Amendment in TDS for Fin. Year 2017-18

Budget 2017 – Changes in TDS Provisions

1.Deduction of tax at source in the case of certain Individuals and Hindu undivided family

 The existing provisions of section 194-I of the Act, inter alia, provide for deduction of tax at source at the time of credit or payment of rent to the account of the payee beyond a threshold limit. It is further provide that an Individual or a Hindu undivided family who is liable for tax audit under section 44AB for any financial year immediately preceding the financial year in which such income by way of rent is credited or paid shall be required to deduction of tax at source under this section.

Therefore, under the existing provisions of the aforesaid section, an Individual and HUF, being a payer (other than those liable for tax audit) are out of the scope of section 194-I of the Act.

In order to widen the scope of tax deduction at source, it is proposed to insert a new section 194-IB in the Act to provide that Individuals or a HUF (other than those covered under 44AB of the Act), responsible for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of month during the previous year, shall deduct an amount equal to five per cent. of such income as income-tax thereon.

It is further proposed that tax shall be deducted on such income at the time of credit of rent, for the last month of the previous year or the last month of tenancy if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

In order to reduce the compliance burden, it is further proposed that the deductor shall not be required to obtain tax deduction account number (TAN) as per section 203A of the Act. It is also proposed that the deductor shall be liable to deduct tax only once in a previous year.

It is also proposed to provide that where the tax is required to be deducted as per the provisions of section 206AA, such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.

This amendment will take effect from 1st June, 2017.

2.Extension of eligible period of concessional tax rate on interest in case of External Commercial Borrowing and Extension of benefit to Rupee Denominated Bonds
The existing provisions of section 194LC of the Act provide that the interest payable to a non-resident by a specified company on borrowings made by it in foreign currency from sources outside India under a loan agreement or by way of issue of any long-term bond including long-term infrastructure bond shall be eligible for concessional TDS of five per cent.

It further provides that the borrowings shall be made, under a loan agreement at any time on or after the 1st July, 2012, but before the 1st July, 2017; or by way of any long-term bond including long-term infrastructure bond on or after the 1st October, 2014 but before the 1st July, 2017, respectively.

Representations have been received requesting for extension of concessional rate of TDS under sections 194LC of the Act to boost the economy by way of introduction of foreign capital.

Therefore, it is proposed to amend section 194LC to provide that the concessional rate of five per cent. TDS on interest payment under this section will now be available in respect of borrowings made before the 1st July, 2020.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years.

Further, consequent upon demand from various stakeholders for granting benefit of lower rate of TDS to rupee denominated bonds, a Press Release dated 29th October, 2015 was issued clarifying that TDS at the rate of 5 per cent would be applicable to these bonds in the same way as it is applicable for off-shore dollar denominated bonds.

In order to give effect to the above, it is further proposed to extend the benefit of section 194LC to rupee denominated bond issued outside India before the 1st July, 2020.

This amendment will take effect retrospectively from 1st April, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent years.

3.Extension of eligible period of concessional tax rate under section 194LD

The existing provisions of section 194LD of the Act, provides for lower TDS at the rate of five per cent. in the case of interest payable at any time on or after 1st June, 2013 bue before the 1st July, 2017 to FIIs and QFIs on their investments in Government securities and rupee denominated corporate bonds provided that the rate of interest does not exceed the rate notified by the Central Government in this behalf.

Considering the representations received from stakeholders, it is proposed to amend section 194LD to provide that the concessional rate of five per cent. TDS on interest will now be available on interest payable before the 1st July, 2020.

This amendment will take effect from 1st April, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years

4.Simplification of the provisions of tax deduction at source in case Fees for professional or technical services under section 194J
The existing provisions of sub-section (1) of section 194J of the Act, inter-alia provides that a specified person is required to deduct an amount equal to ten per cent. of any sum payable or paid ( whichever is earlier) to a resident by way of fees for professional services or fees for technical services provided such sum paid/payable or aggregate of sum paid/payable exceeds thirty thousand rupees to a person in a financial year.

In order to promote ease of doing business, it is proposed to amend section 194J to reduce the rate of deduction of tax at source to two per cent. from ten per cent. in case of payments received or credited to a payee, being a person engaged only in the business of operation of call center.

This amendment will take effect from the 1st day of June, 2017.

Source: TDS Man

Read More

Deduct 5% TDS on Payment of Rent over Rs. 50000 a Month - Budget-17

Budget 2017: Paying rent over Rs 50,000 a month? Get ready to deduct 5% TDS

Individuals and HUFs paying rent of Rs 50,000 or more per month will now have to deduct 5% tax at source i.e TDS at the rate of 5%, as per Budget 2017 proposals. This move is aimed at ensuring that recipients of large rental incomes come into the tax net as they would be forced to report the full rental income in their tax returns in order to claim benefit of the TDS amount. This change is proposed to be made effective from 1.6.2017.

The existing provisions of section 194-I of the Act provide for TDS at the time of credit or payment of rent to the payee beyond a threshold limit. Currently, this provision is applicable to Individuals or Hindu undivided family (HUF) which is liable for tax audit under section 44AB.

However, Individuals and HUF other than those liable for tax audit were not liable to deduct tax at source under this section i.e. section 194-I of the Act. In order to widen the scope of tax deduction at source, it is proposed to insert a new section 194-I B in the Act to provide that Individuals or an HUF (other than those covered under 44AB of the Act), paying to a resident, rent of over Rs 50,000 per month, shall deduct tax at source of 5%.

However, to make this rule tax -payer friendly and easy to comply with, it is proposed that the payer need not obtain a TAN and is required to deduct the tax only once in a financial year.

It is proposed that tax shall be deducted at the time of credit of rent, for the last month of the financial year or the last month of tenancy if the property is vacated during the year to the account of the payee.

Source: The Economic Times

Read More

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

Read More

Impact of Finance Act, 2015 Changes in Sec. 194C w.e.f. 01.06.2016

Changes in TDS from payments to transporters

Previously, 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.

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.

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.

Source: www.tdaman.com

Read More

TIN-NSDL updates Taxpayer's Corner for Payment/e-Payment.

Recently TIN-NSDL has been updated Taxpayer's Corner for Payment/e-Payment of Tax as TDS, TCS, Self Assessment etc.  The Taxpayers, deductors or collectors can pay direct taxes through Authorised Bank branches either physically, through ATM or through internet.  The details of Type of Challans to be used for tax payments as under :

ITNS 280 :  For depositing Advance tax, Self Assessment tax, Tax on Regular Assessment, Surtax, Tax on Distributed Profits of Domestic Company and Tax on Distributed income to unit holders.

ITNS 281 :  For depositing TDS/TCS by company or non company deductee.

ITNS 282 :  For depositing Securities transaction tax, Estate duty, Wealth-tax, Gift-tax, Interest-tax, Expenditure/other tax and Hotel Receipt tax.

ITNS 283 :  For depositing banking cash Transaction Tax and FBT.

Do's by Taxpayer ?

1. Mandatory details required to be filled in challan

• PAN/ TAN
• Name and address of the taxpayer (for physical challans)
• Assessment Year
• Major Head, Minor Head
• Type of payment

2. Use challan type 281 for deposit of TDS/TCS payments.

• Quote the correct TAN, name & address of the deductor on each challan
• Verify your TAN details from Income Tax Department web-site (www.incometaxindia.gov.in) prior to depositing TDS/TCS.
• Use separate challans to deposit tax deducted under each section and indicate the correct nature of payment code in the relevant column in the challan.
• Use separate challans to deposit tax deducted for different types of deductees.

3. For Non TDS/TCS payments use challan types 281/282/283 as applicable.

• Quote the correct PAN, name & address on each challan used for depositing the tax.

4. Mention/verify the correct Financial Year and Assessment Year in the challan before tax payment.

5. Payment confirmation: - Ensure that the Challan Identification Number (CIN) has been provided on the counterfoil issued after successful payment of tax. Challan Identification Number (CIN) comprises of the following

• Seven digit BSR code of the bank branch where tax is deposited
• Date of Deposit (DD/MM/YY) of tax
• Serial Number of Challan

6. Verify the tax payment information submitted to the bank.

• Details available on the TIN website www.tin-nsdl.com under the link “Challan Status Inquiry”
• In case the details are not available then you may contact the bank branch where the tax has been deposited.

7. In case the counterfoil issued by the bank has been misplaced, kindly contact the respective bank/branch for details regarding the same

8. Rectification/Correction in the Challan:- For rectifying errors in a physical challan, taxpayer may approach the Bank. Prescribed timelines for the same are as per table below

Sr. No.	Type of correction on challan	Period for correction request (in days)
1	PAN/TAN	Within 7 days from challan deposit day
2	Assessment Year	Within 7 days from challan deposit day
3	Total Amount	Within 7 days from challan deposit day
4	Major Head	Within 3 months from challan deposit day
5	Minor Head	Within 3 months from challan deposit day
6	Nature of payment	Within 3 months from challan deposit day

Click here for more details.

9. Please visit TIN website www.tin-nsdl.com for details on preparation and furnishing TDS/TCS statements.

Don'ts by Taxpayer ?

1. Do not use incorrect type of challan for payment of taxes.
2. Do not make mistake in quoting PAN / TAN.
3. Do not give PAN in place of TAN or vice versa.
4. Do not use a single challan to deposit tax deducted for corporate and non corporate deductees.
5. Do not use same challan for depositing various types of tax like advance tax, self-assessment tax etc.
6. Do not make mistake in the F.Y. and A.Y. to be indicated in the challan.
7. If you have multiple TANs for the same division filing TDS statements, do not use different TANs in different challans. Use one TAN consistently and surrender the others.

Read More

How to avoid common mistakes while submitting TDS Statement ? - Important Guidelines.

In our endeavor to facilitate improved TDS administration and lower TDS default rates, we are glad to provide information on common mistakes committed by the deductors while submitting TDS statements. These mistakes result into TDS Defaults in the respective statements.

Following are some useful guidelines to avoid common mistakes, while submitting TDS Statements and you are requested to go through the following in detail.

Incorrect reporting of 197 Certificates:

Please refer to the following guidelines for correct reporting of 197 Certificates:

The Certificate Number should be of 10 digits with Alpha-numeric structure. Please refer to the following examples:

• Correct Format 1111AA111A;
• Incorrect Format: 1111AA111A/194C

Certificate Number should be valid during the period for which it is quoted.
 

The Certificate Number should be for the same PAN, Section Code and Section Rate for which it has been mentioned in the statement
 

Threshold limit Amount of the Certificate should not be exceeded.
 

Please ensure that the Certificate is not expired. Please refer to the following illustration:

• Lower deduction Certificate under section 197, issued in April 2013 (e.g. Certificate Number - 1) stands cancelled by Assessing Officer on 10/11/2013.
• A fresh certificate Under Section 197 (e.g. Certificate Number - 2) is issued with effect from 11/11/2013.
• Deductor quotes Certificate Number - 2 against the transactions recorded during the period from 01/11/2013 to 10/11/2013 in Q3 TDS statement.
• Deductor should have quoted Certificate Number - 1 for the transactions conducted till 10/11/2013.

Common errors resulting into Short Payment Defaults:

• Typographical errors committed by deductor, in reporting the date '20032014' in the "Tax Deducted" column.
• Total of "Amount Paid / Credited" reported in the "Tax Deducted" column of the statement. This results into short payment and
• Deductors need to ensure that the TDS/TCS Deducted/Collected amount should be equal to TDS/TCS Deposited Amount.

The above mistakes are illustrated below:    

Amount Paid/ Credited	TDS Deducted	TDS Deposited	Remarks
1,55,000.00	1,55,000.00	15,500.00	Wrong TDS Deducted Amount
2,20,420.00	20032014.00	22042.00	Date mentioned in the TDS Deducted Column

Actions to be taken : 

• CIN Particulars (BSR Code, Date of Deposit and Challan Serial Number) mentioned in the TDS statement should exactly match with the CIN Particulars as available on 'Challan Status' at www.tdscpc.gov. in or 'Challan Status Enquiry' at www.tin-nsdl.com
• For BIN (Book Identification Number), the particulars (24G receipt number, Date of transfer voucher and DDO Serial Number) mentioned in the TDS statement by the Govt. Deductors should exactly match with the BIN Particulars as available on
• 'Challan Status' at www.tdscpc.gov. in or 'BIN View' at www.tin-nsdl.com
• Amount of Tax deposited pertaining to different BIN's/ CIN's should not be clubbed together while reporting in the TDS statements.

Few other common mistakes in reporting dates are as follows:                   

Actual Date of Deposit  (As per Challan)	Date of Deposit mentioned  in TDS Statement	Observations
07/01/2014 (07th Jan, 2014)	07/01/2013  (07th Jan, 2013)	Wrong Year (2013 instead of 2014)
07/01/2014  (07th Jan, 2014)	01/07/2014  (01st July,2014)	Wrong Date Format (MM/DD/YYYY)

You can reach out to us on ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

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

CPC (TDS) TEAM

Read More

Latest TDS/TCS Rate Chart for Fin. Year 2013-14.

TDS and TCS rate changes for financial year 2013-14 and interest provision for late deposit of TDS/TCS.  TDS rate applicable in case of Non submission of PAN, on service tax or not, on job work or not, which rate is applicable to individual, HUF etc. Who should deduct TDS ? Who should not deduct TDS ?

Deduction of TDS/TCS by correct rate is very important for TAX Deductor and Collector.  On late filing of TDS/TCS Return penalty deposit and Dis-allowance of Expenses. Tax deduction rates chart (TDS rate chart)  for Financial year 2013-14 is as below:

Read More