Taxpayee Employee should submit Tax Saving Proofs to Employer for Stop Excess TDS Deductions.

Submit tax saving proofs to your employer to prevent excess TDS

With your company’s accounts department knocking on your door to submit income-tax saving proofs, it’s time for you to gather all the relevant papers in one place.

Since April 2016, the department would have been computing taxes on your salary based on the proposed investment declaration submitted by you earlier.

The taxes deducted at source (TDS) are covered under Section 192 of the Income-tax Act, 1961 making it the obligation of the employer to withhold taxes at the time of payment of salaries.

Once the actual proof is submitted, the accounts department will compute the taxes based on the proofs of the actual investments made by you. And for that you will have to furnish the documentary evidence of having actually made the investments as per the investment declaration made earlier You can make tax-saving investments different from those declared by you earlier but the deduction from taxable income will be given only on the basis of the actuals submitted and not on the basis of the proposed declaration made earlier.

The last date for such submissions varies, but most organisations would expect you to submit them by March 10, 2017. However, employers start asking for them in January (in this case Jan 2017) itself as they would like to start deducting tax at source on the basis of tax calculations based on actual investments from January.. This will also enable the employee to finalise tax adjustments, if any, in the balance months of the current financial year (2016-17).If taxes have been deducted in excess or less, accordingly, they will get deducted in the last 3 months of the FY. Do not wait till March as then there wont be any scope for finalising and one could see a huge tax burden in that month and less of take-home pay.

The documents need not be attached or sent to Income-tax Department at the time of tax filing. Instead, it’s the employer who has to receive them from employees and deduct tax accordingly.

At times it is found that after taking into account the tax saving investments/expenditures, the tax already deducted by one’s employer is in excess and cannot be adjusted in subsequent months. In such cases the excess TDS will reflect in the Form 16 and the refund will have to be claimed by you from the I-T Department by filing the appropriate income tax return.

The important tax saving investment/expenditure proofs include:

Investments – Under Section 80C

When it comes to investments such as Equity Linked Savings Schemes (ELSS) of mutual funds (MFs), life insurance, submit the ELSS fund statement, premium paid receipts respectively. For Public Provident Fund (PPF), if it is maintained with a bank or a post office, submit photocopies of the passbook showing all the transactions and the account details. In case you are maintaining PPF online, take a printout of the e-receipt showing transactions and the account details. In case of Sukanya Samriddhi Scheme and 5-year tax saving fixed deposit, the deposit receipt or a certificate from the bank has to be submitted to the employer.

Tuition fees

In case of tuition fees, submit photocopies of the school receipt carrying the schools’ seal and signature of the receiver.

First-time home buyers

For the current financial year, Section 80EE allows tax benefits for first-time home buyers under which the benefit can be claimed on home loan interest. This deduction is over and above the Rs 2 lakh limit under Section 24 of the Income-tax Act. Hard copies of all the relevant documents have to be submitted.

House Rent Allowance Exemption

For those who claim HRA relief, the Permanent Account Number (PAN) of the landlord is mandatory. This condition is not applicable for those whose rent payment is less than or equal to Rs 1 lakh per annum, i.e., Rs 8,333 per month.

A copy of the lease rent agreement or declaration by the landlord in a prescribed format is to be submitted. Further, ownership proof of landlord of rented premises, which can be house tax receipt or the latest electricity bill or share certificate in case of co-operative society houses have to be submitted. The original rent receipts for the period April 2016 till date have to be provided.

Housing loan repayment (principal)

The certificate from a financial institution specifying the principal paid during April 2016 to March 2017 needs to be submitted. Ask the institution to mention the provisional amount for the last 2-3 months of the current financial year as equated monthly instalments (EMIs) would still be pending.

Loss from housing property – interest on housing loan – self occupied

The interest certificate from the bank or financial institution, specifying the break-up of interest and the principal amount for FY 2016-17 would be required. Possession/construction completion certificate are a must for availing the relief by some employers. Further, the date of loan taken and the date of possession are mandatory to avail the benefit.

Loss from housing property – interest on housing loan – let out on rent

If the house for which loan has been availed is let out, the same should be submitted with certificate from a financial institution specifying principal and interest paid during April 2016 to March 2017 (FY 2016-17).

New Pension Scheme (NPS)

There is no need to submit proof of actual Investments in case the investments in NPS is through Corporate Model or Employee Model as the same are recovered and deposited by company in your PRAN (Permanent Retirement Account Number) account. However, if you have opted for investment of Rs 50,000 under NPS on your own, i.e., outside salary, then submission of copies of PRAN card, NPS Transaction Statement for Tier 1 Account is necessary.

Mediclaim premium

Call up the insurer and ask him to send the statement for tax purpose under Section 80D. The premium should not be paid by cash and should be paid by cheque or digital transfer from the bank account.

Conclusion

It’s better to get a confirmation on the actual requirement from your accounts department. Not all will be asking for all the above mentioned documents, while few others might have their own set of requirements. The documents, if not submitted within time, may make you end up with excess TDS which would have to be claimed as refund. Also, as a precaution, retain the original copies for personal income-tax assessment.

Source: The Economic Times

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Updated Form-15G and 15H for Asstt. Year 2017-18 with detailed information.

The Income Tax department has been modified the Form No. 15G & 15G as per amended notification No. 11/2013 [F.NO.142/31/2012-SO(TPL)]/SO 410(E) Dated 19.02.13 for the assessment year 2013-14. The New Form No. 15G & 15H is applicable to all Taxpayee who do not want TDS Deduction on their Income  or other under section 203 of the Income-tax Act, 1961.

• No TDS to be deducted by bank in case of –

Interest on saving bank account.

Recurring deposits.

• Bank deducts TDS on interest payment of fixed deposit u/s 194 A.

(As per sec 194 A for payment of interest other than on securities, bank deducts 10% TDS, if payment exceed Rs. 10000 p.a.)

• Form no. 15G and 15H are to be submitted every year with bank. These forms are valid only for the financial year in which you have furnished these forms. If you want to apply for nil TDS in the new financial year, then you will have to resubmit these forms. Form 15H or 15G are meant to prevent TDS and not to avoid tax or file your tax return. You may be required to file your tax return if your total income before the deductions is above the basic tax exemption limit.

• Form 15G/15H is a self declaration form, which is provided by a person resident in India (not being a company or firm) to their deductor that the tax on his estimated total income for the previous year will be NIL.

• Assessee should submit these forms before the end of financial year or before first payment of interest whichever is earlier.

• All banks and financial institutions will deduct TDS if payment of interest on fixed deposits exceeds Rs. 10000 during the financial year.

• Bank will issue TDS certificate also called form 16A which mentions the details of TDS payments with the government.

• The limit of Rs. 10000 is applicable for each branch of a bank. So each branch of the bank will see whether the interest of the whole year on all the FDs exceeds the threshold of 10000.

• If a person is making FD in different branches of same bank then these forms should be deposited at each and every branch where the deposit has been made. For example, if Mr. Ashish has made deposits at three different branches of SBI, then he has to submit the Forms at each branch separately.

• In case of FDs made for longer duration where interest on the FD to be paid on maturity, bank will deduct TDS on interest accrued for the year.

• Please ensure to mention Permanent Account Number (PAN) on the forms while submitting form No. 15G or 15H. In case, taxpayer fails to provide PAN to the deductor, the tax would be deductible @ 20%.

• These Forms are to be submitted in duplicate, one of which is forwarded to the IT department.

• These Forms can only be used for payments like dividends, interest on securities, interest other than interest on securities, national saving schemes, interest on units. For other types of payments (like brokerage, rent etc), these forms cannot be used.

• A bank can track you using unique customer ID. If the combined interest in all the branches of bank exceeds the threshold limit of Rs. 10000, TDS will be deducted if you have not filed form 15G/15H. Therefore, it is best to provide the form then to risk TDS. They can then reclaim the amount by filing their tax returns. The second option is to split fixed deposit across several banks and branches so that TDS exemption limit is not breached.

FORM NO. 15G is used to Declaration under section 197A(1) and section 197A(1A) of the Income-tax Act, 1961 to be made by an individual or a person (not being a company or firm claiming certain receipts without deduction of tax.

FORM NO. 15H is applicable to Declaration under section 197A(1C) of the Income-tax Act, 1961 to be made by an individual who is of the age of sixty years or more claiming certain  receipts without deduction of tax.

Difference between Form 15G and Form 15 H

Form 15G	Form 15H
Submitted by individual below the age of 60 years.	Submitted by senior citizens(60 or above 60 year)
Can be submitted by HUF also.	By individuals only (senior citizens).
Two conditions: The final tax on his estimated total income computed as per the provisions of the Income Tax Act should be nil; and The aggregate amount of interest income etc. received during the financial year from all sources should not exceed the basic exemption limit for that relevant year.	One condition: The final tax on his estimated total income computed as per the provisions of the Income Tax Act should be nil; and Can be submitted by the senior citizen even though the total interest amount from the payer may exceed Rs. 3.0 Lacs (i.e., the limit of basic exemption limit).
Can be submitted by residents only.	Can be submitted by residents only.

Download Form 15G

Download Form 15H

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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.

Source: www.tdsman.com

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CBDT mandates to issue even NIL TDS Certificate by deductors - 9th Amendment with New Form No. 13.

As per the provisions of the Income-tax Act, 1961 (‘the Act’), CBDT has issued a notification on 24th Sept., 2014 regarding issuing of TDS Certificate to TDS Deductee.  In this notification CBDT mandates to issue TDS Certificate by TDS Deductor to TDS Deductee even NIL TDS.  Income Tax Department has been made 9th Amendment Rule, 2014 and amended in Rule 28AA by substitution a New Form No. 13.  The Form No. 13 is an application by a person for a certificate u/s. 197 and/or 206C(9) of the Income Tax Act, 1961 for no Deduction/collection of Tax or Deduction/collection of Tax at a lower rate.

The Central Board of Direct Taxes (‘the Board’) vide notification dated 24th Sep., 2014 amended the following by section 295 read with section 197 of the Income Tax Act, 1961 (43 of 1961) :

1. (1) These rules may be called the Income-tax (9thAmendment) Rules, 2014.
   (2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962,—

   (a) in rule 28AA, for sub-rule (4) and sub-rule (5), the following sub-rules shall be substituted, namely:-

“(4) The certificate for no deduction of tax shall be valid only with regard to the person responsible for deducting the tax and named therein.

(5) The certificate referred to in sub-rule (4) shall be issued direct to the person responsible for deducting the tax under advice to the person who made an application for issue of such certificate.

(6) The certificate for deduction of tax at lower rate shall be issued to the person who made an application for issue of such certificate, authorising him to receive income or sum after deduction of tax at lower rate.”;

Download CBDT mandates issue of nil TDS certificate Notification (Click Here)

Download Appendix-II, for Form No.13 (Click Here)

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No TDS liability of assessee on fees charged by NR bank.

Where a foreign bank charged certain sum terming it as interest on an Indian bank in process of negotiating letter of credit on behalf of its customer i.e. assessee, and said bank recouped amount from assessee, in view of fact that assessee had privity of contract with Indian bank and amounts were also paid to Indian bank only, transaction in question could not be said to fall within meaning of section 195 and, therefore, assessee was not required to deduct tax at source while making payments of interest

Where assessee claimed deduction of conveyance allowance paid to employees on lump sum basis without there being any correlation to expenses actually incurred and without showing that it was paid for defraying expenses wholly, necessarily and exclusively in performance of their duty, Tribunal was justified in rejecting said claim

Source: www.taxmann.com

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CPC (TDS) communicates to deductors whose Nil TDS Deposited during Financial Year 2014.

CPC (TDS) has issued a follow up communication to all deductors regarding nil TDS deposited during FY 2014. It may be possible that either the tax may not have been deducted at source or the tax deducted may not have been deposited, within stipulated time. In such case, this may lead to Short / Late Deduction and / or Short / Late Payment Defaults. CPC (TDS) has reminded deductors about the duty of the person deducting tax and suggested them the actions that needs to be taken in case of this kind of situation.

The issued communication has been given below:

Dear Deductor (TAN: ),

As per the records of the Centralized Processing Cell (TDS), it has been observed that there is “No Tax Deposited” during the period April 1 to August 31, 2014 while tax has been deposited in the corresponding period in Financial Year 2013.

It may be possible that either the Tax may not have been deducted at source or the Tax deducted may not have been deposited, within stipulated time. In such case, this may lead to Short / Late Deduction and / or Short / Late Payment Defaults.

Please make note of the following important information :

• Please note the provisions of section 200(1) of the Income Tax Act, 1961; in this regard:

Duty of Person deducting Tax:

• Any person deducting any sum in accordance with [the foregoing provisions of this Chapter] shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs.
• Any person being an employer, referred to in sub-section (1A) of section 192 shall pay, within the prescribed time, the tax to the    credit of the Central Government or as the Board directs.
• Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time,[prepare such statements for such period as may be prescribed] and deliver or cause to be delivered to the prescribed income-tax authority or the person authorized by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed.

• If the tax is not paid in accordance with the provisions of the Act, it may attract penal Interest u/s 201(1A) and 220(2) of the Act.

• Any such interest paid above will not be considered as deductible expense under the provision of section 43(ia) of the Act.

Actions to be taken:

• If any amount needs to be deducted and/ or deposited, immediate action may be taken at the earliest.Please inform us with the reason for “No Tax Deposited” at info@tdscpc.gov.in.

For any assistance, call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

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