Presentation on theme: "TAX DEDUCTED AT SOURCE “PAY AS YOU EARN” Presented By: Sowmya."— Presentation transcript:
1 TAX DEDUCTED AT SOURCE“PAY AS YOU EARN”Presented By: Sowmya
2 TDSWhy – Tax Deducted At Source ?What is Tax Deducted At Source ?
3 Relevant Sections Sec 192 – Salary Sec 193 – Interest on Securities Sec – DividendsSec 194A – Interest other than Interest on SecuritiesSec 194B – Winnings from Lotteries, Crosswords,Puzzles etc.Sec 194BB– Winnings from Horse race
4 Relevant Sections Sec 194C – Payment to Resident Contractors Sec 194D – Insurance commissionSec 194E – Payment to Non Resident Sportsmenor Sports AssociationSec 194EE – Payments in respect of Deposit underNational Savings SchemeSec 194G – Commission on sale of Lottery Tickets
5 Relevant Sections Sec 194H – Commission and Brokerage Sec 194I – Rent Sec 194J – Fees for Professional or TechnicalServicesSec 194K – Income in respect of unitsSec 194LA –Payment of Compensation onacquisition of certain immovableproperty
6 Insertion 2011 Section 194 LB ( w.e.f 01.06.2011 ) Income by way of Interest fromINFRASTRUCTURE DEBT FUND
7 Sec 192 – Salary Person responsible to deduct tax- Employer Tax to be deducted at rate applicable to individuals.Inclusion of income from other headsPayment of tax on Non Monetary Perquisites.Salary from more than one employer.Adjustment of amount deducted U/s192.
8 Sec 192 – Salary Case Law: Judgment: CIT Vs Venron Expat Services INC. (2010)The assesse failed to deduct tax monthly, however deducted towards the end of FY.Judgment:Permits adjustment of excess or deficit.No Interest U/s 201(1A).
9 Sec 193 - Interest on Securities Person responsible to deduct tax –Central or state govt.Local authority.Company or corporation established by govt.Rate of tax %.Exemptions:Debentures (Resident Individuals)Paid by Account Payee Cheque of amount not exceeding Rs 2,500
10 Sec 193 - Interest on Securities List of interest payments- No TDS requiredInterest on Listed SecuritiesPayment to New Pension TrustNational Defence BondsNational Defence LoanNational Development Bond7-year NSCGold BondsLIC, GIC or any of its subsidiaries
11 Sec 194 – DividendsPerson Liable to deduct tax is the principal officer.Rate of tax %.Applicable only if dividend is paid u/s 2(22)(e).
12 Sec194A– Interest other than Interest on Securities Rate of tax – 10%Exemption Limit –Interest by Banking company - Rs 10,000Others Rs 5,000Credit or Payment, whichever is earlier.
13 Sec194A– Interest other than Interest on Securities List of interest payments- No TDS requiredLIC, UTI, Other Insurance CompaniesTo the Partner of the firmBy a Co-operative society to its membersBy Primary Agricultural societySaving, Current Account, Recurring Deposit.Interest on compensation (Motor Accident Claim)-Does not exceed Rs 50,000Interest on Zero Coupon Bond.
14 Sec 194B- Winnings from Lotteries, Crosswords, Puzzles etc. Deductor – Any person paying the sum by way of winningRate of tax – 30%At the time of paymentExemption limit –Upto Rs 5,000From Rs 10,000
15 Sec 194B- Winnings from Lotteries, Crosswords, Puzzles etc. H. Anraj Vs Government of TamilnaduEssential elements that constitute lottery.A prize or some advantage in the nature of prize,Distribution thereof by chance andConsideration paid or promised for purchasing the chance.
16 Sec 194B- Winnings from Lotteries, Crosswords, Puzzles etc. Case Law:ACIT Vs Director of State Lotteries, Assam.Income accruing to an agent/trader in respect of prizes on unsold/unclaimed lottery tickets in his possession.Judgment:Income From Business, not winning from lottery. Hence not subject to TDS.
17 Sec 194BB– Winnings from Horse race Deductor – Licensed by the govt. or licensed bookmakerRate of tax – 30%At the time of paymentExemption limit –Upto Rs 2,500From Rs 5,000
18 Sec 194BB– Winnings from Horse race Case Law:Royal Calcutta Turf ClubLimit u/s 194BB is applicable for each payment or entire winning for the FY?Judgment:Limit should be applied to each payment and not the entire winnings.
19 Sec 194C– Payment to Resident Contractors Rate of Tax –Individuals and HUFs - 1%Others %Exemption Limit-Upto Rs 20,000/50,000From Rs 30,000/75,000
20 Sec 194C– Payment to Resident Contractors ExemptionHiring or Renting equipmentsSale of goodsSupply of goods- Buyers specificationPayment to airlines – Air travel of individualsPayment to banks for Discounting BillsIndividual/HUF- exclusively for personal purposesWorks executed under NREP & RLEGP
21 Sec 194C– Payment to Resident Contractors Case law:Mukta Arts Vs ACIT (2010)Assessee was engaged in Film Financing and made certain payments by way of advances to another party for production of film.Judgment:Assessee was not acting as contractor nor the other party a contracteeAssessee was not required to deduct tax.
22 Sec 194D – Insurance commission Person responsible to deduct tax- Insurance companies.Rate of tax – 10%Credit or Payment, whichever is earlier.Exemption limit –Upto Rs 5,000From Rs 20,000
23 Sec 194E– Payment to Non Resident Sportsmen or Sports Association Rate of tax – 10%+SC + EC 2% + SHEC 1%Credit or Payment, whichever is earlier.No Provision For deduction of Tax at lower rate.Category of payee – Income to NR by way ofParticipation in India in any game (excl card or gambling)AdvertisementContribution of article relating to any game or sport.
24 Sec 194EE– Payments in respect of Deposit under NSS Rate of Tax-20%At time of paymentExemption Limit- Rs 2,500No Provision For deduction of Tax at lower rate.No TDS if payment to legal heir.
25 Sec 194G – Commission on sale of Lottery Tickets Rate of tax – 10%Exemptions –Payment not exceeding Rs 1,000.Payment to New Pension Trust.Category of payeeAny person stocking, purchasing or selling lottery tickets
26 Sec 194G – Commission on sale of Lottery Tickets Case Law:MS hameed Vs director of State Lotteries (2001)Discount given to an agent on bulk purchase of lottery ticket from state Govt.Judgment:Such Discount is not a commission and not liable for TDS
27 Sec 194H – Commission and Brokerage Rate of Tax – 10%Exemption limit –Upto Rs 2,500From Rs 5,000Exemptions –Payable by BSNL/MTNL to their PCOfranchisees.Payment to New Pension Trust.
28 Sec 194H – Commission and Brokerage Case Law:Vodafone Essar Cellular Limited vs ACIT.Sale of sim card and recharge coupons at discounted price to distributorsJudgment:Such Discount given is a commission, hence liable for TDS
29 Sec 194I – Rent Rate of Tax – Land/building/ furniture/Fittings – 10% Machinery/Plant/Equipment – 2%Exemption limit –Upto Rs 1,20,000From Rs 1,80,000Exemptions –If Payee is govt or local authority.Payment to New Pension Trust
30 Sec 194I – Rent Case Law: CIT Vs Asiana Airlines (2009) Landing and Parking charges collected. Is it liable for TDS u/s 194I ?Judgment:Landing and Parking charges is “Deemed” to be rent and liable for TDS
31 Circulars and Cases U/S 194I If a person has taken particular space on rent and sub-lets it.Hotel Accomodation taken on regular basis.Building is let-out along with furniture/ fittings.Payment made for warehousing charges.Payment made to landlord in nature of advance rent or non-refundable deposit.
32 Sec 194J – Fees for Professional or Technical Services Rate of Tax – 10%Exemption Limit-Upto Rs 20,000From Rs 30,000Exemptions –Payment by individual/HUF Exclusively for theirpersonal purposesPayment to New Pension Trust.Category of payee – Professional service or Technical service or Royalty or payments received U/s 28(1)(va)
33 Sec 194J – Fees for Professional or Technical Services Case Law:CIT Vs Bharthi cellular ltdInterconnection/port charges paidJudgment:Fees for technical service includes only service rendered by human not robots/machines
34 Illustrative cases of TDS u/s 194J Advertising agency makes payment to models.Payment made to Recruitment agency.Payment made by a company to share registrar.Maintenance contract involving Technical services.Service of professional cameraman.
35 Sec 194K – Income in respect of units Not relevant now as income from units is exempt w.e.f. Assessment year 04-05
36 Sec 194LA–Compensation on acquisition of immovable property Rate of Tax- 10%Exemption Limit- Rs1,00,000Exemption: Payment to New Pension Trust
37 Sec 194LA–Compensation on acquisition of immovable property Case Law:State of Kerala Vs MariammaDate of Deduction in case of delayed payment in compensationJudgment:Deduction to be made on the date of payment even though the acquisition may have been made much before.
38 Sec 194LB –Income from Infrastructure Debt Fund Rate of Tax- 5%Payment toNon residents other than companyForeign CompanyCredit or Payment, whichever is earlier.W.e.f
39 Sec 195 – TDS on Non Residents Payment toNon residents other than companyForeign CompanyPayment or Credit – whichever is earlierRate of TaxRate as per the Finance ActRate U/s 90Rate U/s 90A
40 Sec 195 – Verdicts TDS liability only if income is taxable. Soliciting exhibitors outside India for an event in India.No TDS on income earned before PE established in India.Managerial & Consultancy services liable to TDS.Interest to non resident with no PE in India liable to TDS.
41 Sec 195 A – Grossing Up Income payable net of tax Gross Income Less: TDSNet IncomeObligation to furnish certificate to the Deductee (Net Income & TDS thereon)
42 Sec 196 – NO TDS No TDS in case payment to Govt RBI Corp established by Central ActMutual Fund U/s 10(23D)
43 Sec 196 B – Income from Units purchased in Foreign currency U/s 115 ABLTCG on transfer of such unitsRate of Tax – 10% + SC + EC +SHEC
44 Sec 196 C – Foreign Currency Bonds / GDR’s Payment to Non ResidentIncome by way ofInterest/dividend on GDR’s & BondsLTCG on transfer of such bondsRate of Tax – 10% + SC + EC +SHEC
45 Sec 196 D – Income of Foreign Institutional Investors Income from SecuritiesRate of Tax – 20% + SC + EC +SHEC
46 Sec 197 - No Deduction or Lower Rate Certificate for deduction at lower rateMake application to AONo deduction or less deductionNo Certificate to be issued if PAN is not provided
47 Other Issues Tax Deducted is deemed to be Income Received TDS deducted & remitted – payment on behalf of the person from whom it was deductedService Tax – TDSWhere sum is used – Including Service taxWhere income is used – Excluding Service tax
48 Other Issues TDS to be deposited to the credit of Govt. Form 15H/15G Tax deducted on behalf of Govt.Without tax challan – same dayWith tax challan – on or before 7daysTax deducted by othersCredited or paid in March – on or before 30 AprilOther case – on or before 7daysForm 15H/15G
49 Other Issues Assessee in default Interest U/s 201 Non deduction, non payment , Non payment of tax U/s 192(1A)Interest U/s 201Does not deduct taxFails to remit tax to the Govt.Does not pay tax U/s 192(1A)Rate of Interest for defaultDOD – Actual DOD = 1%DOD - Date of actual payment = 1.5%
50 Important Points Book entry Consolidated TDS certificate Issue of duplicate TDS certificateNew Pension Trust
51 Important Points Failure to furnish PAN Highest ofRate in Finance ActRate in force( Fin Act)20%Deductor – 194A/194C/194H/194I/194JAny assessee(other than individual/HUF who are not subject to tax audit U/s 44AB for the preceeding financial year)
52 E- Filing Assesses mandatorily required to e-file Govt. Company Assessee subject to tax audit U/s 44ABDeducteess or Collectees for previous FY quarter is = or > 50
53 Form 26ASTIN facilitates a PAN holder to view Annual Tax Statement onlineForm 26AS containsDetails of tax deducted on behalf of the taxpayer by deductorsDetails of tax collected on behalf of the taxpayer by collectorsAdvance tax/self assessment tax/regular assessment tax, etc. deposited by the taxpayers (PAN holders)Details of paid refund received during the financial year
54 Tax Collected at Source Responsibility of the receiver of payment.Presumption that buyer of goods will have taxable income.
55 Tax Collected at Source Rate of TCSSpecified goodsRateAlcoholic liquor for human consuption1%Tendu leaves5%Timber obtained2.5%Any other forest productScrap2%Parking lotToll PlazaMining And Quarring
56 Tax Collected at Source No TCSBuyer should be resident in India.Furnish self declaration in writing.Goods to be utilsed for manufacturing, processing or producing and not for trading.Submit copy of declaration within 7th of following month.