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  4. 4. TDS : TAX DEDUCTION AT SOURCE Persons responsible for making payment of income are liable to deduct tax at source from such payment at specified rates and deposit the same to income tax department within stipulated period of time.
  5. 5. TDS : TAX DEDUCTION AT SOURCE The recipient of income, though he gets only the balance amount (after deduction of tax), is liable to be taxed on the gross amount (not the balance amount) and the tax deducted at source is adjusted against his tax liability.
  6. 6. OBJECTIVES OF TDS Regular inflow of Revenue for GOVERNMENT. Checking of TAX EVASION. Widening of TAX BASE.
  7. 7. OBJECTIVES OF TDS Assesses pays tax in the assessment year on the income earned in previous year. Due to this rule the tax collection is delayed till the completion of the previous year. Even sometimes people conceal their Income and tax is not paid at all.
  8. 8. NATURE OF PAYMENTS S.192 Salary S.193 Int.-Sec. S.194 Dividend S.194A Other Int. 194B Lot/CW 194BB Horse rac. 194C Contract 194D Ins. Com. 194E NR Sports 194EE NSS 194F MF/UTI 194G Com.Lot. 194H Com/Brok 194I Rent 194J Prof/Tec. 194K,194L A Units/C.Ac q
  9. 9. PERSONS RESPONSIBLE FOR DEDUCTIONS (PAYER) ALL PERSONS (Except Individuals & HUF in certain cases)
  10. 10. Contd.. W.E.F. 01-06-2002, INDIVIDUAL & HUF have to deduct tax at source if turnover exceeds : Rs. 40 Lacs (Business) Rs.10 Lacs (Profession) While making Payment U/S : 194A (other Interest) 194C (Contract) 194H (Commission / Brokerage) 194I (Rent) 194J (Professional Fees)
  11. 11. SPECIFIED DEDUCTEE (PAYEE) All Persons Except Quantum of payment is less than the prescribed limit. General exemption u/s.10 or specific exemption in respective TDS provision. Certificate issued by A.O. u/s.197. Declaration in form 15G and 15H.
  12. 12. DEDUCTION OF TAX Tax is to be deducted at the time of credit or at the time of payment whichever is earlier, at the prescribed rate. In the case of salary, TDS is on estimated income. In the case of payments other than salary, the TDS is on payments. Tax to be Deducted at 20% if PAN is not quoted by deductee. Surcharge and Education Cess will be deductible only upto 30.09.2009.
  13. 13. DEPOSIT OF TAX-1 In the case of SALARY– Within One Week (7- days) from the end of the Month.
  14. 14. DEPOSIT OF TAX-2 In case of Payments Other Than salary – Within ONE WEEK from the end of the month. Payments credited or paid on 31st March (last date of Accounting Year), within two months.
  15. 15. DEPOSIT OF TAX-3 Quarterly Payments in Special Cases. 15th June, 15th Sept., 15th Dec., 15th Mar. Prior approval of JCIT.
  16. 16. TAN:TAX DEDUCTION ACCOUNT NUMBER The person responsible for deducting tax at source has to apply for TAN in Form No.49B within one month from the end of the month in which tax is deducted for the first time. The TAN should be quoted in all challans, Certificates, Quarterly Returns, statements and correspondence. Reformatted TAN.
  17. 17. ISSUE OF TDS CERTIFICATES- (S 203 / R 31) The person responsible for deducting tax at source has to issue TDS certificates before the prescribed date – Normally, within One Month from the end of the month in which the tax was deducted at source.
  18. 18. Contd.. If the non-salary payment is credited or paid on 31st March then the TDS will be deposited by 31st May – in such cases certificate should be issued by 7th of June. In case of consolidated certificate, within One Month from the end of the Financial Year.
  19. 19. ISSUE OF TDS CERTIFICATES -(S 203 / R 31) FORM NO. PARTICULARS 16 12BA 16A Salary Perquisites (Gross salary >1,50,000) Non-Salary 16AA Salary-cum-Return of income (Gross salary <1,50,000)
  20. 20. FILING OF QUARTERLY TDS RETURN Every Deductor has to file quarterly return of TDS within stipulated time in prescribed format giving details of name of the Deductee, type of payment made, amount deducted and amount deposited.
  21. 21. Contd.. e-Filing of TDS Returns is Mandatory for the following: An office of Government, Company, Person required to get his accounts audited under section 44AB, If number of deductees records in a quarterly statement for any quarter of the immediately preceding financial year is equal to more than fifty.
  22. 22. QUARTERLY RETURN FORMS Form No. Particulars 24Q Salary 26Q Non-salary 27Q Non-salary to NRI
  23. 23. DUE DATES OF FILING OF QUARTERLY RETURNS Quarter Ending 30th June 30th Sept. 31st Dec. Due Date 15th July 15th Oct. 15th Jan. 31st Mar. 15th June
  24. 24. FILING OF QUARTERLY RETURN BY BANKS (206A/RULE 31 AC/FORM 26QA) Banks are required to file Quarterly Returns in respect of the payment of interest to the deposit holders without TDS. W.E.F 01-06-2005 Banks are required to file Quarterly returns in FORM 26QA in respect of payment of interest to its DEPOSIT-HOLDERS even if the interest amount does not exceed Rs.5000/- (i.e. on which no TAX has to be deducted) .
  25. 25. NO DEDUCTION IS TO BE MADE IN CERTAIN CASES If a declaration is submitted u/s 197A by the recipient (Deductee) to the payer (Deductor), then no tax is deductible in few cases. Applicable to tax deduction on : Interest on securities Dividend Interest other than interest on securities National saving scheme.
  26. 26. Contd.. This benefit is available to specific recipient (not open to all) on fulfillment of certain conditions mention in section 197A. If these conditions are satisfied no tax is deductible on submission of declaration form in duplicate copy. Form 15 H Form 15 G By Senior Citizen By any other Person
  27. 27. LOWER DEDUCTION CERTIFICATE U/S 197 Can be filed by any person. Certificate will be issued by the TDS-AO. Application to be made in Form No.13 to the TDS-AO.
  28. 28. LOWER DEDUCTION CERTIFICATE U/S 197 Certificate for deduction at lower rate (Sec 197) Where tax is to be deducted at source u/s 192, 193,194,194A,194C,194D,194G,194H,194I,19 4J, 194K, 194LA & 195.
  29. 29. Contd.. And if the Income Tax Officer/ Assessing Officer, on an application made on this behalf, after being satisfied that the total income of the recipient justifies the deduction of income tax at lower rate/ or no deduction of tax, the ITO/AO shall give to him such certificate as may be appropriate. On receipt of such certificate, the person responsible for deducting tax at source (TDS) shall deduct the tax at the rates specified in the certificate.
  30. 30. CONSEQUENCES OF FAILURE TO DEDUCT OR DEPOSIT THE TAX AT SOURCE The person responsible for deducting tax at source will be held as assessee in default and the tax he ought to have deducted at source or he ought to have deposited will be collected from such person.
  31. 31. CONSEQUENCES OF FAILURE TO DEDUCT OR DEPOSIT THE TAX AT SOURCE The tax along with interest shall be a charge upon all the assets of the person / company, responsible for deducting tax at source.
  32. 32. CONSEQUENCES OF FAILURE TO DEDUCT OR DEPOSIT THE TAX AT SOURCE [S.40(A)(IA)] W.E.F. 01.04.2004 ( AY 2005-06), if the deductor does not deduct or deposit the tax at source, he shall not be allowed deduction while computing his own total income : Interest Commission & brokerage Fee for professional & technical services and contract Rent Payment to Contractors or Sub-Contractors Payment of Royalty to a Resident
  33. 33. Contd.. IN OTHER WORDS : Non-deduction of tax results in disallowance of such expenditure in computing the taxable income, effectively resulting in increase in the taxable income and simultaneously the tax liability of the deductor.
  34. 34. INTEREST U/S 201 (1A) If the person responsible for deducting tax at source does not deduct tax at source (wholly or partly) or after deducting fails to deposit the same as required by the Act, he is liable to pay interest @ 1% per month u/s 201(1A). Even if the delay is by one day, you will have to pay one month’s interest.
  35. 35. PENALTY U/S 271C If any person fails to deduct the whole or part of the tax, then such person shall be liable to pay, by way of penalty, a sum equal to amount of tax which such person failed to deduct or pay as aforesaid.
  36. 36. FAILURE TO FURNISH THE TDS RETURN272A(2)(c) If the deductor fails to furnish the TDS RETURN within due date, he shall be liable for penalty of Rs.100/- per day for the period of default.
  37. 37. FAILURE TO FURNISH A COPY OF CERTIFICATE272A(2)(G) If the deductor fails to furnish a certificate to the payee within the prescribed time, he shall be liable for penalty of Rs.100/- per day for the period of default.
  38. 38. FAILURE TO APPLY FOR TAN- 272BB If the deductor fails to apply for TAN the prescribed time, he shall penalty of Rs.10000/-. within be liable for
  39. 39. PROSECUTION U/S 276B If the deductor fails to deposit the tax deducted by him at source, he shall be punishable with rigorous imprisonment for a term from three months to seven fine. years along with
  40. 40. FOLLOW TDS PROVISIONS Deduct TDS as per INCOME TAX norms and deposit into the Government Treasury by due date, obtain TAN, issue TDS CERTIFICATE and file the return in time. OR else face PENAL CONSEQUENCES by way of Interest, Penalty and Prosecution and also disallowance of Expenditure.
  41. 41. ON LINE TAX ACCOUNTING SYSTEM (OLTAS)-1 All India Data base of tax paid by the tax payers. It has a facility to check any payment made by the tax payer in the Government Account. Important resource in giving credit to the tax payers while processing IT/TDS return.
  42. 42. ON LINE TAX ACCOUNTING SYSTEM (OLTAS)-2 Important FeaturesOnly 2 challans. Only 1 copy with detachable counterfoil. For Advance tax and Self- Assessment tax – Challan No.280 For TDS Challan No.281.
  43. 43. ON LINE TAX ACCOUNTING SYSTEM (OLTAS)-3 The counterfoil has name of the branch – 7 digit BSR Code – date of deposit – Sl. No. of challan (5 digits). No need to attach copy of challan with the tax return. Mention CIN – combination of 7 digit BSR Code –date of deposit – Sl. No. of challan (5 digits). PAN/TAN must be mentioned correctly .
  44. 44. MANDATORY e-FILING e-Filing of TDS Returns is Mandatory for the followingAn office of Government, Company, Person required to get his accounts audited under section 44AB, number of deductees records in a quarterly statement for any quarter of the immediately preceding financial year is equal to more than fifty.
  45. 45. OBJECTIVE The basic objectives of computerization of TDS Returns is to cut down the compliance cost for deductors, to correlate deduction of taxes made by deductors with the deposit of the deducted tax in the Government account in a designated bank and correlate deduction of tax by the deductors with the corresponding credits claimed by the deductees.
  46. 46. SCHEME FOR ELECTRONIC FILING OF TDS RETURNS The scheme for electronic filing of TDS returns was notified on 26.8.2003. The Board Circular No.8 dated 19.9.2003 clarifies the procedure in this regard. The procedure basically envisages that corporate deductors will prepare their TDS returns in the new TDS return Forms 24, 26 or 27, according to the data structure notified by eFiling Administrator.
  47. 47. Contd.. The e-TDS returns in the prescribed data structure stored on CD ROM and supported by a duly signed control chart in Form 27A in paper format will be submitted to an e-TDS Intermediary appointed by the Board .
  48. 48. e-TDS ADMINISTRATOR AND e-TDS INTERMEDIARY The CBDT has appointed Director General of Income-tax (Systems) as e-TDS Administrator. Separately, M/s National Securities Depository Limited (NSDL), who are also the agency hosting TIN, have been appointed as e-TDS Intermediary.
  49. 49. PROCEDURE FOR ALLOTMENT OF TAN NSDL has been authorized to receive applications (form 49B) for allotment of TAN at their front offices for fee of Rs.50/- to be paid by the applicant to them. The data in respect o f such TAN applications will be entered by NSDL and sent to National Computer Centre (NCC) of Income-tax Department and the respective computer centres on-line . The allotment of TAN will be done by the IT department centres and communicated online to NSDL who will intimate the same to the applicant.
  50. 50. PREPARATION OF e -TDS RETURNS While preparing the e-TDS returns, the deductor has to ensure that FIVE mandatory requirements listed in Circular No.8 of CBDT dated 19.9.2003, are complied with :
  51. 51. MANDATORY REQUIREMENTS FOR e-TDS RETURNS 1. Tax deduction Account Number (TAN) of the deductor is clearly mentioned in the TDS return as also on Form No.27A, as required by sub-section (2) of section 203A of the Income-tax Act. However, in cases where TAN is not available the e-TDS returns will also be accepted if the same is accompanied with an application in Form 49B for allotment or for reformatting.
  52. 52. Contd.. 2. Full particulars relating to deposit of tax deducted at source, in the designated bank are correctly and properly filled in the table at item No.6 of Form No.24 or item No.5 of Form No.26 or item No.5 of Form No.27, as the case may be.
  53. 53. Contd.. 3. The data in the e-TDS return is as per the data structure prescribed by the e-Filing Administrator. This is necessary so that the data structure of e-TDS returns is compatible with the departmental application software for processing the same.
  54. 54. Contd.. 4. The Control Chart in Form 27A is duly filled in all columns, signed and enclosed in paper form with the return on computer media.
  55. 55. Contd.. 5. The Control Totals of the amount paid and the tax deducted at source as mentioned at item No.3 of Form No. 27A tally with the corresponding totals in the e-TDS return in Form No. 24 or Form No. 26 or Form No. 27, as the case may be. In case any of these mandatory requirements are not fulfilled, the e -TDS return will not be received by the e -TDS intermediary.
  56. 56. FILING OF e -TDS RETURNS The deductors should prepare their e-TDS return as per the above procedure, store the data on a CD ROM, enclose the control chart (Form 27A in paper format) and submit these at any of the front offices of NSDL. Although the scheme permits e-TDS returns to be prepared on a floppy, it would be preferable that these are prepared on a CD ROM to avoid any loss of data, viruses etc.
  57. 57. FILING OF e -TDS RETURNS The e-TDS return can be filed at any of the TIN Facilitaion Centres offices being opened by NSDL at 42 cities. At the receipt stage, these front offices will carryout validation checks on the e -TDS returns to ensure compliance with above five parameters, and a provisional receipt will be issued on successful validation.
  58. 58. FILING OF e -TDS RETURNS Section 139A(5B) requires that PAN of the deductees should be mentioned in the TDS returns. Wherever PAN of deductees is not mentioned by a deductor in his e-TDS return, this fact will be recorded on the provisional receipt as deficiency, to be removed by the deductor. However, in such cases, NSDL will accept the e TDS returns.
  59. 59. FILING OF e -TDS RETURNS The deficiency can be removed by the deductor within 7 days, failing which the e-TDS returns will be sent by NSDL to the Department indicating the deficiency therein for appropriate action by the concerned A.O.
  60. 60. UPLOAD CHARGES Since e-filing of TDS returns will reduce the voluminous paper work involved in filing of paper TDS returns and enclosures thereby significantly reducing the compliance cost of deductors, the e -intermediary i.e. NSDL have been authorized to collect service charges in respect of the various services being rendered by them to the deductors for upload of e-TDS returns at some rates.
  61. 61. Contd.. Category of e-TDS Return Upload charges: Number of Records Upload Fee (Rs.)* Up to 100 25 101-1000 150 More than 1000 500 *Service tax if any will be payable by deductors in addition to the above.
  63. 63. Introduction Tax collection at source means collection of tax from the buyer of goods specified in section 206C (1) at the time of sale, and also by a person who grants lease or a license in respect of parking lot or toll plaza or mine or quarry. A tax credit is given to person from whom tax is collected for amount collected
  64. 64. Nature of Collections Sl. No. 1. 2. 3. 4. 5. Nature of Goods Rate* Alcoholic liquor for human consumption (other than Indian made foreign liquor) Indian made foreign liquor Tendu leaves Timber obtained under a forest lease Timber obtained by any mode other than under forest lease 1% 1% 5% 2.5% 2.5% * Excluding Surcharge & cess
  65. 65. Contd… Sl. No. 6. 7. 8. Nature of Goods Any other forest produce not being timber or tendu leaves Scrap Parking lot, toll plaza, mining and quarrying (other than mining & quarrying of mineral oil, petroleum & natural gas.) Rate* 2.5% 1% 2% * Excluding Surcharge & cess
  66. 66. SELLER Seller means Every Person, Except, Individual or HUF whose books of accounts are not audited u/s 44AB
  67. 67. BUYER Buyer means any person other than; a) a public sector company, Central Government, State Government, Embassy, High Commission, Consulate & the trade representation, of a foreign State and Club, b) a buyer in retail sale of such goods purchased goods for personal consumption.
  68. 68. Collection of Tax  Tax has to be collected at the time of debiting of the amount payable or at time of receipt of such amount from the buyer, whichever is earlier.  Buyer is exempt from TCS, if his income is exempt u/s 10(26)
  69. 69. Contd…  Lower deduction can be allowed by Assessing officer on an application made by buyer in Form 13, in this behalf.  No tax shall be collected at source, if resident buyer purchases goods for the purpose of manufacturing, processing or producing any article or thing, provided he gives a declaration in duplicate in Form No. 27C to seller.
  70. 70. TCS CERTIFICATE Issue Form 27D With in One Month from the end of the month in which Tax is Collected
  71. 71. File TCS Return Form No. 27EQ Quarterly On or before the Due Date
  72. 72. DUE DATES OF FILING OF QUARTERLY TCS RETURNS Quarter Ending 30th June 30th Sept. 31st Dec. Due Date 15th July 15th Oct. 15th Jan. 31st Mar. 30th April
  73. 73. Failure to Collect or Pay Tax  Interest :-The amount of tax together with the amount of simple interest at the rate of 1% p.m., or part thereof, shall be a charge upon all the assets of seller.
  74. 74. Contd…  Prosecution :-Section 276BB, provides for prosecution of a person who fails to pay the tax collected at source, for a period which shall not be less than 3 months but may extend up to 7 years and with fine.
  75. 75. e-Filing of TCS Return e-Filing of TCS Return is Mandatory for:1. Corporate and Government collectors, 2. Any collector covered under mandatory tax audit or having more than 49 tax collection transactions during previous financial year.
  76. 76. Procedure for e-Filing of TCS Return The procedure for filing of e-TCS return is the same as that of e-TDS, except the forms to be used are different. The relevant forms for filing the e-TCS return are: Quarterly- Form No 27EQ, 27B.
  77. 77. DISCLAIMER Our views expressed herein are based on the facts and assumptions indicated above. The views cannot be considered as an authorized representation, warranty or guarantee that the revenue authorities or the courts will concur with the same. The views are based on the existing provisions of law and its interpretation, which are subject to change from time to time. The views contained may not be used or reproduced in whole or in part or otherwise referred to in any document or delivered to any one without our prior written consent.