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MSSV & Co, Bangalore 1 IS TDS TEDIOUS ?. MSSV & Co, Bangalore 2 Overview of TDS Provisions CA. D.R. Venkatesh B.Com, LLB, FCA Partner, MSSV & Co Bengaluru.

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Presentation on theme: "MSSV & Co, Bangalore 1 IS TDS TEDIOUS ?. MSSV & Co, Bangalore 2 Overview of TDS Provisions CA. D.R. Venkatesh B.Com, LLB, FCA Partner, MSSV & Co Bengaluru."— Presentation transcript:

1 MSSV & Co, Bangalore 1 IS TDS TEDIOUS ?

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

3 MSSV & Co, Bangalore 3 ISSUES Latest Practical

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

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

6 MSSV & Co, Bangalore 6 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

7 MSSV & Co, Bangalore 7 Last month of the year– on or before 30 th 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

8 MSSV & Co, Bangalore 8 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 9 Quarter endedDue date 30th June7 th July 30 th September7 th October 31 st December7 th January 31 st March30 th April

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

11 MSSV & Co, Bangalore 11 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 12 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

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

14 MSSV & Co, Bangalore 14 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 15 Time Schedule Date of ending of theDue Date Quarter of the F.Y 30 th June15 th July 30 th September15 th October 31 st December15 th January 31 st March15 th May

16 MSSV & Co, Bangalore 16 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 deductees records in the statement for any quarter of the Financial Year are twenty or more

17 MSSV & Co, Bangalore 17 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 18 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 31 st of every year

19 MSSV & Co, Bangalore 19 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 20 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

21 MSSV & Co, Bangalore 21 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 22 Finance Act, 2009 Section – 194C (6) w.e.f 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 23 NEW SECTION 206AA With effect from 1 st 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 24 (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)

25 MSSV & Co, Bangalore 25 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 26 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 notfurnished his PAN to the deductor and the provision of Sec 206AA (1) shall apply accordingly

27 MSSV & Co, Bangalore 27 FINANCE ACT, 2010 Threshold limit w.e.f 1 st July, 2010 SectionEarlier (Rs.)New (Rs.) 194B 5,000 10, BB 2,500 5, C 20,000 30,000 50,000 75, D 5,000 20, H 2,500 5, I1,20,0001,80, J 20,000 30,000

28 MSSV & Co, Bangalore 28 FINANCE ACT, 2010 Interest 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; 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 29 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 30 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 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 31 ISSUES - GENERAL Threshold limit computation– whether to include Service Tax? u / s194Ju / s 194I FeeRs. 27,500RentRs. 1,65,000 STRs. 2,833STRs. 16,995 Rs. 30,333Rs. 1,81,995 Audit Fee of Rs. 25,000 for the year ended provided & deducted in the month of September, Whether TDS is required u /s 194J?

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

33 MSSV & Co, Bangalore 33 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 34 ISSUES - GENERAL Defaults o Non deduction o Short deduction o Non Remittance o Short Remittance o Delay in Remittance

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

36 MSSV & Co, Bangalore 36 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 MSSV & Co, Bangalore 37 ISSUES - GENERAL M/s X Private Limited paid statutory audit fee of Rs. 1,00,000/- in cash during the accounting year without deduction of tax at source For assessment year , examine the disallowance u / s 40(a)(ia) and u /s 40A(3)

38 MSSV & Co, Bangalore 38 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 39 ISSUES - GENERAL U / s 194H o Discount o Rebate o Incentive

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

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

42 MSSV & Co, Bangalore 42 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 43 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 44 DIRECT TAXES CODE, 2010 TDS Provisions

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

46 MSSV & Co, Bangalore 46 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 47 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 48 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

49 MSSV & Co, Bangalore 49 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 50 CONCLUSION Duty / Responsibility under chapter XVII – B cannot be bypassed by the deductor to any person

51 MSSV & Co, Bangalore 51 CONCLUSION Method of Accounting o Cash Basis o Mercantile Basis o Compliance Basis

52 MSSV & Co, Bangalore 52 CONCLUSION GOLDEN PRINCIPLES Applicability Rate Deduction & Remittance Planning

53 MSSV & Co, Bangalore 53 Finally Deduct and RemitWithout failure Avoid – interest, penalty, prosecution and disallowance With due care File TDS returns & issue the forms Within time


55 MSSV & Co, Bangalore 55 THANK YOU

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