TDSMAN Blog

Smart & Easy TDS Software for Preparing TDS Returns

TDSMAN Blog - Smart & Easy TDS Software for Preparing TDS Returns

Changes in TDS Rate in Budget 2016

In Budget 2016, FM announced an overhaul of India’s tax deducted at sources (TDS) system. Government hasreduced the rates of Tax Deducted at Source (TDS) on several deductions with a view to improve cash flow, especially of small tax payer.

Under the scheme of deduction of tax at source as provided in the Act, every person responsible for payment of any specified sum to any person is required to deduct tax at source at the prescribed rate and deposit it with the Central Government within specified time. However, no deduction is required to be made if the payments do not exceed prescribed threshold limit.

In order to rationalise the rates and base for TDS provisions, the existing threshold limit for deduction of tax at source and the rates of deduction of tax at source are proposed to be revised. Changes in TDS Rate in Budget 2016:

Sl. No. Section Nature of Payments Threshold Limit Rate of TDS
Existing Proposed Existing Proposed
1 192A Payment of accumulated balance of provident fund due to an employee 30,000 50,000 No Change No Change
2 194BB Winnings from a horse race 5,000 10,000 No Change No Change
3 194C Payment to contractors 75,000

Aggregate annual

limit

1,00,000

Aggregate annual

limit

No Change No Change
4 194D Insurance commission 20,000 15,000 10% (rate in force) 5%
5 194DA Payment towards a life insurance policy No Change No Change 2% 1%
6 194EE Payment towards a NSS deposit No Change No Change 20% 10%
7 194G Commission on sale of lottery tickets 1,000 15,000 10% 5%
8 194H Commission or brokerage 5,000 15,000 10% 5%
9 194LA Payment of compensation on acquisition of certain immovable property 2,00,000 2,50,000 No Change No Change

These amendments will take effect from 1st June, 2016. 

Section 194K (Income in respect of units) and Section 194L (Payment of compensation on Acquisition of capital asset) are proposed to be omitted with effect from 1st June, 2016

Notes:

  • Section 194LBB (Units of Investment Funds) to deducted TDS

(a) at the rate of 10% where the payee is a resident;

(b) at the rates in force, where the payee is a non-resident (not being a company) or a foreign company

w.e.f 1st June 2016 

  • Section 194LBC is proposed to be inserted where any income is payable to an investor, being a resident, in respect of an investment in a securitisation trust TDS is to be made @:

(a) 25% if the payee is an individual or a Hindu undivided family;

(b) 30% if the payee is any other person. 

  • It is proposed to amend Section 197 to include section 194LBB, 194LBC in the list of sections for which a certificate for deduction of tax at lower rate or no deduction of tax can be obtained e.f 1st June 2016 
  • It is proposed to amend the provisions of Section 197A for making the recipients of payments referred to in section 194-I (Rent) also eligible for filing self-declaration in Form no 15G/15H for non-deduction of tax at source in accordance with the provisions of section 197A e.f 1st June 2016 
  • It is proposed to amend Section 206AA so as to provide that the said section shall not apply to a nonresident, not being a company, or to a foreign company, in respect of- (a) Payment of interest on long term bond referred in section 194 LC; (b) Any other payment subject to condition as may be prescribed on w.e.f 1st June 2016. 
  • It is proposed to amend the Section 206C (TCS) to provide that the seller shall collect the tax at the rate of 1%:

(a) from the purchaser on sale of motor vehicle of the value exceeding Rs. 10 Lacs; and

(b) sale in cash of any goods (other than bullion and jewellery) or providing of any services (other than payments on which TDS is made) exceeding Rs. 2 Lacs

w.e.f 1st June 2016.

Source: Mr. Alok Patnia, founder of Taxmantra.com

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CPC (TDS) reminder to report tax deducted against collection of 197 certificates for FY 2013-14

CPC (TDS) has observed that some deductors have not filed TDS Statements for FY 2013-14, despite collecting lower deduction 197 Certificates from their deductees. The CPC (TDS) has issued a communication in this regard and has suggested deductors to file TDS Statements and take appropriate action for reporting deduction of tax against certificate 197 while filing.

The issued communication has been given below:

Dear Deductor,

Centralized Processing Cell (TDS) has observed from its records that you have not filed TDS Statements for Financial Year 2013-14, despite collecting lower deduction 197 Certificates from your deductees.

Please note that the obligation to report each transaction in the relevant quarter, including, where tax has been deducted at lower rates, falls on the deductor. Also, Rule 31A(4)(v) of Income Tax Rules specify to furnish particulars of amount paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax under section 197 by the Assessing Officer of the payee.

About Certificate u/s 197:

Assessing Officer issues a certificate for lower deduction of tax:

  • To the deductee, if is a resident or
  • To the deductor, where the deductee is a non-resident
  • If the Assessing Officer is satisfied that the total income of the deductee justifies deduction of tax at a lower rate.

Accordingly, the clause provides that the deduction shall be made in accordance with the certificate, until such certificate is cancelled by the Assessing Officer or the expiry of the validity of the certificate, whichever is earlier.

Actions to be taken for reporting deduction of tax against certificate 197:

  • Please validate the PAN of the deductee submitting the certificate.
  • The Certificate should be valid for the PAN, Section and Rate which has been mentioned in the statement being filed.
  • Check that the certificate is valid for the relevant Financial Year.
  • Verify that the threshold limit for the certificate has not been exceeded in previous quarters.
  • Correct certificate number should be quoted in the statement. Example of Correct Certificate Number – 2XXXAH7XXE.
  • Raise the Flag “A” in the statement for a certificate u/s 197.
  • Please ensure that the Certificate Number is mentioned in the Deductee detail of the statement. (For F.Y.2013-14 Onwards)

It is therefore, suggested to file your TDS Statements and take appropriate action with respect to the above while filing. For any further assistance, you can also write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

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CPC(TDS) Advisory Communication regarding “Aggregated TDS Compliance” at Organization’s PAN Level

CPC (TDS) has issued a letter to all deductors with information regarding the release of new feature “Aggregated TDS Compliance” at Organization’s PAN level.

The letter produced is here as under:

Date of communication: 03/05/2014

Dear Deductor,

In our endeavor to facilitate improved TDS administration, CPC (TDS) feels glad to provide you with the feature of “Aggregated TDS Compliance” at PAN level for all TANs associated with the referenced PAN. Following are additional details related to the new feature.

What is meant by Organization’s PAN:

The above indicates the PAN of an entity, having more than one TANs of its branches, associated with the referenced PAN. This will be the PAN of the Central Office, Headquarter etc., as may be appropriate. The said PAN must review the “Aggregated TDS Compliance” report on a regular basis to improve TDS compliance at Organization level.

What does the new feature offer:

  • The above stated PAN can view TDS performance for all of its respective TANs by logging into TRACES as a Taxpayer.
  • The Defaults generated for all the TANs can be viewed by using the feature. The following type of Defaults for the branches can be viewed:

      1. Total Default
      2. Short Payment Default
      3. Short Deduction Default
      4. Interest on Payment Default u/s 201
      5. Interest on Deduction Default u/s 201
      6. Late Filing Fee u/s 234E
      7. Interest u/s 220(2)
      8. PAN Errors

The respective TANs with Defaults in their TDS Statements can be pursued to get the above resolved by taking following actions:

    1. Carrying out necessary corrections in the records reported in the TDS statements,
    2. Paying the outstanding demand and
    3. Submitting the Correction Statements at the earliest.

  •  The respective TANs with Defaults in their TDS Statements can be pursued to get the above resolved by taking following actions:

  •  The feature thus provides for a summary of Defaults, which assists in effective TDS administration, monitoring, control and compliance at Organization level.
  •  The feature will be extremely useful for the purpose of complying with the provisions of Section 40(a)(ia) of the Income Tax Act, 1961 by the concerned entity,  to ensure that correct information is disclosed in paragraph 27A/B of the Tax Audit Report (Form 3CD) u/s 44AB of the Act.

How to use the feature:

  •  You are requested to Log in to TRACES as a Taxpayer, using your credentials.
  •  Navigate to Aggregated TDS Compliance menu on the webpage.
  •  Choose the views according to Financial Year (Download Option 1) or Default Type (Download Option 2) from the drop down lists.
  •  PDF or html views are available for the entity having less than 25 TANs. For larger number of TANs, a download request needs to be submitted.
  •  Submit the Request to generate a Request Number.
  •  The submitted request will be made “Available” in MS Excel format, under “Requested Downloads” in the “Download” menu. The reports will usually be made available within four hours of submission.
  •  The report will be “Not Available” if there are No Defaults or there are statements yet to be processed. If you believe that either of the two is not true, the same can be reported to CPC (TDS).
  • The feature provides for the above information for Financial Year 2007-08 onwards.

The steps to use the functionality are easy and convenient, however, e-Tutorials for the above release will shortly be made available on the portal. You can reach out to us on contactus@tdscpc.gov.in or call our toll-free number 1800 103 0344 for any assistance.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

Notes:

  • Please maintain updated email address and Contact Number on TRACES to receive regular periodic updates and guidelines from TRACES.
  • Please refer to our FAQs and e-tutorials for detailed screen-driven assistance, before seeking further help.
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CPC(TDS) Advisory Communication regarding Certificate u/s 197/197A for Lower or No Deduction of Tax

CPC(TDS) has issued a letter to all deductors regarding clarification of “Lower Deduction/No deduction u/s 197 or 197A

The letter produced is here as under:

Date of communication: 04/02/2014   

Dear Deductor,

Greetings from CPC(TDS) team!   

CPC(TDS) team feels glad to constantly update our stakeholders with relevant advisory communications from time to time. This communication seeks to provide important information related to a Certificate issued for Deduction of Tax at Lower/ NIL Rates under section 197/197A of the Income Tax Act, 1961.

About Certificate u/s 197/ 197A:

Assessing Officer can issue a certificate for lower or no deduction of tax:

  • To the deductee, if is a resident or
  • To the deductor, where the deductee is a non-resident
  • If the Assessing Officer is satisfied that the total income of the deductee justifies deduction of tax at a lower or nil rate.

Accordingly, the clause provides that the deduction shall be made in accordance with the certificate, until such certificate is cancelled by the Assessing Officer or the expiry of the validity of the certificate, whichever is earlier.

Actions to be taken on receipt of the certificate:

  • Please validate the PAN of the deductee submitting the certificate
  • The Certificate should be valid for the PAN, Section and Rate which has been mentioned in the statement fiiled.
  • Check that the certificate is valid for the relevant Financial Year
  • Verify that the threshold limit for the certificate has not been exceeded in previous quarters.
  • Correct certificate number should be quoted in the statement. Example of Correct Certificate Number – 2XXXAH7XXE
  • Raise the Flag “A” in the statement for a certificate u/s 197 and Flag “B” for certificate u/s 197A.
  • Please ensure that the Certificate Number is mentioned in the Deductee detail of the statement. (For F.Y. 2013-14 Onwards)
  • If you are in receipt of a CPC(TDS) Intimation u/s 200A/ 154 for Short Deduction, you are requested to download the Justification report. The details of the Short Deduction due to an issue with the 197/197A certificate can be checked under the TAB “Short Deduction due to 197 Certificates”. You may verify the details and correct in accordance with the above guidelines.
  •  If a Correction Statement is being submitted, please ensure that the above has been taken care of for the Conso File downloaded from TRACES.

Please refer to our e-tutorial <https://www.tdscpc.gov.in/en/download-nsdl-conso-file-etutorial.html> for any assistance with Conso File.

Caution to be exercised for the following:

  •  Please ensure that Flag A/B is not raised for any Invalid PAN.
  •  Please do not raise Flag A/ B for a PAN which does not have the above certificate.
  •  Avoid mentioning Section code in the “Certificate Number” field of the statement.
  •  Expired certificates are not to be used.
  • Please check that the threshold limit has not been exceeded in the previous quarter.

For any further assistance, you can also write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.   

CPC (TDS) is committed to provide best possible services to you.   

CPC (TDS) TEAM

 

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