........286 7.8 Other provisions relating to TDS on transfer of certain immovable property ..............286 7.9 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........287 7.10 Important FAQs by CBDT ...........................................................................................287 (B) TDS on Consideration (not in kind) under Specified Agreement referred to in Section 67(14) (erstwhile Section 45(5A)) [Section 393(1) (Table: Sl. No. 3(ii)) (erstwhile Section 194-IC)] 7.11 Who is liable for deduction of tax at source? ...............................................................289 7.12 When does the liability to deduct tax at source arise? ..................................................290 7.13 Rate of TDS..................................................................................................................290 7.14 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................290 7.15 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........291 7.16 Other provisions relating to TDS on transfer of immovable property referred to in section 67(14)...............................................................................................................291 7.17 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........293 7.18 Judicial Decision...........................................................................................................293 (C) TDS on Consideration/compensation on account of compulsory acquisition of immovable property [Section 393(1) (Table: Sl. No. 3(iii))] 7.19 Who is liable for deduction of tax at source? ...............................................................295 7.20 When does the liability to deduct tax at source arise? ..................................................295 7.21 Rate of TDS..................................................................................................................296 7.22 Where is no tax to be deducted at source?....................................................................296 7.23 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................297 7.24 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........297 7.25 Other provisions relation to TDS on payment of compensation/consideration for compulsory acquisition.................................................................................................297 7.26 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........300 7.27 Judicial decisions..........................................................................................................300 , Contents xix Chapter 8: TDS on Income from Capital Market.......................................................................303 [Section 393(1) (Table Sl. No. 4) (erstwhile Sections 194K, 194LBA(1), 194LBB, 194LBC(1))] (A) TDS on Income in respect of Units other than (B), (C) & (D) [Section 393(1) (Table: Sl. No. 4(i)) (erstwhile Section 194K)] 8.1 Who is liable for deduction of tax at source? ...............................................................304 8.2 When does liability to deduct tax at source arise? ........................................................305 8.3 Rate of TDS..................................................................................................................305 8.4 Where no tax is to be deducted at source......................................................................305 8.5 Can self declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a)/(b) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))]...............306 8.6 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........307 8.7 Other provisions relating to TDS on income in respect of units...................................308 8.8 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........310 8.9 Can credit of TDS be given to a person other than the deductee? ................................310 (B) TDS on Distributed Income of the nature referred to in Schedule V (Table: Sl. No. 3 & 4) payable by Business Trust to Unit Holder [Section 393(1) (Table: Sl. No. 4(ii)) (erstwhile Section 194LBA(1))] 8.10 Who is liable for deduction of tax at source? ...............................................................311 8.11 When does liability to deduct tax at source arise? ........................................................312 8.12 Rate of TDS..................................................................................................................312 8.13 Where no tax is to be deducted at source......................................................................312 8.14 Can self declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................313 8.15 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)].........313 8.16 Other provisions relating to Distributed Income of the nature referred to in Schedule V (Table: Sl. No. 3 & 4) payable by Business Trust to Unit Holder ............................313 8.17 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........315 8.18 Can credit of TDS be given to a person other than the deductee? ................................316 (C) TDS on Income in respect of Units of Investment Fund [Section 393(1) (Table: Sl. No. 4(iii)) (erstwhile Section 194LBB)] 8.19 Who is liable for deduction of tax at source? ...............................................................317 8.20 When does liability to deduct tax at source arise? ........................................................317 8.21 Rate of TDS..................................................................................................................317 8.22 When no tax is to be deducted at source.......................................................................317 8.23 Can self declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................318 8.24 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........318 , xx Law, Practice & Procedure on Tax Deduction & Collection at Source... 8.25 Other provisions relating to Income in respect of Units of Investment Fund ...............318 8.26 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........321 8.27 Can credit of TDS be given to a person other than the deductee? ................................321 (D) TDS on Income in Respect of Investment in Securitisation Trust [Section 393(1) (Table: Sl. No. 4(iv)) (erstwhile Section 194LBC(1))] 8.28 Who is liable for deduction of tax at source? ...............................................................322 8.29 When does liability to deduct tax at source arise? ........................................................322 8.30 Rate of TDS..................................................................................................................323 8.31 When no tax is to be deducted at source.......................................................................323 8.32 Can self declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................323 8.33 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........323 8.34 Other provisions relating to Income in respect of Units of Investment Fund ...............324 8.35 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........326 8.36 Can credit of TDS be given to a person other than the deductee? ................................326 8.37 Judicial decisions..........................................................................................................326 Chapter 9: TDS on Interest Income ............................................................................................. 327[Section 393(1) (Table Sl. No. 5) (erstwhile Section 193 and 194A)] (A) TDS on Income by way of interest on securities [Section 393(1) Table: Sl. No. 5(i) (erstwhile Section 193)] 9.1 Who is liable for deduction of tax at source? ...............................................................328 9.2 Meaning of “Interest on Securities”: ............................................................................328 9.3 When does the liability to deduct tax at source arise? ..................................................329 9.4 Rate of TDS..................................................................................................................329 9.5 When no tax is to be deducted at source.......................................................................330 9.6 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................331 9.7 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........332 9.8 Other provision relating to TDS on interest on securities.............................................333 9.9 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........336 9.10 Can credit of TDS be given to a person other than the deductee? ................................336 9.11 Gist of Relevant Circulars ............................................................................................336 9.12 Relevant Notifications under Section 393(4) (Table: Sl. No. 6.C(a)(ii)) of ITA, 2025 (erstwhile clause (iib) of the proviso to section 193)....................................................337 9.13 Important Judicial Decisions ........................................................................................350 (B) TDS on Income by way of interest other than on securities [Section 393(1) Table: Sl. No. 5(ii)/(iii) (erstwhile Section 194A)] 9.14 Who is liable for deduction of tax at source? ...............................................................352 9.15 Meaning of “Interest on Securities”: ............................................................................353 , Contents xxi 9.16 When does the liability to deduct tax at source arise? ..................................................353 9.17 Rate of TDS..................................................................................................................353 9.18 Where no tax is to be deducted at source......................................................................354 9.19 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................357 9.20 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........358 9.21 Other provisions relating to TDS on interest other than interest on securities .............358 9.22 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........362 9.23 Can credit of TDS be given to a person other than the deductee? ................................362 9.24 Gist of Relevant Circulars and Notifications................................................................362 9.25 Judicial decisions..........................................................................................................370 Chapter 10: TDS on Payments to Contractors, Fees for professional and technical services...378 [Section 393(1) (Table Sl. No. 6) (erstwhile Section 194C, 194M and 194J)] (A) TDS on Payments to Contractors [Section 393(1) (Table: Sl. No. 6(i)) (erstwhile Section 194C)] 10.1 Who is liable for deduction of tax at source? ...............................................................380 10.2 Meaning of work ..........................................................................................................381 10.3 When does the liability to deduct tax at source arise? ..................................................382 10.4 Rate of TDS..................................................................................................................382 10.5 When is no tax to be deducted at source? .....................................................................382 10.6 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................383 10.7 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)].........383 10.8 Other provisions relating to TDS on payment to contractors .......................................384 10.9 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........387 10.10 Gist of Relevant Circulars ............................................................................................387 10.11 Judicial Decisions.........................................................................................................397 10.11-a Meaning of "Work" ......................................................................................................397 10.11-b "Works Contract" vs. "Contract for Sale".....................................................................398 10.11-c Scope of Section 393(1) (Table Sl. No. 6(i)) (erstwhile Section 194C) ....................... 402 10.11-d Section 393(1) (Table Sl. No. 6(i)) (erstwhile Section 194C) VS. Section 393(1) (Table Sl. No. 2(ii)) (erstwhile Section 194-I).........................................................................406 10.11-e Section 393(1) (Table Sl. No. 6(i)) (erstwhile Section 194C) VS. Section 393(1) (Table Sl. No. 6(ii)) (erstwhile Section 194J)..........................................................................409 10.11-f Other Case Laws........................................................................................................... 414 (B) TDS on Payments of certain sums by certain individuals or Hindu Undivided Family [Section 393(1) (Table: Sl. No. 6(ii)) (erstwhile Section 194M)] 10.12 Who is liable for deduction of tax at source? ...............................................................419 10.13 When does the liability to deduct tax at source arise? ..................................................420 10.14 Rate of TDS..................................................................................................................420 , xxii Law, Practice & Procedure on Tax Deduction & Collection at Source... 10.15 When is no tax to be deducted at source? .....................................................................420 10.16 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................421 10.17 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........421 10.18 Other provisions relating to TDS on Payment of certain sums by certain individuals or Hindu Undivided Family..........................................................................................421 10.19 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........422 (C) TDS on Fees for Professional or Technical Services or Royalty or Non-Compete Fee [Section 393(1) (Table: Sl. No. 6(iii)) (erstwhile Section 194J)] 10.20 Who is liable for deduction of tax at source? ...............................................................424 10.21 Meaning of Important Terms........................................................................................424 10.21-a Meaning of "Professional Services" ............................................................................. 424 10.21-b Meaning of "Fees for Technical Services" ...................................................................425 10.21-c Meaning of "Royalty"...................................................................................................425 10.21-d Meaning of Sum referred to in Section 26(2)(h) (erstwhile Section 28(va))................ 426 10.22 When does the liability to deduct tax at source arise? ..................................................427 10.23 Rate of TDS..................................................................................................................427 10.24 When is no tax to be deducted at source? .....................................................................427 10.25 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................428 10.26 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........428 10.27 Other provisions relating to TDS on fees for professional or technical services..........429 10.28 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........432 10.29 Gist of Relevant Circulars ............................................................................................432 10.30 Judicial Decisions.........................................................................................................434 Chapter 11: TDS on Dividends.......................................................................................................444 [Section 393(1) (Table: Sl. No. 7) (erstwhile section 194)] 11.1 Who is liable for deduction of tax at source? ...............................................................444 11.2 When does liability to deduct tax at source arise? ........................................................445 11.3 Rate of TDS..................................................................................................................445 11.4 When is no tax to be deducted at source.......................................................................445 11.5 Can self declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a)/(b) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))]...............446 11.6 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28, 28AA and 29)] ...447 11.7 Other provision relating to TDS on dividend ...............................................................448 11.8 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........449 11.9 Can credit of TDS be given to a person other than the deductee? ................................449 11.10 Gist of Relevant Circular..............................................................................................450 , Contents xxiii 11.11 Judicial Decision...........................................................................................................450 Chapter 12: TDS in Other Cases....................................................................................................451 [Section 393(1) Table Sl. No. 8 (erstwhile Sections 194DA, 194Q, 194P, 194R, 194O and 194S)] (A) TDS on Payments under Life Insurance Policy [Section 393(1) (Table: Sl. No. 8(i)) (erstwhile Section 194DA)] 12.1 Who is liable for deduction of tax at source? ...............................................................452 12.2 When does the liability to deduct tax at source arise? ..................................................452 12.3 Rate of TDS..................................................................................................................452 12.4 Tax deductible only from Income comprised in such sum ...........................................453 12.4-a Keyman Insurance Policy............................................................................................. 453 12.4-b Unit Linked Insurance Policy ....................................................................................... 453 12.4-c Life insurance policies other than Unit linked insurance policy or keyman insurance policy referred above ....................................................................................................453 12.4-d Computation of income chargeable to tax under Section 92(2)(l) (erstwhile section 56(2)(xiii)) [Rule 59 (erstwhile Rule 11UACA)]............................................................................. 453 12.5 When is no tax to be deducted at source? .....................................................................454 12.6 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................456 12.7 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)].........457 12.8 Other provisions relating to TDS on sums paid under a life insurance policy..............457 12.9 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........459 (B) TDS on Payment of Sum for Purchase of Goods [Section 393(1) (Table: Sl. No. 8(ii)) (erstwhile Section 194Q)] 12.10 Who is liable for deduction of tax at source? ...............................................................460 12.11 When does the liability to deduct tax at source arise? ..................................................461 12.12 Rate of TDS..................................................................................................................461 12.13 When is no tax to be deducted at source? .....................................................................461 12.14 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................461 12.15 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........461 12.16 Other provisions relating to TDS on payment of sum for purchase of goods...............462 12.17 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........465 12.18 Gist of relevant Circulars and Notification...................................................................465 (C) TDS on Income of a Specified Senior Citizen [Section 393(1) Table Sl. No. 8(iii) (erstwhile section 194P)] 12.19 Who is liable for deduction of tax at source? ...............................................................473 12.20 When does the liability to deduct tax at source arise? ..................................................474 , xxiv Law, Practice & Procedure on Tax Deduction & Collection at Source... 12.20-a Furnishing of declaration and evidence of claims by specified senior citizen under section 393(1) (Table: Sl. No. 8(iii)) (erstwhile section 194P) [Rule 208 (erstwhile Rule 26D)] .................................................................................. 475 12.21 Rate of TDS..................................................................................................................475 12.22 When is no tax to be deducted at source? .....................................................................475 12.23 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................475 12.24 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........475 12.25 Other provisions relating to TDS on income of a specified senior citizen ...................476 12.26 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........477 (D) TDS on Benefit of Perquisite in Respect of Business or Profession [Section 393(1) (Table: Sl. No. 8(iv)) (erstwhile Section 194R)] 12.27 Who is liable for deduction of tax at source? ...............................................................479 12.28 When does the liability to deduct tax at source arise? ..................................................479 12.29 Rate of TDS..................................................................................................................479 12.30 Where no tax is to be deducted at source......................................................................480 12.31 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................480 12.32 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)].........480 12.33 Other provisions relating to TDS from benefit/perquisite ............................................480 12.34 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........482 12.35 Gist of relevant circular................................................................................................482 (E) TDS on Payment of Certain Sums by E-commerce Operator to E-commerce Participant [Section 393(1) (Table: Sl. No. 8(v)) (erstwhile Section 194-O)] 12.36 Who is liable for deduction of tax at source? ...............................................................493 12.37 When does the liability to deduct tax at source arise? ..................................................493 12.38 Rate of TDS..................................................................................................................494 12.39 Where no tax is to be deducted at source......................................................................494 12.40 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................495 12.41 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........495 12.42 Other provisions relating to TDS on payment of certain sums by E-Commerce Operator to E-Commerce Participant ...........................................................................495 12.43 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........499 12.44 Gist of Relevant Circulars ............................................................................................499 , Contents xxv (F) TDS on Consideration for Transfer of Virtual Digital Asset [Section 393(1) Table Sl. No. 8(vi) (erstwhile section 194S)] 12.45 Who is liable for deduction of tax at source? ...............................................................507 12.46 Meaning of “Virtual Digital Asset” ..............................................................................508 12.47 When does the liability to deduct tax at source arise? ..................................................509 12.48 Rate of TDS..................................................................................................................509 12.49 When is no tax to be deducted at source? .....................................................................510 12.50 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................510 12.51 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)].........510 12.52 Other provisions relating to TDS on transfer of VDA..................................................511 12.53 Consequences of failure to deduct or pay tax, furnish statement/certificate, etc. .........513 12.54 Gist of relevant circulars...............................................................................................514 Part D: TDS on Payments to Non-residents only Chapter 13: TDS on Payments to Non-Residents..........................................................................520 [Section 393(2) (Table: Sl. No. 1 to 17) (erstwhile 194E, 194LC, 194LB, 194LBA(2) &(3), 194LBB, 194LBC(2), 196A, 196B, 196C, 196D and 195)]] (A) TDS on Payment to Non-Resident Sportsmen or Sports Association [Section 393(2) (Table: Sl. No. 1) (erstwhile 194E)] 13.1 Who is liable for deduction of tax at source? ...............................................................525 13.2 When does the liability to deduct tax at source arise? ..................................................526 13.3 Rate of TDS..................................................................................................................526 13.4 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................526 13.5 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........526 13.6 Other provision relating to TDS on payment to non-resident sportsman, sports association or entertainers.............................................................................................527 13.7 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........529 13.8 Judicial Decisions.........................................................................................................529 (B) TDS on Income by way of Interest from Indian Company or Business Trust [Section 393(2) (Table: Sl. No. 2, 3 and 4) (erstwhile section 194LC)] 13.9 Who is liable for deduction of tax at source? ...............................................................530 13.10 When does the liability to deduct tax at source arise? ..................................................531 13.11 Rate of TDS..................................................................................................................531 13.12 When is no tax required to be deducted at source ........................................................532 13.13 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................533 , xxvi Law, Practice & Procedure on Tax Deduction & Collection at Source... 13.14 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........533 13.15 Other provisions relation to TDS on income by way of interest from Indian Company or Business Trust..........................................................................................533 13.16 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........535 13.17 Can credit of TDS be given to a person other than the deductee? ................................535 13.18 Gist of Relevant Circulars ............................................................................................536 (C) TDS on Income by way of Interest from Infrastructure Debt Fund [Section 393(2) (Table: Sl. No. 5) (erstwhile 194LB)] 13.19 Who is liable for deduction of tax at source? ...............................................................537 13.20 When does the liability to deduct tax at source arise? ..................................................537 13.21 Rate of TDS..................................................................................................................537 13.22 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................538 13.23 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........538 13.24 Other provisions relation to TDS from income from by way of interest from Infrastructure Debt Fund ..............................................................................................538 13.25 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........540 (D) TDS on Distributed Income of Nature referred to in Schedule V (Table: Sl. No. 3 and 4) payable by Business Trust [Section 393(2) (Table: Sl. No. 6 and 7) (erstwhile 194LBA(2) &(3))] 13.26 Who is liable for deduction of tax at source? ...............................................................542 13.27 When does liability to deduct tax at source arise? ........................................................542 13.28 Rate of TDS..................................................................................................................543 13.29 Where no tax is to be deducted at source......................................................................544 13.30 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................544 13.31 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........544 13.32 Other provisions relation to Distributed Income of the nature referred to in Schedule V (Table: Sl. No. 3 & 4) payable by Business Trust to Non-resident Unit Holder.......544 13.33 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........547 13.34 Can credit of TDS be given to a person other than the deductee? ................................547 (E) TDS on Income in respect of Units of Investment Fund [Section 393(2) (Table: Sl. No. 8) (erstwhile Section 194LBB)] 13.35 Who is liable for deduction of tax at source? ...............................................................548 13.36 When does liability to deduct tax at source arise? ........................................................548 13.37 Rate of TDS..................................................................................................................548 13.38 Where no tax is to be deducted at source......................................................................549 , Contents xxvii 13.39 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................549 13.40 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........549 13.41 Other provisions relation to TDS from income in respect of units of investment fund 549 13.42 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........551 13.43 Can credit of TDS be given to a person other than the deductee? ................................551 (F) TDS on Income in respect of Investment in Securitisation Trust [Section 393(2) (Table: Sl. No. 9) (erstwhile Section 194LBC(2))] 13.44 Who is liable for deduction of tax at source? ...............................................................552 13.45 When does liability to deduct tax at source arise? ........................................................553 13.46 Rate of TDS..................................................................................................................553 13.47 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................553 13.48 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........553 13.49 Other provisions relation to TDS from income in respect of investment in securitization trust.........................................................................................................554 13.50 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........556 13.51 Can credit of TDS be given to a person other than the deductee? ................................556 (G) TDS on Income in respect of Units of Mutual Fund or Specified Company [Section 393(2) (Table: Sl. No. 10) (erstwhile Section 196A)] 13.52 Who is liable for deduction of tax at source? ...............................................................557 13.53 When does liability to deduct tax at source arise? ........................................................558 13.54 Rate of TDS..................................................................................................................558 13.55 When is no tax to be deducted at source.......................................................................558 13.55-a Condition for no deduction of tax at source from income in respect of units of non- residents referred to in section 393(2) (Table: Sl. No. 10) read with section 393(4) (Table: Sl. No. 15). [Rule 210]..................................................................................................................... 558 13.56 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................558 13.57 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........558 13.58 Other provisions relation to TDS from income in respect of units of mutual fund or units from specified company.......................................................................................559 13.59 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........561 13.60 Can credit of TDS be given to a person other than the deductee? ................................561 (H) TDS on Income from Units or LTCG from transfer of Units referred in Section 208 (erstwhile Section 115AB) arising to Offshore Fund [Section 393(2) (Table: Sl. No. 11 & 12) (erstwhile Section 196B)] 13.61 Who is liable for deduction of tax at source? ...............................................................562 , xxviii Law, Practice & Procedure on Tax Deduction & Collection at Source... 13.62 When does liability to deduct tax at source arise? ........................................................563 13.63 Rate of TDS..................................................................................................................563 13.64 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................563 13.65 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........563 13.66 Other provisions relation to TDS on income in respect of units or on LTCG from their transfer arising to an Offshore Fund.....................................................................563 13.67 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........566 (I) TDS on Income from Foreign Currency Bonds or GDRs referred to in Section 209 (erstwhile Section 115AC) [Section 393(2) (Table: Sl. No. 13 & 14) (erstwhile Section 196C)] 13.68 Who is liable for deduction of tax at source? ...............................................................567 13.69 When does liability to deduct tax at source arise? ........................................................568 13.70 Rate of TDS..................................................................................................................568 13.71 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................568 13.72 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........568 13.73 Other provisions relation to TDS on income in respect of foreign currency bonds or GDRs or income arising from transfer thereof as LTCG..............................................569 13.74 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........572 13.75 Can credit of TDS be given to a person other than the deductee? ................................572 (J) TDS on Income in respect of Securities referred in Section 210(1) (Table: Sl. No. 1) (erstwhile Section 115AD) arising to FII or Specified Fund [Section 393(2) (Table: Sl. No. 15 & 16) (erstwhile Section 196D)] 13.76 Who is liable for deduction of tax at source? ...............................................................574 13.77 When does liability to deduct tax at source arise? ........................................................576 13.78 Rate of TDS..................................................................................................................576 13.79 When is no tax to be deducted at source.......................................................................576 13.79-a Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))]..................... 579 13.80 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........579 13.81 Other provisions relation to TDS on income in respect of securities referred to in Section 210 arising to FIIs or Specified Fund ..............................................................579 13.82 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........582 (K) TDS on Interest or other Sums chargeable to tax (Other than Salary) [Section 393(2) (Table: Sl. No. 17) (erstwhile Section 195)] 13.83 Who is liable for deduction of tax at source? ...............................................................583 13.83-a Payer to deduct tax from payment to non-resident ....................................................... 583 13.83-b Meaning of "Person responsible for paying" ................................................................ 584 , Contents xxix 13.83-c Obligation to deduct tax irrespective of residential status............................................ 585 13.84 When does liability to deduct tax at source arise? ........................................................586 13.85 Rate of TDS..................................................................................................................586 13.86 Rates of TDS for the tax year 2026-27 (As per Part II to the First Schedule of Finance Act, 2026) .......................................................................................................587 13.87 When is no tax to be deducted at source.......................................................................594 13.88 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................594 13.89 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........595 13.90 Other provisions relating to TDS on payments to non-residents (not being a company) or a foreign company ...................................................................................595 13.91 Consequences of failure to deduct or pay tax, furnish statement/ certificate, etc. ........598 13.92 Claim of refund by "Person responsible to deduct tax" ................................................598 13.93 Gist of Relevant Circulars ............................................................................................601 13.94 Judicial Decisions.........................................................................................................602 13.94-a Meaning of "non-resident" for the purpose of section 393(2) (Table: Sl. No. 17)........602 13.94-b Duty under section 393(2) (Table: Sl. No. 17) is statutory and cannot be bypassed by agreement ..................................................................................................................... 603 13.94-c Applicability of section 195 (Section 393(2) (Table: Sl. No. 17) of IT Act, 2025) on accrual of income..........................................................................................................603 13.94-d Tax to be deducted only from income chargeable to tax in India .................................604 13.94-e Purchase of property from a Non-Resident ..................................................................607 13.94-f Where there is no PE of Non-Resident.........................................................................607 13.94-g Interest payment by subsidiary ..................................................................................... 612 13.94-h "Make available" clause in DTAA ............................................................................... 612 13.94-i Payment under a Decree ............................................................................................... 614 13.94-j Purchase of copyrighted article is not a payment for copyright....................................614 13.94-k Other General Cases.....................................................................................................614 13.94-l Whether tax has to be deducted at source on the gross amount or the income element in the amount .................................................................................................................... 623 13.94-m TDS to be deducted at rates given in DTAA if beneficial ............................................ 625 13.94-n Applicability of limitation period prescribed in sections 153 to 195............................ 626 Part E: TDS on Payments to Any Person Chapter 14: TDS on Payments to Any Person (Whether Resident or Non-Resident deductees).628 [Section 393(3) (Table: Sl. No. 1 to 7) (erstwhile 194B, 194BA, 194BB, 194G, 194N, 194EE and 194T)] (A) TDS on Winnings from Lottery, Crossword puzzle, Card Game, Gambling etc. [Section 393(3) (Table: Sl. No. 1) (erstwhile 194B)] 14.1 Who is liable for deduction of tax at source? ...............................................................629 14.2 When does the liability to deduct tax at source arise? ..................................................630 14.3 Rate of TDS..................................................................................................................630 14.4 When is no tax to be deducted at source? .....................................................................631 , xxx Law, Practice & Procedure on Tax Deduction & Collection at Source... 14.5 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................631 14.6 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........631 14.7 Other provisions relating to TDS on lotteries, etc. .......................................................631 14.8 Consequences of failure to deduct or pay tax, furnish statements/ certificate, etc........635 14.9 Gist of Relevant Circulars ............................................................................................635 14.10 Circular No. 264, dated 11.2.1980................................................................................635 14.11 Important Judicial Decisions ........................................................................................635 14.11-a Scope of Section 393(3) (Table: Sl. No. 1) (erstwhile section 194B)........................... 635 14.11-b Tax cannot be demanded from the payee if it has already been deducted at source .....637 (B) TDS on Winnings from Online Game [Section 393(3) (Table: Sl. No. 2) (erstwhile section 194BA)] 14.12 Who is liable for deduction of tax at source? ...............................................................638 14.13 When does the liability to deduct tax at source arise? ..................................................638 14.13-a Calculation of Net winnings from online games [Rule 135 (erstwhile Rule 133)] ................................................................................... 639 14.14 Rate of TDS..................................................................................................................641 14.15 When is no tax required to be deducted?......................................................................641 14.16 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................641 14.17 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........641 14.18 Other provisions relating to TDS on winnings from online game ................................642 14.19 Consequences of failure to deduct or pay tax, furnish statements/ certificate, etc........644 14.20 Gist of Relevant Circulars ............................................................................................644 (C) TDS on Winnings from Horse Races [Section 393(3) (Table: Sl. No. 3) (erstwhile section 194BB)] 14.21 Who is liable for deduction of tax at source? ...............................................................648 14.22 When does the liability to deduct tax at source arise? ..................................................649 14.23 Rate of TDS..................................................................................................................649 14.24 When is no tax to be deducted at source? .....................................................................650 14.25 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................650 14.26 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........650 14.27 Other provisions relating to TDS on horse races..........................................................650 14.28 Consequences of failure to deduct or pay tax, furnish statement certificate, etc. .........653 14.29 Important Judicial Decisions ........................................................................................653 , Contents xxxi (D) TDS on Commission, etc. on Sale of Lottery Tickets [Section 393(3) (Table: Sl. No. 4) (erstwhile section 194G)] 14.30 Who is liable for deduction of tax at source? ...............................................................654 14.31 When does the liability to deduct tax at source arise? ..................................................654 14.32 Rate of TDS..................................................................................................................655 14.33 Where no tax is to be deducted at source......................................................................656 14.34 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................656 14.35 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........656 14.36 Other provisions relating to TDS on commission on sale of lottery tickets .................656 14.37 Consequences of failure to deduct or pay tax, furnish statements/ certificate, etc........660 14.38 IMPORTANT JUDICIAL DECISIONS ......................................................................660 (E) TDS on Payment of certain amounts in cash [Section 393(3) (Table: Sl. No. 5) (erstwhile section 194N)] 14.39 Who is liable for deduction of tax at source? ...............................................................661 14.40 When does the liability to deduct tax at source arise? ..................................................661 14.41 Rate of TDS..................................................................................................................661 14.42 When no tax is to be deducted at source.......................................................................663 14.43 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................665 14.44 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 & 28AA)]............665 14.45 Other provisions relating to TDS on payment of certain amounts in cash ...................666 14.46 Consequences of failure to deduct or pay tax, furnish statements/ certificate, etc........669 14.47 Tax Deducted is not deemed to be income received [Section 396 (erstwhile section 198)]...........................................................................669 14.48 Credit of Tax paid [Rule 203(7) (erstwhile Rule 37BA(3A))].....................................................................669 14.49 Judicial Decision...........................................................................................................669 (F) TDS on Payment in respect of Deposit under National Saving Scheme, etc. [Section 393(3) (Table: Sl. No. 6) (erstwhile section 194EE)] 14.50 Who is for deduction of tax at source? .........................................................................671 14.51 When does the liability to deduct tax at source arise? ..................................................671 14.52 Rate of TDS..................................................................................................................671 14.53 When no tax is to be deducted at source.......................................................................671 14.54 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1C))]......................................671 14.55 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........672 14.56 Other provisions relating to TDS on withdrawals from National Saving Scheme .......672 , xxxii Law, Practice & Procedure on Tax Deduction & Collection at Source... 14.57 Consequences of failure to deduct or pay tax, furnish statements/ certificate, etc........674 (G) TDS on Payments to partners of Firms [Section 393(3) (Table: Sl. No. 7) (erstwhile section 194T)] 14.58 Who is liable for deduction of tax at source? ...............................................................675 14.59 When does the liability to deduct tax at source arise? ..................................................676 14.60 Rate of TDS..................................................................................................................676 14.61 Where no tax is to be deducted at source......................................................................677 14.62 Can Self Declaration under Form No. 121 (erstwhile Form No. 15G/15H) be made for no deduction of tax at source [Section 393(6)(a) (erstwhile Section 197A(1A), 197A(1B), 197A(1C))].....................677 14.63 Can certificate be obtained from Assessing Officer for deduction of tax at nil rate or lower rate [Section 395(1) and Rule 213 (erstwhile Section 197 and Rules 28 and 28AA)] .........677 14.64 Other provisions relating to TDS on payment made to the partners of the firm...........677 14.65 Consequences of failure to deduct or pay tax, furnish statements/ certificate, etc........680 14.66 Frequently Asked Questions released by CBDT ..........................................................680 Part F: Collection of Tax at Source Chapter 15: TCS on Certain Receipts............................................................................................ 684 [Section 394] (A) TCS on Sale of Alcoholic Liquor, Forest Produce, Scrap and Minerals [Section 394(1) (Table Sl. No. 1 to 5) (erstwhile 206C(1)/(1A)/(1B))] 15.1 Who is liable for collection of tax at source? ...............................................................687 15.1-a Meaning of "Seller" (Section 402(33)(a)): Seller means: ............................................. 687 15.1-b Meaning of "Buyer" (Section 402(6) (Table Sl. No. 2)): Buyer means:....................... 688 15.2 When does the liability to collect tax at source arise? ..................................................688 15.3 Rate of TCS ..................................................................................................................688 15.4 When no tax is to be collected at source.......................................................................689 15.5 Can Self Declaration be made for no collection of tax at source [Section 394(2) and Rule 212 (erstwhile Section 206C(1A) and Rule 37C))]..............689 15.6 Can certificate be obtained from Assessing Officer for collection of tax at lower rate [Section 395(3) and Rule 213 (erstwhile Section 206C(9) and Rules 37G and 37H))] 690 15.7 Other provisions relating to TCS on Sale of Alcoholic Liquor, Tendu Leaves, Timber, Forest Produce or Scrap and Minerals ............................................................690 15.8 Consequences of failure to collect or pay tax, furnish statements/ certificate, etc........690 15.9 Judicial Decisions.........................................................................................................690 15.9-a Meaning of "Scrap" ......................................................................................................690 15.9-b Applicability of provisions of Section 394(1) (Table Sl. No. 1 to 5) (erstwhile section 206C(1)) ....................................................................................................................... 692 15.9-c Applicability of Declaration under Section 394(2) (erstwhile Section 206C(1A)).......693 (B) TCS on Sale consideration exceeding ₹10 Lakh in case of Motor Vehicle or Notified Goods [Section 394(1) (Table Sl. No. 6) (erstwhile 206C(1F))] 15.10 Who is liable for collection of tax at source? ...............................................................694 15.10-a Meaning of "Seller" (Section 402(33)(a)): Seller means: ............................................. 694 15.10-b Meaning of "Buyer" (Section 402(6) (Table Sl. No. 3)): Buyer means:....................... 694 15.11 When does the liability to collect tax at source arise? ..................................................695 , Contents xxxiii 15.12 Rate of TCS ..................................................................................................................695 15.13 When no tax is to be collected at source.......................................................................695 15.14 Can Self Declaration be made for no collection of tax at source [Section 394(2) and Rule 212 (erstwhile Section 206C(1A) and Rule 37C))]..............696 15.15 Can certificate be obtained from Assessing Officer for collection of tax at lower rate [Section 395(3) and Rule 213 (erstwhile Section 206C(9) and Rules 37G and 37H))] 696 15.16 Other provisions relating to TCS on Sale of Motor Vehicles or Notified Goods. ........696 15.17 Consequences of failure to collect or pay tax, furnish statements/ certificate, etc........696 15.18 Frequently Asked Questions released by CBDT ..........................................................696 15.18-a FAQ dated 23.4.2025....................................................................................................696 15.18-b Circular No. 22/2016 dated 8.6.2016............................................................................ 696 15.19 Judicial decisions..........................................................................................................697 (C) TCS on Remittance under LRS [Section 394(1) (Table Sl. No. 7) (erstwhile 206C(1G)(a))] 15.20 Who is liable for collection of tax at source? ...............................................................698 15.20-a Meaning of "Authorised Dealer" (Section 402(4))....................................................... 698 15.20-b Meaning of "Buyer" (Section 402(6) (Table Sl. No. 4))............................................... 698 15.21 When does the liability to collect tax at source arise? ..................................................699 15.22 Rate of TCS ..................................................................................................................699 15.23 When no tax is to be collected at source.......................................................................699 15.24 Can Self Declaration be made for no collection of tax at source [Section 394(2) and Rule 212 (erstwhile Section 206C(1A) and Rule 37C))]..............700 15.25 Can certificate be obtained from Assessing Officer for collection of tax at lower rate [Section 395(3) and Rule 213 (erstwhile Section 206C(9) and Rules 37G and 37H))] 700 15.26 Other provisions relating to TCS on Remittance under LRS........................................700 15.27 Consequences of failure to collect or pay tax, furnish statements/ certificate, etc........700 15.28 Frequently Asked Questions released by CBDT ..........................................................700 (D) TCS on Sale of "Overseas Tour Programme Package" [Section 394(1) (Table Sl. No. 8) (erstwhile 206C(1G)(b))] 15.29 Who is liable for collection of tax at source? ...............................................................701 15.29-a Meaning of "Seller" (Section 402(33)(b)) ....................................................................701 15.29-b Meaning of "Buyer" (Section 402(6) (Table Sl. No. 5))............................................... 701 15.30 When does the liability to collect tax at source arise? ..................................................702 15.31 Rate of TCS ..................................................................................................................702 15.32 When no tax is to be collected at source.......................................................................702 15.33 Can Self Declaration be made for no collection of tax at source [Section 394(2) and Rule 212 (erstwhile Section 206C(1A) and Rule 37C))]..............702 15.34 Can certificate be obtained from Assessing Officer for collection of tax at lower rate [Section 395(3) and Rule 213 (erstwhile Section 206C(9) and Rules 37G and 37H))] 702 15.35 Other provisions relating to TCS on Sale of Overseas Tour Programme Package.......702 15.36 Consequences of failure to collect or pay tax, furnish statements/ certificate, etc........702 15.37 Frequently Asked Questions released by CBDT ..........................................................703 15.37-a Press Release dated 19.05.2023.................................................................................... 703 15.37-b Circular No. 10/2023 dated 30.06.2023 as corrected by Circular No. 11/2023 dated 6.7.2023 ........................................................................................................................ 704 15.37-c Other issues for consideration ...................................................................................... 706 , xxxiv Law, Practice & Procedure on Tax Deduction & Collection at Source... (E) TCS on Use of Parking Lot or Toll Plaza or Mine or Quarry [Section 394(1) (Table Sl. No. 9) (erstwhile 206C(1C))] 15.38 Who is liable for collection of tax at source? ...............................................................707 15.39 When does the liability to collect tax at source arise? ..................................................708 15.40 Rate of TCS ..................................................................................................................708 15.41 Can Self Declaration be made for no collection of tax at source [Section 394(2) and Rule 212 (erstwhile Section 206C(1A) and Rule 37C))]..............708 15.42 Can certificate be obtained from Assessing Officer for collection of tax at lower rate [Section 395(3) and Rule 213 (erstwhile Section 206C(9) and Rules 37G and 37H))] 708 15.43 Other provisions relating to TCS on Use of Parking Lot or Toll Plaza or Mine or Quarry...........................................................................................................................708 15.44 Consequences of failure to collect or pay tax, furnish statements/ certificate, etc........708 15.45 Judicial decisions..........................................................................................................709 15.46 Other provisions relating to TCS under Section 394(1) (erstwhile Section 206C).......709 DIVISION III Chapter 16: Declaration and Certificates...................................................................................... 715 [Section 393(6), (7), 394(2) & (3) and 395] I. Declaration for No Deduction/Collection of Tax at Source in certain cases (A) Declaration for No Deduction of Tax at Source in certain cases 16.1 Declaration for No deduction of tax at source (Section 393(6)/(7) (erstwhile Section 197A)) ..........................................................................................................................719 16.1-a Declaration to be furnished to person responsible for paying incomes or sums for no deduction of tax at source (Section 393(6)(a)) ............................................................. 719 16.1-b Declaration by person claiming receipt of certain incomes without deduction of tax under section 393(6) [Rule 211 (erstwhile Rule 29C)]................................................................................... 721 16.1-c _Declaration may alternatively by furnished under section 393(7) to depository in certain cases (Section 393(6)(b) inserted by Finance Act, 2026 w.e.f. 1.4.2027).........721 16.1-d Declaration to be furnished to prescribed income-tax authority on or before 7th day of the month from the end of the quarter (Section 393(7) (erstwhile section 197A(2))....722 16.1-e Summarised Process flow of Filing Form No. 121....................................................... 722 16.1-f Gist of Relevant Circulars ............................................................................................ 723 16.1-g Relevant Judicial Decisions.......................................................................................... 725 (B) Declaration for No Collection of Tax at Source in certain cases 726 16.2 Self-declaration by buyer if relevant goods are purchased for manufacturing or producing any articles or things [Section 394(2) and Rule 212(1) and (2) (erstwhile section 206C(1A) and Rule 37C(1) and (2))]...........................................................................................................726 16.2-a Declaration to be furnished to person responsible for collecting tax for no collection of tax at source (Section 394(2))....................................................................................... 726 16.2-b Declaration furnished under section 394(2) to be delivered to the Principal Chief Commissioner/Chief Commissioner or Principal Commissioner /Commissioner [Section 394(3) and Rule 212(3) (erstwhile Section 206C(1B) and Rule 37C(3))]......726 16.2-c Declaration by a buyer for no collection of tax at source under section 394(2). [Rule 212 (erstwhile Rule 37C)]................................................................................... 726 16.2-d Relevant judicial decisions........................................................................................... 726 , Contents xxxv II. Certificates (A) Certificate for lower / nil deduction/collection of income-tax at source in case of Resident Payees 16.3 Certificate for deduction of income-tax at lower rate or no deduction of income-tax [Section 395(1) (erstwhile Section 197(1))].................................................................727 16.4 Certificate for collection of income-tax at lower rate [Section 395(3) (erstwhile Section 206C(9))]...............................................................728 16.5 The Assessing Officer may cancel the certificate [Section 395(5)]............................................................................................................728 16.6 Application for grant of certificates for deduction or collection of income-tax at any lower rates, or no deduction of income-tax. [ Rule 213 (erstwhile Rule 28/28AA /28AB/29 for TDS and Rule 37G/ 37H for TCS)]728 16.7 Process Flow of Filing Form No. 128...........................................................................731 16.8 Gist of relevant Notifications/Circulars........................................................................732 16.9 Judicial decisions..........................................................................................................732 (B) Certificate in case of Non-Resident Payees 16.10 Application by payee for certificate authorising receipt of interest and other sums without deduction of tax. (Rule 209 (erstwhile Rule 29B))..........................................735 16.11 Certificate for determination of appropriate portion of sum (other than salary) [Section 395(2) (erstwhile Section 195(2))].................................................................737 16.12 Application by notified class of persons or cases for determination of appropriate portion of sum (other than salary) [Section 400(3) (erstwhile section 195(7))]..................................................................737 16.12-a Application by payer for grant of certificate under section 395(2) or section 400(3) for determination of appropriate proportion of sum (other than salary), payable to non- resident, chargeable in case of recipients. (Rule 214 (erstwhile Rule 29BA)) ............. 737 16.13 Judicial Decisions.........................................................................................................738 (C) Certificate for TDS/TCS and Tax paid on Non-Monetary perquisites 16.14 Certificate for tax DEDUCTED/COLLECTED at source (Section 395(4)(a) (erstwhile Section 203(1) and 206C(5)) .......................................................................739 16.15 Certificate for tax PAID on Non-monetary perquisites (Section 395(4)(b) (erstwhile Section 203(2) and 206C(5)) ........................................................................................739 16.16 Certificate of tax deducted or collected at source to be furnished under section 395(4). (Rule 215 (erstwhile Rule 31/37D)).................................................................739 16.17 Consequences if certificate is not issued ......................................................................741 16.18 Relevant Judicial Decisions..........................................................................................741 16.19 Credit for tax deducted or collected at Source..............................................................745 16.19-a Credit for tax deducted or collected OR paid by the employer for non-monetary perquisites [Section 390(5) (erstwhile Section 199 & 206C(4))].................................................... 745 16.19-b Rule for giving credit for tax deducted or collected or paid by the employer for non- monetary perquisites [Section 390(6)]: The Board may make rules (see Rule 203 below) for—.................. 745 16.19-c Credit for tax deducted or collected at source. [Rule 203 (erstwhile Rule 37BA/37-I)].........................................................................745 16.20 Gist of Relevant Notifications......................................................................................747 , xxxvi Law, Practice & Procedure on Tax Deduction & Collection at Source... Chapter 17: Compliances & Reporting and Processing of Statements.......................................748 (I) Compliance & Reporting 17.1 Tax Deduction and collection Account Number [Section 397(1) (erstwhile section 203A)]....................................................................752 17.1-a Application for allotment of a tax deduction and collection account number [Rule 216 (erstwhile Rule 114A)]................................................................................. 752 17.2 Requirement of furnishing of Permanent Account Number [Section 397(2) (erstwhile Section 206AA & 206CC merged)]....................................760 17.2-a Judicial Decisions.........................................................................................................761 17.3 Duty of person deducting or collecting tax [Section 397(3) (erstwhile Section 200, 206C(3) and 206A))].....................................762 17.3-a Payment of Tax Deducted or Collected to the Credit of Central Government [Section 397(3)(a) (erstwhile Section 200(1) & (2) and Section 206C(3))]................. 762 17.3-b Statement by Government offices for tax paid without challan....................................762 17.3-c Time and mode of payment to Government account of tax deducted or collected at source or tax paid under section 392(2)(a) [Rule 218(1) to (4) & (9) to (11) (erstwhile Rule 30 and 37CA)].................................762 17.3-d Furnishing of Periodical Statements of Tax Deducted or Collected [Section 397(3)(b) (erstwhile Section 200(3) and Proviso to Section 206C(3))]..........764 17.3-e Statement of TDS to be furnished by prescribed/notified persons [Section 397(3)(g)(i) and (ii) (erstwhile Section 206A(1) and (2))]............................. 764 17.3-f Statement of deduction or collection of tax at source under section 397(3)(b): [Rule 219 (erstwhile Rule 31A/31AA)].........................................................................765 17.3-g Gist of Relevant Notification........................................................................................ 766 17.3-h Correction of Discrepancy or Updation of statement by prescribed/notified persons under Section 397(3)(b) or (e) (erstwhile Proviso to Section 200(3) and Proviso to Section 206C(3B))........................................................................................................767 17.3-i Correction of Discrepancy or Updation of statement by person referred to in Section 397(3)(g)(i) or (ii) (erstwhile Section 206A(3)) ........................................................... 767 17.3-j Issuance of Statements by Prescribed Authority to Buyer, Licensor or Lessee [Section 397(3)(c)].......................................................................................................767 17.3-k Furnishing of Information in Respect of Payments to Non-Residents [Section 397(2)(d)].......................................................................................................768 17.3-l Furnishing of information for payment to a non-resident, not being a company, or to a foreign company. [Rule 220 (Erstwhile Rule 37BB)]................................................................................ 768 17.3-m Consequences for failure to collect tax at source [Section 397(3)(h) (erstwhile Section 206C(6))].......................................................... 773 (II) Processing of Statements 17.4 Processing of Statements of TDS/TCS including correction statements [Section 399 (erstwhile Section 200A and 206CB)].....................................................773 Chapter 18: Consequences of Defaults........................................................................................... 775 [Sections 35(b), 35(c); 398; 412; 427; 448; 449; 461; 465; 468, 471; 476; 477; 485 and 486 (erstwhile sections 40(a); 201 & 206C(6A) to (8); 221; 234E; 271C; 271CA; 271H; 271-I; 272A; 272BB; 274; 276B; 276BB; 278A; 278AA)] 18.1 Consequences for non-compliance with the provisions relating to TDS/TCS..............782 , Contents xxxvii (A) Consequences of failure to deduct/collect and/or pay tax 18.2 Disallowance of 30% of any expenditure claimed as payable to a resident. [Section 35(b)(i) (erstwhile Section 40(a)(ia))]............................................................783 18.3 Judicial Decisions.........................................................................................................784 18.4 Disallowance of any expenditure claimed as payable outside India or to a non- resident. [Section 35(b)(ii) (erstwhile Section 40(a)(i))].............................................................785 18.5 Disallowance of payment to Provident or other fund on failure to secure deduction of tax from Payments from such funds which are chargeable under the head "Salaries". [Section 35(b)(iii) (erstwhile Section 40(a)(iv))]..........................................................785 18.6 Disallowance of expenditure claimed as payable outside India or to a non-resident chargeable under the head "Salaries". [Section 35(c) (erstwhile Section 40(a)(iii))] ...............................................................786 18.7 Assessee shall be deemed to be in default. [Section 398(1), (2), (5) and (6) (erstwhile sections 201(1), (2) to (4) and 206C(7A) and (8)) merged]...........................................................................................................786 18.7-a When is an assessee deemed to be in Default? (Section 398(1))..................................786 18.7-b Assessee not deemed to be in default in certain cases [Section 398(2) read with Rule 221 (erstwhile First proviso to section 201(1) and Rule 31ACB and Proviso to Section 206C(6A) and Rule 37J))]: .........................................786 18.7-c Providing time limits for passing of orders under section 398(1) holding a person to be an assessee in default [Section 398(5) and (6)]............................................................................................... 786 18.8 Judicial Decisions.........................................................................................................787 18.9 Payment of Interest on delayed deduction/collection or payment of tax (Section 398(3))............................................................................................................791 18.9-a Period of Default and Rate of Interest ..........................................................................791 18.9-b Waiver of Interest.........................................................................................................793 18.10 Judicial decisions..........................................................................................................795 18.11 Penalty payable when tax in Default [Section 412 (erstwhile Section 221)] ..........................................................................799 18.11-a Assessee in Default or deemed to be in default shall be liable for penalty (Section 412(1))............................................................................................................ 799 18.11-b Penalty to not exceed arrears in Tax (Section 412(2)).................................................. 799 18.11-c Penalty not to be levied (Section 412(3)) .....................................................................799 18.11-d Assessee not to cease to be liable for penalty merely upon payment of tax before levy of penalty (Section 412(4))............................................................................................... 799 18.11-e Refund of Penalty when tax wholly reduced as result of any final order (Section 412(5))............................................................................................................ 799 18.11-f Penalty not to be levied if tax is not deducted due to good and sufficient reasons [Section 398(7) (erstwhile Second Proviso to Section 201 and Second Proviso to Section 206C(6A))] ......................................................................................................799 18.12 Judicial decisions..........................................................................................................799 18.13 Penalty for failure to deduct/collect tax at source. [Sections 448 and 449 (erstwhile Sections 271C and 271CA)]....................................800 18.13-a Penalty for Failure to Deduct Tax at Source [Section 448 (erstwhile Section 271C)]........................................................................800 18.13-b Penalty for Failure to Collect Tax at Source [Section 449 (erstwhile Section 271CA)] .....................................................................800 , xxxviii Law, Practice & Procedure on Tax Deduction & Collection at Source... 18.14 Judicial Decisions.........................................................................................................801 18.15 Imprisonment for failure to deduct/collect tax at source ..............................................801 18.15-a Failure to pay tax to credit of Central Government under Chapter XIX-B. [Section 476 (erstwhile Section 276B)]........................................................................801 18.15-b Failure to pay tax collected at source. [Section 477 (Erstwhile Section 276BB)].....................................................................802 18.16 Judicial Decision...........................................................................................................802 (B) Consequences of failure to furnish statements or certificates, etc. 18.17 Fee for default in furnishing statements [Section 427 (erstwhile Section 234E)]........................................................................803 18.18 Penalty for failure to furnish statements, etc. [Section 461 (Erstwhile Section 271H)].......................................................................803 18.19 Penalty for failure to furnish information or furnishing inaccurate information under section 397(3)(d). [Section 462 (Erstwhile Section 271-I)].......................................................................803 18.20 Penalty for failure to answer questions, sign statements, furnish information, returns or statements, allow inspections, etc. (Section 465 (erstwhile Section 272A)) ............804 18.20-a Relevant provisions of Section 465 and immunity thereof........................................... 804 18.21 Judicial decisions..........................................................................................................805 (C) Other Penal Provisions and Immunity/Waiver 18.22 Penalty for failure to comply with provisions of Section 397 [Section 468 (erstwhile Section 272BB)]......................................................................806 18.23 Penalty not to be imposed in certain cases [Section 470 (erstwhile Section 273B)]........................................................................806 18.24 Punishment for second and subsequent offences [Section 485 (erstwhile Section 278A)]........................................................................806 Chapter 19: Provisions relating to Relaxation from TDS/TCS ..................................................... 807 (A) (relating to Threshold Limits), (C) (relating to Section 393(4)), (D) (relating to Sections 394(4) and 394(5)) and (G) (relating to relaxation by Central Government) have been discussed in the relevant chapters (B) (relating to Declaration and Certificates) is discussed in detail in the chapter on "declarations and certificates" (E) No TDS in certain cases (Section 393(5), 393(8) and 393(9) (erstwhile sections 196, 197A(1D) and 197A(1E)) 19.1 No TDS in case of amount payable to the Government, RBI, etc. [Section 393(5) (erstwhile section 196)] ......................................................................807 19.2 Judicial Decisions.........................................................................................................808 19.3 No deduction of tax on interest paid by the Offshore Banking Unit to certain persons [Section 393(8) (erstwhile Section 197A(1D))]............................................................808 19.4 Relevant Circular..........................................................................................................808 19.5 No deduction of tax on any payment made to New Pension System Trust [Section 393(9) (erstwhile section 197A(1E))].............................................................809 (F) No TDS in case of entities whose income is exempt 19.6 Requirement of tax deduction at source in case of entities whose income is exempt under section 10 of the Income-tax Act – Exemption thereof (Circular 18/2017 dated 29.05.2017)...................................................................................................................809 , Contents xxxix (G) Power of Central Government to relax the provisions of the Chapter of TDS/TCS (Section 400) 19.7 Power of Central Government to relax the provisions (Section 400)...........................811 19.7-a Lower or Nil deduction of tax on specified amount to notified institution association or body, etc. [Section 400(1) (erstwhile Section 197A(1F)].............................................................. 811 Chapter 20: Other Important Provisions relating to TDS/TCS................................................... 813 20.1 Income payable "net of tax" [Section 393(10) (erstwhile Section 195A]...................................................................813 20.1-a Provision subject to other provisions of Act.................................................................813 20.2 Relevant Circular..........................................................................................................813 20.3 Judicial Decisions.........................................................................................................814 20.4 Tax deducted is income received [Section 398 (erstwhile Section 198)] ..........................................................................814 20.4-a Where the tax paid or deducted at source shall not be deemed to be income received by the assessee:.................................................................................................................. 814 20.5 Judicial Decision...........................................................................................................814 20.6 Bar against direct demand on assessee [Section 401 (erstwhile Section 205)] ..........................................................................814 20.7 Judicial Decisions.........................................................................................................815 DIVISION IV Chapter 21: Advance Payment of Tax ........................................................................................... 817 [Sections 403 to 410 (erstwhile sections 207-211, 218 and 219)] 21.1 Liability for payment of Advance Tax [Section 403 (erstwhile Section 207)] ..........................................................................822 21.2 Conditions of Liability to pay Advance Tax [Section 404 (erstwhile Section 208)] ..........................................................................822 21.3 Computation of Advance Tax [Section 405 (erstwhile Section 209)] ..........................................................................822 21.4 Payment of advance tax................................................................................................824 21.5 Judicial decision ...........................................................................................................826 21.6 Net agricultural income to be taken into account for computing advance tax [Section 405(2) (erstwhile Section 209(2))].................................................................827 21.7 Instalments of advance tax and due dates [Section 408 (erstwhile Section 211)] ..........................................................................827 21.8 Frequently Asked Questions on Advance tax...............................................................829 21.9 Payment of advance tax in case of capital gains, dividend income, winning of lotteries etc. [Section 425(4) (erstwhile Proviso to section 234C)]..................................................836 21.10 When assessee is deemed to be in default. [Section 409 (erstwhile Section 218 of ITA 1961)] ......................................................837 21.11 Credit for Advance Tax [Section 410 (erstwhile Section 219)] ..........................................................................837 21.12 Consequences if Advance Tax is not paid or paid less or if there is deferment of payment of Advance Tax..............................................................................................837 , xl Law, Practice & Procedure on Tax Deduction & Collection at Source... Chapter 22: Refunds........................................................................................................................ 839 [Sections 431 to 438 (erstwhile sections 237 to 241 & 245)] 22.1 Who is entitled to Refund? [Section 431 (erstwhile Section 237)] ..........................................................................839 22.2 Person entitled to claim refund in certain special cases. [Section 432 (erstwhile Section 238)] ..........................................................................839 22.3 Form of claim for refund and limitation. [Section 433 (erstwhile Section 239)] ..........................................................................839 22.3-a Procedure for filing a delayed refund claim .................................................................839 22.4 Judicial decision ...........................................................................................................841 22.5 Refund for denying liability to deduct tax in certain cases. [Section 434 (erstwhile Section 239A)]........................................................................841 22.6 Refund on appeal, etc. [Section 435 (erstwhile Section 240 and proviso thereon)] .........................................842 22.7 Judicial decision ...........................................................................................................842 22.8 Correctness of assessment not to be questioned. [Section 436 (erstwhile Section 242)] ..........................................................................842 22.9 Interest on refunds. [Section 437 (erstwhile Section 244A)]........................................................................842 22.10 Judicial Decisions.........................................................................................................845 22.11 Set off and withholding of refunds in certain cases. [Section 438 (erstwhile Section 245)] ..........................................................................847 22.12 Judicial decisions..........................................................................................................847 DIVISION V Appendix 1 [Relevant Rules (Income Tax Rules, 2026 vis-à-vis Income Tax Rules, 1962)] ...........851 Appendix 2 [Relevant Forms (Forms under Income-tax Rules, 1962 vis-à-vis Income-tax Rules, 2026)] ................................................................................................................877 Appendix 3 [Recent Judicial Decisions]........................................................................................1080 Appendix 4 [Relevant Circulars and