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Tds overview final


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Tds overview final

  1. 1. OVERVIEW OF TDS• What is TDS• Who shall deduct tax at source• What a Deductor must do• TAN• Nature of payments attracting TDS and rates• Non deduction or deduction at lower rate in certain cases• What is TCS• Provisions relating to TCS and rates• Due date to deposit TDS and TCS• Persons required to file e-TDS/e-TCS returns• Due dates for e-TDS/e-TCS returns• Issuance of TDS certificates (Form-16 and Form-16A)• TDS defaults• Consequences of Defaults• General Information2
  2. 2. What is TDS Tax Deduction at Source or best known as TDS is one of the modes of collectingIncome-tax. In simple terms, TDS is the tax getting deducted from the person receiving theamount (Employee/Deductee) by the person paying such amount(Employer/Deductor). The tax so deducted at source by the payer, has to be deposited in theGovernment treasury to the credit of Central Govt, within the specified time. The tax so deducted from the income of the recipient is deemed to be payment ofIncome-tax by the recipient at the time of his assessment. Presently this concept of TDS is also used as an instrument in enlarging the taxbase. Some of such income subjected to TDS are salary, interest, dividend, interest onsecurities, winnings from lottery, horse races, commission andbrokerage, rent, fees for professional and technical services, payments to non-residents etc. It is always considered as an Advance tax which is paid to the government.3
  3. 3. Who shall deduct tax at source Every person responsible for making payment of nature covered by TDS provisionsof Income Tax Act shall be responsible to deduct tax. However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J inrespect of individual and HUF, only if the turnover or professional receipt exceedsRs.100 Lakhs or Rs. 25 Lakhs respectively in previous year, he is required to deducttax at source. These persons are mainly: Principal Officer of a company for TDS purpose including the employer in case of privateemployment or an employee making payment on behalf of the employer. DDO (Drawing & Disbursing Officer), In case of Govt. Office any officer designated assuch. In the case of "interest on securities" other than payments made by or on behalf of theCentral govt. or the State Government, it is the local authority, corporation orcompany, including the Principal Officer thereof. Such person is called Deductor while the person from whom the tax is deducted iscalled Deductee. Tax must be deducted at the time of payment in cash or cheque or credit to thepayees account whichever is earlier. Credit to payable account or suspenseaccount is also considered to be credit to payees account and TDS must be madeat the time of such credit.4
  4. 4. What a Deductor must do To apply for Tax Deduction Account Number (TAN) in form 49B, induplicate at the designated TIN facilitation centers of, within onemonth from the end of the month in which tax was deducted. To quote TAN (10 digit reformatted TAN) in all TDS/TCSChallans, certificates, statements and other correspondence. To deduct/collect tax at the prescribed rates at the time of every creditor payment, whichever is earlier, in respect of all liable transactions. To remit the tax deducted/collected within the prescribed due dates byusing Challan no. ITNS 281 by quoting the TAN and relevant section ofthe Income-tax Act. To issue TDS/TCS certificate, complete in all respects, within theprescribed time in Form No.16(TDS on salaries), 16A(other TDS) and27D( TCS). To file TDS/TCS quarterly statements within the due date. To mention PAN of all Deductees in the TDS/TCS quarterly statements.5
  5. 5. TAN Tax Deduction Account Number TAN is a unique identificationnumber for person deducting the tax. TAN is a 10 characters alpha numeric string comprising of 4Alpha - 5 Numeric - 1 Alpha. [Eg: MUMR02933A]. The first 3characters consists of Income Tax Region Code (MUM =>Mumbai) and the Fourth digit comprises of First Character ofdeductor name (R => Relyon Softech Ltd). Remainingcharacters form an unique combination to get identified atIncome Tax Department.6
  6. 6. Nature of payments attracting TDS and ratesSl.No.Section Nature of Payment Cut Off Amount Rate %01.04.2012 01.07.2012 HUF/IND Others1 192 Salaries Salary income must bemore than exemption limitafter deductions.Average Rate2 193 Interest on debentures 2500 5000 10 103 194 Deemed dividend - - 10 104 194A Interest other than Int. on securities (by Bank) 10000 10000 10 104A 194A Interest other than Int. on securities (By others) 5000 5000 10 105 194B Lottery / Cross Word Puzzle 10000 10000 30 306 194BB Winnings from Horse Race 5000 5000 30 307 194C(1) Contracts 30000 30000 1 28 194C(2) Sub-contracts/ Advertisements 30000 30000 1 29 194D Insurance Commission 20000 20000 10 1010 194EE Payments out of deposits under NSS 2500 2500 20 -11 194F Repurchase of units by MF/UTI 1000 1000 20 2012 194G Commission on sale of lottery tickets 1000 1000 10 1013 194H Commission or Brokerage 5000 5000 10 107
  7. 7. 14 194I Rent (Land & building) furniture & fittings) 180000 180000 10 10Rent (P & M , Equipment 180000 180000 2 215 194J Professional/Technical charges/Royalty &Non-compete fees30000 30000 10 1016 194J(1)(ba) Any remuneration or commission paid todirector of the company(Effective from 1July 2012)NA NIL 10 1017 194LA Compensation on acquisition of immovableproperty100000 200000 10 1018 194LLA Payment on transfer of certain immovableproperty other than agriculturalland (Withdrawn on 07/05/2012)(a) INR 50 lakhs in casesuch property is situated ina specified urbanagglomeration; or(b) INR 20lakhs in case such propertyis situated in any otherarea)(Withdrawn on07/05/2012) no tds on suchtransactions8
  8. 8. Exceptions/Notes: TDS at higher rate (i.e., 20%) has to be made if the deductee does not provide PAN to thedeductor Surcharge on Income-tax is not deductible/collectible at source in case of individual/ HUF/Firm/ AOP / BOI/Domestic Company in respect of payment of income other than salary. In the case of Company other than Domestic Company, the rate of surcharge is @ 2% ofIncome-tax, where the income or the aggregate of such income paid or likely to be paidexceeds Rs.1,00,00,000. No Cess on payment made to resident: Education Cess is not deductible/collectible at sourcein case of resident Individual/HUF/Firm/ AOP/ BOI/ Domestic Company in respect of paymentof income other than salary.Education Cess @ 2% plus secondary & Higher Education Cess @1% is deductible at source in case of non-residents and foreign company. No TDS on Goods Transport :No deduction shall be made from any sum credited or paid orlikely to be credited or paid during the previous year to the account of a contractor duringthe course of business of plying, hiring or leasing goods carriages on furnishing of hisPermanent Account Number, to the person paying or crediting such sum. Where the aggregate of the amounts paid/credited or likely to be paid/credited to Contactoror Sub-contractor exceeds Rs.75,000 during the financial year, TDS has to be made u/s 194CTDS by Individual and HUF (Non Audit) case not deductible :An Individual or a Hindu Undivided Family whose total sales, gross receipts or turnoverfrom business or profession carried on by him does not exceed the monetarylimits(Rs.100,00,000 in case of business & Rs.25,00,000 in case of profession) under Clause(a) or (b) of Sec.44AB during the preceding financial year shall not be liable to deduct taxu/s.194A,194C, 194H, 194I & 194J.So no tax is deductible by HUF/Individual in first year ofoperations of business even sales/Fees is more than 100/25 Lakhs.9
  9. 9. Non deduction or deduction at lowerrate in certain cases• No Tax has to be deducted for the payment made toGovernment, RBI, Corporation whose income is exemptfrom tax or mutual fund specified u/sec. 10(23D). Also incase where deductee produces a non deduction certificateor lower deduction certificate u/sec. 197 of the Income TaxAct 1961.• Self declaration in Forms 15G and 15H can be filed by theDeductee if his income doesnt exceed the amountchargeable to tax. This self declaration can be filed fordividends, interest and mutual fund income only. In thesecases no tax has to be deducted. However the tax Deductoris required to furnish copies of this self declaration to theconcerned CCIT or CIT as per the rules.10
  10. 10. What is TCS• Section 206C of the Act.• Provides that every person being a sellershall, at the time of debiting of the amountpayable by the buyer to the account of thebuyer or at the time of receipt of such amountfrom the said buyer in cash or by issue of acheque or draft or by any other mode , whicheveris earlier , collect from the buyer of any of thegoods of nature specified , a sum equal to thepercentage as specified of such amount asincome tax.11
  11. 11. Who shall collect TCS• The Central And State Government.• Local authority• Statutory corporation or Authority• Company• Firm• Co-operative society• Individual or Hindu undivided family(HUF) ifcovered under section 44AB (mandatoryAudit)12
  12. 12. Buyer under the scope of TCSBuyer Means a person who obtains in any sale, by way ofauction, tender or any other mode, specified goods ,or right to receive anysuch goodsbut does not include the following :• Public sector company,• Central/state Government,• Embassy,a high commission,consulate and the trade representation of aforeign state• A club• A buyer in the retail sale of such goods purchased for personalconsumptionThus, goods purchased by consumers are not covered under TCS.13
  13. 13. Goods specified under the scope of TCS• Alcoholic liquor for human consumption• Tendu leaves• Timber obtained under a forest lease• Timber obtained by any mode other than under a forest lease• Any other forest produce not being timber or tendu leaves• Scrap• Parking lot• Toll plaza• Mining and quarrying• Minerals , being coal or lignite ore• Bullion or Jewellery (if the sale consideration paid in cashexceeding Rs. Five lakhs in jewellery and Rs. two lakh in caseof Bullion)14
  14. 14. TCS ratesSl.No. Nature of Goods Rates in %1 Alcoholic liquor for human Consumption 12 Tendu leaves 53 Timber obtained under forest lease 2.54 Timber obtained by any mode other than a forestlease2.55 Any other forest produce not being timber or tenduleaves2.56 Scrap 17 Parking lot 28 Toll plaza 29 Mining & Quarrying 210 Minerals, being coal or lignite or iron ore 1 (wef 01.07.2012)11 Bullion or jewellery (if the sale consideration ispaid in cash exceeding INR 5 lakhs in jewelleryand two lakh in case of Bullion)1 (wef 01.07.2012)15
  15. 15. Due date to deposit TDS and TCS“Time and mode of payment to Government account of tax deducted at source or taxpaid under sub- section (1A) of section 192.Rule :30.(1) All sums deducted in accordance with the provisions of Chapter XVII‐B by an officeof the Government shall be paid to the credit of the Central Government ‐(a) on the same day where the tax is paid without production of an income‐taxchallan; and(b) on or before seven days from the end of the month in which the deduction ismade or income‐tax is due under sub‐section (1A) of section 192, where tax is paidaccompanied by an income‐tax challan.16Tax to be deducted by Govt OfficeTax deposited without challan Same dayTax deposited with challan 7th of next monthTax on perquisites opt to bedeposited by the employer7th of next month
  16. 16. (2) All sums deducted in accordance with the provisions ofChapter XVII‐B by deductors other than an office of theGovernment shall be paid to the credit of the CentralGovernment ‐(a) on or before 30th day of April where the income oramount is credited or paid in the month of March; and(b) in any other case, on or before seven days from theend of the month in which the deduction is made orincome‐tax is due under sub‐section (1A) of section 192.Tax deducted by other1 tax deductible in March 30th April of nextyear2 other months & tax on perquisitesopted to be deposited by employer7th of next month17
  17. 17. (3) Notwithstanding anything contained in sub‐rule (2), in specialcases, the Assessing Officer may, with the prior approval of theJoint Commissioner, permit quarterly payment of the tax deductedunder section 192 or section 194A or section 194D or section 194Hfor the quarters of the financial year specified to in column (2) ofthe Table below by the date referred to in column (3) of the saidTable:‐Sl. No. Quarter ended On Date of payment1 30th June 7th July2 30the September 7th October3 31st December 7th January4 31st March 30Th April18
  18. 18. Persons required to file e-TDS returnsVide Notification No. 238/2007, dated 30-8-2007,following persons are liable to file e-tds/e-tcs return:1) All Government department/office;2) All companies3) All persons who are required to get their accountsaudited under section 44AB in the immediatelypreceding financial year;4) All persons where the number of Deductees’ records ina quarterly statement for any quarter of theimmediately preceding financial year is equal to ormore than fifty.19
  19. 19. Due dates for e-TDS returnsDue date e-tds return 24Q, 26Q, 27Q and Form16 ,Form 16ASl. No. Quarter ending From 01.11.2011 on wardsFor Govt officesFor other deductorsEtds return Form 16A Etds return Form 16A1 30th June 31st July 15th August 15th July 30th July2 30th September 31st October 15th November 15th October 30th October3 31st December 31st January 15th Feburary 15th January 30th January4 31st March 15th May 30th May (31stMay for form 16)15th May 30th May (31st Mayfor form 16)20
  20. 20. Issuance of TDS certificates (Form-16 and Form-16A)• Tax deducted on or after 01.04.2012, it is mandatory for all type of deductors toissue quarterly form 16A (non salary tds certificate) only after downloaded thesame from the TIN-NSDL website. Earlier this was mandatory for only companies,Banks and co-operative societies engaged in Banking services with effect from01.04.2011 through circular number 3/2011.• Form 16A downloaded from TIN-NSDL can be signed manually or can beauthenticated through digital signature only.FY 2010-11 FY 2011-12 FY 2012-13Download Form 16Afrom TIN Web SiteOptional Mandatory forCompanies and Banks.Optional for othersMandatory for all type ofdeductorsDigitally Sign Form16AOptional but only ifdownloaded from TINWeb siteOptional but only ifdownloaded from TINWeb siteOptional but only ifdownloaded from TINWeb siteManually Issue TDSCertificate(Form 16A)All deductors canmanually issue TDSCertificateCompanies and Bankscannot manually issueTDS CertificateNo deductor can issuedmanually TDS certificateManually Issue TDSCertificate(Form 16salary)All deductors canmanually issue TDSCertificateAll deductors canmanually issue TDSCertificateAll deductors canmanually issue TDSCertificate21
  21. 21. TDS defaults Failure to deduct or remit TDS /TCS(full or part) Interest: Interest at the rates in force (12% p.a.) from the date on which tax wasdeductible /collectible to the date of payment to Government Account is chargeable.The Finance Act 2010 amended interest rate wef 01.07.2010 and created a separateclass of default in respect of tax deducted but not paid to levy interest at a higher rate of1.5 per cent per month, i.e. 18 per cent p.a. as against 1 per cent p.m., i.e. 12 per centp.a., applicable in case the tax is deducted late after the due date. The rationale behindthis amendment is that the tax once deducted belongs to the government and theperson withholding the same needs to be penalized by charging higher rate of interestPenalty equal to the tax that was failed to be deducted/collected or remitted is leviable. In case of failure to remit the tax deducted/collected, rigorous imprisonment rangingfrom 3 months to 7 years and fine can be levied. Failure to apply for TAN in time or Failure to quote allotted TAN or Wrong quoting ofTAN :Penalty of Rs.10,000 is leviable u/s.272BB(for each failure) Failure to issue TDS/TCS certificate in time or Failure to submit form 15H/15G in timeor Failure to furnish statement of perquisites in time or Failure to file QuarterlyStatements in time: For each type of failure, penalty of Rs.100/- per day for the periodof default is leviable. Maximum penalty for each failure can be up to the amount ofTDS/TCS.22
  22. 22.  New Section for Penalty for non submission of e-TDS /eTCS return (section271H)(applicable from 01.07.2012) Failure to deliver statement within time prescribed u/s 200 (3) or to the provisoto sub-section (3) of section 206C may liable to penalty which shall not be lessthan Rs. 10,000/- but which may extend to Rs. 1,00,000/-. No penalty if paymentof tax deducted or collected along with fee or interest and delivering thestatement aforesaid before the expiry of 1 year from the time prescribed fordelivering the such statement. However No penalty shall be imposed u/s 271H ifthe person proves that there was reasonable cause for the failure.(section 273B) Assessee In default (amendment in section 201) The Deductor will not to be treated as assessee in Default provided the residentpayee has furnished his return u/s 139 and has taken into account such amountfor computing income in such Return of Income and has paid the Tax Due on theincome declared by him in such return of income and furnishes a certificate tothis effect, duly certified by a CA, in the prescribed form. This form is yet tobe notified. However, the interest for not deducting tax would be payable from the dateon which such tax was collectible till the date of furnishing of return of income bythe resident payee. The limit of passing orders under section 201(1) increased from 2 years to 6 years(retrospective amendment wef 1-04-2010)23
  23. 23. Consequences of Defaults24
  24. 24. General InformationDeduction at lower or nil rate requires certificateu/s.197, which will take effect from the day it isissued. It cannot be used retrospectively.If TDS/TCS certificate is lost, duplicate may beissued on a plain paper giving necessary detailsmarking it as duplicate.Refund can be claimed by the deductee on filingof return of income.Even if the recipient of payment has shown it inhis income-tax return and paid the taxesthereon, the deductor/collector who has failed todeduct/collect tax will be liable to pay interestand penalty.25
  25. 25. THANK YOU26