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For Government Deductors By Shital Shashwat Verma,IRS Deputy Commissioner of Income Tax 1.

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Presentation on theme: "For Government Deductors By Shital Shashwat Verma,IRS Deputy Commissioner of Income Tax 1."— Presentation transcript:

1 For Government Deductors By Shital Shashwat Verma,IRS Deputy Commissioner of Income Tax 1

2 What is TDS? Deductor’s Duty Rates and details 24G Penal provisions Do’s and Don'ts for the deductors 2

3  Not a tax but a mode of tax collection.  It is similar to "pay as you earn" scheme also known as Withholding Tax in many other countries.  Prevents evasion of tax against subsequent variations / manipulations of accounts  Maintains better cash-flow for the Govt. 3

4  Unique identification number of a Deductor. Mandatory to quote TAN on challan &returns.  Non-obtaining / False TAN–Penalty Rs.10,000  A ten character alpha-numeric number.  JBPC04371B 4

5  To Deduct  To Deposit  To File Quarterly TDS Returns(F.24Q,26Q)  To Issue TDS Certificates to the Payee(F.16/A)  To check status online at TRACES. 5

6  Obligation is of the Deductor to deduct Tax from any sum liable to TDS  At the prescribed rate - depending on the nature of payment and status of Deductee  On Credit or payment, whichever is earlier  Credit to “suspense a/c” also attracts TDS 6

7 At the time of payment (Estimated annual income) Rates prescribed in the Finance Act. To include all perks, allowances, reimbursements, voucher payments ; Pension; Annuity; Gratuity; Perquisite; Commission; allowances, Encashment of leave, profits in lieu of salary, Advance salary and arrears of salary. Amount of deduction of tax may vary from month to month. However, the correct tax liability has to be worked out in the month of February of the FY. For details- see printed material. 7

8  TDS on Interest Payments  TDS on GROSS INTEREST  On interest exceeding Rs /- 10% 8

9 all types of contracts - transport of goods or passengers(except by railway), advertising, broadcasting, telecasting, labour contracts, material contracts, works contracts, catering, printing/ supplying any product according to your specification with your material, AMC, Security contracts. Nil rate will be applicable if the transporter quotes his PAN. If PAN is not quoted the rate will be 20%. 9

10  The amount of any sum credited or paid exceeds Rs (or Rs. 75,000 during the fin. Year- then tax will be required to be deducted, even where individual transaction is less than the threshold of Rs. 30,000).  1% in case of payments to individual/ HUF. (check the 4 th letter of PAN- it should be “P” or “H”)  In case of 10

11  ‘(i) “rent” means any payment, by whatever name called, under any lease, sublease,tenancy or any other agreement or arrangement for the use of (either separately or together) any, —  (a) land; or  (b) building (including factory building); or  (c) land appurtenant to a building (including factory building); or  (d) machinery; or  (e) plant; or  (f) equipment; or  (g) furniture; or  (h) fittings,  whether or not any or all of the above are owned by the payee ;’. 11

12  Payments exceeding Rs 1,80,000 per annum  Rent of plant, machinery or 2%, and  for rent of land, building or 10% 12

13 TDS on fees for professional or technical services. Professional- eg. Legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, advertising, sportspersons, I.T.Ps, Film artistes, Company secretary, Information technology experts, event managers. 13

14 In case of any managerial, technical, consultancy services royalty, etc. On gross payments including reimbursements, taxes if any. TDS is deductible if payment is in excess of Rs. 30,000/- per annum. 10% 14

15 on payment of commission or brokerage exceeding Rs 10% commission or brokerage” includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities; 15

16 16 Section of Act Nature of payment Threshold Limit (Rs) Rate of TDS (%) Non-Co.Company 192Salary2.00 lacsAverage Rate AInterest>10,000/ CContract>30,000/- or >75,000/- 1 (Ind/HUF) 2 (Others)

17 Section of Act Nature of payment Threshold Limit (Rs) Rate of TDS (%) Non-Co.Company 194HCommission / Brokerage >5,000/ I (Rent) Land & Building >1.80 lac10 Machinery, Equipment, Plant -“ JProfessional fee/ Tech services / Royalty >30,000/-10 17

18 Section of Act Nature of payment Threshold Limit (Rs) Rate of TDS (%) Non-Co.Company 194IAPurchase of Immovable Property > 50 lakhs11 194LACompensation for immovable property >2.00 lac10 18

19  The Seller who sells the goods specified u/s.206C(1) is liable to collect income-tax at the prescribed rate from the Buyer of such goods at the same time of debiting of the account of the buyer or at the time of receipt of such amount.  The TCS is to be collected apart from the sale value. TCS is to be deposited to Central Government A/C.

20 Sl. Nature of Goods OR Alcoholic liquor for human consumption 1% 2. Tendu leaves 5% 3. Timber under forest lease 2.5% 4. Timber other than a forest lease 2.5% 5. Any other forest produce 2.5% 6. Sale of Scrap 1% 7. Minerals, being coal or lignite or iron ore 1% 8. Parking lot, Toll Plaza, Mining & quarrying 2%

21  Tax deducted or collected must be remitted to the Central Govt. Account through challan No.281.  before 7 th of the following month(Even for March)  Govt DDOs- on Same day (Book Adjustment) CDDO/PAO/DTO - 7 days(Through Challan) 21

22 22 Nature of payment ReturnsCertificates to the Payee Salary (TDS)24QForm 16 Other than Salary(TDS) 26QForm 16A TCS27EQForm 27D

23 Quarter endingTDS returnsForm 16/16A 30 th June31 st July*15 th August* 30 th September31 st October*15 th Nov* 31 st December31 st January*15 th Feb* 31 st March15 th May *(Due by 15 th of the month if challan payment) 30 th May (31 st May for Form 16) *(Due by 30 th of the next month if challan payment) 23

24 Quarter ending27EQ Statement Certificate Form 27D 30 th June15 th July30 th July 30 th September15 th October30 th October 31 st December15 th January30 th January 31 st March15 th May30 th May 24

25 In respect of Govt. DDOs crediting TDS through Book Adjustment :  Respective PAO / TO / CDDO to obtain AIN  Submit statement in Form 24G within 10 days from the end of the month  Intimate Book Identification No. (BIN) to DDOs 25

26  *S.192(1A) r.w.Rule 30(4) An office of the Government, where tax has been paid to the credit of Central Government without the production of a challan is required to- a) file Form 24G within 10 days from the end of the month for that month. B) Intimate Book Identification Number(BIN) generated by System to each DDO. (Income – Tax Department Notification no. 41/2010 dtd ) *To be filed by PAO / DTO / CDDO

27  Deductor – Deemed to be assessee in default – Recovery of amount of TDS  Liable to pay simple p.m. for delay in deduction; p.m. for delay in deposit of tax  Creates charge on all the assets of Deductor for failure to deposit tax to Govt’s a/c 27

28 Failure to : (i) issue TDS certificate, or (ii) deliver Form 15G /15H, within due date - Rs.100 per day of default Penalty u/s.271C - 100% of tax in default Failure to apply / quote PAN or TAN : - Penalty of Rs.10,000/- 28

29 Penalty-Failure to file TDS statement- u/s Rs. 100 per day of default  From Qtr-1 of FY U/s 271H- Rs. 10,000/- to Rs.1,00,000/-. Fee- Fee per day of default - Fee shall not exceed the amount of Tax The fee is mandatory. No provision for its waiver.

30  Failure to deposit Tax to the credit of Central Government’s account : - Rigorous Imprisonment with Fine; - Period of imprisonment may vary from 3 months to 7 years 30

31 Instances of Mistakes in Challan- 1. Mentioning of wrong Assessment Year. 2. Mentioning of wrong Section code. 3. Mentioning of wrong deductee code. 4. Mentioning of wrong payment code. 5. Mentioning of wrong TAN. 6. Mentioning of wrong PAN/PAN instead of TAN. 31

32  TRACES is for TDS reconciliation Analysis and Correction Enabling System.  Log in to TDS CPC’s website-TRACES regularly. E-tutorials on the site for guidance.  Download default summary in case of demands w.r.t TDS statements filed by you-correction.  Use separate challans for different sections.  Forms-16/16A/ to the payee to be issued from TRACES compulsorily. Circular No. 03/2011

33  TCS- purchase price includes any amount( by whatever name called) paid/payable by the buyer. It also includes excise duty.  Penal interest payments- attracts TDS  Deductions allowed to salaried employees, including LTC-it is obligatory to keep and preserve evidence.  No specific order from I.T. Deptt required for enforcing TDS u/s 192. CIT v. BK Chatterjee (1993) 202 ITR 785(Cal)

34  Matching of information in e-TDS return with payment details / PAN database  Matching of Challan details in e-TDS return with that of Bank data base (OLTAS)  Matching with respect to details available in Income Tax e-return of Deductee  Mismatch- correction Statements. 34

35  For Online view of ATS : - Registration of PAN for User ID & Password - No Fee payable at TIN-FC  Form 26AS contains : - TDS/TCS deposited on behalf of taxpayer - Advance/Self-assessment Tax paid - Regular Tax paid by the PAN holder 35

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