194K of the Income Tax Act:
As per of Budget 2020, Dividend Distribution Tax (DDT) was eliminated which is effective as of April 1, 2020, or FY 2020–21. The dividend received by shareholders on equity and mutual funds formerly exempt under Section 10(35) of the Income Tax Act. But now it is taxable subject to slab rates of taxation in hands of shareholder.
So, Dividend income is taxable in hands of shareholder TDS is required to deductible as per section 194K of Income Tax Act.
Who is eligible to Deduct TDS:
As per Section 194K, any person responsible for paying a resident with for making the payments by the mode:
- Units of a mutual fund as per Section 10(23D)
- Units from the administrator
- Units from a specified company
Rate of TDS u/s 194K:
TDS under Section 194K is not required to be withheld
- TDS rate is the @10% for amount exceeding Rs: 5,000 in a financial year.
- The relevant rate of TDS is 20% when the not furnished the Permanent Account Number of payee.
Time of Deduction of TDS:
TDS is required to deduct earlier of the following
- At the time of credit of such income to the payee’s account (Or)
- At the time of making payment
Exceptions to the section 194K:
TDS under Section 194K is not required to be deducted in the following cases:
- Tax at 10% is not required to be deducted at source if the dividend income is up to Rs 5,000 in a financial year.
- Capital gain income is also exempted from the applicability of Section 194K.
Due date of TDS deposit and Filing of TDS returns:
The Deductor is liable to deposit TDS with the Government with following dates:
| Particulars | Due date of Deposite |
|---|---|
| April-February | 7th of Next following next Month |
| March month | 30th April |
The Deductor is liable to File TDS Returns with the Government with following dates:
| Quarter | Due Date for Return |
|---|---|
| April to June | 31st of July |
| July to September | 31st of October |
| October to December | 31st of October |
| January to March | 31st of May |
Due dates for Issue of TDS Statement:
Here the TDS statement means Form 16A which is issued by specified persons who is required to deduct the TDS
| Particulars | Due Date |
|---|---|
| April-June | 15th August |
| July-September | 15th November |
| October-December | 15th February |
| January-March | 15th June |
Consequences Non compliance of TDS deposit and TDS Return within Due Date:
| Particulars | Rate of Interest/Penalty |
|---|---|
| When TDS not deducted | 1% per month or part of the month |
| TDS deducted but not Deposited to the Government | 1.5% per month or part of the month |
| Late filing of TDS Return | As per Section 234E, Late fee is 200 per day but not exceeds TDS amount |
