tax deducted at source presented by: sowmya “pay as you earn”
TRANSCRIPT
Relevant Sections
Sec 192 – Salary Sec 193 – Interest on Securities Sec 194 – Dividends Sec 194A – Interest other than Interest on Securities Sec 194B – Winnings from Lotteries, Crosswords,
Puzzles etc. Sec 194BB– Winnings from Horse race
Sec 194C – Payment to Resident Contractors Sec 194D – Insurance commission Sec 194E – Payment to Non Resident Sportsmen
or Sports Association Sec 194EE – Payments in respect of Deposit under
National Savings Scheme Sec 194G – Commission on sale of Lottery Tickets
Relevant Sections
Sec 194H – Commission and Brokerage Sec 194I – Rent Sec 194J – Fees for Professional or Technical
Services Sec 194K – Income in respect of units Sec 194LA –Payment of Compensation on
acquisition of certain immovable
property
Relevant Sections
Section 194 LB ( w.e.f 01.06.2011 )
Income by way of Interest from
INFRASTRUCTURE DEBT FUND
Insertion 2011
Person responsible to deduct tax- Employer Tax to be deducted at rate applicable to
individuals. Inclusion of income from other heads Payment of tax on Non Monetary Perquisites. Salary from more than one employer. Adjustment of amount deducted U/s192.
Sec 192 – Salary
Case Law: CIT Vs Venron Expat Services INC. (2010)
The assesse failed to deduct tax monthly, however deducted towards the end of FY.
Sec 192 – Salary
Judgment: Permits adjustment of excess or deficit. No Interest U/s 201(1A).
Sec 193 - Interest on Securities
Person responsible to deduct tax – Central or state govt.Local authority.Company or corporation established by govt.
Rate of tax - 10%.
Exemptions:• Debentures (Resident Individuals)
Paid by Account Payee Cheque of amount not exceeding Rs 2,500
List of interest payments- No TDS required Interest on Listed Securities Payment to New Pension Trust National Defence Bonds National Defence Loan National Development Bond 7-year NSC Gold Bonds LIC, GIC or any of its subsidiaries
Sec 193 - Interest on Securities
Sec 194 – Dividends
Person Liable to deduct tax is the principal officer.
Rate of tax - 10%. Applicable only if dividend is paid u/s 2(22)(e).
Sec194A– Interest other than Interest on Securities Rate of tax – 10% Exemption Limit –
Interest by Banking company - Rs 10,000
Others - Rs 5,000 Credit or Payment, whichever is earlier.
Sec194A– Interest other than Interest on SecuritiesList of interest payments- No TDS required
LIC, UTI, Other Insurance Companies To the Partner of the firm By a Co-operative society to its members By Primary Agricultural society Saving, Current Account, Recurring Deposit. Interest on compensation (Motor Accident Claim)
-Does not exceed Rs 50,000 Interest on Zero Coupon Bond.
Sec 194B- Winnings from Lotteries, Crosswords, Puzzles etc. Deductor – Any person paying the sum by way
of winning Rate of tax – 30% At the time of payment Exemption limit –
Upto 30.06.10 - Rs 5,000
From 01.07.10 - Rs 10,000
H. Anraj Vs Government of TamilnaduEssential elements that constitute lottery.
A prize or some advantage in the nature of prize, Distribution thereof by chance and Consideration paid or promised for purchasing
the chance.
Sec 194B- Winnings from Lotteries, Crosswords, Puzzles etc.
Case Law: ACIT Vs Director of State Lotteries, Assam.
Income accruing to an agent/trader in respect of prizes on unsold/unclaimed lottery tickets in his possession.
Judgment: Income From Business, not winning from
lottery. Hence not subject to TDS.
Sec 194B- Winnings from Lotteries, Crosswords, Puzzles etc.
Sec 194BB– Winnings from Horse race Deductor – Licensed by the govt. or licensed
bookmaker Rate of tax – 30% At the time of payment Exemption limit –
Upto 30.06.10 - Rs 2,500
From 01.07.10 - Rs 5,000
Case Law:Royal Calcutta Turf ClubLimit u/s 194BB is applicable for each payment or entire winning for the FY?
Judgment:Limit should be applied to each payment and not the entire winnings.
Sec 194BB– Winnings from Horse race
Sec 194C– Payment to Resident
Contractors Rate of Tax –
Individuals and HUFs - 1%
Others - 2%
Exemption Limit-
Upto 30.06.10- Rs 20,000/50,000
From 01.07.10- Rs 30,000/75,000
Sec 194C– Payment to Resident
Contractors Exemption Hiring or Renting equipments Sale of goods Supply of goods- Buyers specification Payment to airlines – Air travel of individuals Payment to banks for Discounting Bills Individual/HUF- exclusively for personal
purposes Works executed under NREP & RLEGP
Case law: Mukta Arts Vs ACIT (2010)
Assessee was engaged in Film Financing and made certain payments by way of advances to another party for production of film.
Judgment: Assessee was not acting as contractor nor the
other party a contractee
Assessee was not required to deduct tax.
Sec 194C– Payment to Resident Contractors
Sec 194D – Insurance commission
Person responsible to deduct tax- Insurance companies.
Rate of tax – 10% Credit or Payment, whichever is earlier. Exemption limit –
Upto 30.06.10 - Rs 5,000
From 01.07.10 - Rs 20,000
Sec 194E– Payment to Non Resident Sportsmen or Sports Association
Rate of tax – 10%+SC + EC 2% + SHEC 1% Credit or Payment, whichever is earlier. No Provision For deduction of Tax at lower rate. Category of payee – Income to NR by way of
Participation in India in any game (excl card or gambling)
Advertisement Contribution of article relating to any game or sport.
Sec 194EE– Payments in respect of Deposit under NSS
Rate of Tax-20%At time of paymentExemption Limit- Rs 2,500No Provision For deduction of Tax at lower
rate.No TDS if payment to legal heir.
Sec 194G – Commission on sale of Lottery Tickets Rate of tax – 10% Exemptions –
Payment not exceeding Rs 1,000.
Payment to New Pension Trust. Category of payee
Any person stocking, purchasing or selling lottery tickets
Case Law:MS hameed Vs director of State Lotteries (2001)Discount given to an agent on bulk purchase of lottery ticket from state Govt.
Judgment:Such Discount is not a commission and not liable for TDS
Sec 194G – Commission on sale of Lottery Tickets
Sec 194H – Commission and Brokerage
Rate of Tax – 10% Exemption limit –
Upto 30.06.10 - Rs 2,500
From 01.07.10 - Rs 5,000 Exemptions –
• Payable by BSNL/MTNL to their PCO
franchisees.• Payment to New Pension Trust.
Case Law: Vodafone Essar Cellular Limited vs ACIT.Sale of sim card and recharge coupons at discounted price to distributors
Judgment:Such Discount given is a commission, hence liable for TDS
Sec 194H – Commission and Brokerage
Sec 194I – Rent
Rate of Tax –
Land/building/ furniture/Fittings – 10%
Machinery/Plant/Equipment – 2% Exemption limit –
Upto 30.06.10 - Rs 1,20,000
From 01.07.10 - Rs 1,80,000 Exemptions –
• If Payee is govt or local authority.• Payment to New Pension Trust
Case Law:CIT Vs Asiana Airlines (2009)Landing and Parking charges collected. Is it liable for TDS u/s 194I ?
Judgment:Landing and Parking charges is “Deemed” to be rent and liable for TDS
Sec 194I – Rent
Circulars and Cases U/S 194I
If a person has taken particular space on rent and sub-lets it.
Hotel Accomodation taken on regular basis.Building is let-out along with furniture/ fittings.Payment made for warehousing charges.Payment made to landlord in nature of
advance rent or non-refundable deposit.
Sec 194J – Fees for Professional or Technical Services
Rate of Tax – 10% Exemption Limit-
Upto 30.06.10- Rs 20,000
From 01.07.10- Rs 30,000 Exemptions –
Payment by individual/HUF Exclusively for their
personal purposes Payment to New Pension Trust.
Category of payee – Professional service or Technical service or Royalty or payments received U/s 28(1)(va)
Case Law:CIT Vs Bharthi cellular ltd Interconnection/port charges paid
Judgment:Fees for technical service includes only service rendered by human not robots/machines
Sec 194J – Fees for Professional or Technical Services
Illustrative cases of TDS u/s 194J
Advertising agency makes payment to models.
Payment made to Recruitment agency.Payment made by a company to share
registrar.Maintenance contract involving Technical
services.Service of professional cameraman.
Sec 194K – Income in respect of units Not relevant now as income from units is
exempt w.e.f. Assessment year 04-05
Sec 194LA–Compensation on acquisition of immovable property
Rate of Tax- 10%
Exemption Limit- Rs1,00,000
Exemption: Payment to New Pension Trust
Case Law:State of Kerala Vs MariammaDate of Deduction in case of delayed payment in compensation
Judgment:Deduction to be made on the date of payment even though the acquisition may have been made much before.
Sec 194LA–Compensation on acquisition of immovable property
Sec 194LB –Income from Infrastructure Debt Fund
Rate of Tax- 5%Payment to
Non residents other than companyForeign Company
Credit or Payment, whichever is earlier.W.e.f 01.06.2011
Sec 195 – TDS on Non Residents
Payment to Non residents other than companyForeign Company
Payment or Credit – whichever is earlierRate of Tax
Rate as per the Finance ActRate U/s 90Rate U/s 90A
Sec 195 – Verdicts
TDS liability only if income is taxable.Soliciting exhibitors outside India for an event
in India.No TDS on income earned before PE
established in India.Managerial & Consultancy services liable to
TDS. Interest to non resident with no PE in India
liable to TDS.
Sec 195 A – Grossing Up
Income payable net of taxGross IncomeLess: TDSNet Income
Obligation to furnish certificate to the Deductee (Net Income & TDS thereon)
Sec 196 – NO TDS
No TDS in case payment to Govt RBI Corp established by Central Act Mutual Fund U/s 10(23D)
Sec 196 B – Income from Units purchased in Foreign currencyIncome from units
U/s 115 AB LTCG on transfer of such units
Rate of Tax – 10% + SC + EC +SHEC
Sec 196 C – Foreign Currency Bonds / GDR’s
Payment to Non ResidentIncome by way of
Interest/dividend on GDR’s & BondsLTCG on transfer of such bonds
Rate of Tax – 10% + SC + EC +SHEC
Sec 196 D – Income of Foreign Institutional Investors
Income from Securities
Rate of Tax – 20% + SC + EC +SHEC
Sec 197 - No Deduction or Lower RateCertificate for deduction at lower rate
Make application to AO
No deduction or less deduction
No Certificate to be issued if PAN is not provided
Tax Deducted is deemed to be Income Received
TDS deducted & remitted – payment on behalf of the person from whom it was deducted
Service Tax – TDS Where sum is used – Including Service tax Where income is used – Excluding Service tax
Other Issues
TDS to be deposited to the credit of Govt. Tax deducted on behalf of Govt.
Without tax challan – same day With tax challan – on or before 7days
Tax deducted by others Credited or paid in March – on or before 30 April Other case – on or before 7days
Form 15H/15G
Other Issues
Assessee in default Non deduction, non payment , Non payment
of tax U/s 192(1A) Interest U/s 201
Does not deduct tax Fails to remit tax to the Govt. Does not pay tax U/s 192(1A)
Rate of Interest for default DOD – Actual DOD = 1% DOD - Date of actual payment = 1.5%
Other Issues
Important Points
Book entryConsolidated TDS certificate Issue of duplicate TDS certificateNew Pension Trust
Important Points
Failure to furnish PAN Highest of
Rate in Finance Act Rate in force( Fin Act) 20%
Deductor – 194A/194C/194H/194I/194J Any assessee(other than individual/HUF who
are not subject to tax audit U/s 44AB for the preceeding financial year)
E- Filing
Assesses mandatorily required to e-file Govt. Company Assessee subject to tax audit U/s 44AB Deducteess or Collectees for previous FY
quarter is = or > 50
TIN facilitates a PAN holder to view Annual Tax Statement online
Form 26AS contains Details of tax deducted on behalf of the taxpayer
by deductors Details of tax collected on behalf of the taxpayer
by collectors Advance tax/self assessment tax/regular
assessment tax, etc. deposited by the taxpayers (PAN holders)
Details of paid refund received during the financial year
Form 26AS
Responsibility of the receiver of payment.Presumption that buyer of goods will have
taxable income.
Tax Collected at Source
Rate of TCS
Tax Collected at Source
Specified goods Rate
Alcoholic liquor for human consuption 1%
Tendu leaves 5%
Timber obtained 2.5%
Any other forest product 2.5%
Scrap 2%
Parking lot 2%
Toll Plaza 2%
Mining And Quarring 2%
No TCS Buyer should be resident in India. Furnish self declaration in writing. Goods to be utilsed for manufacturing,
processing or producing and not for trading. Submit copy of declaration within 7th of
following month.
Tax Collected at Source