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Smart & Easy TDS Software for Preparing TDS Returns

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

Budget 2017: Paying rent over Rs 50,000 a month? Get ready to deduct 5% TDS

Individuals and HUFs paying rent of Rs 50,000 or more per month will now have to deduct 5% tax at source i.e TDS at the rate of 5%, as per Budget 2017 proposals. This move is aimed at ensuring that recipients of large rental incomes come into the tax net as they would be forced to report the full rental income in their tax returns in order to claim benefit of the TDS amount. This change is proposed to be made effective from 1.6.2017.

The existing provisions of section 194-I of the Act provide for TDS at the time of credit or payment of rent to the payee beyond a threshold limit. Currently, this provision is applicable to Individuals or Hindu undivided family (HUF) which is liable for tax audit under section 44AB.

However, Individuals and HUF other than those liable for tax audit were not liable to deduct tax at source under this section i.e. section 194-I of the Act. In order to widen the scope of tax deduction at source, it is proposed to insert a new section 194-I B in the Act to provide that Individuals or an HUF (other than those covered under 44AB of the Act), paying to a resident, rent of over Rs 50,000 per month, shall deduct tax at source of 5%.

However, to make this rule tax -payer friendly and easy to comply with, it is proposed that the payer need not obtain a TAN and is required to deduct the tax only once in a financial year.

It is proposed that tax shall be deducted at the time of credit of rent, for the last month of the financial year or the last month of tenancy if the property is vacated during the year to the account of the payee.

Source: The Economic Times

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FAQ on TDS Refund

(Q1.) Can I apply for TDS refund offline?

No, deductor cannot apply for refund offline.

(Q2.) Form which FY can deductor claim for Refund?

Deductor can apply for TDS refund from FY 2007-8 onwards for Form type 24Q, 26Q, 27EQ, 27Q.

(Q3.) Is DSC mandatory for Refund?

Yes

(Q4.) Deductor is unable to submit the request for Refund at Step-4?

Dongle has to be inserted while raising the request for refund, in case deductor is unable to submit request at step -4.

(Q5.) Can deductor claim for Refund for amount less than Rs 100/-?

Refund can be claimed for amount greater the equal to Rs 100/-.

(Q6.) Can deductor claim for Refund even if there is outstanding demand on his TAN?

Yes, deductor can still claim for refund.

(Q7.) Can government deductor claim for refund as they have no PAN?

Pan of the Deductor should be available and should be same as TAN master, so government deductor will not be able to give the request.

(Q8.) If deductor has shown money in interest and fee column by mistake, can he claim the refund?

If Deductor has shown money in interest and fee column by mistake, he cannot claim the refund unless correction is filed and amount is removed from this column.

(Q9.) Can deductor cancel the Refund request once submitted?

Refund request can be cancelled only before AO approval, if AO has approved the request it cannot be cancelled.

(Q10.) What if deductor has mentioned incorrect Bank details while submitting the Refund request?

Deductor should provide correct bank account details as these details will be verified by the AO and one time correction in bank details and communication details is allowed.

Q11.) How do I get my refund amount?

If refund amount is more than Rs 50,000/- then only cheque is issued below Rs 50,000/- amount will be transferred in the bank account.

(Q12.) Can deductor give Refund Request for amount more than Rs 100,000/-?

Yes, If refund amount is more than Rs 100,000/- the AO as well as additional AO’s approval is required.

(Q13.) What all can be the reasons for Rejection of Refund Request?

Some of the common rejection Reasons are:

  • Status will be rejected if outstanding demand comes after AO approval.
  • Request is rejected by AO TDS in case outstanding demand for TANs associated with the PAN of the deductor
  • Request will be rejected by AO in case invalid Bank Details.
  • Request will be rejected in case change in available balance due to change in associated challan.
  • Request will be rejected in case reduction in available balance due to change in associated challan.
  • Request will be rejected in case open challan correction due to change in associated challan.
  • Request will be rejected in case force challan matching by AO due to change in associated challan.
  • Request will be rejected in case Demand Outstanding due to change in associated challan.

CLARIFICATION ABOUT STATUS OF REQUEST OF REFUND AFTER SUBMITTING 26B (ACKNOWLEDGMENT OF REQUEST) TO A.O.

  • PENDING WITH AO: Once the request is submitted and validated request will be displayed with status
  • PENDING WITH TDS: Status will be pending with TDS CPC if request is approved by AO
  • PENDING WITH REFUND BANKING: Status will be pending with Refund Banker if request is with Bank.

Source: TRACES

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Procedure for the purposes of furnishing and verification of Form 27BA for removing of default of Short Collection and/or Non Collection of Tax at Source

F.Ro. DGIT(S)/CPC(TDS)/NOTIFICATION/2016-17
Government of India
Ministry of Finance
Central Board of Direct Taxes
Directorate of Income-tax(Systems)
New Delhi.

Notification No. 12/ 2016

New Delhi, 8th December, 2016

Subject: — Procedure for the purposes of furnishing and verification of Form 27BA for removing of default of Short Collection and/or Non Collection of Tax at Source – Reg.

1. As per first proviso to sub-section (6A) of section 206C of Income-tax Act, 1961, any person, other than a person referred to in sub-section (ID), responsible for collecting tax in accordance with the provisions of this section, who fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall not be deemed to be an asses see in default in respect of such tax if such buyer or licensee or Iessee —
(i) has furnished his return of income under section 139;
(ii) has taken into account such amount 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.
2. As per sub-rule (1) of Rule 37J of Income-tax Rules, 1962, the certificate from an accountant under the first proviso to sub-section (6A) of section 206C shall be furnished in Form 27BA to the Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems) in accordance with the procedures, formats and standards specified under sub-rule (2), and verified in accordance with the procedures, formats and standards specified under sub rule (2).

Click here to read full notification

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