CA Intermediate · Taxation

Tax Deduction or Collection at Source and Advance Tax: formula sheet

Full chapter guide

Key formulas

Net tax payable at filing: Tax on total income (with cess) − TDS − TCS − advance tax paid = self-assessment tax payable (or refund if negative); This is the basic reconciliation. Credit is given for tax deducted, collected or paid in the tax year.
Liability to pay advance tax: Advance tax is payable if estimated tax liability for the tax year, after deducting TDS and TCS, is ₹10,000 or more; Check this threshold before computing instalments.
Advance tax instalments (assessees other than eligible presumptive taxpayers): By 15 June: not less than 15% | By 15 September: not less than 45% | By 15 December: not less than 75% | By 15 March: 100% of the advance tax; These are cumulative percentages. The instalment due on each date is the increase over the amount already due.
Eligible presumptive taxpayers: Entire advance tax in one instalment, on or before 15 March; Applies to eligible assessees under the presumptive scheme for business (the 44AD equivalent) and for professionals (the 44ADA equivalent). Check conditions in the presumptive taxation topic.
Senior citizen exemption: Resident individual aged 60 years or more with no business or professional income need not pay advance tax; They pay the balance as self-assessment tax.
Roles: TDS: deductor pays, deductee receives net | TCS: collector sells, buyer pays extra; TDS is cut from the payment. TCS is added to the price.
TDS on salary (monthly): Monthly TDS = (Estimated tax on total income for the year − TDS already deducted) ÷ Remaining months; Tax includes health and education cess at 4%, and surcharge where applicable. Use the regime the employee has chosen; if none is declared, the default regime applies.
Interest other than interest on securities: 10%. Threshold per payee per year: ₹50,000 for interest from banks, co-operative banks and post office deposits (non-senior citizens); ₹1,00,000 for the same interest paid to senior citizens; ₹10,000 for interest paid by all other payers; The ₹50,000 and ₹1,00,000 limits apply only to interest from banks, co-operative banks and post office deposits. Any other payer uses ₹10,000. The threshold applies to interest paid by that deductor, and for banks it is across branches using core banking. Confirm the figures against your latest ICAI material.
Commission or brokerage: 2%. Threshold: ₹20,000 in a year; Excludes insurance commission, which has its own provision and rate.
Rent: 2% for plant, machinery or equipment; 10% for land, building or furniture. Threshold: ₹6,00,000 in a year; TDS starts in the month in which the rent paid or credited in the year crosses the threshold. At that point, deduct on the whole rent paid or credited so far in the year (a catch-up deduction), not only the excess. Later months are deducted as usual.
Professional and technical fees: 10% for professional fees; 2% for fees for technical services and call centre. Threshold: ₹50,000 in a year; Check the exact label in the question. Technical services at 2% is a frequent trap. An individual or HUF not liable to tax audit need not deduct under this regular provision; a separate provision covers only their large payments.
Payment to contractors: 1% if payee is an individual or HUF; 2% for others. Threshold: ₹30,000 for a single payment or ₹1,00,000 aggregate in the year; Deduct if the single payment exceeds ₹30,000. Once the aggregate crosses ₹1,00,000, deduct TDS on the payment that crosses it and on all later payments. Earlier payments need not be revisited. Covers sub-contractors and advertising contracts too, with the rate again decided by the payee type. Deductor-side exception: an individual or HUF who is not liable to tax audit need not deduct under this regular provision (a separate provision applies only to their large payments).
Dividend to resident shareholder: 10%. Threshold: ₹10,000 in a year; Applies to dividend paid by a company.
Payee without PAN: Rate = Highest of (rate specified in the provision, rate in force, 20%); Applies when PAN is not furnished or is invalid, under the no-PAN provision of the 2025 Act. The twice-the-rate rule is a separate provision for specified non-filers of returns.
Surcharge and cess on non-salary TDS to residents: Nil; For payments to residents other than salary, deduct only the stated rate, with no surcharge or cess. Cess, and surcharge where applicable, form part of salary TDS.
Who deducts and on what: Payer of any sum chargeable to tax in India (other than salary) to a non-resident or foreign company → deduct tax at rates in force; The general provision has no monetary threshold. Specific provisions and exceptions exist, so follow the facts in the question. The payer can be any person who pays the sum.
Rate to apply: The payee may opt for the more beneficial of the Act rate and the DTAA rate, subject to the required documents (tax residency certificate, Form 10F, beneficial ownership); Treaty benefit is an option for the payee, not automatic. Use the rate given in the question.
Tax to deduct: TDS = Gross sum chargeable × rate, plus surcharge and health and education cess as applicable; If the question says the rate is inclusive of surcharge and cess, do not add them again.
Time of deduction: Deduct at the time of credit to the payee's account or at the time of payment, whichever is earlier; Credit to a suspense account also counts as credit.
Gross-up when payer bears the tax: Gross sum = Net sum × 100 ÷ (100 − rate %); Use when the payer agrees to pay the amount net of tax. TDS = Gross − Net.
Resident vs non-resident: Resident: section-wise threshold and fixed rate. Non-resident (general provision): no monetary threshold, rate in force, treaty relief possible; Salary is excluded from this rule; it follows salary TDS.
Basic TCS: TCS = Rate × Amount received or debited; Use the rate for the specific item. Identify the item before touching the rate.
Motor vehicle: If sale consideration > ₹10,00,000: TCS = 1% × total consideration; Applies on the full amount, not just the excess. No TCS if the consideration is ₹10 lakh or less.
Overseas remittance (LRS): TCS = Rate for the purpose × (Total remittances in the year − ₹10,00,000), for every purpose except education funded by a specified loan; The ₹10 lakh threshold is per person per year, counted across all remittances by the same person. For education funded by a specified loan, the rate is nil on the whole amount, so the threshold does not matter. Rates commonly seen are nil for that loan-funded education, 2% for education (otherwise) and medical, and 20% for other purposes. Use the rate given in the question or in the current ICAI study material for your attempt.
Overseas tour package: TCS = Rate given in the question or study material × tour package amount; The rate has changed over time, so do not memorise it from old notes. Use the rate given in the question or in the current study material.
No PAN: Higher rate = the greater of 2 × specified rate and 5%; Applies to every TCS item when the buyer does not furnish a PAN, under the Income-tax Act, 2025, unless the provision or the question expressly excludes the item. For a 1% item, the higher rate is 5%. For a 20% item, it is 40%.
Deposit date: TDS in general: Deducted in April to February: by 7th of next month. Deducted in March: by 30 April; Government deductors paying without challan deposit on the same day. Some property and rent payments by individuals or HUFs follow a 30-day-from-month-end rule.
Deposit date: TCS: Collected in a month (including March): by 7th of next month; TCS collected in March is due by 7 April. The 30 April date is only for TDS deducted in March.
Quarterly TDS statement due dates: Q1 (Apr-Jun): 31 July | Q2 (Jul-Sep): 31 Oct | Q3 (Oct-Dec): 31 Jan | Q4 (Jan-Mar): 31 May; TCS statements fall earlier, on 15 July, 15 Oct, 15 Jan and 15 May.
Certificate time limits: Salary: by 15 June after the tax year | Non-salary TDS: 15 days from the due date of the quarterly statement | TCS: 15 days from the due date of the quarterly statement; A delay can attract a per-day penalty. Check the current rate in your material.
Interest on late deduction or collection: 1% per month or part of month, from the date tax was deductible to the date it is actually deducted; Any part of a month counts as a full month.
Interest on late deposit: 1.5% per month or part of month, from the date of deduction to the date of deposit; It runs from the date of deduction, not from the due date of deposit.
Fee for late statement: ₹200 per day for each day of default, capped at the amount of TDS or TCS for that statement; It applies to both TDS and TCS statements. The fee must be paid before the statement is filed.
Disallowance for non-deduction or non-deposit: Specified payment to a resident, tax deductible but not deducted or not deposited: 30% of the expenditure is disallowed. Specified payment to a non-resident, tax not deducted or not deposited: the entire amount is disallowed; This applies only to the specified payments on which tax is deductible, not to all expenses. If the tax is deducted during the tax year and deposited on or before the due date of the return, there is no disallowance. If it is deducted later or deposited after that date, the disallowed amount is allowed in the year of deposit. Use the section number given in your ICAI Income-tax Act, 2025 material.
Penalty for failure to deduct, collect or pay: Penalty equals the amount of tax not deducted, collected or paid; It can be avoided if the deductor proves a reasonable cause for the default.
Liability test: Advance tax is payable if: (Tax on estimated current-year income − TDS/TCS expected) ≥ ₹10,000; Tax includes surcharge and health and education cess. Use TDS/TCS only on income that is part of the estimated total income.
Advance tax amount: Advance tax = Tax on estimated total income (with cess) − TDS/TCS on income included in that total; This is the total to be paid over the year. Round off as per the question's instruction or the rounding rule for tax.
Instalments for other assessees (not under the presumptive schemes for eligible business or profession): By 15 June: 15% | By 15 September: 45% | By 15 December: 75% | By 15 March: 100%; Percentages are cumulative on the total advance tax. The amount to pay on each date is the difference from the previous percentage.
Assessee declaring profits under the presumptive scheme for eligible business or eligible profession: 100% of advance tax on or before 15 March; This applies only to assessees who declare profits under the presumptive schemes for eligible business or eligible profession. Payment made on or before 31 March of the tax year is also treated as advance tax paid on time.
Resident senior citizen: No advance tax if: resident individual, aged 60 years or more at any time during the tax year, and no business/profession income; All three conditions must be met. Having business or profession income removes the relief.
Advance tax liability: Advance tax is payable if tax payable after TDS/TCS and reliefs ≥ ₹10,000; A resident senior citizen with no business or professional income need not pay advance tax.
Instalments for companies: 15% by 15 June; 45% by 15 September; 75% by 15 December; 100% by 15 March; Percentages are cumulative, on the tax due on current-year income.
Instalments for non-corporate assessees: 30% by 15 September; 60% by 15 December; 100% by 15 March; No instalment on 15 June. An eligible presumptive-scheme assessee pays 100% in one instalment by 15 March.
Shortfall interest: 1% × number of months (or part) × (assessed tax − advance tax paid − TDS/TCS − reliefs); Applies only if advance tax paid is below 90% of assessed tax. Months run from 1 April after the tax year to the date the shortfall is paid.
Deferment interest: Companies: 1% × 3 months × shortfall on each of 15 June, 15 September and 15 December. Non-corporates: 1% × 3 months × shortfall on each of 15 September and 15 December. All assessees: 1% × 1 month × shortfall on 15 March; Shortfall = due cumulative amount − cumulative advance tax paid by the due date. Base is tax on returned income after TDS/TCS and reliefs.
No-interest safe limit: Companies: 12% on the 15 June instalment and 36% on the 15 September instalment. Non-corporates: 36% on the 15 September instalment. No safe limit for 15 December or 15 March; Test each date on its own. If cumulative advance tax paid by that date is at least this percentage of tax on returned income, no deferment interest arises on that instalment's shortfall. Later instalments have no safe limit.
Late-arising income relief: No deferment interest on the shortfall caused by capital gains, lottery or game winnings, or dividend income arising after the instalment date, if tax on it is paid in the remaining instalments or by 31 March; The relief covers only that part of the shortfall. Check your study material for the full list of similar incomes.

Quick revision

TDS is deducted by the payer. TCS is collected by the seller. Advance tax is paid by the taxpayer.
Salary TDS is based on the estimated tax for the year, spread over the payments.
Check the threshold before deducting. Below the threshold, most payments need no TDS.
Payments to non-residents depend on the nature of the payment and residence status, not only the amount.
Credit for TDS or TCS goes to the person from whose payment the tax was deducted or from whom it was collected: the payee for TDS, the buyer for TCS.
Deposit TDS and TCS by the due dates. Interest on failure to deduct is 1% per month or part of a month, from the date tax was deductible to the date it was deducted. Interest on late deposit is 1.5% per month or part of a month, from the date of deduction to the date of deposit.
Quarterly returns and certificates have fixed due dates. Learn them as a list.
Advance tax is due when the tax payable, after TDS and TCS, is ₹10,000 or more.
Regular instalments are cumulative: up to 15% by 15 June, up to 45% by 15 September, up to 75% by 15 December and 100% by 15 March.
An eligible assessee who opts for the presumptive scheme for small business or for professionals pays the whole advance tax in one instalment by 15 March.
A resident individual of the age of 60 years or more at any time during the tax year, with no income chargeable under the head profits and gains of business or profession, need not pay advance tax.
Interest for default in advance tax is charged per month or part of a month, so count months carefully.

Common mistakes

Treating TDS or TCS as an extra tax over and above income tax. Fix: State clearly that TDS and TCS are advance payments of the assessee's own tax, adjusted against final tax liability.
Confusing TDS with TCS, or mixing up who deposits the tax. Fix: Remember: TDS is cut from what the payer pays out. TCS is collected on top of what the seller receives. The deductor or collector deposits the tax, not the deductee or buyer.
Deducting TDS on only the excess over the threshold. Fix: Once the threshold is crossed, deduct on the whole amount credited or paid in that year (for rent, for example). For contractors with an aggregate trigger, deduct on the payment that crosses the limit and on later payments.
Using 10% for all fees. Fix: Read the nature of the service. Professional services get 10%; technical services and call centres get 2%.
Applying a resident threshold to a non-resident payment Fix: For payments chargeable to tax in India under the general non-resident provision, deduct from the first rupee. Use thresholds only for resident TDS sections, and follow the question's facts if a specific provision applies.
Always using the Act rate and ignoring the treaty Fix: Whenever a DTAA rate is mentioned, compare it with the Act rate and apply the more beneficial one, subject to the payee giving the required documents.
Applying TCS on motor vehicle only to the amount above ₹10 lakh. Fix: For motor vehicles, the ₹10 lakh is a trigger. Once crossed, 1% applies on the whole consideration.
Applying TCS on sale of goods above ₹50 lakh at 0.1%. Fix: This TCS was withdrawn from 1 October 2024. Do not use it.
Charging interest on late deposit from the due date of deposit. Fix: Interest for late deposit runs from the date of deduction to the date of deposit, at 1.5% per month or part of month.
Counting complete months only. Fix: Count every part of a month as a full month. For example, 2 months and 8 days is 3 months.

Exam tips

Write 'tax year' every time. Using 'assessment year' or 'previous year' in a 2025 Act answer signals that you studied the wrong law.
In numerical questions, show the line 'tax − TDS − TCS' and the ₹10,000 test explicitly. Examiners award step marks for it.
For instalments, give both the cumulative figure and the amount due on each date, so a small slip does not cost the whole answer.
In theory questions on difference between TDS and TCS, structure the answer as a short comparison: who acts, when, how it is recovered, who deposits.
Quote section 390 only for the basic provision on deduction and collection of tax at source. Describe advance tax in words, and do not guess other section numbers if you are not sure.
Learn the rate and threshold list as a single table. Most MCQs test one number from it.
In written answers, state the threshold test in words before applying the rate. Examiners give marks for the condition.
Read the payee carefully: individual or HUF versus others for contractors, and building versus machinery for rent.