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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SBI deposit holder can generate Form 15G or 15H to avoid TDS deductions by Online "Generate 15 G/H" Utility.

Recently, State Bank of India has provided a very important and useful utility with the name of "Generate 15 G/H".  To avoid TDS deduction on the fixed deposits, please download form 15 G/H, verify it , sign it and submit it to the branch concerned (in three copies) for recording the same in CBS. The branch will subsequently submit the form 15 G/H to the Income Tax Assessing Officer under whose jurisdiction the branch is located.  The functionality for online generation of Form 15G/H has been introduced for the sake of customer convenience by obviating the manual filling up fixed deposit details by the customers.

Required Fields to Generate 15 G/H :

• Name
• Address
• Mobile No.
• Pan No.
• Deposit Details etc.

Some fields like A.O. Codes and nature of business were asked to enter manually. 

Requirement for generation of Form 15G / 15H :

• SBI login user id and password.
• Any deposit in the shape of FDR with any branch of State Bank of India.
• Path for Generation of Form 15G or 15H. is given in below picture. 

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No TDS liability of bank under sec. 194A on interest accrued on Fixed Deposit

IT: Where litigant deposit FD with the bank on directions of Court, he ceased to have any control or proprietary right over those funds. Although FD was drawn in the name of the Registrar General, he was neither the recipient of the amount credited to that account nor the interest accruing thereon. There was no assessee to whom interest income from the FD could be ascribed, thus, bank was not liable to deduct tax under section 194A on interest accrued on such FD.

Facts:
(a)           The petitioner ('UCO Bank') accepted a Fixed Deposit ('FD') made by litigant as per directives of the Court. The bank did not deduct tax on accrued interest on such FD as it was in name of Register General of Court as custodian and the actual beneficiaries were not known, as the matter was sub-judice.
 

(b)           Thus, the issue that arose for consideration of the High Court was:
          • Whether the bank would be liable to deduct tax under section 194A on interest accrued on such FD where the assessee was not ascertainable and the person in whose name the interest was credited was also not a person liable to pay tax under the income-tax Act ('the Act')?

The High Court held in favour of assessee as under:
(1)           The words "credit of such income to the account of the payee" occurring in section 194A of the Act necessarily imply that deduction of tax bears nexus with the income of an assessee. In absence of an assessee, the machinery provisions for deduction of tax to his credit were ineffective. The expression "payee" under section 194A of the Act would mean the recipient of income whose account was maintained by the person paying interest.
 

(2)           In the instant case, although FD was made in the name of the Registrar General, the account represented funds which were in custody of the Court and the Registrar General was neither the recipient of the amount credited to that account nor the interest accruing thereon. Thus, the Registrar General could not be considered as payee for the purpose of section 194A of the Act.
 

(3)           There was no assessee to whom interest income from the FD could be ascribed; no person could file return claiming the interest payable by bank as income. The machinery provisions of recovering tax by deduction of tax at source would not be applicable in absence of an ascertainable assessee.
 

(4)           The litigant who was asked to deposit the money in the court ceased to have any control or proprietary right over those funds. The amount deposited vested in the Court and the depositor ceased to exercise any dominion over those funds. It was also not necessary that the litigant who deposited the money would be the ultimate recipient of income. The person to whom funds would be granted was to be determined by orders passed subsequently. Thus, petitioner-bank was not required to deduct tax under section 194A on interest accrued on FD made by the litigant.

Source: www.taxmann.com

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No TDS liability under sec. 194H if exp. incurred for rendering free services

Where payment of rent did not exceed limit of Rs. 1,20,000 specified under section 194-I, assessee was not liable to deduct TDS.

Where expenses were wrongly ledgerised under commission account while expenses were, in fact, for free services, assessee was not liable to deduct TDS.

Where payment of advertisement and publicity expenses was below specified limit of Rs. 50,000 in whole of year, assessee was not liable to deduct TDS.

Where PF and ESI were not made within due date of respective Acts but were paid within due date of filing of return of income, deduction was to be allowed.

Source: www.taxmann.com

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CPC (TDS) communicates to Bank for Non reporting of 15G/H transaction

CPC (TDS) has issued a communication to banks regarding non reporting of 15G/H transaction in contravention of rule 31A (4) of Income Tax Rules read with section 200 of Income Tax Act. CPC (TDS) has requested banks to ensure the details of 15G/H transactions from their source data and raise Flag “B” in the original TDS Statements. It has also requested them to ensure submission of correction statements for previous quarterly TDS statements of the branches.

The issued communication has been given below:

To,

(Bank Name)
(PAN:XXXXXXXXXX),

Dear Sir/ Madam,

Please refer the subject mentioned above.

1) In this regard, it is to inform you that ________ branches out of ________ active branches of your bank have not reported transaction of payment of interest on which tax was not deducted in view of declaration of 15G or 15H form by the payee. We are also sending a separate communication to the non-compliant branches, attached in the list.

2) __________ branches have in all reported __________ transactions involving declaration of 15G or 15H. The amount involved in such transactions is to the tune of Rs. _______ Crore for F.Y. 2013-14. Form 15G/15H can be submitted by the payee only if the income including the interest income is less than the taxable amount.

3) You are requested to reconcile the amount of Rs. ______ Crore reported by your bank branches with the interest amount paid to payees who declared 15G or 15H as per core banking solution of your bank. In case of discrepancy, it is requested that the relevant branches may be instructed on top priority to comply to the provisions of Income tax act in respect of complete & correct reporting of transactions involving 15G or 15H declaration.

Since the due date of filing Q2 2014 TDS Statements (October 15) is approaching fast, you are requested to ensure the details of 15G/H transactions from your source data and raise Flag "B" in the Original TDS Statements. Also, please ensure submission of Correction Statements for previous Quarterly TDS Statements of the branches.

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

CPC (TDS) TEAM

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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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No TDS to be deducted if commission paid to foreign agents.

No TDS to be deducted if commission paid to foreign agents for rendering services abroad

Article authored by Mr. Alok Patnia, founder of Taxmantra.com

ITAT Chennai Bench recently held that assessee is not liable to deduct tax at source for making payment to its foreign agents for rendering services abroad, if the foreign agent does not have a permanent establishment in India and the service rendered is not in the nature of technical service.

Facts of the case:

The assessee, a private limited company, manufactures and exports leather garments and incurred expenditure towards commission paid to non-residents for the purpose of procuring orders abroad. The A.O disallowed the same, by observing that section 9 of the Act applied in this case as the commission amount had accrued to a non-resident/ payee principally on account of a business activity in India which required TDS deduction. The Assessing Officer further held that the certificate under section 195(2) of the Act had also not been produced. Accordingly, he disallowed/added the commission amount in assessee’s income.

The Appellate Tribunal held that:
The Revenue’s only grievance is that the aforesaid foreign agency commission paid by the assessee to the non residents/payee attracts disallowance under section 40 (a)(i) for non deduction of TDS. It is made clear that in support of this plea, no cogent evidence has been produced. It transpires from the case file the assessee has paid foreign exchange commission to its non-resident agent who do not have any permanent establishment in India. There is no material to prove that these payment have arisen out of an agreement executed in India. Nor there is any evidence to conclude that the non-resident/payee has rendered any technical service to the assessee. The Revenue also fails to prove the payments to have been accrued, arisen or paid in India so as to make it taxable under provision of the Act.

Taking into consideration all these circumstances, CIT(A) held that the assessee was not liable to deduct TDS on above stated commission paid to its non-resident payees.

Source: www.blog.tdsman.com

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Now Banks issued Acknowledgement of Form-15H/15G.

RBI has been issued a notification No. RBI/2012-13/516, DBOD.No.Leg.BC.100/09.07.005/2012-13 dated 31.05.2013 for issuing acknowledgement of Form No. 15H/15G to customers who did not want TDS Certificate against interest Income.  Read the following notification.

Acknowledgement by banks at the time of submission of Form 15-G / 15-H

As you are aware banks are not required to deduct TDS from depositors who submit declaration in Form 15-G/15-H under Income Tax Rules, 1962. However, it has been brought to our notice that despite submission of Form 15-G/15-H by customers, banks are deducting tax at source, at times, causing inconvenience to customers resulting in a number of complaints.  Such instances arise because either the forms are misplaced or a track is not kept of forms received in the branches.

2. The matter has been examined by us in consultation with Indian Banks’ Association (IBA). With a view to protect interest of the depositors and for rendering better customer service, banks are advised to give an acknowledgment at the time of receipt of Form 15-G/15-H. This will help in building a system of accountability and customers will not be put to inconvenience due to any omission on part of the banks.

Read more detailed information to issue Acknowledgment of Form 15h or 15G.

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No TDS on Certain Cases Income Tax Notification w.e.f. Ist day of January, 2013

No Tax Deduction at Souce on Certain Cases, Notification issued by Income tax department which is as under:

Section 197A of the income-tax Act, 1961 - Deduction of tax at source - no deduction in certain cases - Specified payment under section 197A(1f)

NOTIFICATION NO. 56/2012 [F. NO. 275/53/2012-IT(B)], DATED 31-12-2012

In exercise of the powers conferred by sub-section (1F) of section 197A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the nature specified below, in case such payment is made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934 (2 of 1934), excluding a foreign bank, namely:-

(i)  bank guarantee commission;

(ii)  cash management service charges;

(iii)  depository charges on maintenance of DEMAT accounts;

(iv)  charges for warehousing services for commodities;

(v)  underwriting service charges;

(vi)  clearing charges (MICR charges);

(vii)  credit card or debit card commission for transaction between the merchant establishment and acquirer bank.

2. This notification shall come into force from the Ist day of January, 2013.

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