Tds presentation 14.3.10 pdf

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This was a training workshop for employees of Co-operative Banks

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Tds presentation 14.3.10 pdf

  1. 1. Presentation on TDS PROVISIONS & PROCEDURES 14th March, 2010 CA. Kalyan Chakravarthy Vennety
  2. 2. What is TDS? • Is a form of Advance Tax collection • Mechanism puts the onus of compliance on the payer of transaction • TDS covers major kind of Transactions • Fairly simple provisions to comply 14.3.2010 CA. Kalyan Chakravarthy Vennety 2
  3. 3. Process flow of TDS Payer deducts Tax from payment • Payer deducts Tax from payment Payer Deposits the same to credit of Govt. • Payer Deposits the same to credit of Govt. Payer files Return of TDS • Payer files Return of TDS Payer issues TDS Certificate to the payee • Payer issues TDS Certificate to the payee Payee claims refund of the TDS in his return • Payee claims refund of the TDS in his return 14.3.2010 CA. Kalyan Chakravarthy Vennety 3
  4. 4. Section 192 - Salaries • TDS @average rate of Tax payable for FY • Salary means ‘”salary” as per Sec 17 of Act • TDS has to be deducted @ the time of payment every month • Amount = Estimated Tax for FY /12 months • Consider: Salary from previous employer • Consider: Income from other sources • Issue Form 16 within 1 month from end of FY 14.3.2010 CA. Kalyan Chakravarthy Vennety 4
  5. 5. Section 193 - Interest on securities • TDS @ 10% • At the time of Credit or payment whichever is earlier • Following are exempt from TDS provisions: – National Defence, Development Bonds etc. – NSC – Gold Bonds – Central or State Govt. Securities etc. 14.3.2010 CA. Kalyan Chakravarthy Vennety 5
  6. 6. Section 194A –Interest other than on securities • Non-applicable to : Ind/HUF below Tax Audit • At the time of Credit or pmt whichever is earlier Nature of Payment Threshold Limit to deduct tax Rate of Deduction Interest other than interest on securities Rs.10,000/- p.a. 10 % Interest from Banking Company Interest other than interest on securities Rs.5,000/- p.a. 10 % Interest other than from Banking Company 14.3.2010 CA. Kalyan Chakravarthy Vennety 6
  7. 7. Section 194A (3) –Exemption to Co-op societies • The provisions of sec 192(1) shall not apply to (among other clauses) – (v) to such income credited or paid by a co- operative society to a member thereof or to any other co-operative society 14.3.2010 CA. Kalyan Chakravarthy Vennety 7
  8. 8. Section 194B - Winning from lottery • Rate of Deduction@30% • At the time of Winning from Lottery – In cash – Or kind • Exemptions: – If amount of Winning does not exceed Rs.5000 14.3.2010 CA. Kalyan Chakravarthy Vennety 8
  9. 9. Section 194BB - Winning from Horse Race • Rate of Deduction@30% • At the time of Winning from Horse Race – In cash – Or kind • Exemptions: – If amount of Winning does not exceed Rs.5000 14.3.2010 CA. Kalyan Chakravarthy Vennety 9
  10. 10. Section 194C – Payment to Contractors • Non-applicable to : Ind/HUF below Tax Audit • At the time of Credit or pmt whichever is earlier • Exemptions: – If amount of sum paid or credited does not exceed Rs.20,000 and the aggregate amount does not exceed Rs.50,000 in a FY 14.3.2010 CA. Kalyan Chakravarthy Vennety 10
  11. 11. Section 194C – Payment to Contractors Threshhold Limit to In case recipient is an If the recipient is other Section Code Nature of Payment deduct tax Individual / HUF than Individual / HUF Rs.20,000/- Per Single Contract or Rs.50,000/- 194-C Payment to Contractor 1% 2% exceed during the financial year Rs.20,000/- Per Single Payment to Advertising Contract or Rs.50,000/- 194-C Contractor / Sub 1% 2% exceed during the Contractor financial year Payment to Transport 194-C contractor / sub If PAN Quoted NIL NIL contractor Payment to Transport 1% 2% 194-C contractor / sub If PAN not quoted *20% from *20% from contractor 01.04.2010 01.04.2010 14.3.2010 CA. Kalyan Chakravarthy Vennety 11
  12. 12. Section 194C – Payment to Contractors • Important Points to note: – Work will not include manufacturing or supplying a product as per the specification of customer by using material purchased from person other than such customer – In case the material is supplied by customer and the same is separately mentioned on the invoice, then TDS will not be deducted on the amount of material 14.3.2010 CA. Kalyan Chakravarthy Vennety 12
  13. 13. Section 194 D - Insurance commission • At the time of Credit or pmt whichever is earlier • Exemptions: – If sum paid or credited does not exceed Rs.5000 14.3.2010 CA. Kalyan Chakravarthy Vennety 13
  14. 14. Section 194H – Commission or Brokerage • Non-applicable to : Ind/HUF below Tax Audit • At the time of Credit or pmt whichever is earlier • Exemptions: – If sum paid or credited does not exceed Rs.2500 Section Code Nature of Payment Threshold Limit to In case recipient is If the recipient deduct tax an Individual / is other than HUF Individual / HUF 194-H Payment of Rs.2,500/- p.a. 10 % 10 % commission or brokerage to resident 14.3.2010 CA. Kalyan Chakravarthy Vennety 14
  15. 15. Section 194I - Rent • Non-applicable to : Ind/HUF below Tax Audit • At the time of Credit or pmt whichever is earlier • Exemptions: – If sum paid or credited does not exceed Rs.120,000 14.3.2010 CA. Kalyan Chakravarthy Vennety 15
  16. 16. Section 194I - Rent Threshold Limit to Section Code Nature of Payment Rate of Deduction deduct tax 10% 194-I Payment of Rent Rs.1,20,000/- p.a. *20% from 01.04.2010 Payment of Rent for 2% use of Plant , 194-I Rs.1,20,000/- p.a. *20% from Machinery or 01.04.2010 Equipment 14.3.2010 CA. Kalyan Chakravarthy Vennety 16
  17. 17. Section 194J - Professional fees • Non-applicable to : Ind/HUF below Tax Audit • At the time of Credit or pmt whichever is earlier • Exemptions: – If sum paid or credited does not exceed Rs.20,000 Section Code Nature of Payment Threshold Limit to Rate of Deduction deduct tax 194-J Payment of Rs.20,000/- p.a. 10 % professional or technical services 14.3.2010 CA. Kalyan Chakravarthy Vennety 17
  18. 18. Due Dates of Payment Scenario Due Date 7 days from the end of the month in Salaries which the Salary is paid 7 days from the end of the month in Non-Salary for all months except which the amount is credited or paid entries on 31st March of the FY whichever is earlier Non-Salary where the amount is 31st May credited on 31st March of the FY 14.3.2010 CA. Kalyan Chakravarthy Vennety 18
  19. 19. E-TDS Returns • Periodicity of Returns is Quarterly • Due in 15 days from the end of the quarter • Returns in prescribed Forms – Form 24Q for Salaries – Form 26Q for other than Salaries • Returns to be printed on CD media • To be submitted to NSDL TIN centre • Provisional receipt number is generated 14.3.2010 CA. Kalyan Chakravarthy Vennety 19
  20. 20. Section 201 - failure to deduct or pay • Penalty u/s 221 if AO is not satisfied with reasons for default • Interest @ 1% p.m. till default continues • Charge on assets of assessee for recovery of TDS with interest 14.3.2010 CA. Kalyan Chakravarthy Vennety 20
  21. 21. Section 40(a) (ia) - Following exp will be dis-allowed • Payments under 194A, 194C, 194H, 194I, 194J • On which Tax is deductible but – has not been deducted or – if deducted, has not paid before a) in case where deduction was in last month, on or before due date u/s 139(1) b) in other case, on or before the last day of previous year 14.3.2010 CA. Kalyan Chakravarthy Vennety 21
  22. 22. Section 40(a) (ia) - When these exp will be allowed? • In case of such payments , Tax has been deducted – in the subsequent year; or – during the last month of the previous year but paid after the due date; or – During any month of the previous year but paid after the end of the said previous year • Such sums shall be allowed in the year of pmt. 14.3.2010 CA. Kalyan Chakravarthy Vennety 22
  23. 23. Reasons… • There seems to be a system failure in the process the Income Tax Department • Notices are bieng generated based on the information in their database system • In most of the cases, the last challan paid appears as short payment or late payment • AO is just signing and sending the notices 14.3.2010 CA. Kalyan Chakravarthy Vennety 23
  24. 24. How to deal with it… • No need to worry if you receive the notice • Just reply to the letter providing all the information regarding your return in terms of: – Date of deduction – Rate of deduction – Amount of TDS section wise calculation – Date of payment etc – In tabulated form in appropriate format. 14.3.2010 CA. Kalyan Chakravarthy Vennety 24
  25. 25. Changes in TDS Threshold Limits w.e.f. 1-07-2010 EXISTING PROPOSED SEC NATURE OF PAYMENT THRESHOLD THRESHOLD Winning from Lottery & 194B 5,000 10,000 crossword puzzles 194BB Winnings from Horse Race 2,500 5,000 20,000 194C Payment to Contractors [for single 30,000 transaction] 50,000 194C Payment to Contractors [for aggregate 75,000 transactions] 194D Insurance Commission 5,000 20,000 194H Commission or brokerage 2,500 5,000 194I Rent 1,20,000 1,80,000 Fess for professional or 194J 20,000 30,000 technical services 14.3.2010 CA. Kalyan Chakravarthy Vennety 25
  26. 26. TDS Best practices… • Always be alert for TDS provisions & compliance • Always pay TDS dues in time • If delayed, pay challan with proper interest • If paid via challan, get correct serial no. from bank • Cross verify Challan serial no. online www.tin-nsdl.com 14.3.2010 CA. Kalyan Chakravarthy Vennety 26
  27. 27. End of Presentation. 14.3.2010 CA. Kalyan Chakravarthy Vennety 27
  28. 28. THANK YOU ! CA. Kalyan Chakravarthy Vennety BCOM, ACA, DISA(ICAI), CISA V R Jogeswara Rao & Co., Chartered Accountants Phone: 99700-88669 Email: ca.vkalyanc@gmail.com 14.3.2010 CA. Kalyan Chakravarthy Vennety 28

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