MSSV & Co, Bangalore 1 IS TDS TEDIOUS ?. MSSV & Co, Bangalore 2 Overview of TDS Provisions CA. D.R....

MSSV & Co, Bangalore

1

IS TDS

TEDIOUS ?


2

Overview of TDS

Provisions

CA. D.R. VenkateshB.Com, LLB, FCAPartner, MSSV & CoBengaluru


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ISSUES

Latest

Practical


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Issues - Latest

Circulars / Notifications

Finance Act, 2009

Finance Act, 2010


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CIRCULAR / NOTIFICATIONS

S.o. 1261(E) dated 31st May, 2010

Income Tax (6th Amendment)

Rules, 2010

w.e.f 1st Day of April, 2010


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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

DEDUCTOR - GOVERNMENT


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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

DEDUCTOR - OTHERS


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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


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Quarter ended Due date

30th June 7th July

30th September 7th October

31st December 7th January

31st March 30th April


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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


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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


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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

CERTIFICATE


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Time Specified

Form No. Periodicity Due Date16 Annual By 31st day of May

16A Quarterly Within 15 days from the

due date for furnishing the

statement – Form 26Q


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Quarterly Returns

Statement of Deduction of Tax

Form No. 24Q - Salary

Form No. 26Q - All other deductees

Form No. 27Q - Deductees – Non-

Resident


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Time Schedule

Date of ending of the Due DateQuarter of the F.Y

30th June 15th July

30th September 15th October

31st December 15th January

31st March 15th May


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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


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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


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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


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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


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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

Finance Act, 2009


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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


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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


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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:


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(i) At the rate specified in the relevant provisions of this

Act or

(ii) At the rate or rates in force or

(iii) 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)


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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


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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


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FINANCE ACT, 2010

Threshold limit w.e.f 1st July, 2010

Section Earlier (Rs.) New (Rs.)194B 5,000 10,000194BB 2,500 5,000194C 20,000 30,000

50,000 75,000194D 5,000 20,000194H 2,500 5,000194I 1,20,000 1,80,000194J 20,000 30,000


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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


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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


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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


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ISSUES - GENERAL

Threshold limit computation– whether to include Service Tax?

u / s194J u / 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?


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ISSUES - GENERAL

The entries in the books of accounts for MIS

purposes.

- Examine the applicability of

Chapter XVII - B


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ISSUES - GENERAL

Excess / Short Dedcution

Excess / Short Remittance – Adjustment

- Within the quarter

- Within the financial year

Refund of Excess tax remitted


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ISSUES - GENERAL

Defaults

o Non deduction

o Short deduction

o Non Remittance

o Short Remittance

o Delay in Remittance


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ISSUES - GENERAL

Consequences

o Interest

o Penalty

o Prosecution

o Amount not deductible


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ISSUES - GENERAL

Disallowance u /s 40 (a) (ia) & Form No 3CD

o In the case of

non deduction

short deduction

non remittance

short remittance

delay in remittance


37

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)


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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


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ISSUES - GENERAL

U / s 194H

o Discount

o Rebate

o Incentive


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ISSUES - SPECIFIC

U / s 194I – Rent

o Advance Rent of Rs. 8 Lakhs paid for next 5 Financial Years on 30.06.2010

o Rent of Rs. 8 Lakhs paid to 5 co-owners

o Warehousing Charges

o Cooling Charges paid to cold storage owners


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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?


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ISSUES - SPECIFIC

Tenants in a commercial complex following

payments are made to the owner:

– Rent

– Maintenance Charges

– Power & Water Charges re-imbursements


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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%?


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DIRECT TAXES CODE, 2010

TDS Provisions


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CHAPTER XIII

Collection and Recovery of Tax

A – Deduction of Tax at Source

(Section 193 – 201)


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Section 195

Liability to Deduct tax at source

Section 195(1):– Specified Payment– At the time of Payment– At the appropriate rate


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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


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Section 195(5):

Deductee has failed to furnish his PAN

Higher of the following

(a) 20% or

(b) The rate specified in Sub-section

(2),(3) or (4) of Section 195


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SECTION 200

No deduction of tax in certain cases19 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


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CONCLUSION

Duty / Responsibility under chapter XVII – B

cannot be bypassed by the deductor to any

person


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CONCLUSION

Method of Accounting

o Cash Basiso Mercantile Basiso Compliance Basis


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CONCLUSION

GOLDEN PRINCIPLES

Applicability Rate Deduction & Remittance Planning


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Finally

Deduct and Remit Without failure

Avoid – interest, penalty, prosecution and disallowance

With due care

File TDS returns & issue the forms

Within time


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Then…

TDS IS NOT

TEDIOUS

TO DEDUCTOR

TO DEDUCTEE

TO DEPARTMENT


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THANK YOU

MSSV & Co, Bangalore 1 IS TDS TEDIOUS ?. MSSV & Co, Bangalore 2 Overview of TDS Provisions CA. D.R....

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