Presentation on theme: "BASICS UPDATES & ISSUES"— Presentation transcript:
1 BASICS UPDATES & ISSUES CA D R Venkatesh,B.COM, LLB, FCA,Partner, MSSV & Co.,Chartered AccountantsBangalore
2 BASICS Status of Deductor/Payer Any Person ……. Tax Payer Agriculturist Charitable/ Educational Institutions1.5 minutesMSSV & CO., BANGALORE2
3 BASICS Individual / HUF Whose total sales, gross receipts or turnover Exceed the monetary limits specified under clause (a) or clause (b) of Section 44ABDuring the financial year immediately preceding financial year1.5 minutesMSSV & CO., BANGALORE3
4 BASICS Status of Recipient/Payee Rate of Deduction Government Applicability of surcharge1 minuteMSSV & CO., BANGALORE4
5 BASICS Residential status of Recipient/Payee Resident Non-resident 0.5 minuteMSSV & CO., BANGALORE5
6 BASICS Nature of expenditure In the hands of the deductor – payment / Debit may be towardsCapital ExpenditureRevenue ExpenditureReimbursement of Expenses0.5MSSV & CO., BANGALORE6
7 BASICS When to deduct Payment Credit Tds deduction????? Previous 3 slides 1 minuteMSSV & CO., BANGALORE7
8 BASICSWhen to RemitDuring the year payment (Other than March) – on or before 7 days from the end of the month in which deduction is made.Other cases – On or before 30th day of April where the income or amount is credited or paid in the month of March.
9 BASICS Rate of Deduction Tax rate - Under the respective sections - Part II to First Schedule- Part III to First Schedule – Salary- Part II to First Schedule – u/s 195- No Surcharge & No Education Cess1 minuteWave of handMSSV & CO., BANGALORE9
12 DISALLOWANCE Finance Act, 2008 w.r.e.f 01.04.2005 Has not been paid- In a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sec 139(1); orIn any other case, on or before the end of the previous year
13 DISALLOWANCE Finance Act, 2010 w.e.f AY 2010-11 Has not been paid, - On or before the due date specified in sec 139(1)Amendment by Finance Act, 2010 is retrospective effect from AYAs held in Kunubai Ramjibai v/s ITO (2010) 49 DTR 70 (Mumbai Trib.)This amendment is clarificatory in nature
14 Finance Act, 2012Provisio inserted to Sec 40 (a)(ia) w.e.f. 1st April, 2013.Provisio – Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not to deemed to be an assessee in default under the provisio to sub section (1) of section 201, then, for the purpose of this sub clause, it shall be deemed that the assessee has deducted and paid tax on such sum on the date of furnishing of the return of income by the resident payee referred to in the said provisio.
15 Finance Act, 2012 Insertion of Proviso to Sec 201 w.e.f 1st July,2012 Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax, if such resident-
16 has furnished his return of income u/s 139 (ii) has taken into account such sum for computing income in such return of income, and(iii) has paid the tax due on the income declared by him in such return of income.And the person furnishes a certificate to this effect from an accountant in such form as may be prescribed - Form No.26A
17 Form No. 26A [See Rule 31ACB] Form for furnishing accountant certificate under first proviso of sub-section (1) of section 201 of the Income-tax Act, 1961Details to be furnished by the DeductorName of the DeductorPAN,TAN and address of the DeductorName of the DeducteeAmount Paid without deduction of whole or any part of tax .
18 Certificate from an accountant certifying that the deductee has fulfilled all the conditions mentioned in first proviso of section 201(1) of Income Tax Act is enclosed as Annexure – A.Details of Interest paid, if anyDetails of Payment – BSR Code, Challan Serial Number and Date of Deposit of ChallanDesignation of the person who signs this Form.
19 Annexure A Certificate of Accountant under first proviso section 201(1) certifying the furnishing of return of income, payment of tax by the deductee.Certifying with regard to-Name of the AccountantName and Address of the DeducteePAN of the DeducteePayer has paid or credited – a sum to the account of the payee without deduction of whole or any part of tax.Details of Payment- Nature of Payment, Date of Payment, Section under tax was deductible, Amount paid or credited, Amount of tax deductible, Date of Deduction, if any.
20 Details of the Return of Income filed by the resident payee for the relevant Assessment year- Receipt on tax has not been deducted, Head of Income under which receipt is accounted for, Acknowledgement Number of the Return filed, If paper return details of Assessing Officer, Amount of Total Taxable Income as per Return filed, Tax due on the income declared in the return, Details of tax paid.
21 Payee has taken to account sum paid by the payer for computing his taxable income in the Return of Income filed.Receipt on which Tax has not been deductedHead of Income under which the receipt is accounted forGross receipt under the head of income under which the receipt is accounted forAmount of taxable income under the head of income under which the receipt is accounted for
22 It has been ensured that the information furnished is true and correct in all respects and no relevant information has been concealed or withheldDeclaration with regard to neither the accountant nor any of his partners, is a director, partner, or an employee of the entity or its associated concernsDeclaration with regard to that if the details provided in the certificate is proved incorrect or false, will render him/them liable for any penal or other consequences as may be prescribed in law or is otherwise warranted.
23 Issues When to obtain this certificate from Accountant Deductor assures that he will obtain the certificate from the accountant of the deductee.Form No. 3CD - clause 17(f).
24 Provisio to Sec 201 (1A) w.e.f 1st July 2012. Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first provisio of sub section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident.
25 IssuesInterest to be calculated irrespective of the tax liability of the deductee.When to compute this interest?Rate of Interest is 1%.
26 PENALTY Finance Act, 2012 New Section 271H, w.e.f 1st July, 2012. Penalty for failure to furnish the statements or false statements.271H – Fails to comply the provisions of Sec 200 (3) or 206 C (3), the penalty shall not be less than Rs 10,000 but may extend up to Rs 1,00,000.
27 Fees Finance Act, 2012 New Section 234E, w.e.f 1st July, 2012. Fees for default in furnishing statements234E (1) – without prejudice to the provisions of the Act, where a person fails to deliver or causes to be delivered a statement within the time prescribed in sub section (3) of section 200 or provision to sub section (3) of section 206 C, he shall be a liable to pay, by way fee, a sum of Rs 200 for everyday during which the failure continues.
28 Finance Act, 2012 Insertion of clause (1D), w.e.f 1st July, 2012. 206C (1D)Every person being a seller, who receives any amount in cash as consideration for sale of bullion (excluding any coin or any other article weighing 10gm or less)* or jewellery, shall, at the time of receipt of such amount in cash , collect from the buyer, a sum equal to 1% of sale consideration as income tax, if the sale consideration,(i) For bullion, exceeds Rs 2,00,000 or(ii) For Jewellery, exceeds Rs 5,00,000.* Deleted from 1st June 2013.
29 Finance Act, 2013Insertion of Section 194-IA.(1), w.e.f 1st June, 2013194-IA (1) Any Person, being a transferee, responsible for paying(other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to one percent of such sum as income-tax thereon.
30 194-IA (2) No deduction under sub-section (1) shall be made where the consideration for the transfer of an immovable property is less than fifty lakh rupees.Explanation – For the purposes of this section-“agricultural land” means agricultural land in India, not being a land situate in any area referred to in items (a) and (b) of sub-clause (iii) of clause (14) of section 2;“immovable property” means any land (other than agricultural land) or any building or part of a building.
31 IssuesWhether this provision is applicable to agreements executed before 1st June, 2013 but consideration is paid later.Section 203A is not applicable to this provision, how seller will get a credit for the TDS made.Whether this provision is applicable to Joint Development Agreements where amount received is less than Rs. 50 Lakhs but the Land Owner gets in kind i.e 50% of the area constructed where the value is more than Rs. 50 Lakhs.
35 FINANCE ACT, 2010Interest u /s 201 – w.e.f: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; andAt 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 paidMSSV & CO, Bangalore
36 ISSUES:M/s.ABC co. passed the following entries in the books of accounts. Internal Audit fee A/c Dr Rs.1,00,000 To M/s. Smart Associates. Rs.1,00,000 (Being the internal audit fee payable for the month of January 2013.)MSSV & CO, Bangalore
37 M/s.ABC co. passed the following entries in the books of accounts. Internal Audit fee A/c Dr Rs.1,00,000To M/s. Smart Associates A/c. Rs.90,000To TDS Payable A/c Rs.10,000(Being the internal audit fee payable for the month of January 2013 and TDS payable provided for.)MSSV & CO, Bangalore
38 ISSUES:M/s X Co Ltd deducted tax of Rs 1 lakh on professional charges of Rs 10 lakh on The Company remitted the above tax on Calculate the interest liability.
39 Rule 119A, Income Tax Rules, 1962Procedure to be followed in calculating interest.In calculating the interest payable by the assessee or the interest payable by the Central Government to the assessee under any provision of the Act,—(a) where interest is to be calculated on annual basis, the period for which such interest is to be calculated shall be rounded off to a whole month or months and for this purpose any fraction of a month shall be ignored; and the period so rounded off shall be deemed to be the period in respect of which the interest is to be calculated;
40 (b) where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be a full month and the interest shall be so calculated; (c) the amount of tax, penalty or other sum in respect of which such interest is to be calculated shall be rounded off to the nearest multiple of one hundred rupees and for this purpose any fraction of one hundred rupees shall be ignored and the amount so rounded off shall be deemed to be the amount in respect of which the interest is to be calculated.]
41 ISSUES: Threshold limit computation– whether to include Service Tax? u / s194J u / s 194IFee Rs. 27,500 Rent Rs. 1,65,000ST Rs. 2,833 ST Rs ,995Rs. 30,333 Rs. 1,81,995MSSV & CO, Bangalore
42 IssuesM/s X Private Limited paid statutory audit fee of Rs.1,00,000/- in cash during the accounting year 2012– 2013 with out deduction of tax at source.For Assessment year 2013–14, Examine the disallowance u/s 40(a)(ia) and u/s 40A(3) ?
43 IssuesMr.X a practicing CA who is subject to Tax Audit u/s 44AB for the year ending having the following transactions during the financial year :1. Constructed a house for self occupation & he is making payment to contractor Rs.10,00,000/-2. Borrowed funds from friends Rs.10,00,000/- on which he wants to pay interest Examine the applicability of TDS
44 Issues u/s 206 AA Furnishing of PAN Furnished after Previous Year is endedFurnished within the Financial Year after 3 QuartersTDS CreditWrong PAN furnished by the Deductee
45 Issues Disallowance under Sec 40(a)(ia) Service Tax element on fees/paymentFees – Rs 10 lacsST - Rs 1.24 lacsWhether Disallowance u/s 40(a)(ia)Rs 10 lacs ???OrRs lacs ???
46 Issues Commission Or Brokerage Discount/Rebate/Incentive Commission paid to partners on percentage of export salesMSSV & Co.
47 IssuesRentAdvance Rent of Rs. 8 Lakhs paid for next 5 during the financial yearsRent of Rs lakhs paid to 5 co-ownersWarehousing ChargesCooling Charges paid to cold storage ownersMSSV & Co.
48 Issues Rent paid to owner as a percentage of sales. Tenants in a commercial complex following payments are made to the owner:-- Rent- Maintenance charges- Power & Water charges re-imbursements.MSSV & Co.
50 IssuesM/s co-operative Bank received form 15G and From 15H the depositors for non-deduction of tax at source. The Co-operative Bank did not file copy of these forms before the jurisdictional Commissioner. The AO proposed to disallow u/s 40(a)(ia) the interest payment to these depositors for not filing the forms.DISCUSS…
51 IssuesThe deductor M/s Defaults ltd not filed the quarterly returns for the financial year The AO proposed to disallow the payments u/s 40(a)(ia) on which TDS is deducted & remitted.DISCUSS..
52 ISSUESM/s. Land Owners Pvt Ltd. entered into Joint Venture with M/s. Developers Pvt Ltd. to develop a property. The Area available for development is 10,000 Sq. Ft. Market Value of the property on the date of agreement on was Rs. 10 Crores. The Developer completed the project and handed over the possession of the commercial property to land owner on Total construction cost of the project to Developer is Rs. 10 Crores. Discuss the applicability of TDS and which year?
53 ISSUESM/s. Land Owners Pvt Ltd. entered into Joint Venture with M/s. Developers Pvt Ltd. to develop a property. The Developer agreed to compensate the land Rs. 10 Lakh per month during the period of construction. Kindly examine the applicability of TDS for the compensation payment.
54 IssuesMr. R purchased a residential property from Mr. NR for Rs. 20 Crores and sale was concluded by registration on Mr. R received notice from Income Tax Department stating that Mr. R violated the provisions of Section 195. Discuss…
55 IssuesMr. R purchased a property from Mr. NR (Non – Resident) for Rs. 20Crores and deducted Tax at Source U/s The tax was remitted through a company’s TAN Number in which Mr. R is a Director. Subsequently the Income-tax Department issued a notice to Mr.R for violation of provisions of section 195. Discuss…
56 IssuesBank has paid gold appraisal fee of Rs.70,000/- to Appraiser during the Financial Year Whether Bank has to deduct Tax at Source U/s. 194C or U/s. 194J.
57 IssuesThe Bank has paid the commission of Rs. 1,00,000/- each to 10 pigmy agents without deducting Tax at Source. The Assessing Officer proposes to disallow the expenditure U/s. 40(a)(ia). Discuss…
58 IssuesM/s. S Pvt Ltd paid the Audit Fee for 3 financial years together on 1st March, The details of the payment is as follows;Audit Fee for the financial year ending – Rs. 28,090 (incl. of Service Tax)Audit Fee for the financial year ending – Rs. 28,090 (incl. of Service Tax)Audit Fee for the financial year ending – Rs. 28,090 (incl. of Service Tax)Kindly advice whether M/s. S pvt Ltd is required to deduct Tax at Source U/s. 194J
59 IssuesM/s. Manufacturing Company has paid a transport charges of Rs. 10 Lakh to M/s. Logistics Pvt Ltd during the financial year The company has not deducted the tax at source under the plea that provisions of section 194C (6) is applicable. Kindly examine…
60 IssuesSection 40(a)(ia) is attracted only to sums payable as on Balance Sheet date?Meriliyn Shipping and Transport V/s. Additional Commissioner of Income Tax (2012) 016 ITR (Trib) 0001 (ITAT) (Vishakapatnam)S S Warad V/s. Additional Commissioner of Income Tax (2012) 019 ITR (Trib) 0035 – Bangalore BenchSmt. J Rama V/s. ITO Ward 1(3) ITA No (Bangalore)/08
61 Section 40(a)(ia) is attracted only to the expenses claimed U/s Section 40(a)(ia) is attracted only to the expenses claimed U/s. 30 to 38.Teja Constructions V/s. Assistant Commissioner of Income Tax (2010) 129 TTJ 0057