TDSMAN Blog

Smart & Easy TDS Software for Preparing TDS Returns

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

Healthy Practices for Error-Free TDS Returns

Healthy practices for error – free TDS returns has been given below:
  1. Deduction/ Collection of Tax at Correct Rates.
  2. Timely Deposit of Tax Deducted at Source.
  3. Accurate Reporting of data related to tax deductions/ collections made.
  4. Submission of TDS Statements within the due dates.
  5. Verification and Issuance of TDS Certificates within time.
  6. CPC (TDS) is now sending “Intermediate Default Communication” for PAN Errors and Short Payments, which can be corrected during the interim period of a week of filing TDS Statements, before CPC (TDS) proceeds with computing Defaults for the relevant statement.
  7. User-friendly Online Correction facility can be used for Correction of Deductees, Tagging Unmatched Challans and Payment of Fees/ Interest. (Please navigate to Defaults tab to locate Request for Correction from the drop-down menu. For any assistance, please refer to the e-tutorial available on TRACES).
  8. Aggregated TDS Compliance Report assists the PAN of the Deductor to administer TDS Defaults for associated TANs and to take appropriate action.
  9. The Deductor’s Dashboard provides you all necessary information to assist you in “Compliance Self-Assessment” and to take appropriate action.
  10. Non-filing Self-declaration can be made by navigating to Statements / Payments menu and submit details under Declaration for Non-Filing of Statements.
  11. PAN Verification and Consolidated TAN – PAN File facility on TRACES can be used for verifying the deductees.
  12. The Conso Files and Justification Reports downloaded from TRACES help you to identify errors in submission of revised Quarterly TDS Statements.
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Due dates for filing of Statement and Challan

The due dates for filing statements for different forms are as per the below table:

Quarter Period Government Deductor Non-Government Deductor
Q1 1 Apr-30 June 31st July 15th July
Q2 1 July-30 Sep 31st Oct 15th Oct
Q3 1 Oct-31 Dec 31st Jan 15th Jan
Q4 1 Jan-31 Mar 15th May 15th May

Form 24Q, Form 26Q & Form 27Q

Period  Government Deductor Non-Government Deductor
Tax Deducted from April to February Tax deposit without Challan i.e. through Book entry-Same Day 

Tax Deposit Through Challan

7th of Next Month

7th of next month
Tax Deducted in March from 1st to 31st March Tax deposit without Challan i.e. through Book entry-Same Day

Tax Deposit Through Challan

7th of Next Month

30th April

The Due Date of Filing Quarterly Statement of TCS (27EQ) is as below:

Quarter Period Government Deductor Non-Government Deductor
Q1 1 Apr-30 June 15th July 15th July
Q2 1 July-30 Sep 15th Oct 15th Oct
Q3 1 Oct-31 Dec 15th Jan 15th Jan
Q4 1 Jan-31 Mar 15th May 15th May

Source: TRACES

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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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TDS Rates to come down to better cash flow of Small Taxpayers

Government has reduced the rates of Tax Deducted at Source (TDS) on several deductions with a view to improve cash flow, especially of small tax payer.

According to the Budget proposal for 2016-17, the TDS rate in respect of life insurance policies has been reduced from 2 per cent to 1 per cent and on insurance commission from 10 per cent to 5 per cent.

The TDS rate has been halved in case of National Savings Scheme to 10 per cent, and on commission on sale of lottery tickets and other brokerages to 5 per cent.

The Budget also proposes to abolish TDS on income in respect of unit and payment of compensation on acquisition of capital assets.

As part of the rationalisation exercise, the limits for deduction of TDS has been raised.

In case of payment of accumulated balance due to an employee in EPF, the TDS limit is being raised from Rs. 30,000 to Rs. 50,000.

The limits for TDS deduction have also been raised in case of payments to contractors from Rs. 75,000 to Rs. 1 lakh, commission or brokerages (from Rs. 5,000 to Rs. 15,000), commission on lottery ticket (from Rs. 1,000 to Rs. 15,000) and on acquisition of immovable property (from Rs. 2 lakh to Rs. 2.5 lakh).

However, in case of insurance commission the threshold for TDS deduction has been reduced from Rs. 20,000 to Rs. 15,000.

The Budget also proposed to extend the presumptive taxation scheme to professionals with gross receipts up to Rs. 50 lakh with the presumption of profit being 50 per cent of the gross receipts.

At present, the Presumptive taxation scheme under the Income Tax Act is available for small and medium enterprises i.e. non corporate businesses with turnover or gross receipts not exceeding Rs. 1 crore.

Jaitley also proposed to increase the turnover limit under this scheme to Rs. 2 crore with a view to give relief to assessees in the MSME category.

The Budget also proposes to increase the rate of interest from 6 per cent to 9 per cent on delay in giving effect to Appellate Tribunal’s order beyond 90 days.

The monetary limit for deciding an appeal by a single member bench of ITAT will be enhanced from Rs. 15 lakh to Rs. 50 lakh.

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