TDSMAN Blog

smart & easy software for eTDS & eTCS returns

Duties of Tax Deductors (TDS)

Deduct Tax at Correct Rate and deposit in Government Account – Sec. 200

Every person responsible for deducting tax at source shall at the time of payment or credit of income, whichever is earlier, verify whether the payment being made is to be subject to deduction of tax at source. If it is so, he must deduct such tax as per the prescribed rates. Further he is required to deposit such tax deducted in the Central Government Account within the prescribed time as specified in Rule 30.

Issue a TDS certificate

Further, such person is required to issue a certificate of tax deduction at source u/s 203 to the person from whose income the TDS has been done, in the prescribed proforma i.e. Form No.16A within prescribed time(as discussed earlier).

File Prescribed Return/Quarterly Statement

A return of TDS is a comprehensive statement containing details of payments made and taxes deducted thereon along with other prescribed details. For deductions made prior to 01.04.2005 earlier every deductor was required as per the provisions of Section 206 (read with Rule 36A and 37) to prepare and deliver an annual return, of tax deducted at source. However w.e.f. 01.04.2005 there is no requirement to file annual returns and instead Quarterly statements of TDS are to be submitted in form 26Q by the deductors. 

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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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TDS/TCS Rates Chart for F.Y. 2015-16

The TDS and TCS rates chart for the financial year 2015-16 has been given below:

TDS rates for F.Y. 2015-16 

Nature of Payment Made To Residents

Cutoff (Rs.)

Company / Firm / Co-operative Society / Local Authority

Individual / HUF

If No / Invalid PAN

Section – Description

                       Rate  (%)                                          

192 – Salaries - NA Avg rates 30
192A-Premature withdrawal from EPF ( wef 01.06.2015) 30000 NA 10 20
193 – Interest on securities - 10 10 20
194 – Dividends 2500 10 10 20
194A – Interest other than interest on securities – Others 5000 10 10 20
194A – Banks(Time deposits) 10000 10 10 20
194A – Banks (Recurring deposit)(01.06.15) 10000 10 10 20
194A – Deposit in Co-op Banks (01.06.15) 10000 10 10 20
194B – Winning from Lotteries 10000 30 30 30
194BB – Winnings from Horse Race 5000 30 30 30
194 C – Payment to Contractors - - - -
194C- Payment to Contractor – Single Transaction 30000 2 1 20
194C-Payment to Contractor – Aggregate During the F.Y. 75000 2 1 20
194C- Contract – Transporter who has provided valid PAN (up to 31.05.2015) - - - 20
194C- Contract – Transporter not covered under 44AE (wef 01.06.2015) 30000 / 75000 2 1 20
194C- Contract – Transporter covered under 44AE & submit declaration on prescribed form with PAN (wef 01.06.2015) - - - 20
194D – Insurance Commission 20000 10 10 20
194DA Payment in respect of life insurance policy(applicable from 01.1.2014) 100000 2 2 20
194E – Payment to Non-Resident Sportsmen or Sports Association - 20 20 20
194EE – Payments out of deposits under NSS 2500 20 - 20
194F – Repurchase Units by MFs - 20 20 20
194G – Commission – Lottery 1000 10 10 20
194H – Commission / Brokerage 5000 10 10 20
194I – Rent – Land and Building – furniture – fittings 180000 10 10 20
194I – Rent – Plant / Machinery / equipment 180000 2 2 20
194IA -Transfer of certain immovable property other than agriculture land (w.e.f 1-6-2013) 5000000 1 1 20
194J – Professional Fees 30000 10 10 20
194LA – Immovable Property 200000 10 10 20
194LB – Income by way of interest from infrastructure debt fund (non-resident) - 5 5 20
194LB – Income by way of interest from infrastructure debt fund (non-resident) - 5 5 20
Sec 194 LC – Income by way of interest by an Indian specified company to a non-resident / foreign company on foreign currency approved loan / long-term infrastructure bonds from outside India (applicable from July 1, 2012) - 5 5 20
194LD – Interest on certain bonds and govt. Securities(from 01-06-2013) - 5 5 20
196B – Income from units - 10 10 20
196C-Income from foreign currency bonds or GDR (including long-term capital gains on transfer of such bonds) (not being dividend) - 10 10 20
196D – Income of FIIs from securities - 20 20 20

Note:

1. No TDS on service Tax :As per circular 01/2014 dated 13.01.2014 TDS is not applicable on service tax part if service tax is shown separately.

2. TDS at higher rate ie., 20% has to be deducted if the deductee does not provide PAN to the deductor.(read detail u/s 206AA)

3. No TDS on Goods Transport  :No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages on furnishing of his Permanent Account Number, to the person paying or crediting such sum.(read details here No TDS on Goods Transport )up to 31.05.2015.

4. TDS on Good Transport wef 01.06.2015 : TDS shall be applicable on payment to transporter  wef 01.06.2015 .However tds exemption will be available only to those transporters

  • who own ten or less goods carriages at any time during the previous year.
  • such a transporter would also need to furnish a declaration to that effect to the payer along with the PAN.

5. Surcharge on tax is not deductible/collectible at source in case of  resident individual/ HUF /Firm/ AOP / BOI/Domestic Company in respect of payment of income other than salary.

6. Surcharge on TDS is applicable on payment made to non resident other than company ,if payment is in excess of one crore.(12 %)

7. Surcharge on TDS on salary is applicable if taxable salary is more than one crore @ 12 %

8. In the case of Company other than Domestic Company,

 (i) at the rate of two per cent. of such tax, where the amount or the aggregate of such amounts collected and subject to the collection exceeds one crore rupees but does not exceed ten crore rupees;

 (ii) at the rate of five per cent. of such tax, where the amount or the aggregate of such amounts collected and subject to the collection exceeds ten crore rupees.

9. No Cess on payment made to resident: Education Cess is not deductible/collectible at source in case of resident Individual/HUF/Firm/ AOP/ BOI/ Domestic Company in respect of payment of income other than salary.Education Cess @ 2% plus secondary & Higher Education Cess @ 1% is deductible at source in case of non-residents and foreign company.

TCS rates for F. Y. 2015-16

Section

Nature of Payment

 

F. Y. 2015-16

Individual / HUF

Other

206C Scrap 1 1
206C Tendu Leaves 5 5
206C Timber obtained under a forest lease or other mode 2.5 2.5
206C Any other forest produce not being a timber or tendu leave 2.5 2.5
206C Alcoholic Liquor for human consumption 1 1
206C Parking Lot, toll plaza, mining and quarrying 2 2
206C

Minerals, being coal or lignite or iron ore (applicable from July 1, 2012)

1

1
206C

Bullion if consideration (excluding any coin / article weighting 10 grams or less) exceeds Rs. 2 Lakhs or jewellery if consideration exceeds Rs. 5 Lakhs (and any amount is received in cash) (applicable from July 1, 2012)

1 1
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Changes in Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) in Budget 2015

Several amendments have been proposed in the sections dealing with the deduction of tax at source.

1. Requirement for obtaining evidence/ particulars by employer for TDS–Section 192

1.1 Currently, the person responsible for paying salary has to depend upon the evidence/particulars furnished by the employee in respect of deductions, exemptions and set-off of loss claimed. There is neither any guidance regarding the nature of evidence/particulars to be obtained nor any uniformity in this regard.

1.2 With a view to rationalise the collection of information and documents by employers, a new sub-Section (2C) is proposed to be introduced in Section 192 to provide that the person will be required to obtain evidence or proof or particulars of prescribed claims including claim for set-off of loss under the provisions of the Act in the prescribed form and manner.

This amendment is effective from 1st June 2015.

2. TDS from premature withdrawal from Employees’ Provident Fund Scheme (EPFS)–Sections 192A and 197A

For complete details, click here

3. TDS from interest (other than interest on securities)–Section 194A

There are several amendments pertaining to TDS from interest.

  • TDS from Recurring deposit
  • TDS from deposit in cooperative Banks
  • Interest from all branches of a Bank is to be considered to check cut off amount of Rs 10000/- 

For complete details, click here

All the above amendments are effective from 1st June 2015.

4. TDS from payments to transporters–Section 194C

4.1 Currently, payment to transporters carrying on the business of plying, hiring, or, leasing of goods carriages is not liable to withholding tax if the transporter furnishes her/his permanent account number to the payer. It seems that the intention of having this provision was to exclude small transporters from the rigours of TDS provisions. But because of the way the section was drafted, all transporters were excluded from the TDS provisions if they had a PAN.

4.2 With a view to bring back the big transporters back into the TDS fold, from 1st June 2015 onwards, this exemption will be available only to those transporters who own ten or less goods carriages at any time during the previous year. Such a transporter would also need to furnish a declaration to that effect to the payer along with the PAN.

4.3 There was also some bit of confusion in the minds of a few people as to whether the said section (and exclusion) applied to payers engaged in the business of transport or to payees engaged in the business of transport. To remove this confusion, it has now been clarified in the Memorandum to the Finance Bill that this exemption is available whether such amount is paid by a person engaged in the business of transport or otherwise.

All these amendments shall take effect from 1st June 2015.

5. Obtaining/quoting tax deduction and collection account number (TAN) relaxed for certain notified persons–Section 203A

5.1 At present, any person who is required to deduct tax at source (other than under Section 194IA) is expected to obtain a TAN and quote that TAN in the challan and the TDS statement that he is supposed to file. This is a cumbersome requirement–particularly to the individuals who acquire an immovable property from non-residents. In such cases, for one time transactions also, the TAN related formalities have to be complied with. In order to provide relief to such individuals or Hindu undivided families (HUFs) who are not liable for audit under Section 44AB or for one time transactions such as single transaction of acquisition of immovable property from non-residents on which tax is deductible under Section 195, it is proposed to amend Section 203A to the effect that the requirement of obtaining and quoting of TAN shall not apply to such notified persons.

This amendment is effective from 1st June, 2015.

6. Processing of TCS returns–Section 206CB

6.1 A new Section 206CB is proposed to be introduced to facilitate the processing of TCS (tax collected at source) statements on the same lines as TDS statements.

6.2 Section 206CB(1) permits adjustments to the sums collectible to take care of arithmetical errors or incorrect claims apparent from any information in the TCS statement filed.

6.3 Interest if any, payable on the sum collectible and fee payable under Section 234E are now chargeable in respect of the TCS. For this purpose, suitable provisions have been introduced in the Sections 200A and 206CB.

6.4 The intimation has to be sent before the expiry of one year from the end of the financial year in

which the statement is filed. 

6.5 Section 206C(7) provides for payment of interest if the person responsible for collecting the tax does not collect the tax or after collecting does not pay it as required under that Section. At the same time, since an intimation generated under Section 206CB is deemed to be a notice of demand under Section 156, interest under Section 220(2) would be payable if the tax collector fails to pay such demand within thirty days of the service of the notice of demand. This could give rise to a situation where interest is charged under both Sections, 220(2) as well as 206C(7). To avoid this, a new sub-Section (2C) is proposed to be inserted in the Section 220 to provide that where interest is charged for any period under Section 206C(7), no interest shall be charged under Section 220(2) of the Act on the same amount for the same period.

These amendments are effective from 1st June 2015.

7. Self-declaration for non-deduction of tax from life insurance payments–Sections 194DA and 197A

7.1 Section 194DA provides for deduction of tax at source at the rate of 2% from payments made under a life insurance policy, if such amount is chargeable to tax and the amount is not less than R1,00,000/-. However, there is no facility for such an assessee to file a self-declaration under Section 197A to receive the amount without deduction of tax at source even if she/ he has no tax liability.

7.2 It is now proposed to amend Section 197A provided that tax shall not be deducted under Section 194DA if the recipient of the payment on which tax is deductible furnishes to the payera self-declaration in the prescribed Form No. 15G/15H declaring that the tax on his estimated total income for the relevant previous year would be nil.

This amendment is effective from 1st June 2015.

8. Interest on certain bonds and Government securities earned by FIIs–Section 194LD

8.1 Presently, interest paid to a foreign institutional investor, qualified foreign investor and foreign portfolio investor on rupee denominated bonds of an Indian company or a Government security is taxed at a concessional rate of 5% plus applicable surcharge and cess. This concession was available for interest payable on or after 1st June 2013 but before 1st July 2015.

8.2 The concessional rate of tax is proposed to be extended up to 30th June 2017.

9. Furnishing of information made more stringent and penalty introduced – Sections 195 and 271-I

9.1 Presently, when any person responsible for making a payment to a non-resident of any interest or other sum chargeable under the provisions of this Act, such person is required to deduct tax from such payment under Section 195(1). Further, sub-Section (6) of Section 195 requires such person to furnish the information relating to payment of any sum in Form 15CA. In most cases, a view was taken that this provision applied only to payments which gave rise to income chargeable to tax in India.

Consequently, payments that did not give rise to income chargeable to tax in India were not reported in the Form 15CA.

9.2 Now, sub-Section (6) is proposed to be amended to provide for furnishing of information whether

or not such remittances are chargeable to tax. This would cast a heavy burden on persons who make payments to non residents–especially in case of import of goods. Even for such payments, now, the obligation to furnish Form 15CA (and also Form 15CB) will have to be complied with. 

9.3 This burden has been further compounded by the proposal to introduce a new Section 271-I to levy a penalty of R1,00,000/- if the person required to furnish information under Section 195 fails to furnish such information or furnishes inaccurate information.

This amendment is effective from 1st June 2015.

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