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IS TDS

TEDIOUS ?. IS TDS. Overview of TDS Provisions CA. D.R. Venkatesh B.Com, LLB, FCA Partner, MSSV & Co Bengaluru. ISSUES. Latest Practical. Issues - Latest. Circulars / Notifications Finance Act, 2009 Finance Act, 2010. CIRCULAR / NOTIFICATIONS.

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IS TDS

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  1. MSSV & Co, Bangalore TEDIOUS? IS TDS

  2. MSSV & Co, Bangalore Overview of TDS Provisions CA. D.R. Venkatesh B.Com, LLB, FCA Partner, MSSV & Co Bengaluru

  3. MSSV & Co, Bangalore ISSUES • Latest • Practical

  4. MSSV & Co, Bangalore Issues - Latest • Circulars / Notifications • Finance Act, 2009 • Finance Act, 2010

  5. MSSV & Co, Bangalore CIRCULAR / NOTIFICATIONS • S.o. 1261(E) dated 31st May, 2010 • Income Tax (6th Amendment) Rules, 2010 • w.e.f 1st Day of April, 2010

  6. MSSV & Co, Bangalore Rule 30 – Time and Mode of Payment Without Challan – Same Day With Challan – on or before seven days from the end of the month in which the deduction is made

  7. MSSV & Co, Bangalore Last month of the year – on or before 30th day of April where the income or amount is credited or paid in the month of March During the year – on or before seven days from the end of the month in which the deduction is made

  8. MSSV & Co, Bangalore SPECIAL PERMISSION • Prior approval of the Joint Commissioner • Permit quarterly payment • Salary - under section 192 • Interest - under section 194A • Insurance Commission - under section 194D • Commission or Brokerage - under section 194H

  9. MSSV & Co, Bangalore Quarter endedDue date 30th June 7th July 30th September 7th October 31st December 7th January 31st March 30th April

  10. MSSV & Co, Bangalore E – Payment • Rule 125 - w.e.f 01.04.2008 • Circular 5/2008 - dated 14.7.2008 • a company and • a person (other than a company) to whom the provisions of Sec 44AB are applicable

  11. MSSV & Co, Bangalore Deductor – Government without challan remittance • Submit statement in Form No. 24G within 10 days from the end of the month to the Agency authorised by the Director General of Income Tax (Systems) • Intimate the BIN generated by the agency to each of the deductors

  12. MSSV & Co, Bangalore • Form No. 16 – Salary • Form No. 16A – other than Salary • Specify • Valid PAN of the Deductee • Valid TAN of the Deductor BIN - CIN Receipt number of the relevant Quarterly Statement

  13. MSSV & Co, Bangalore Time Specified Form No.PeriodicityDue Date 16 Annual By 31st day of May 16A Quarterly Within 15 days from the due date for furnishing the statement – Form 26Q

  14. MSSV & Co, Bangalore Quarterly Returns Statement of Deduction of Tax • Form No. 24Q - Salary • Form No. 26Q - All other deductees • Form No. 27Q - Deductees – Non- Resident

  15. MSSV & Co, Bangalore Time Schedule Date of ending of theDue Date Quarter of the F.Y 30th June 15th July 30th September 15th October 31st December 15th January 31st March 15th May

  16. MSSV & Co, Bangalore Furnishing the statement electronically • the deductor is an office of the Government or • the deductor is the Principal Officer of a Company or • the deductor is a person who is required to get his accounts audited u / s 44AB in the immediately preceding Financial Year or • the number of deductee’s records in the statement for any quarter of the Financial Year are twenty or more

  17. MSSV & Co, Bangalore CIRCULAR / NOTOFICATIONS Notification No. 28/2009 • Income Tax (Sixth Amendment) Rules, 2009 • w.e.f April 1, 2009 • New Rule 37BA, 37I • Credit for tax deducted at source for the purpose of Sec 199 (3) • On the basis of information relating to deduction of tax furnished by the deductor to the income tax authority or the person authorized by such authority

  18. MSSV & Co, Bangalore ANNUAL TAX STATEMENT • Form No. 26AS • Section 203AA • Rule 37AB • Statement issued on behalf of Income Tax Department • Details of tax indicated based on the data submitted by the deductor • Due date for sending this statement is July 31st of every year

  19. MSSV & Co, Bangalore Form 26AS consists of: • General Information • Part A : Details of TDS • Part B : Details of TCS • Part C : Details of Tax paid (other than TDS/ TCS) • Details of Refund granted

  20. MSSV & Co, Bangalore Finance Act, 2009 U / s 194C (3) • where any sum paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source • on the invoice value excluding the value of material, if such value mentioned

  21. MSSV & Co, Bangalore • on the whole of invoice value, if the value of material is not mentioned separately in the invoice • “work” shall include – (e) manufacturing or supply of product according to the requirement or specification of the customer by using the material purchased from such customer

  22. MSSV & Co, Bangalore Finance Act, 2009 Section – 194C (6) w.e.f 01.10.2009 • No TDS • During the course of business of plying, hiring or leasing the goods carriage on furnishing his PAN to the person paying or crediting such sum • Section – 194C (7) - Prescribed Form

  23. MSSV & Co, Bangalore NEW SECTION 206AA • With effect from 1st April, 2010 • Requirement to furnish PAN • 206AA (1) Any person entitled to receive any sum or income or amount, on which tax is deductible under chapter XVII-B (deductee) shall furnish his PAN to deductor, failing which tax shall be deducted at the higher of the following rates, namely:

  24. MSSV & Co, Bangalore • At the rate specified in the relevant provisions of this Act or • At the rate or rates in force or • At the rate of 20% Section 206AA (2) No declaration u /s 197A(1), 197A(1A) & 197A(1C) shall be valid unless the person furnishes his PAN in such declaration (Form 15G & 15H)

  25. MSSV & Co, Bangalore • Sub Section (3) in case any declaration becomes invalid U/s 206AA (2), the deductor shall deduct TDS in accordance with provisions of Sec 206AA (1) • Sub Section (4) no certificate u /s 197 shall be granted unless the application made under that section contains the PAN of the applicant

  26. MSSV & Co, Bangalore • Sub Section (5) the deductee shall furnish his PAN to the deductor and both shall indicate the same in all correspondences, bills, vouchers and other documents which are sent to each other • Sub Section (6) where PAN provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his PAN to the deductor and the provision of Sec 206AA (1) shall apply accordingly

  27. MSSV & Co, Bangalore FINANCE ACT, 2010 • Threshold limit w.e.f 1st July, 2010 SectionEarlier (Rs.)New (Rs.) 194B 5,000 10,000 194BB 2,500 5,000 194C 20,000 30,000 50,000 75,000 194D 5,000 20,000 194H 2,500 5,000 194I 1,20,000 1,80,000 194J 20,000 30,000

  28. MSSV & Co, Bangalore FINANCE ACT, 2010 Interest u /s 201 – w.e.f: 01.07.2010 • at 1% for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and • At 1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid

  29. MSSV & Co, Bangalore Amendment to Section 40(a)(ia) (ia) …………… has not been paid on or before the due date specified in Sub Section (1) of Section 139

  30. MSSV & Co, Bangalore ISSUES - GENERAL • Rent paid for the months of April 2010 to June 2010 to owner ‘A’ is Rs. 14,500/- p.m. • Total rent payable during the F.Y 2010-11 is Rs. 1,74,000/- • Whether TDS is to be made u / s 194I for rent for the months of April 2010, May 2010 and June 2010

  31. MSSV & Co, Bangalore ISSUES - GENERAL • Threshold limit computation– whether to include Service Tax? u / s194Ju / s 194I Fee Rs. 27,500 Rent Rs. 1,65,000 ST Rs. 2,833 ST Rs. 16,995 Rs. 30,333 Rs. 1,81,995 • Audit Fee of Rs. 25,000 for the year ended 31.03.2010 provided & deducted in the month of September, 2010 - Whether TDS is required u /s 194J?

  32. MSSV & Co, Bangalore ISSUES - GENERAL The entries in the books of accounts for MIS purposes. - Examine the applicability of Chapter XVII - B

  33. MSSV & Co, Bangalore ISSUES - GENERAL • Excess / Short Dedcution • Excess / Short Remittance – Adjustment - Within the quarter - Within the financial year • Refund of Excess tax remitted

  34. MSSV & Co, Bangalore ISSUES - GENERAL • Defaults • Non deduction • Short deduction • Non Remittance • Short Remittance • Delay in Remittance

  35. MSSV & Co, Bangalore ISSUES - GENERAL • Consequences • Interest • Penalty • Prosecution • Amount not deductible

  36. MSSV & Co, Bangalore ISSUES - GENERAL • Disallowance u /s 40 (a) (ia) & Form No 3CD • In the case of • non deduction • short deduction • non remittance • short remittance • delay in remittance

  37. MSSV & Co, Bangalore ISSUES - GENERAL • M/s X Private Limited paid statutory audit fee of Rs. 1,00,000/- in cash during the accounting year 2009-2010 without deduction of tax at source • For assessment year 2010-11, examine the disallowance u / s 40(a)(ia) and u /s 40A(3)

  38. MSSV & Co, Bangalore ISSUES - SPECIFIC • Following payments made by Partnership Firm to its Partners: • Salary Rs. 10 Lakhs to each partner • Interest of Rs. 5 Lakhs on Capital contribution to one of the partner who is non-resident during the year • Commission of Rs. 10 Lakhs paid to partners on percentage of Export Sales • Rent of Rs. 15 Lakhs paid to one of the partner Examine the applicability of provisions of Chapter XVII-B

  39. MSSV & Co, Bangalore ISSUES - GENERAL • U / s 194H • Discount • Rebate • Incentive

  40. MSSV & Co, Bangalore ISSUES - SPECIFIC • U / s 194I – Rent • Advance Rent of Rs. 8 Lakhs paid for next 5 Financial Years on 30.06.2010 • Rent of Rs. 8 Lakhs paid to 5 co-owners • Warehousing Charges • Cooling Charges paid to cold storage owners

  41. MSSV & Co, Bangalore ISSUES - SPECIFIC • M/s King Fisher Airlines paid landing fee and parking fee of Rs. 10 Crores to Airport Authorities during the accounting year 2010-11. M/s King Fisher Airlines proposes to deduct tax at source: • 194 C or 194I?

  42. MSSV & Co, Bangalore ISSUES - SPECIFIC Tenants in a commercial complex following payments are made to the owner: • Rent • Maintenance Charges • Power & Water Charges re-imbursements

  43. MSSV & Co, Bangalore ISSUES - SPECIFIC M/s Specialty Hospital Private Limited makes payment to consulting doctors by collecting amount from patients. It retains 20% of the fee collected as its service charges and pays the balance 80% to the consulting doctors • TDS u /s 192 or 194J? • TDS on 80% or 100%?

  44. MSSV & Co, Bangalore DIRECT TAXES CODE, 2010 TDS Provisions

  45. MSSV & Co, Bangalore CHAPTER XIII Collection and Recovery of Tax A – Deduction of Tax at Source (Section 193 – 201)

  46. MSSV & Co, Bangalore Section 195 Liability to Deduct tax at source Section 195(1): • Specified Payment • At the time of Payment • At the appropriate rate

  47. MSSV & Co, Bangalore • Section 195(2) & (3): Specified payment (Column 2) Third Schedule, if the deductee is a resident Fourth Schedule, if the deductee is a non-resident

  48. MSSV & Co, Bangalore • Section 195(5): Deductee has failed to furnish his PAN Higher of the following • 20% or • The rate specified in Sub-section (2),(3) or (4) of Section 195

  49. MSSV & Co, Bangalore SECTION 200 • No deduction of tax in certain cases • 19 cases • Individual or a HUF is not liable to audit of accounts u / s 88 for the financial year immediately preceding the financial year in which the payment is made

  50. MSSV & Co, Bangalore CONCLUSION • Duty / Responsibility under chapter XVII – B cannot be bypassed by the deductor to any person

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