WORKSHOP ON TDS For Government Deductors By Shital Shashwat Verma,IRS Deputy Commissioner of Income Tax

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

What is TDS? 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.

Tax deduction Account Number (TAN) 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

Deductor’s Duty 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.

To Deduct 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

Section 192 – TDS on salary 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.

S. 194A-Interest other than interest on securities TDS on Interest Payments TDS on GROSS INTEREST On interest exceeding Rs. 10000/- @ 10%

S.194C-TDS on contract payments 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%.

S.194C 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%.

S.194I-TDS on rent payments ‘(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;’.

S.194I Payments exceeding Rs 1,80,000 per annum Rent of plant, machinery or equipment @ 2% , and for rent of land, building or furniture @ 10%

TDS u/s 194J-Professional & Technical Services 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.

S.194J 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%

S.194H-Commission 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;

TDS at a Glance 192 Salary 2.00 lacs Average Rate --- 194A Interest 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 194C Contract >30,000/- or >75,000/- 1 (Ind/HUF) 2 (Others)

Commission / Brokerage >5,000/- 10 Section of Act Nature of payment Threshold Limit (Rs) Rate of TDS (%) Non-Co. Company 194H Commission / Brokerage >5,000/- 10 194I (Rent) Land & Building >1.80 lac Machinery, Equipment, Plant -“- 2 194J Professional fee/ Tech services / Royalty >30,000/-

Purchase of Immovable Property Section of Act Nature of payment Threshold Limit (Rs) Rate of TDS (%) Non-Co. Company 194IA Purchase of Immovable Property > 50 lakhs 1 194LA Compensation for immovable property >2.00 lac 10

Tax Collected at Source (TCS) 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.

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 5. Any other forest produce 6. Sale of Scrap 7. Minerals, being coal or lignite or iron ore 8. Parking lot, Toll Plaza, Mining & quarrying 2%

To Deposit- (section 200/Rule30) 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)

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

TDS Returns and Form 16/16A 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)

Due Date of TCS Quarter ending 27EQ Statement Certificate Form 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

Form No. 24G wef 01.04.2010 Respective PAO / TO / CDDO to obtain AIN 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

Form 24G *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

Failure to make TDS 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

PENALTY 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/-

Late filing of Statement Penalty-Failure to file TDS statement- u/s 272A(2)(k) @ Rs. 100 per day of default From Qtr-1 of FY 2012-13 U/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.

PROSECUTION 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

Dos and Don’ts Instances of Mistakes in Challan- Mentioning of wrong Assessment Year. Mentioning of wrong Section code. Mentioning of wrong deductee code. Mentioning of wrong payment code. Mentioning of wrong TAN. Mentioning of wrong PAN/PAN instead of TAN.

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)

Matching of Information 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. If matching successful then PAN ledger of each deductee is credited.

Annual Tax Statement (26AS) 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