for government deductors by shital shashwat verma,irs deputy commissioner of income tax 1

WORKSHOP ON TDS

For Government Deductors

By

Shital Shashwat Verma,IRSDeputy Commissioner of Income Tax

1

What is TDS? Deductor’s Duty Rates and details 24G Penal provisions Do’s and Don'ts for the deductors

2

Agenda of the presentation-

Not a tax but a mode of tax collection.

It is similar to "pay as you earn" scheme also known as Withholding Tax in many other countries.

Prevents evasion of tax against subsequent variations / manipulations of accounts

Maintains better cash-flow for the Govt.

3

What is TDS?

Unique identification number of a Deductor. Mandatory to quote TAN on challan &returns.

Non-obtaining / False TAN–Penalty Rs.10,000

A ten character alpha-numeric number.

JBPC04371B

4

Tax deduction Account Number (TAN)

To Deduct

To Deposit

To File Quarterly TDS Returns(F.24Q,26Q)

To Issue TDS Certificates to the Payee(F.16/A)

To check status online at TRACES.

5

Deductor’s Duty

Obligation is of the Deductor to deduct Tax from any sum liable to TDS

At the prescribed rate - depending on the nature of payment and status of Deductee

On Credit or payment, whichever is earlier

Credit to “suspense a/c” also attracts TDS

6

To Deduct

At the time of payment (Estimated annual income)

Rates prescribed in the Finance Act. To include all perks, allowances,

reimbursements, voucher payments; Pension; Annuity; Gratuity; Perquisite; Commission; allowances, Encashment of leave, profits in lieu of salary, Advance salary and arrears of salary.

Amount of deduction of tax may vary from month to month. However, the correct tax liability has to be worked out in the month of February of the FY.

For details- see printed material.7

Section 192 – TDS on salary

TDS on Interest Payments

TDS on GROSS INTEREST

On interest exceeding Rs. 10000/-

@ 10%

8

S. 194A-Interest other than interest on securities

all types of contracts - transport of goods or passengers(except by railway), advertising, broadcasting, telecasting, labour contracts, material contracts , works contracts, catering, printing/ supplying any product according to your specification with your material, AMC, Security contracts.

Nil rate will be applicable if the transporter quotes his PAN. If PAN is not quoted the rate will be 20%.

9

S.194C-TDS on contract payments

The amount of any sum credited or paid exceeds Rs.30000 (or Rs. 75,000 during the fin. Year- then tax will be required to be deducted, even where individual transaction is less than the threshold of Rs. 30,000).

TDS @ 1% in case of payments to individual/ HUF. (check the 4th letter of PAN- it should be “P” or “H”)

In case of others, @2%.

10

S.194C

‘(i) “rent” means any payment, by whatever name called, under any lease, sublease,tenancy or any other agreement or arrangement for the use of (either separately or together) any, —

(a) land; or (b) building (including factory building); or (c) land appurtenant to a building (including factory

building); or (d) machinery; or (e) plant; or (f) equipment; or (g) furniture; or (h) fittings, whether or not any or all of the above are owned by

the payee;’.

11

S.194I-TDS on rent payments

Payments exceeding Rs 1,80,000 per annum

Rent of plant, machinery or equipment @ 2% , and

for rent of land, building or furniture @ 10%

12

S.194I

TDS on fees for professional or technical services.

Professional- eg. Legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, advertising, sportspersons, I.T.Ps, Film artistes, Company secretary, Information technology experts, event managers.

13

TDS u/s 194J-Professional & Technical Services

In case of any managerial, technical, consultancy services royalty, etc. On gross payments including reimbursements, taxes if any.

TDS is deductible if payment is in excess of Rs. 30,000/- per annum.

TDS @ 10%

14

S.194J

• on payment of commission or brokerage exceeding Rs 5000/-

• @ 10%

• commission or brokerage” includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities;

15

S.194H-Commission

TDS at a Glance

16

Section of Act

Nature of payment

Threshold Limit (Rs)

Rate of TDS (%)

Non-Co. Company

192 Salary 2.00 lacs Average Rate

---

194A Interest >10,000/- 10 10

194C Contract >30,000/- or

>75,000/-

1(Ind/HUF)

2(Others)

Section of Act

Nature of payment

Threshold Limit (Rs)

Rate of TDS (%)

Non-Co. Company

194H Commission / Brokerage

>5,000/- 10 10

194I (Rent)

Land & Building>1.80 lac 10 10

Machinery, Equipment, Plant

-“- 2 2

194J Professional fee/ Tech services / Royalty

>30,000/- 10 10

17

Section of Act

Nature of payment

Threshold Limit (Rs)

Rate of TDS (%)

Non-Co. Company

194IA Purchase of Immovable

Property

> 50 lakhs 1 1

194LA Compensation for immovable property

>2.00 lac 10 10

18

The Seller who sells the goods specified u/s.206C(1) is liable to collect income-tax at the prescribed rate from the Buyer of such goods at the same time of debiting of the account of the buyer or at the time of receipt of such amount.

The TCS is to be collected apart from the sale value. TCS is to be deposited to Central Government A/C.

Tax Collected at Source (TCS)

Liability of TCS

Sl. Nature of Goods OR licence/lease @

1. Alcoholic liquor for human consumption 1%

2. Tendu leaves 5%

3. Timber under forest lease 2.5%

4. Timber other than a forest lease 2.5%

5. Any other forest produce 2.5%

6. Sale of Scrap 1%

7. Minerals, being coal or lignite or iron ore 1%

8. Parking lot, Toll Plaza, Mining & quarrying 2%

Tax deducted or collected must be remitted to the Central Govt. Account through challan No.281.

before 7th of the following month(Even for March)

Govt DDOs- on Same day (Book Adjustment) CDDO/PAO/DTO - 7 days(Through Challan)

21

To Deposit- (section 200/Rule30)

22

To File TDS Returns &To Issue TDS Certificates to the Payee

Nature of payment

Returns Certificates to the Payee

Salary (TDS) 24Q Form 16

Other than Salary(TDS)

26Q Form 16A

TCS 27EQ Form 27D

Quarter ending TDS returns Form 16/16A

30th June 31st July* 15th August*

30th September 31st October* 15th Nov*

31st December 31st January* 15th Feb*

31st March 15th May*(Due by 15th of the month if challan payment)

30th May(31st May for Form 16)*(Due by 30th of the next month if challan payment)

23

TDS Returns and Form 16/16A

Quarter ending 27EQ Statement

CertificateForm 27D

30th June 15th July 30th July

30th September 15th October 30th October

31st December 15th January 30th January

31st March 15th May 30th May

24

Due Date of TCS

In respect of Govt. DDOs crediting TDS through Book Adjustment :

Respective PAO / TO / CDDO to obtain AIN

Submit statement in Form 24G within 10 days from the end of the month

Intimate Book Identification No. (BIN) to DDOs

25

Form No. 24G wef 01.04.2010

*S.192(1A) r.w.Rule 30(4)

An office of the Government, where tax has been paid to the credit of Central Government without the production of a challan is required to-

a) file Form 24G within 10 days from the end of the month for that month.

B) Intimate Book Identification Number(BIN) generated by System to each DDO.(Income – Tax Department Notification no. 41/2010 dtd 31.5.2010.)

*To be filed by PAO / DTO / CDDO

Form 24G

Deductor – Deemed to be assessee in default – Recovery of amount of TDS

Liable to pay simple Interest: @1% p.m. for delay in deduction; and

@1.5% p.m. for delay in deposit of tax

Creates charge on all the assets of Deductor for failure to deposit tax to Govt’s a/c

27

Failure to make TDS

Failure to : (i) issue TDS certificate, or (ii) deliver Form 15G /15H, within due

date - Penalty @ Rs.100 per day of

default

Penalty u/s.271C - 100% of tax in default

Failure to apply / quote PAN or TAN :- Penalty of Rs.10,000/-

28

PENALTY

Penalty-Failure to file TDS statement-u/s 272A(2)(k) @ Rs. 100 per day of default

From Qtr-1 of FY 2012-13U/s 271H- Rs. 10,000/- to Rs.1,00,000/-.Fee- Fee payable @Rs.200/- per day of

default- Fee shall not exceed the amount of Tax

The fee is mandatory.No provision for its waiver.

Late filing of Statement

30

Failure to deposit Tax to the credit of Central Government’s account :

- Rigorous Imprisonment with Fine;

- Period of imprisonment may vary from 3 months to 7 years

PROSECUTION

Instances of Mistakes in Challan-

1. Mentioning of wrong Assessment Year.

2. Mentioning of wrong Section code.

3. Mentioning of wrong deductee code.

4. Mentioning of wrong payment code.

5. Mentioning of wrong TAN.

6. Mentioning of wrong PAN/PAN instead of TAN.

31

Dos and Don’ts

TRACES is for TDS reconciliation Analysis and Correction Enabling System.

Log in to TDS CPC’s website-TRACES regularly. E-tutorials on the site for guidance.

Download default summary in case of demands w.r.t TDS statements filed by you-correction.

Use separate challans for different sections. Forms-16/16A/ to the payee to be issued from TRACES

compulsorily. Circular No. 03/2011

Dos and Don’ts

TCS- purchase price includes any amount( by whatever name called) paid/payable by the buyer. It also includes excise duty.

Penal interest payments- attracts TDS Deductions allowed to salaried employees,

including LTC-it is obligatory to keep and preserve evidence.

No specific order from I.T. Deptt required for enforcing TDS u/s 192. CIT v. BK Chatterjee (1993) 202 ITR 785(Cal)

Dos and Don’ts

Matching of information in e-TDS return with payment details / PAN database

Matching of Challan details in e-TDS return with that of Bank data base (OLTAS)

Matching with respect to details available in Income Tax e-return of Deductee

Mismatch- correction Statements.

34

Matching of Information

For Online view of ATS :- Registration of PAN for User ID &

Password- No Fee payable at TIN-FC

Form 26AS contains :- TDS/TCS deposited on behalf of

taxpayer- Advance/Self-assessment Tax paid- Regular Tax paid by the PAN holder

35

Annual Tax Statement (26AS)

36