TDSMAN Blog

Smart & Easy TDS Software for Preparing TDS Returns

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

No TDS for provident fund withdrawals of up to Rs 50,000 from June 1

No tax would be deducted at source for PF withdrawals of up to Rs 50,000 from June 1.

The government has notified raising the threshold limit of PF withdrawal for deduction of tax (TDS) from existing Rs 30,000 to Rs 50,000, a senior official told PTI.

“The Finance Act, 2016 has amended section 192A of Income Tax Act, 1961 to raise the threshold limit of PF withdrawal from Rs 30,000 to Rs 50,000 for Tax Deducted at Source (TDS),” the notification stated.

The provision will come into effect from June 1, 2016, providing relief to subscribers of retirement fund body EPFO.

The government had introduced the proposal to deduct TDS on PF withdrawals in order to discourage pre-mature withdrawal and to promote long term savings.

According to existing provisions, TDS is deducted at the rate of 10 per cent provided PAN is submitted.

TDS will be deducted at the rate of 10 per cent provided PAN is submitted.

However, in case Form 15G or 15H is submitted by the member, then TDS is not deducted. These forms are to declare that their income would not be taxable after receiving payment of their PF accumulations from retirement fund body EPFO.

While Form 15H is submitted by senior citizens (above 60 years of age), Form 15G is submitted by claimants below the age of 60 years.

TDS is deducted at the maximum marginal rate of 34.608 per cent if a member fails to submit PAN or Form 15G or 15H.

However, there are certain exceptions to deduction of TDS by EPFO. TDS shall not be deducted in case of transfer of PF from one account to another PF account.

Also, no tax is deducted if employee withdraws PF after a period of five years.

Source: The Times of India

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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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