MSSV & Co, Bangalore IS TDS TEDIOUS ?

Overview of TDS Provisions CA. D.R. Venkatesh B.Com, LLB, FCA MSSV & Co, Bangalore Overview of TDS Provisions CA. D.R. Venkatesh B.Com, LLB, FCA Partner, MSSV & Co Bengaluru

MSSV & Co, Bangalore ISSUES Latest Practical

Issues - Latest Finance Act, 2009 Finance Act, 2010 MSSV & Co, Bangalore Issues - Latest Circulars / Notifications Finance Act, 2009 Finance Act, 2010

CIRCULAR / NOTIFICATIONS MSSV & Co, Bangalore CIRCULAR / NOTIFICATIONS S.o. 1261(E) dated 31st May, 2010 Income Tax (6th Amendment) Rules, 2010 w.e.f 1st Day of April, 2010

Rule 30 – Time and Mode of Payment MSSV & Co, Bangalore Rule 30 – Time and Mode of Payment Without Challan – Same Day With Challan – on or before seven days from the end of the month in which the deduction is made DEDUCTOR - GOVERNMENT

MSSV & Co, Bangalore DEDUCTOR - OTHERS Last month of the year – on or before 30th day of April where the income or amount is credited or paid in the month of March During the year – on or before seven days from the end of the month in which the deduction is made

SPECIAL PERMISSION Prior approval of the Joint Commissioner MSSV & Co, Bangalore SPECIAL PERMISSION Prior approval of the Joint Commissioner Permit quarterly payment Salary - under section 192 Interest - under section 194A Insurance Commission - under section 194D Commission or Brokerage - under section 194H

Quarter ended Due date 30th June 7th July 30th September 7th October MSSV & Co, Bangalore Quarter ended Due date 30th June 7th July 30th September 7th October 31st December 7th January 31st March 30th April

MSSV & Co, Bangalore E – Payment Rule 125 - w.e.f 01.04.2008 Circular 5/2008 - dated 14.7.2008 a company and a person (other than a company) to whom the provisions of Sec 44AB are applicable

without challan remittance MSSV & Co, Bangalore Deductor – Government without challan remittance Submit statement in Form No. 24G within 10 days from the end of the month to the Agency authorised by the Director General of Income Tax (Systems) Intimate the BIN generated by the agency to each of the deductors

CERTIFICATE Form No. 16 – Salary Form No. 16A – other than Salary MSSV & Co, Bangalore CERTIFICATE Form No. 16 – Salary Form No. 16A – other than Salary Specify Valid PAN of the Deductee Valid TAN of the Deductor BIN - CIN Receipt number of the relevant Quarterly Statement

Time Specified Form No. Periodicity Due Date MSSV & Co, Bangalore Time Specified Form No. Periodicity Due Date 16 Annual By 31st day of May 16A Quarterly Within 15 days from the due date for furnishing the statement – Form 26Q

Statement of Deduction of Tax MSSV & Co, Bangalore Quarterly Returns Statement of Deduction of Tax Form No. 24Q - Salary Form No. 26Q - All other deductees Form No. 27Q - Deductees – Non- Resident

Time Schedule MSSV & Co, Bangalore Date of ending of the Due Date Quarter of the F.Y 30th June 15th July 30th September 15th October 31st December 15th January 31st March 15th May

Furnishing the statement electronically MSSV & Co, Bangalore Furnishing the statement electronically the deductor is an office of the Government or the deductor is the Principal Officer of a Company or the deductor is a person who is required to get his accounts audited u / s 44AB in the immediately preceding Financial Year or the number of deductee’s records in the statement for any quarter of the Financial Year are twenty or more

CIRCULAR / NOTOFICATIONS MSSV & Co, Bangalore CIRCULAR / NOTOFICATIONS Notification No. 28/2009 Income Tax (Sixth Amendment) Rules, 2009 w.e.f April 1, 2009 New Rule 37BA, 37I Credit for tax deducted at source for the purpose of Sec 199 (3) On the basis of information relating to deduction of tax furnished by the deductor to the income tax authority or the person authorized by such authority

ANNUAL TAX STATEMENT Form No. 26AS Section 203AA Rule 37AB MSSV & Co, Bangalore ANNUAL TAX STATEMENT Form No. 26AS Section 203AA Rule 37AB Statement issued on behalf of Income Tax Department Details of tax indicated based on the data submitted by the deductor Due date for sending this statement is July 31st of every year

Part C : Details of Tax paid (other than TDS/ TCS) MSSV & Co, Bangalore Form 26AS consists of: General Information Part A : Details of TDS Part B : Details of TCS Part C : Details of Tax paid (other than TDS/ TCS) Details of Refund granted

MSSV & Co, Bangalore Finance Act, 2009 U / s 194C (3) where any sum paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source on the invoice value excluding the value of material, if such value mentioned

MSSV & Co, Bangalore on the whole of invoice value, if the value of material is not mentioned separately in the invoice “work” shall include – (e) manufacturing or supply of product according to the requirement or specification of the customer by using the material purchased from such customer

Finance Act, 2009 Section – 194C (6) w.e.f 01.10.2009 No TDS MSSV & Co, Bangalore Finance Act, 2009 Section – 194C (6) w.e.f 01.10.2009 No TDS During the course of business of plying, hiring or leasing the goods carriage on furnishing his PAN to the person paying or crediting such sum Section – 194C (7) - Prescribed Form

NEW SECTION 206AA With effect from 1st April, 2010 MSSV & Co, Bangalore NEW SECTION 206AA With effect from 1st April, 2010 Requirement to furnish PAN 206AA (1) Any person entitled to receive any sum or income or amount, on which tax is deductible under chapter XVII-B (deductee) shall furnish his PAN to deductor, failing which tax shall be deducted at the higher of the following rates, namely:

MSSV & Co, Bangalore At the rate specified in the relevant provisions of this Act or At the rate or rates in force or At the rate of 20% Section 206AA (2) No declaration u /s 197A(1), 197A(1A) & 197A(1C) shall be valid unless the person furnishes his PAN in such declaration (Form 15G & 15H)

MSSV & Co, Bangalore Sub Section (3) in case any declaration becomes invalid U/s 206AA (2), the deductor shall deduct TDS in accordance with provisions of Sec 206AA (1) Sub Section (4) no certificate u /s 197 shall be granted unless the application made under that section contains the PAN of the applicant

MSSV & Co, Bangalore Sub Section (5) the deductee shall furnish his PAN to the deductor and both shall indicate the same in all correspondences, bills, vouchers and other documents which are sent to each other Sub Section (6) where PAN provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his PAN to the deductor and the provision of Sec 206AA (1) shall apply accordingly

FINANCE ACT, 2010 MSSV & Co, Bangalore Threshold limit w.e.f 1st July, 2010 Section Earlier (Rs.) New (Rs.) 194B 5,000 10,000 194BB 2,500 5,000 194C 20,000 30,000 50,000 75,000 194D 5,000 20,000 194H 2,500 5,000 194I 1,20,000 1,80,000 194J 20,000 30,000

FINANCE ACT, 2010 Interest u /s 201 – w.e.f: 01.07.2010 MSSV & Co, Bangalore FINANCE ACT, 2010 Interest u /s 201 – w.e.f: 01.07.2010 at 1% for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and At 1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid

Amendment to Section 40(a)(ia) MSSV & Co, Bangalore Amendment to Section 40(a)(ia) (ia) …………… has not been paid on or before the due date specified in Sub Section (1) of Section 139

MSSV & Co, Bangalore ISSUES - GENERAL Rent paid for the months of April 2010 to June 2010 to owner ‘A’ is Rs. 14,500/- p.m. Total rent payable during the F.Y 2010-11 is Rs. 1,74,000/- Whether TDS is to be made u / s 194I for rent for the months of April 2010, May 2010 and June 2010

ISSUES - GENERAL MSSV & Co, Bangalore Threshold limit computation– whether to include Service Tax? u / s194J u / s 194I Fee Rs. 27,500 Rent Rs. 1,65,000 ST Rs. 2,833 ST Rs. 16,995 Rs. 30,333 Rs. 1,81,995 Audit Fee of Rs. 25,000 for the year ended 31.03.2010 provided & deducted in the month of September, 2010 - Whether TDS is required u /s 194J?

MSSV & Co, Bangalore ISSUES - GENERAL The entries in the books of accounts for MIS purposes. - Examine the applicability of Chapter XVII - B

ISSUES - GENERAL Excess / Short Dedcution MSSV & Co, Bangalore ISSUES - GENERAL Excess / Short Dedcution Excess / Short Remittance – Adjustment - Within the quarter - Within the financial year Refund of Excess tax remitted

ISSUES - GENERAL Defaults Non deduction Short deduction Non Remittance MSSV & Co, Bangalore ISSUES - GENERAL Defaults Non deduction Short deduction Non Remittance Short Remittance Delay in Remittance

ISSUES - GENERAL Consequences Interest Penalty Prosecution MSSV & Co, Bangalore ISSUES - GENERAL Consequences Interest Penalty Prosecution Amount not deductible

ISSUES - GENERAL Disallowance u /s 40 (a) (ia) & Form No 3CD MSSV & Co, Bangalore ISSUES - GENERAL Disallowance u /s 40 (a) (ia) & Form No 3CD In the case of non deduction short deduction non remittance short remittance delay in remittance

MSSV & Co, Bangalore ISSUES - GENERAL M/s X Private Limited paid statutory audit fee of Rs. 1,00,000/- in cash during the accounting year 2009-2010 without deduction of tax at source For assessment year 2010-11, examine the disallowance u / s 40(a)(ia) and u /s 40A(3)

ISSUES - SPECIFIC MSSV & Co, Bangalore Following payments made by Partnership Firm to its Partners: Salary Rs. 10 Lakhs to each partner Interest of Rs. 5 Lakhs on Capital contribution to one of the partner who is non-resident during the year Commission of Rs. 10 Lakhs paid to partners on percentage of Export Sales Rent of Rs. 15 Lakhs paid to one of the partner Examine the applicability of provisions of Chapter XVII-B

ISSUES - GENERAL U / s 194H Discount Rebate Incentive MSSV & Co, Bangalore ISSUES - GENERAL U / s 194H Discount Rebate Incentive

ISSUES - SPECIFIC U / s 194I – Rent MSSV & Co, Bangalore ISSUES - SPECIFIC U / s 194I – Rent Advance Rent of Rs. 8 Lakhs paid for next 5 Financial Years on 30.06.2010 Rent of Rs. 8 Lakhs paid to 5 co-owners Warehousing Charges Cooling Charges paid to cold storage owners

MSSV & Co, Bangalore ISSUES - SPECIFIC M/s King Fisher Airlines paid landing fee and parking fee of Rs. 10 Crores to Airport Authorities during the accounting year 2010-11. M/s King Fisher Airlines proposes to deduct tax at source: 194 C or 194I?

MSSV & Co, Bangalore ISSUES - SPECIFIC Tenants in a commercial complex following payments are made to the owner: Rent Maintenance Charges Power & Water Charges re-imbursements

MSSV & Co, Bangalore ISSUES - SPECIFIC M/s Specialty Hospital Private Limited makes payment to consulting doctors by collecting amount from patients. It retains 20% of the fee collected as its service charges and pays the balance 80% to the consulting doctors TDS u /s 192 or 194J? TDS on 80% or 100%?

MSSV & Co, Bangalore DIRECT TAXES CODE, 2010 TDS Provisions

Collection and Recovery of Tax A – Deduction of Tax at Source MSSV & Co, Bangalore CHAPTER XIII Collection and Recovery of Tax A – Deduction of Tax at Source (Section 193 – 201)

Section 195 Liability to Deduct tax at source Section 195(1): MSSV & Co, Bangalore Section 195 Liability to Deduct tax at source Section 195(1): Specified Payment At the time of Payment At the appropriate rate

Specified payment (Column 2) MSSV & Co, Bangalore Section 195(2) & (3): Specified payment (Column 2) Third Schedule, if the deductee is a resident Fourth Schedule, if the deductee is a non-resident

Deductee has failed to furnish his PAN Higher of the following 20% or MSSV & Co, Bangalore Section 195(5): Deductee has failed to furnish his PAN Higher of the following 20% or The rate specified in Sub-section (2),(3) or (4) of Section 195

SECTION 200 No deduction of tax in certain cases 19 cases MSSV & Co, Bangalore SECTION 200 No deduction of tax in certain cases 19 cases Individual or a HUF is not liable to audit of accounts u / s 88 for the financial year immediately preceding the financial year in which the payment is made

MSSV & Co, Bangalore CONCLUSION Duty / Responsibility under chapter XVII – B cannot be bypassed by the deductor to any person

CONCLUSION Method of Accounting Cash Basis Mercantile Basis MSSV & Co, Bangalore CONCLUSION Method of Accounting Cash Basis Mercantile Basis Compliance Basis

CONCLUSION GOLDEN PRINCIPLES Applicability Rate Deduction & Remittance MSSV & Co, Bangalore CONCLUSION GOLDEN PRINCIPLES Applicability Rate Deduction & Remittance Planning

Finally MSSV & Co, Bangalore Deduct and Remit Without failure Avoid – interest, penalty, prosecution and disallowance With due care File TDS returns & issue the forms Within time

Then… TEDIOUS TO DEDUCTOR TO DEDUCTEE TO DEPARTMENT TDS IS NOT MSSV & Co, Bangalore Then… TDS IS NOT TEDIOUS TO DEDUCTOR TO DEDUCTEE TO DEPARTMENT

MSSV & Co, Bangalore THANK YOU