Tax Ready Reckoner

Section 194-O of the Income Tax Act, 1961, mandates Tax Deducted at Source (TDS) on payments made by e-commerce operators to resident e-commerce participants for sales of goods/services facilitated through digital platforms. Introduced in 2020, this provision ensures tax compliance in the growing digital economy. 1. Applicability of Section 194-O ✅ Covered Transactions: Payments by e-commerce operators(e.g., Amazon, Flipkart) to resident participants (sellers/service providers) for: Sale of […]

Section 194P of the Income Tax Act, 1961, provides a TDS exemption for senior citizens (aged 75+) with only pension and interest income, subject to certain conditions. This provision simplifies tax compliance for eligible retirees. 1. Eligibility Criteria ✅ Who Qualifies? Resident individuals aged 75+in the relevant financial year. Income Sources: Only pension (from one former employer)and interest income (from the same bank where pension

Section 194Q of the Income Tax Act, 1961, mandates Tax Deducted at Source (TDS) on payments made by buyers to resident sellers for the purchase of goods exceeding ₹50 lakh in a financial year. Introduced in Budget 2021, this provision targets large-scale business transactions. 1. Applicability of Section 194Q ✅ Covered Transactions: Purchase of goods(raw materials, inventory, etc.) exceeding ₹50 lakh/year per seller. Applies to buyerswith:

Section 195 of the Income Tax Act, 1961, mandates Tax Deducted at Source (TDS) on payments made to non-residents (excluding salary income) to ensure tax compliance on income earned in India. Below is a structured breakdown of its provisions: 1. Applicability of Section 195 ✅ Covered Payments: Interest, royalties, fees for technical services(e.g., software, consultancy). Capital gains(e.g., sale of property/shares by NRIs).

Section 195A of the Income Tax Act, 1961, governs scenarios where the payer agrees to bear the tax liability on income payable to a recipient, requiring the income to be “grossed up” to ensure the recipient receives the agreed net amount after tax deduction. Below is a detailed breakdown: 1. Applicability of Section 195A ✅ Covered Cases: Applies when the payer

Section 196 of the Income Tax Act, 1961 provides an exemption from Tax Deducted at Source (TDS) for payments made to: The Government(Central or State) Reserve Bank of India (RBI) Corporations established under a Central Actthat are exempt from income tax Mutual Fundsspecified under Section 10(23D). Key Points of Section 196 ✅ No TDS Required – Payments in the form of interest, dividends, or other

Section 196A of the Income Tax Act, 1961 governs the Tax Deducted at Source (TDS) on income paid to non-residents (including foreign companies) from units of Mutual Funds or the Unit Trust of India (UTI). 1. Applicability Applies to income from unitsof: Mutual Funds(under Section 10(23D)) Unit Trust of India (UTI) Payee must be: A non-resident individual(not a company) or A foreign company. 2. TDS Rate Default rate: 20%(flat, without surcharge/cess at

Section 196B of the Income Tax Act, 1961 governs the Tax Deducted at Source (TDS) on income paid to non-residents or foreign companies from units of Offshore Funds. This provision ensures tax collection at the source for cross-border investments in Indian securities or assets through offshore vehicles. 1. Applicability Payee: Non-residents or foreign companies receiving income from units of Offshore Funds. Income Covered: Dividends or other

Section 196C of the Income Tax Act, 1961 mandates Tax Deducted at Source (TDS) on income paid to non-residents (including foreign companies) from: Foreign currency-denominated bonds Global Depository Receipts (GDRs)issued by Indian companies. Key Provisions of Section 196C Applicability Payee: Non-residents or foreign companies. Income Covered: Intereston specified foreign currency bonds. Dividendson GDRs (referenced under Section 115AC). Long-term capital gains (LTCG)from the transfer

Section 196D of the Income Tax Act, 1961 governs the Tax Deducted at Source (TDS) on income earned by Foreign Institutional Investors (FIIs) from securities in India. This provision ensures tax compliance for foreign investments in Indian capital markets by mandating TDS on interest and capital gains from securities. Key Provisions of Section 196D Applicability Payee: Foreign Institutional Investors (FIIs) or Foreign Portfolio