CA Inter · Income Tax · Chapter 7
TDS, TCS & Advance Tax: Memory Tricks & Charts
This chapter is mostly numbers: rates, thresholds and due dates. Mugging them up one section at a time doesn’t hold. This page sorts all of them into a few families, adds a trick for each family, and ends with flash-card self-tests. Based on the ICAI Study Material (P.Y. 2025-26 / A.Y. 2026-27).
🧠 7 Master Tricks
📊 Rate & Threshold Charts
📅 Due-Date Calendar
❓ 25 Flash Cards
📊 Rate & Threshold Charts
📅 Due-Date Calendar
❓ 25 Flash Cards
⚡ How to use this pageOpen Part 1 first and learn the 7 master tricks. They cover about 80% of the numbers in this chapter. Then go through the section-wise cards in Part 2 once. On revision days, open only the charts (Part 1), the exam traps (orange boxes) and the flash cards (Part 6). Priority tags: A = asked very often · B = asked regularly · C = read once.
Part 0 · The Big Picture in 60 Seconds ▾Three ways the Government gets its tax before the year ends
Tax is charged on the income of a previous year in the next assessment year. The Government still doesn’t wait: it collects most of the tax during the year itself in three ways [Section 190]:
TDS
PAYER deducts
Payer cuts tax from the payment he makes (salary, interest, rent, fees…)
TCS
SELLER collects
Seller adds tax to what the buyer pays (scrap, liquor, car > ₹10L, LRS…)
Advance Tax
ASSESSEE pays himself
You estimate your own income and pay tax in instalments (15 Jun → 15 Mar)
🎯 Trick: D-C-PDeduct (TDS: payer) · Collect (TCS: seller) · Pay yourself (Advance tax). Whatever tax is still due after all three is paid as self-assessment tax u/s 140A before filing the return.
Direct payment & assessee-in-default [Sec 191]
- The assessee pays tax directly on (i) income where no TDS is required, and (ii) income where TDS was required but not deducted.
- A payer (including the principal officer of a company) who doesn’t deduct, or deducts but doesn’t deposit, is deemed an assessee-in-default.
- Exception: if the payee has himself paid the tax, the payer is not treated as in default.
Part 1 · The 7 Master Tricks (Learn These First) ▾Rates, thresholds, payer test, timing, PAN, interest, and the TDS decision flow
Trick 1 · The Rate Ladder: only 7 rate levels in the whole chapter A ▾
You don’t need to learn 30 rates. There are only seven rate levels. Learn which sections sit at each level:
30%
LUCK = 30% · 194B Lottery/crossword/card game · 194BB Horse race · 194BA Online games (on net winnings)
20%
NO PAN = 20% · Sec 206AA higher rate when PAN is not furnished (5% for 194Q)
10%
PASSIVE / INVESTOR INCOME = 10% · 193 Int. on securities · 194 Dividend · 194A Other interest · 192A EPF · 194K MF units · 194LA Compensation · 194-I Land/Building/Furniture · 194J Professional/Director/Royalty/Non-compete · 194D to domestic company · 194R Perquisite · 194T Partner
5%
5% GROUP · TCS on tendu leaves · TCS on LRS edu/medical above ₹10L · overseas tour up to ₹10L · 194N non-filer above ₹1 cr · 194Q without PAN
2%
BUSINESS / SMALL-PAYER = 2% · 194C non-Ind/HUF · 194H Commission · 194-I Plant & machinery · 194J Technical/Call centre/Film royalty · 194D non-corporate · 194DA LIC · 194G Lottery commission · 194M · 194-IB · 194N
1%
1% CLUB · 194C Individual/HUF contractor · 194-IA Immovable property · TCS on liquor, scrap, minerals · 206C(1F) car/luxury goods > ₹10L
0.1%
0.1% · 194Q Purchase of goods (only on the amount above ₹50L)
🎯 One-line memory hook“Luck pays 30, Investors pay 10, Business pays 2, Property & small contractor pay 1, Big buyer pays 0.1.”
Trick 2 · The Threshold Ladder: group by number, not by section A ▾
Read from the bottom up. Each step is one threshold amount and the sections that use it:
₹10 crore
194Q: buyer’s turnover in the preceding F.Y. must exceed ₹10 crore
₹1 crore / ₹3 crore
194N cash withdrawal (₹3 crore if recipient is a co-op society)
₹50 lakh
“Big-ticket 50L club”: 194-IA Property (≥ ₹50L) · 194M Ind/HUF payments · 194Q Purchase of goods (excess over ₹50L)
₹20 lakh
194N cash withdrawal, if the recipient didn’t file ITR for 3 years
₹10,00,000
TCS 206C(1F) Motor vehicle/luxury goods (per sale) · TCS 206C(1G) LRS (combined, per remitter) · Overseas tour rate switch 5%→20%
₹5,00,000
194LA Compensation on compulsory acquisition
₹1,00,000
194A Bank interest to a senior citizen · 194DA Life insurance payout (≥ ₹1 lakh)
₹50,000
“Half-lakh club”: 194A by Bank/Co-op bank/Post office · 194J (each of the 4 categories separately) · 194-I & 194-IB Rent (per month) · 192A EPF (≥ ₹50,000) · 194A MACT interest paid
₹30,000 / ₹1,00,000
194C Contractor: single payment > ₹30,000 OR aggregate > ₹1 lakh in the F.Y.
₹20,000
“Commission 20K club”: 194H Commission/Brokerage · 194D Insurance commission · 194G Lottery-ticket commission · 194R Business perquisite · 194T Partner’s remuneration/interest
₹10,000
“Investor 10K club”: 193 Int. on securities · 194 Dividend (to individual, non-cash) · 194A Interest (general payer) · 194K MF units · 194B Lottery & 194BB Horse race (single transaction)
NIL
194J director’s remuneration/fees/commission · 194BA online games
🎯 Memory hook10K = investors (interest, dividend, units, luck) · 20K = commission-type (every commission plus perquisites and partners) · 50K = banks, professionals and monthly rent · 50L = big-ticket (property, 194M, 194Q).
⚠️ Exam trap194-I/194-IB: ₹50,000 is per month or part of a month, not per year. 194J: ₹50,000 applies separately to professional fees, technical fees, royalty and non-compete fees (Illustration: ₹28,000 professional + ₹25,000 technical = no TDS).
Trick 3 · The “₹1 Crore / ₹50 Lakh” Payer Test for Individuals & HUFs A ▾
For most business payments, an Individual/HUF has to deduct TDS only if the previous year’s turnover was > ₹1 crore (business) or > ₹50 lakh (profession). Others (companies, firms, etc.) always deduct.
| Payment | Big Ind/HUF (TO > 1 cr / 50 L) | Small Ind/HUF (salaried, pensioner, small trader) |
|---|---|---|
| Interest (non-securities) | 194A @10% | No TDS |
| Contract work | 194C @1%/2% (not for personal purposes) | 194M @2% if aggregate > ₹50L |
| Commission/Brokerage | 194H @2% | 194M @2% if aggregate > ₹50L |
| Professional fees | 194J @10% (not for personal purposes) | 194M @2% if aggregate > ₹50L |
| Technical fees / royalty / non-compete | 194J (FTS only; no TDS on royalty & non-compete) | No TDS |
| Rent | 194-I @2%/10% | 194-IB @2% if rent > ₹50,000 p.m. |
| Perquisite/Benefit | 194R @10% | No TDS |
🎯 Trick: “Small payer → Big threshold, Small rate, No TAN”When the payer is a small Individual/HUF, the law gives a big threshold (₹50 lakh in 194M, ₹50,000 p.m. in 194-IB), a flat 2% rate, and no TAN (challan-cum-statement 26QC/26QD). The same “No TAN” rule applies to 194-IA (26QB).
Trick 4 · When to Deduct: the “Payment-Only” club A ▾
Default rule: deduct at the time of credit or payment, whichever is earlier. Credit to a “Suspense / Interest Payable” account also counts as credit. Learn only the exceptions, where tax is deducted only at the time of payment:
👨💼 Employee story
192 Salary
192A EPF withdrawal
194P Senior-citizen pension
192A EPF withdrawal
194P Senior-citizen pension
🎰 Luck story
194B Lottery
194BB Horse race
194BB Horse race
🏦 Asset payout story
194 Dividend (before payment)
194DA Life insurance
194LA Compensation
194DA Life insurance
194LA Compensation
💵 Cash & perks
194N Cash withdrawal
194R Before providing benefit
194R Before providing benefit
🎯 Logic, so you don’t have to cram itThese are payments where you can’t tell the income is final until money actually moves: the employee is paid, the winner collects, the policy matures, the land award is paid, cash is withdrawn. Everything else is “credit or payment, whichever is earlier”.
⚡ Special timing194-IB: deduct once, from the rent for the last month of the year (March) or the last month of tenancy if the property is vacated. 194BA: at the time of withdrawal and on the balance at the end of the F.Y.
Trick 5 · No PAN? 20 for TDS, Twice-or-5 for TCS B ▾
| TDS: Sec 206AA | TCS: Sec 206CC | |
|---|---|---|
| Rate if no PAN | Highest of: (i) rate in the Act, (ii) rate in force, (iii) 20% | Higher of: (i) twice the normal rate, (ii) 5% |
| Special | 194Q: 5% instead of 20% | Capped at a maximum of 20% |
| Effect where rate > 20% | No impact (lottery stays at 30%) | — |
| 15G/15H/declaration without PAN | Higher rate still applies | Higher rate applies even with a 206C(1A) declaration |
| Invalid PAN | Treated as PAN not furnished | Treated as PAN not furnished |
⚠️ 194-IB cap (Illustration 7)Rent ₹55,000 p.m., no PAN: 20% × 55,000 × 10 = ₹1,10,000, restricted to one month’s rent = ₹55,000.
Trick 6 · Interest & Fees: “1 for Forgetting, 1½ for Keeping, 200 for Being Late” A ▾
| Default | Section | Rate | Period |
|---|---|---|---|
| Did not deduct | 201(1A)(i) | 1% p.m. or part | From date deductible → date actually deducted |
| Deducted but did not deposit | 201(1A)(ii) | 1.5% p.m. or part | From date deducted → date actually paid |
| Late TDS statement | 234E | ₹200 per day | Capped at the TDS amount |
| Advance tax < 90% of assessed tax | 234B | 1% p.m. or part | From 1st April (after the F.Y.) → date of 143(1)/assessment |
| Deferment of instalments | 234C | 1% p.m. | 3 + 3 + 3 + 1 months |
🎯 Why 1.5% is higherForgetting to deduct is negligence, so 1%. Deducting someone’s money and keeping it is a breach of trust, so 1.5%.
✅ Relief: payer is not an assessee-in-default if…the payee has (1) filed his return u/s 139, (2) included that income in it, and (3) paid the tax on it, and the payer furnishes an accountant’s certificate. Interest @1% is still payable up to the date the payee filed his return.
Trick 7 · The 6-Step TDS Decision Flow (use it in every practical question) A ▾
Step 1: Nature of payment? Salary / interest / contract / commission / rent / fees… → pick the section.
▼
Step 2: Is the payer covered? Individual/HUF → apply the ₹1 cr/₹50 L test. Personal purpose? → no 194C/194J.
▼
Step 3: Threshold crossed? Check single vs aggregate vs per-month. In 194C, once the aggregate crosses ₹1L, TDS is on the whole amount.
▼
Step 4: Any exemption? 196 (Govt/RBI/MF), 197 certificate, Form 15G/15H, specific exclusions of the section.
▼
Step 5: Rate? Normal rate, or 206AA if no PAN. Exclude GST if shown separately.
▼
Step 6: Time & amount? Credit/payment, whichever is earlier (or payment-only). Compute TDS.
Part 2 · Section-wise TDS Cards (Sec 192 – 196) ▾Each card: what · who · rate · threshold · exam traps
Sec 192 · Salary A ▾
| Point | Rule |
|---|---|
| Who deducts | Employer |
| Rate | Average rate of tax on estimated total income (Tax ÷ Total income) |
| When | At the time of payment |
| Threshold | Basic exemption limit (built into the average rate) |
| Regime | Default regime u/s 115BAC(1A) unless the employee intimates that he is opting out. This intimation is not the option u/s 115BAC(6), which must be exercised separately. |
Sec 192(1A): Employer pays tax on non-monetary perquisites
🎯 Trick: the “4-NO” rule for tax paid by the employer on perquisites(1) NOT taxable for the employee [10(10CC)] · (2) NOT deductible for the employer [40(a)] · (3) NOT grossed up [195A] · (4) NOT deemed income received [198].
Illustration 1 (memorise the method): Salary ₹7,30,000 + non-monetary perquisites ₹1,20,000 − standard deduction ₹50,000 = ₹8,00,000. Tax ₹75,400 → average rate 9.425%. The employer may pay 9.425% × 1,20,000 = ₹11,310 on the perquisites and deduct the balance ₹64,090 from salary.
Other points
- More than one employer / job change: the employee may give details of the other salary to the current employer, who then deducts on the total.
- Relief u/s 89 is allowed while deducting (Government, company, co-op and similar employees).
- Employee may report other income, TDS/TCS and house property loss (only if he has opted out of the default regime). TDS can be reduced only for HP loss (max ₹2 lakh) and for TDS/TCS already suffered.
- Form 12BA (perquisites statement) where salary > ₹1,50,000. Otherwise the details go in Form 16.
🎯 Form 12BB claims: “HoLIDay”HRA: landlord’s PAN if rent > ₹1 lakh · LTC: proof of expense · Interest on housing loan: lender’s name, address, PAN · Deductions under Chapter VI-A: proof of investment.
Sec 193 · Interest on Securities B ▾
| Point | Rule |
|---|---|
| Payee | Resident |
| Rate | 10% |
| Threshold | > ₹10,000 in a F.Y. |
| When | Credit or payment, whichever is earlier |
| Meaning | Interest on Central/State Govt securities; debentures of a local authority, company or statutory corporation |
⚠️ No TDS on (remember “NNDGL”)National Development Bonds · 7-year NSC (IV issue) · notified Debentures (e.g., PFC & IRFC 54EC bonds) · Central/State Govt securities · securities owned by LIC/GIC/insurers.
But TDS applies on 8% Savings (Taxable) Bonds 2003, 7.75% Savings Bonds 2018 and Floating Rate Savings Bonds 2020 if interest > ₹10,000.
But TDS applies on 8% Savings (Taxable) Bonds 2003, 7.75% Savings Bonds 2018 and Floating Rate Savings Bonds 2020 if interest > ₹10,000.
Sec 194A · Interest other than on Securities A ▾
| Payer | Threshold (F.Y.) | Rate |
|---|---|---|
| General payer (company, firm, big Ind/HUF) | ₹10,000 | 10% |
| Bank / Co-op bank / Post office (notified schemes: SCSS, Mahila Samman) | ₹50,000 | 10% |
| …same, where payee is a senior citizen (60+, resident) | ₹1,00,000 | 10% |
🎯 Trick: “10 – 50 – 100”Ordinary payer 10K → Bank 50K → Bank to a senior 1 lakh. Each step is 5× or 2× the one before.
No TDS u/s 194A (exam favourites)
- Interest paid by a firm to its partner (now covered by 194T).
- Interest paid to banks, co-op banks, LIC, UTI, insurers, financial corporations, notified bodies (HUDCO, National Skill Development Fund).
- Savings-account interest (deposits other than time deposits).
- Co-op society (other than co-op bank) to a member/another co-op society. But TDS applies if the society’s turnover > ₹50 crore and interest > ₹50,000 (₹1 lakh for a senior citizen).
- Interest paid by the Central Govt under the Income-tax Act (refund interest).
- MACT compensation interest: no TDS on credit; on payment, TDS only if > ₹50,000.
- Zero-coupon bonds issued on or after 1.6.2005 by infra capital companies/funds, PSUs, scheduled banks.
⚠️ Exam traps (Illustration 2)CBS bank: the threshold is checked on interest from all branches together (3 FDs of ₹3L in 3 branches → ₹60,750 > ₹50,000 → TDS).
Time deposits include recurring deposits.
Bank provisioning on CBS for macro-monitoring is not “credit”. TDS applies on accrual at year end / maturity, whichever is earlier.
Time deposits include recurring deposits.
Bank provisioning on CBS for macro-monitoring is not “credit”. TDS applies on accrual at year end / maturity, whichever is earlier.
Sec 194BA · Online Games B ▾
- 30% on net winnings in the user account, with no threshold.
- Deduct at withdrawal (on the net winnings withdrawn) and at the end of the F.Y. on the balance.
- Winnings in kind, or cash not enough to cover the tax → ensure tax is paid before releasing the winnings.
- CBDT relief: no TDS if net winnings withdrawn ≤ ₹100 in a month (deducted later when it crosses ₹100 or at year end).
- Valuation in kind: FMV; purchase price if the intermediary bought it; selling price if it manufactured it. GST excluded.
Sec 194C · Payment to Contractors / Sub-contractors A ▾
| Payee | Rate |
|---|---|
| Individual / HUF contractor | 1% |
| Others (firm, company…) | 2% |
| Transporter (≤ 10 goods carriages + declaration + PAN) | Nil |
🎯 Threshold trick: “30 single, 1 lakh total”No TDS if a single payment ≤ ₹30,000 and the yearly aggregate ≤ ₹1,00,000. Once the aggregate crosses ₹1 lakh, TDS is on the entire amount.
Illustration 3: 20,000 + 25,000 + 28,000 + 30,000 = ₹1,03,000 → TDS 1% × 1,03,000 = ₹1,030, deducted from the last payment (net paid ₹28,970).
Illustration 3: 20,000 + 25,000 + 28,000 + 30,000 = ₹1,03,000 → TDS 1% × 1,03,000 = ₹1,030, deducted from the last payment (net paid ₹28,970).
🎯 What “work” includes: “ABC-CM”Advertising · Broadcasting & telecasting (incl. programme production) · Carriage of goods/passengers (except by railways) · Catering · Manufacturing to the customer’s specification using material bought from that customer or his associate. TDS is on the invoice value excluding that material if shown separately, otherwise on the whole invoice.
✅ Transporter exemption: all 3 conditions together(1) Engaged in plying, hiring or leasing goods carriages, (2) owns 10 or fewer goods carriages at any time in the year, (3) gives a declaration with PAN.
Related point u/s 40A(3): the cash limit for transporters is ₹35,000 per day (vs ₹10,000).
Related point u/s 40A(3): the cash limit for transporters is ₹35,000 per day (vs ₹10,000).
⚠️ Exam trapsContract for sale (material bought from a third party) is not “work” → no 194C · Professional services go under 194J, not 194C · Ind/HUF paying for personal purposes → no 194C · Cold storage cooling charges → 194C (not 194-I) · TV channel’s payment for a programme made to its specs with copyright transferred → 194C; buying telecast rights of ready content → no 194C (Illustration 5).
Sec 194H · Commission or Brokerage B ▾
| Point | Rule |
|---|---|
| Payer | Other than Ind/HUF (big Ind/HUF also covered) |
| Rate | 2% |
| Threshold | > ₹20,000 in a F.Y. |
| When | Credit or payment, whichever is earlier |
⚠️ Not covered by 194HInsurance commission (→ 194D) · Professional services · Transactions in securities · BSNL/MTNL payments to PCO franchisees · Media company’s payment to an advertising agency for booking ads (CBDT Circular 5/2016).
Sec 194-I · Rent A ▾
| Rent for | Rate |
|---|---|
| Plant, Machinery, Equipment | 2% |
| Land, Building (incl. factory), Land appurtenant, Furniture, Fittings | 10% |
🎯 Trick: “Machines 2, Buildings 10”Anything that runs (plant, machinery, equipment) → 2%. Anything that stays (land, building, furniture, fittings) → 10%. Threshold: rent > ₹50,000 per month or part of a month.
Illustration 6: Rent ₹46,000 p.m. from May 2024 with a 10% escalation after one year → ₹50,600 from May 2025. April 2025 (₹46,000): no TDS. May–March: 10% × 50,600 × 11 = ₹55,660.
⚠️ NOT rent / special pointsCold storage cooling charges → 194C · Passenger Service Fee paid by an airline to an airport operator → no 194-I · Lump-sum lease premium for a long-term lease (not adjustable against rent) → not rent · GST shown separately → excluded from the TDS base.
Sec 194-IB · Rent paid by Small Individuals / HUF A ▾
| Point | Rule |
|---|---|
| Payer | Individual/HUF not covered by 194-I (TO ≤ ₹1 cr / ₹50 L) |
| Rate | 2% |
| Threshold | Rent > ₹50,000 per month / part of a month |
| When | Once: from the rent for March, or the last month of tenancy if vacated |
| TAN | Not required (Form 26QC; certificate 16C) |
| Rent means | Land or building or both (no machinery/furniture) |
Illustration 7: Rent ₹55,000 p.m. from June 2025 → 2% × 55,000 × 10 = ₹11,000 from the March rent. Vacated in December → 2% × 55,000 × 7 = ₹7,700 from the December rent. No PAN → 20%, capped at one month’s rent (₹55,000).
Sec 194J · Fees for Professional or Technical Services A ▾
| Nature | Rate | Threshold |
|---|---|---|
| Fees for technical services (FTS) | 2% | ₹50,000 |
| Payee only in call-centre business | 2% | — |
| Royalty for sale/distribution/exhibition of cinematographic films | 2% | ₹50,000 (royalty) |
| Professional fees | 10% | ₹50,000 |
| Other royalty | 10% | ₹50,000 (royalty) |
| Non-compete fees u/s 28(va) | 10% | ₹50,000 |
| Director’s remuneration/fees/commission (not salary) | 10% | NIL |
🎯 Trick: “3 T’s at 2%”Technical services · Telecalling (call centre) · Theatre (film royalty) → 2%. Everything else in 194J → 10%. Directors get no threshold.
🎯 Professions covered: “LMEATIA” + notifiedLegal · Medical · Engineering · Architecture · Accountancy · Technical consultancy · Interior decoration · Advertising + notified: authorised representative, film artist, company secretary, information technology, sports-related (sportspersons, umpires, coaches, team physicians, event managers, commentators, anchors, sports columnists).
Not covered: teaching, painting, sculpture (unless notified).
Not covered: teaching, painting, sculpture (unless notified).
⚠️ Exam trapsFTS = managerial, technical, consultancy services, provision of personnel; excludes construction/assembly/mining projects and salary · TPA payments to hospitals → 194J · Software licence = royalty → 194J (no TDS on an unmodified subsequent transfer if TDS was already deducted and a declaration with PAN is obtained) · Big Ind/HUF deducts only on professional and technical fees, not on royalty/non-compete · No TDS for personal-purpose professional fees by Ind/HUF.
Sec 194M · Payments by Small Individuals / HUF A ▾
| Point | Rule |
|---|---|
| Payer | Ind/HUF not required to deduct u/s 194C/194H/194J |
| Covers | (i) Contract work (ii) Commission/brokerage (not insurance) (iii) Professional fees |
| Rate | 2% |
| Threshold | Aggregate > ₹50 lakh in a F.Y. (to one payee) |
| When | Credit or payment, whichever is earlier |
| TAN | Not required (Form 26QD; certificate 16D) |
🎯 Trick: “C-C-P, 50 lakh, 2%”Contract · Commission · Professional. Note: technical fees, rent and interest are NOT in 194M.
⚠️ Illustration 9: classic case analysisBig trader (TO ₹2.5 cr) repairing his own house for ₹5L → personal purpose, so no 194C; ₹5L < ₹50L, so no 194M · Small trader (TO ₹95L) paying a contractor ₹55L → 194M @2% · Salaried person paying ₹51L brokerage → 194M · Pensioner paying ₹48L → no TDS.
Sec 194N · Cash Withdrawal B ▾
| Recipient | Threshold | Rate |
|---|---|---|
| Normal (has been filing ITR) | Cash > ₹1 crore (₹3 crore for co-op society) | 2% on the excess |
| Non-filer (no ITR for all 3 preceding years, time limit expired) | > ₹20 lakh up to ₹1 cr (₹3 cr co-op) | 2% |
| Non-filer | Above ₹1 cr (₹3 cr co-op) | 5% |
- Payer: banking company, co-op bank, post office. At the time of payment.
- No TDS on withdrawals by Govt, banks, business correspondents, white-label ATM operators.
- TDS u/s 194N is not deemed income of the recipient [Sec 198].
- Example: Non-filer withdraws ₹1.20 cr → ₹80L × 2% + ₹20L × 5% = ₹2,60,000.
Other TDS Sections: One Master Table A ▾
| Sec | Payment | Threshold | Rate | Key point |
|---|---|---|---|---|
| 192A | Premature EPF withdrawal | ≥ ₹50,000 | 10% | No TDS after 5 years’ service, on transfer to a new employer, or on ill-health/closure of business |
| 194 | Dividend | > ₹10,000 (individual, non-cash) | 10% | Includes deemed dividend 2(22)(a)–(f); no TDS to LIC/GIC/insurers |
| 194B | Lottery, crossword, card game | > ₹10,000 per transaction | 30% | Prize in kind → tax to be paid before release; deduct before setting off losses |
| 194BB | Horse race | > ₹10,000 per transaction | 30% | — |
| 194D | Insurance commission | > ₹20,000 | 2% (non-co) / 10% (domestic co) | Credit or payment, whichever is earlier |
| 194DA | Life insurance payout not exempt u/s 10(10D) | ≥ ₹1,00,000 | 2% on income portion | Income = proceeds − premiums paid |
| 194G | Commission on lottery tickets | > ₹20,000 | 2% | — |
| 194-IA | Transfer of immovable property (not rural agri land) | ≥ ₹50 lakh | 1% of higher of consideration or SDV | No TAN; 26QB; includes club, parking, maintenance charges |
| 194K | Income on MF units (not capital gains) | > ₹10,000 | 10% | — |
| 194LA | Compensation on compulsory acquisition | > ₹5,00,000 | 10% | No TDS on agricultural land (rural or urban) |
| 194P | Pension + interest of specified senior citizen (75+) | Basic exemption limit | Slab rates | Same specified bank; declaration → no ITR required |
| 194Q | Purchase of goods (buyer TO > ₹10 cr) | > ₹50 lakh | 0.1% on excess (5% without PAN) | Not if TDS under another section or TCS applies |
| 194R | Business perquisite/benefit | > ₹20,000 | 10% of value | Payer: other than small Ind/HUF; before providing |
| 194T | Partner’s salary, remuneration, commission, bonus, interest | > ₹20,000 | 10% | Paid by a firm; credit (incl. capital a/c) or payment |
⚠️ Illustration traps194DA (Illus 10): policy after 31.3.2012 with premium > 10% of sum assured → not exempt → 2% on (4.50L − 3.75L) = ₹75,000 income → TDS ₹1,500. Payout < ₹1L → no TDS.
194-IA (Illus 11): consideration ₹60L, SDV ₹85L → TDS 1% × 85L = ₹85,000. Rural agricultural land → no TDS.
194Q (Illus 13): payments 20L + 25L + 22L + 28L. TDS starts on the 22L instalment: 0.1% × 17L = ₹1,700, then 0.1% × 28L = ₹2,800.
194-IA (Illus 11): consideration ₹60L, SDV ₹85L → TDS 1% × 85L = ₹85,000. Rural agricultural land → no TDS.
194Q (Illus 13): payments 20L + 25L + 22L + 28L. TDS starts on the 22L instalment: 0.1% × 17L = ₹1,700, then 0.1% × 28L = ₹2,800.
Sec 195A (Grossing up) & Sec 196 (No TDS to Govt etc.) C ▾
- 195A: if the payer bears the tax (“net of tax”), the income is grossed up so that income − TDS = the agreed net amount. Exception: tax paid u/s 192(1A).
- 196: no TDS on sums payable to the Government, RBI, a tax-exempt Central-Act corporation, or a Mutual Fund (u/s 10(23D)), on securities/shares they own or have full beneficial interest in, or on any income accruing to them.
🎯 Trick for 196: “G-R-C-M”Government · RBI · exempt Corporation · Mutual fund: the people the Government doesn’t take TDS from.
Part 3 · Lower Deduction, 15G/15H & Compliance (Sec 197 – 206AA) ▾Certificates, declarations, credit, due dates and forms
Sec 197 & 197A: Lower / Nil deduction A ▾
| Sec 197 Certificate | Form 15G | Form 15H | |
|---|---|---|---|
| Who | Any assessee (application with PAN) | Resident not a company or firm | Resident individual 60+ |
| Issued/given by | Assessing Officer | Self-declaration (in duplicate) | Self-declaration (in duplicate) |
| Condition | AO satisfied that total income justifies it | Tax on estimated total income = Nil and aggregate of such incomes ≤ basic exemption limit | Tax on estimated total income = Nil (no basic exemption limit restriction) |
| Sections | 192, 193, 194, 194A, 194C, 194D, 194G, 194H, 194-I, 194J, 194K, 194LA, 194M, 194Q | 192A, 193, 194, 194A, 194D, 194DA, 194-I, 194K | Same as 15G |
🎯 Trick: 15G/15H sections are “passive income of small people”PF (192A) · Securities interest (193) · Dividend (194) · Interest (194A) · Insurance commission (194D) · LIC payout (194DA) · Rent (194-I) · Units (194K). There is no 15G for contractor (194C) or professional (194J) payments.
⚡ Copy of declarationThe payer sends one copy of the 15G/15H to the CIT by the 7th of the following month.
Sec 198, 199, 200A, 204, 205: Quick hits B ▾
| Section | Rule in one line |
|---|---|
| 198 | TDS is deemed income received, except (i) tax paid by the employer u/s 192(1A), (ii) TDS u/s 194N |
| 199 | TDS deposited = tax paid on behalf of the payee/owner/depositor/unit-holder/shareholder; CBDT rules decide credit and A.Y. |
| 200A | Computerised processing of TDS statements: arithmetic errors and incorrect claims (inconsistent entries, wrong rate). Intimation within 1 year from the end of the F.Y. of filing |
| 204 | “Person responsible for paying”: employer/company incl. principal officer; DDO for Govt; for a non-resident payer, the payer, his authorised person or his agent |
| 205 | Bar on direct demand: the assessee can’t be asked to pay the tax that was deducted from his income |
| 203A | TAN is compulsory for deductors and collectors (except 194-IA/194-IB/194M deductors) |
📅 TDS Compliance Calendar (Deposit → Return → Certificate) A ▾
Step 1 · Deposit TDS [Rule 30]
| Deductor | Due date |
|---|---|
| Govt office, without challan | Same day |
| Govt office, with challan | 7 days from end of month |
| Others: tax deducted in March | 30th April |
| Others: other months | 7th of next month |
| 194-IA / 194-IB / 194M | Within 30 days from end of the month of deduction (challan-cum-statement) |
| Quarterly payment (192/194A/194D/194H, with AO + JC approval) | 7 July / 7 Oct / 7 Jan / 30 April |
Step 2 · Quarterly TDS Statement [Rule 31A]
Q1 · Apr–Jun
31 July
Q2 · Jul–Sep
31 Oct
Q3 · Oct–Dec
31 Jan
Q4 · Jan–Mar
31 May
🎯 TrickThe return is due on the last day of the month after the quarter, except Q4, which gets two months (31 May).
Step 3 · TDS Certificate [Rule 31]
| Form | For | Due |
|---|---|---|
| Form 16 | 192 Salary & 194P | Annually by 15th June of the next F.Y. |
| Form 16A | All other sections | Quarterly, within 15 days from the due date of the TDS statement |
| 16B / 16C / 16D | 194-IA / 194-IB / 194M | Within 15 days from the due date of 26QB / 26QC / 26QD |
🎯 Trick for the forms: “B-C-D = 1-A, 1-B, M”Property 194-IA → 26QB/16B · Rent 194-IB → 26QC/16C · 194M → 26QD/16D. Letters go in alphabetical order, same as the sections. (ICAI says form numbers aren’t required for the exam, but this makes them easy anyway.)
Part 4 · Advance Tax (Sec 207 – 219, 234B, 234C) ▾Who pays · how much · when · interest
Liability & Computation A ▾
- Payable if advance tax for the year is ₹10,000 or more [208]. Below ₹10,000 → no 234B/234C (234A can still apply).
- Exempt: resident individual aged 60+ with no PGBP income. Pays self-assessment tax instead.
- Tax on estimated current income at the rates in force, less TDS/TCS. Net agricultural income is considered for rate purposes [209(2)].
- Trap: tax deductible but not actually deducted can NOT be reduced [proviso to 209(1)(d)].
- AO may order payment u/s 210(3) based on the higher of last assessed or last returned income. Order can be served up to the last day of February. If the assessee’s own estimate is higher, he pays the higher amount.
- Credit for advance tax is given in the regular assessment [219].
📊 Instalment Chart: “15-45-75-100” A ▾
15 June
15%
15 Sept
45%
15 Dec
75%
15 March
100%
🎯 Trick: “15 + 30 + 30 + 25”Cumulative 15 → 45 → 75 → 100. In each instalment you pay 15%, 30%, 30%, 25%. All on the 15th of the last month of each quarter: Jun, Sep, Dec, Mar.
✅ Presumptive taxpayers (44AD / 44ADA)Pay 100% in one instalment by 15th March. For everyone, anything paid by 31st March counts as advance tax. If the due date is a bank holiday, the next working day is fine (no interest).
Interest u/s 234B vs 234C A ▾
| 234B: Default | 234C: Deferment | |
|---|---|---|
| Trigger | Advance tax paid < 90% of assessed tax | Instalment short of 15/45/75/100% of tax due on returned income |
| Rate | 1% p.m. or part | 1% p.m. |
| Period | From 1st April after the F.Y. to the date of 143(1) / regular assessment | 3 + 3 + 3 + 1 months |
| Amount | Assessed tax − advance tax paid | Shortfall at each instalment |
| Safe harbour | — | No interest if paid ≥ 12% by 15 June and ≥ 36% by 15 Sept |
| Base | Assessed tax (after TDS/TCS, relief u/s 89, 115JD credit) | Tax due on returned income (after the same reductions) |
🎯 Trick: “B = Balance at the end, C = Calendar instalments”234B asks whether you paid at least 90% by the end. 234C asks whether you paid on time at each date. Safe harbour: 12 and 36 are 80% of 15 and 45.
🎯 No 234C on shortfall due to: “CaLeNDar”Capital gains · Lottery-type winnings [2(24)(ix)] · New business income (PGBP arising for the first time) · Dividend (not 2(22)(e) deemed dividend). Condition: tax on this income must be paid in the remaining instalments, or by 31st March.
⚡ 234B: after self-assessment taxIf tax is paid u/s 140A, interest is calculated up to the date of that payment (less interest already paid u/s 140A). After that, 1% applies on the remaining shortfall.
Part 5 · Tax Collection at Source (Sec 206C) ▾Goods · lease of parking/toll/mine · car & luxury goods · LRS & overseas tours
206C(1): Sale of specified goods A ▾
| Goods | Rate |
|---|---|
| Alcoholic liquor for human consumption | 1% |
| Tendu leaves | 5% |
| Timber / forest produce under forest lease | 2% |
| Timber by any other mode | 2% |
| Scrap | 1% |
| Minerals: coal, lignite, iron ore | 1% |
🎯 Trick: “Tendu 5, Trees 2, Rest 1”Tendu leaves → 5% · Trees (timber, forest produce) → 2% · Liquor, Scrap, Minerals → 1% (“LSM = 1”).
- When: at debit to the buyer’s account or receipt, whichever is earlier.
- Nil TCS [206C(1A)]: resident buyer declares the goods are for manufacturing/processing/power generation, not trading. The copy goes to the CIT by the 7th of next month.
- Buyer excludes PSU, Govt, embassies etc., a club, and a retail buyer for personal consumption.
- Seller = Govt, local authority, corporation, company, firm, co-op, and Ind/HUF with TO > ₹1 cr / ₹50 L.
- Scrap = waste from manufacture or mechanical working that is definitely not usable as such.
206C(1C), (1F), (1G): Lease, Luxury goods, LRS A ▾
| Sub-sec | Transaction | Rate | Key point |
|---|---|---|---|
| 1C | Lease/licence of Parking lot, Toll plaza, Mine/quarry for business | 2% | Not if the lessee is a PSU; mining excludes mineral oil (petroleum, natural gas) |
| 1F | Motor vehicle > ₹10 lakh | 1% | Per vehicle, at time of receipt; retail sales only (not manufacturer → dealer); mode of payment irrelevant |
| 1F | Notified luxury goods > ₹10 lakh (w.e.f. 22.4.2025) | 1% | Wrist watch, art/antiques, coins/stamps, yacht/helicopter, sunglasses, handbag, shoes, sportswear (golf kit, ski-wear), home theatre, race/polo horse |
| 1G | Overseas tour package | 5% up to ₹10L, 20% above | No threshold: TCS from the first rupee |
| 1G | LRS: education funded by loan from a financial institution | Nil | — |
| 1G | LRS: education / medical treatment | 5% above ₹10L | Threshold is combined for all purposes, per remitter (not per bank) |
| 1G | LRS: other purposes | 20% above ₹10L | — |
🎯 Luxury-goods trick: “Wear it, Watch it, Ride it, Hang it, Collect it”Wear: watch, sunglasses, bag, shoes, sportswear · Watch: home theatre · Ride: yacht, canoe, helicopter, race/polo horse · Hang: painting, sculpture, antiques · Collect: coins, stamps.
⚠️ LRS traps (CBDT Q&A)₹10L threshold for LRS and the ₹10L for the tour package apply independently · Tour package of ₹3L bought under LRS → tour rules apply → 5% TCS (no ₹10L exemption) · Only a flight ticket or only a hotel booking is not a tour package (needs at least 2 components) · No TCS where the buyer has already deducted TDS, or the buyer is Govt/embassy/local authority/non-resident without a PE.
TDS vs TCS + 194Q vs 206C comparison B ▾
| Basis | TDS | TCS |
|---|---|---|
| Who | Payer deducts | Seller / lessor / authorised dealer collects |
| Time | Credit or payment, whichever is earlier (payment-only for salary, LIC etc.) | Debit or receipt, whichever is earlier (receipt-only for 206C(1F)) |
| No PAN | 206AA: higher of rate or 20% | 206CC: higher of 2× rate or 5%, max 20% |
| Deposit | 7th of next month (March → 30 April) | Within one week from the last day of the month |
| Situation | Applicable |
|---|---|
| Scrap sold to a trader | 206C(1) TCS 1% |
| Scrap sold to a manufacturer with a declaration (buyer TO > ₹10 cr, purchases > ₹50L) | 194Q TDS (TCS nil u/s 206C(1A)) |
| Car > ₹10L sold by a dealer to a customer | 206C(1F) TCS 1% |
| Cars sold by a manufacturer to a dealer (dealer TO > ₹10 cr, purchases > ₹50L) | 194Q TDS 0.1% |
| Any other goods, purchases > ₹50L, buyer TO > ₹10 cr | 194Q TDS 0.1% |
Part 6 · 25 Flash Cards (Tap to reveal) ▾Test yourself before you close this page
❓ Rate & threshold of 194H?
Answer: 2%, if commission > ₹20,000 in the F.Y.
❓ Rent of a machine ₹60,000 p.m. paid by a company: rate?
Answer: 194-I @2% (plant/machinery/equipment).
❓ Bank FD interest ₹75,000 to a 65-year-old: TDS?
Answer: No. Senior-citizen threshold is ₹1,00,000.
❓ Same bank, ₹60,750 interest across 3 CBS branches, non-senior?
Answer: Yes. Aggregate of all branches > ₹50,000 → 10%.
❓ Contract payments 20K, 25K, 28K, 30K to an individual: TDS?
Answer: Yes. Aggregate ₹1,03,000 > ₹1L → 1% on the whole ₹1,03,000 = ₹1,030.
❓ Transporter with 12 trucks, gives PAN: TDS u/s 194C?
Answer: Yes. The exemption needs ≤ 10 goods carriages (plus declaration and PAN).
❓ Three 2% items in 194J?
Answer: Technical services, call-centre payee, film royalty (the 3 T’s).
❓ Threshold for director’s sitting fees u/s 194J?
Answer: NIL. TDS @10% from the first rupee.
❓ Salaried person pays ₹51L brokerage for a house: TDS?
Answer: Yes, u/s 194M @2% (aggregate > ₹50L).
❓ Salaried person pays rent ₹55,000 p.m. from June: TDS and when?
Answer: 194-IB @2% × 55,000 × 10 = ₹11,000, from the March rent.
❓ Property bought for ₹60L, SDV ₹85L: TDS u/s 194-IA?
Answer: 1% of ₹85L (higher) = ₹85,000.
❓ Rate if a payee doesn’t give PAN for 194Q?
Answer: 5% (not 20%).
❓ TDS on lottery winnings without PAN?
Answer: 30% (206AA has no effect when the rate is above 20%).
❓ Interest for deducting TDS but not depositing?
Answer: 1.5% p.m. or part, from date of deduction to date of payment [201(1A)].
❓ Fee for late TDS return?
Answer: ₹200 per day u/s 234E, capped at the TDS amount.
❓ Due date to deposit TDS deducted in March (non-Govt)?
Answer: 30th April.
❓ Due date of the Q4 TDS statement?
Answer: 31st May.
❓ Two items NOT deemed income u/s 198?
Answer: Tax paid by the employer u/s 192(1A); TDS u/s 194N.
❓ Who can’t file Form 15G?
Answer: A company or a firm. Also anyone (other than a senior citizen) whose aggregate of such incomes exceeds the basic exemption limit.
❓ Advance tax instalments for a non-44AD assessee?
Answer: 15% by 15 June, 45% by 15 Sept, 75% by 15 Dec, 100% by 15 March.
❓ Safe harbour under 234C?
Answer: 12% by 15 June and 36% by 15 Sept → no interest for those dates.
❓ Shortfall due to which incomes gets no 234C interest?
Answer: CaLeNDar: Capital gains, Lottery, New business income, Dividend (not 2(22)(e)).
❓ 70-year-old with pension and interest only: advance tax?
Answer: Not required (resident senior citizen with no PGBP income).
❓ TCS on tendu leaves vs scrap?
Answer: Tendu 5%; scrap 1%.
❓ ₹3L overseas tour package: TCS?
Answer: Yes, 5%. No ₹10L threshold for tour packages.
📝 Night-before-exam: 10 lines to read
- Rates: Luck 30 · Investor 10 · Business 2 · Property & Ind contractor 1 · 194Q 0.1.
- Thresholds: 10K investors · 20K commissions · 30K/1L contract · 50K banks, professionals, monthly rent · 50L big-ticket.
- Payer test: Ind/HUF deduct only if TO > ₹1 cr (business) / ₹50 L (profession); else 194-IB / 194M.
- Payment-only: Salary, PF, Pension · Lottery, Horse · Dividend, LIC, Land compensation · Cash, Perks.
- 194-I: Machines 2, Buildings 10 · 194J: 3 T’s at 2, rest 10, directors no limit.
- No PAN: TDS 20% (194Q 5%) · TCS 2× or 5%, max 20%.
- Interest: 1% not deducted · 1.5% not deposited · ₹200/day late return.
- Due dates: deposit 7th (March → 30 Apr) · returns 31 Jul/Oct/Jan/May · Form 16 by 15 June.
- Advance tax: ≥ ₹10,000 · 15-45-75-100 · 44AD/ADA 100% by 15 Mar · 234B < 90% · 234C 3-3-3-1, safe 12/36 · CaLeNDar.
- TCS: Tendu 5, Trees 2, LSM 1 · Parking/Toll/Mine 2 · Car/luxury > 10L 1% · LRS 5/20 above 10L, tour 5/20 from the first rupee.
Tricks help you remember. Tests show you what stuck.
A chapter like TDS only stays in memory if you keep coming back to it. CharteredTeam’s test planner is built around a 4-revision cycle, so this chapter gets tested again before and after every round, with written answers checked the way ICAI checks them.
Based on the ICAI Study Material for Income-tax Law (P.Y. 2025-26 / A.Y. 2026-27), Chapter 7. Students should check the exam-wise applicability notified by ICAI for their attempt.