T D S is not TEDIOUS

Transcription

1 T D S is not TEDIOUS You may disagree with the above statement that TDS is not Tedious. This may be because of various notices from TDS department regarding various demands on account of short deduction, late payment and mainly late filing of TDS returns i.e. under section 234E. But it is completely a correct statement only if the procedures are followed strictly. In the practical scenario, due to lack of knowledge, it becomes virtually impossible to follow the TDS rules. With this circular we wish to highlight the TDS & TCS provisions. The following are the steps to be followed for TDS compliances: Obtain TAN Identification of TDS liable Transactions Deposit TDS (Challan 281) Obtaining Deductee details Filing Quarterly TDS Returns on time Page 1

2 Following are rate applicable for tax deduction at source: S. No. Section Nature of Payment Threshold Limit (Rs) TDS shall be deducted on Rate (%) Salary #193 Interest on securities Taxable salary as per Income tax Act Interest paid/payable on: /4% National Defense Bonds /4% National Defense Loan, 1968 or 4 3/4% National Defense Loan, National Development Bonds year National Savings Certificates (IV Issue) 5. Debentures issued by any Co-operative society (notified by *CG) /2% Gold Bonds, In accorda nce to the average rate determi ned after conside ring details submitt ed by employ ee in Form 12B Page 2

3 1977 or 7% Gold Bonds, Any Security of *CG or **SG (interest exceeding Rs. 000/- on 8% Savings (Taxable) Bonds, 2003 subject to tax deduction ) 8. Security is beneficially owned by the Life Insurance Corporation of India or the General Insurance Corporation of India or to any of the four companies formed by virtue of the schemes framed under sec 16(1) of the General Insurance Business (nationalisation) Act, 1972 or any other insurer 9. Any Listed DEMAT Security. Interest Exceeds Rs. 5000/- from Debentures listed on recognised Stock Exchange in India 3 #194 Dividend: a. Deemed Dividend 2500 Provisions of section 194 will not apply if deemed dividend is paid to nonshareholder b. Any other dividend - - Nil 4 #194- A Interest Other than Interest on Securities a. Payer is banking Co. / cooperative society engaged in carrying on banking business & interest is paid or payable on time deposit. 000 Interest amount paid or payable Page 3

4 b. Payer is post office & interest is paid or payable on notified deposit scheme with post office. 000 c. Payer is any other person 5000 Interest amount paid or payable Interest amount paid or payable B Winnings from Lottery or Crossword Puzzle or card game or other game of any sort. 000 Total Amount actually Paid BB Winnings from horse races 5000 (Payment made by bookmaker/ person having license granted by Govt.) Total Amount actually Paid C Payment or Credit to- Resident Contractor or Sub-contractor:- Single sum Credited or paid Amount credited or paid Aggregate sum credited or Amount credited or paid paid (does not apply when a. to an Individual or HUF contract is entered into 1 b. any other person for personal work E.g. contract for building residential home for oneself) D Insurance Commission E Payment to non-resident sportsmen or sports associations or an entertainer Commission paid/ payable F Repurchase of units of MF or UTI - 20 Page 4

5 G Commission on Sale of Lottery Tickets 00 commission paid/payable H Commission or brokerage 5000 commission paid/payable I Rent a. Rent of plant & machinery Rent paid /Payable 2 b. Rent of land & building or Furniture or fixture Rent paid /Payable 14 ##194- IA Transfer of Immovable Property other than Agricultural land Amount paid/payable J Professional Fees, Technical Fees, Royalty or remuneration to director LA Compensation on acquisition of certain immovable property (other than agricultural land) LB Interest from infrastructure debt fund (Paid to non-resident only) LC Interest to Nonresident/Foreign Co. by Indian Co Fees paid /payable amount Paid - Amount paid/payable 5 - Interest paid/payable 5 (Interest is paid at approved rate & is in respect of money borrowed- under a loan agreement or by way of issue of long-term infrastructure bonds, from to , in foreign currency from source outside India) LD Interest on certain bonds & Government securities (Paid to a Qualified / Institutional Foreign - Interest Payable 5 (Interest Payable from for investment made by Page 5

6 Investor) payee in rupee denominated bond of Indian Co. or a government security provided that rate shall not exceed the rate as specified by *CG) Other sums (paid to Non- Residents) (not Considered under section 194-LB 194-LC, 194- LD) - Interest or royalty Paid/Payable As applica ble B Income from units (not applicable to ***LTCG exempt u/s (38) - amount of long-term capital gain arising from transfer of units referred to in section 115AB C Income from foreign currency bonds or shares of Indian Co. (Payment to Non-residents) - Interest/ ***LTCG, paid/payable D Interest Payable to foreign institutional Investor from securities (not being interest referred to in sec 194LB/194LC/194LD) - Amount paid/payable (No TDS on dividend income which is exempt u/s (34) ) 20 *CG- Central Government **SG- State Government ***LTCG- Long term capital gain # If the recipient gives a declaration to the payer of income along with his PAN, the payer will not deduct tax at source. Such declaration should be given in the Form No.15G (Form 15H for senior citizen). The payer of the income is required to deliver one copy of aforesaid declaration to the CIT on or before seventh day of the month, immediately preceding the month in which the declaration is furnished to him. Page 6

7 ## Payment of TDS u/s 194IA: 1. The online form available on the TIN website for furnishing information regarding TDS on property is termed as Form 26QB. It has been specifically introduced for deducting TDS on property purchase. 2. According to rules in respect of tax deducted at source, buyer of the property would have to deduct the TDS and deposit the same in Government treasury. 3. Buyer or Purchaser of the property is NOT required to procure Tax Deduction Account Number (TAN). The Buyer is required to quote his or her PAN and seller s PAN. ***Important Note: TDS is required to be deducted at the time of credit of such amount to the account of payee or at the time of payment thereof, whichever is earlier. Surcharge and Education Cess on rates of TDS prescribed: 1) In case of resident payee/ deductee No surcharge & education cess is leviable on TDS for companies or Any other assessee; however, it shall be levied on TDS on salary- education 3% + % where taxable salary exceeds Rs. 1Crore). 2) In case of non-resident payee/ deductee Foreign Surcharge- 2% (where payment made subject to TDS > 1 crore) + education cess-3% a. Companies: Surcharge- 5% (where payment made subject to TDS > crore) + education cess-3% b. Any other assessee: Surcharge- % (where payment made subject to TDS > 1 crore) + education cess-3% TAX COLLECTED AT SOURCE: Section 206C(1): Every person, being a SELLER must collect a sum equal to the following percentage of purchase price from BUYER at the time of debiting amount payable to buyer account or time of receipt of such amount: S.No. Nature of Goods Rate (%) 1 Alcoholic Liquor for human consumption 1 2 Tendu leaves 5 3 Timber obtained Any other forest produce not being timber or Tendu 2.5 leaves 5 Scrap 1 6 Minerals being coal or lignite or iron ore 1 Page 7

8 206C(1C): Every person who grants lease or license or enters into a contract or otherwise transfer any right or interest in any parking lot or toll plaza or mine or quarry to a person, other than public sector company shall collect Tax on the amount Received or receivable whichever is earlier, at following rates: S.No. Nature of contract/license/ lease, etc. Percentage to be collected 1 Parking lot 2 2 Toll plaza 2 3 Mining and quarrying 2 206C(1D): Every person receiving any amount in cash as consideration for sale of bullion or jewellery, shall collect income tax from the 1% of sale consideration only if sale consideration exceeds: Commodity Threshold Limit Jewellery Bullion a. The above percentages referred to in section 206C(1), 206C(1C) and 206C(1D) shall be increased by a surcharge & education cess as under: Foreign Surcharge- 2% (where payment made subject to TCS > 1 crore) + education cess-3% Companies: Surcharge- 5% (where payment made subject to TCS > crore) + education cess-3% b. Non- resident : Surcharge- % (where payment made subject to TCS > 1 crore) + education cess-3% OTHER RELEVANT INFORMATION FOR TDS & TCS: Section 197- Certificate for deduction at lower rate: On the basis of total income, the assessee may apply to the assessing officer for deduction of Income tax at source u/s 192, 193, 194A, 194C, 194D, 194G, 194H, 194I, 194J, 194LA & 195 at lower rates. The recipient can apply in Form 13 to the assessing officer to get a certificate authorizing the payer to deduct tax at lower or deduct no tax as may be appropriate. If the A.O is satisfied that the total income of the recipient justifies deduction of income tax at lower rates or no deduction, on application by assessee, the A.O. shall give him lower tax deduction certificate as he thinks fit. Section 206AA: Requirement to furnish PAN: Where PAN is not furnished by deductee, tax is to be deducted at higher of the following rates:- 1) At the rate specified in relevant provision of this act. 2) At the rate specified in finance act, 3) At the rate of 20% Provisions of section 206AA do not apply in respect section 194LC Page 8

9 If PAN is not provided then, Form 15G & 15H will also be invalid and TDS shall be deducted at above mentioned rates. Section 201- Failure to deduct or collect tax: If a person does not deduct or collect tax at source, wholly or partly u/s 192 to 196C and 206C, OR After deducting or collecting fails to pay such tax, Such person will be liable to pay Interest as follows- Rate of Period for which interest is payable Interest 1% per month from date on which tax was deductible to the date on which tax is actually deducted 1.5% per month from date on of which tax is actually deducted to the date of which tax is actually paid Section 234E- Fee for default in furnishing quarterly returns of TDS/TCS: If a person fails to deliver quarterly returns of TDS/TCS within the time prescribed then he/she shall be liable to pay a fee of Rs. 200/- for every day during which the failure continues.(this is in addition to the penalty under section 271H.) However, such fees shall not exceed the amount of TDS/TCS Deductible or collectible in the quarterly return. Such fees shall be paid before furnishing the quarterly returns of TDS/TCS Section 271H- Penalty for incorrect information or failure to furnish statements: A person shall be liable to pay penalty if: 1. He fails to deliver quarterly returns of TDS/TCS within the time prescribed or 2. He furnishes incorrect information in the quarterly returns of TDS/TCS. The penalty shall be a minimum of Rs.000/- and can extend up to Rs. 0000/- The above penalty shall not be levied for delay in furnishing the quarterly returns if assessee proves that- After paying the tax deducted or collected along with fees under section 234E and interest under section 201, has filed the quarterly returns before the expiry of a period of 1 year from the time prescribed for filing the quarterly return. Important Due Dates: Time limit for payment of tax- Where income or amount of income is credited or paid in the month of march In any other case On or before 30 th April On or before 7 days from the end of the month in whichi) The deduction is made, or ii) Income tax is due u/s192 (1A) Page 9

10 Time limit for furnishing Quarterly Returns of TDS/TCS- S. No. Date of Quarter ending of the financial year Due date for other than Government Deductor 1 30 th June 15 th July of F.Y th September 15 th October of F.Y st December 15 th January of F.Y st March 15 th May of the F.Y. immediately following the F.Y. in which tax is deducted/collected We have to follow TDS/TCS rules as per the procedure given by the government to avoid harassment of the demands and notices from the Income Tax Department. Deducting the taxes in time and paying thereof to the government treasury before due dates prescribed and also filing the TDS/TCS returns in time, will save us from high interest and penalties. This circular is intended to provide general information in a concise form and is not intended to be used as professional advice. This circular is prepared exclusively for the information of clients & staff of Shah Parekh & Associates (Chartered Accountants), Nitin Parekh & Associates (Chartered Accountants), Shah Parekh & Sabhani (Chartered Accountants) & SNR & associates (Chartered Accountants). SHAH PAREKH & ASSOCIATES Chartered Accountants SHAH PAREKH & SABHANI Chartered Accountants NITIN PAREKH & ASSOCIATES Chartered Accountants ROMI SABHANI & ASSOCIATES Chartered Accountants SNR & ASSOCIATES Thakkar House, 2418 Chartered Accountants East Street, Pune Phone: , M.G. Road Pune Phone: (020) /65/55 Phone: (020) Fax no: (020) Website: Page