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1 To subscribe our Pendrive for CS Course call/whatsp on Connect with us: Facebook/ADHOC CONTACT: Mr. NAKUL SHRIWASTAV Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 1

2 Double Taxation Avoided Agreement (DTAA) Double taxation means the same income getting taxed twice in hand of same assessee in the same year any country taxed income on basis of two rules i.e. residency rule & source rule. Double taxation is possible when assessee is a resident of one country & derives income from another country. Suppose Mr. BB is resident of India & deriving income from UK, then India will tax such income on the basis of resident rule & UK will also tax such income on the basis of source rule. There are two types of double taxation relief Unilateral relief DTAA Sec 91 Bilateral relief DTAA Sec 90 & 90A Under Bilateral relief tax exemption method is follows to provide relief under tax exemption method income taxed in one country & exempt in other country. Now which country will levy tax & which country will exempt? Tax will be levied by that country in which: a) P.E. (permanent establishment) is available b) If P.E. available in both country then that country, where place of effective management is situated. P.E. means fixed place of business or profession, Like Office, Branch etc. In case of person who do not have P.E. in any country (Like Virat Kohli) then tax will be levied by country wherea) Assessee has a Permanent Home b) If home available in both country then that country with which the economic & personal relationship is more closer (..) * Sec 90: Agreement with foreign countries (DTAA) central Govt. may enter into agreement with Govt. of foreign country or specified territory outside Indiaa) For granting relief for double taxed income or b) Exchange of information with each other for prevention of tax evasion transaction, investigation of such cases & cooperation with each other of recovery of taxes. Note: 1) DTAA on Income tax Act whichever is more beneficial to the assessee shall apply Sec 90(2) 2) Non-resident to whom DTAA applies, shall not be entitled to claim any relief under DTAA unless TRC (Tax Residence Certificate) of his being resident in any foreign country is obtained by him foreign Govt. Sec. 90(4) 3) As per Sec. 90A specified Association of India can enter into an agreement with specified Association of foreign country CG may adopt or implement such agreement. special association means association functioning Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 2

3 * Sec. 91: Double taxation relief if there is no DTAA. a) Assessee resident of India b) Income derived from foreign Co. c) Tax should have been deducted or paid in foreign country d) There should be no DTAA * Amount of Relief Step 1: Compute NTI (Indian + Foreign Income) 2: Find out Gross Tax (after claiming rebates & relief, but before claiming TDS/TCS/NAT amount Credit/EA Tax/ Advance Tax) 3: Find out Average Rate of Tax on NTI ART = Gross Tax X 100 NTI 4: Find out rate at which tax paid/deducted in Foreign country 5: Find out lower rate from Step 3 & 4 6: Relief u/s 91 = foreign Income X Rate in Step 5 Taxability of foreign Income Resident Non Resident DTAA Yes DTAA No Sec 90/91 A apply Sec 91 apply Not Taxable Not taxable in Taxable in Compute NTI & gross Tax India India (India + foreign Income) a) DTAA rate From total tax payable reduce lower of b) IT Act rate a) Average tax in India on foreign Income Whichever is less b) Tax in Foreign country Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 3

4 Transfer Pricing *Sec 92: Any income, expenditure,interest,allocation of cost in relation of international transaction or specified domestic transaction or specified domestic transaction shall be computed having regard to arm lengths price ALP means correct market price, fair price. If due to alp there is reduction in the income or increasing the losses then transfer pricing shall not apply. Sec 92: International transactions It means [A] Transaction between two or more associated enterprises [A.E] [B] At least one must be nonresident [NR] Notes:- 1. Transaction may be purchase, sale, vase, provision of service, lending, borrowing, etc. 2. If both AE s are NR, then TP shall only apply if income of one of the nr is taxable lender IT act, Transaction between enterprise & unrelated person shall be deemed to be international transaction, if : [a] There exist prior agreement between AE & unrelated person. [b] Terms of transaction are determined by AE. In the above example, there is transaction between X Ltd, A ltd is not an international transaction but if there is prior agreement between x ltd A ltd, terms are determined by y ltd there transaction between X ltd & A ltd is treated as demand to be international transaction. SEC 92A : Associated enterprises. Two enterprises shall be treated as AE s y at any time during the P.Y: [A] one enterprises hold at least 26% shares [ voting power ] of other enterprises. [b] any person holds at least 26% shares of each of such enterprises. [c] one enterprises appoints more than half of the BOD or one or more executive director of other enterprises. [d]any person appoints more than half of BOD or one or more executive director of each of such enterprises. [e] a loan given one enterprises to other enterprises, at least 51% of the total assets of other enterprise. [f] one enterprise guarantees at least 10% of the total borrowings of the other enterprise. [g] the business of one enterprise is wholly dependent on knowhow, patent, copy right, etc of other enterprise. Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 4

5 [h] 90% or more of raw materials required by one enterprise is supplied by other enterprise. [i] goods manufactured by one enterprise condition are influenced by other enterprise. are sold to other enterprise & price & other [j] one enterprise is controlled by individ & other enterprise is controlled by such individual or his relative or jointly by individual & relative. [k] one enterprise is controlled by HUF & other enterprise is controlled by members, relatives of member or jointly by member & relative. [l] One enterprise has at least 10 % interest in another enterprise being partnership firm, AOP, BOI. *Sec 92C: computation of arm length price ALP shall be computed as per most appropriate method out of the following method. 1. Comparable uncontrolled price method (CUP) Method price charged/paid in comparable uncontrolled transaction (+/-) Adj for difference between international transaction and comparable uncontrolled transaction. ALP XX XX XX Note: Normally cup is applicable when comparable uncontrolled transaction available. 2. Resale price method (RPM) Price charged for goods sold to unrelated enterprise (resale price) XX (- ) normal G.P. margin in similar transaction (XX) XX (-) Purchase method expenses. (XX) XXX Note: normally RPM is applicable when goods purchased from A.E. is tranfered (sale) to unrelated person 3. Cost plus method (CPM) Direct cost + Indirect cost of prod. XXX (+) Normal G.P margin in similar transaction XXX (+)/(-) adjustment for difference between international transaction and comparable uncontrolled transaction. XXX XXX Note: Normally CPM is applicable when goods manufactured by one A.E. Sold to other A.E. Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 5

6 4. Profit split method (PSM) Normally PSC is applicable when assessee executes an order in joint venture with its associate enterprise. First find out total profit earned in joint venture & after that divide that profit between A.E s in the ratio of man power employed, functions performed, hilc taken etc. Cost incurred by assesse xxx (+) Share of profit of such enterprise xxx ALP XXX *Transactional Net Margin Method (TNMM) Under this method, profit (Net profit) earned by other players in the same industry under same or similar consideration taken into account for computing ALP. *Sec 92 C (2): More than one ALP If more than one price are determined as per the most appropriate method the average (Automatic mean) of such price shall be ALP (Arm s Length Price) *Penalties Section Default Penalty 271AA i. Failure to keep & maintain into & docs. As per sec 92D ii. Fails to report transaction iii. Fails to maintain/furnish correct info documents 2% of Transection Value 271 G Failure to furnish info & documents as per 2% of Sec 92D Transection Value 271BA Failure to furnish report of CA as per Sec 92E Rs. 1,00,000 *Sec 92CC: Advance Pricing Agreement (APA) 1. The board (CBDT) with the approval of CG, may ever into an APA with any person, either determining the ALP or.. the manner in which ALP is to be determined 2. APA is applicable only in case of international Transaction & for maximum 5 consecutive years. 3. The APA shall be binding on a) The person who entered into APA Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 6

7 b) The I.T. Authority till level of CIT 4. APA shall be binding if there is change in law/facts. 5. with the approval of CG, CBDT may declare an APA to be void-an-initio, if it finds that the APA has been obtained by Fraud or misrepresentation of facts.. Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 7

8 Authority for Advance ruling (AAR) Advance ruling means a decision taken in advance. If application is made of AAR(Authority for Advance Ruling) then AAR will give its ruling (Judgment) in relation to a transactionwhich has been undertaken by assesse & such judgment may be related to any question of law/fact. *Applicant: 1. Non Resident 2. Resident having transaction with non resident (related to tax liability of N.R.) 3. Resident his tax liability arising out of one or more transactions valuing Rs. 100 crore. 4. Other notified resident [till date public sector co, notified by CG (PSU)]. *Application to AAR 1. Make an application in prescribed form & manner stating question on which ruling is sought. 2. Application can be withdrawn within 30 days from date of application. 3. Application shall be quadruplicate. 4. Fees: Assessee Fees a) Public sector company (PSU s) Rs b) Other assesses: Amt of transaction is upto Rs. 100 Cr Rs Amt of transaction >100 Cr upto Rs 300cr Rs Amt of transaction >300 Cr Rs *Procedure 1. AAR shall forward a copy of application to CIT to ascertain whether the case is pending or not, & if necessary call for the records. 2. AAR may allow or reject application :- A. In case of public sector co. [PSU] when question is already pending before H.C. or S.C. B. In case of other assessee if question already pending before 17 authority / ITAT / HC / SC. C. Question involves determination of FMV. D. Question in the application relates to a transaction which is designed prima facie for avoidance of tax [ except application made by PSU ] 3. If the application is allowed then AAR shall pronounce its ruling within 6 months from the date of receipt of application of assessee. 4. Copy of ruling shall be forwarded to assessee & CIT. Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 8

9 Note : If application made by PSU, then IT authority, ITAT shall not proceed further, means wait for the decision of AAR. *Application of ruling Judgment [ruling] shall be building on : A. To the applicants only. B. To the transaction for which ruling taken. C. Become tax authority upto the level of CIT. 1) Ruling not building if there is change in law or facts. 2) If ruling obtained by fraud or mute presentation facts then AAR may declare vaid on iritio. Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 9

10 MINIMUM ALTERNATE TAX [MAT] The prov. of MAT is applicable only to COMPANIES [including foreign / government / non government company ] As per 115 JB, company have to pay tax. (i) Tax as per normal prov. Of income tax (ii) 18.5% of book profit (MAT) + SC + EC whichever is higher *Normal tax in case of company XXX XXX Indian company foreign company Tax rate 30 % 40% Surcharge : If NIT > Rs 1 cr. Up to Rs 10 cr. 7% of tax 2% of tax NIT > Rs 10 cr. 12% of tax 5% of tax E. Cess 2% 2% SHC 1% 1% *MAT calculation 18.5% of book profits XXX (+) Surcharge: If BP> Rs. 1Cr. 7% If BP>Rs. 10Cr.12% XXX (+) Cess@ (2% + 1%) XXX MAT XXX Note: 1) In case foreign co. surcharge rate is 2% & 5% 2) Sec 115JB (7): where unit of assessee is located in an international financial services center (IFSC) & derives its income solely in convertible foreign exchange, then MAT is 9% instead of 18.5% {F.A. 2016] Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 10

11 *EXPLAINATION TO SEC 115JB: computation of book profit Net profit as per P & L A/C (Companies Act) Add: [Only if Dr. to P & L] (except point no. 10) 1. Income Tax paid/prov. [includes interest on IT,DDT,surcharge & education cess] 2. Dividend paid/ proposed. 3. Any amount transferred to any reserves A/C 4. Losses of subsidy co. 5. Prov. For unascertained/contingent liability 6. Expenses for earning income exempt u/s 10, 11, 12 (except 10(38)) 7. Depreciation debited to P & L A/c (total Dep 8. Prov. For diminution in the value of assets (prov. For bad debt/as- 13/AS-28) 9. Deferred tax 10. Balance in revaluation reserve on retirement or disposal of assets (if not credited. To P & L A/c) 11. Expenses related to share in the income of AOP/BOI 12. Expenses relating to become to foreign company from (i) (ii) Capital Gain on securities, or Interest, Royalty,Fees for technical services If the tax rate on above income is less than Any national loss on exchange of shares of SPV (Special Purpose Vehicle) with units of business trust. 14. Expenditure related to income by way of royalty of patent taxable u/s 115 BBF (Added F.A 2016 Less: a. Amount withdrawn from any reserve (If reserve made through P & L A/c ) b. Become exempted u/s 10/11/12 (except sec 10(38)) c. Deferred tax d. Depreciation (excluding dep.on revaluation of asset) e. Profit of sick industrial company. f. Transfer from revaluation reserve to the extent dep. on revaluation assets. g. (i) B/f business loss or (ii) B/f unabsorbed dep. Which ever is lower h. Become as a share in income of AOP/BOI(because become already taxable in hands of AOP/BOI) i. Income to foreign co. from- (a) Capital Gain on securities, or (b) Interest, Royalty or fees for technical services If tax rate on above income is less than 18.5%. Rs. Rs. *** ** Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 11

12 j. Any national gain on exchange of shares of SPV with units of business trust. k. Income by way of royalty in respect of patent chargeable to tax u/s 115 BBF (Added by F.A, 2016) (as per sec 115 BBF royalty is so MAT is not applicable ) Book profit Note : 1. For above adjustment that profit should be computed as per sch III of companies act In point no 2 ( above table ) prov. for gratuity, leave salary, prov. Foe warranty shall not be added if it is made as per actual valuation or scientific basis. 3. Depreciation referred in point on no. 7 and d should be as per companies Act, not as per 17 Act. 4. B/f business loss and unabsorbed depreciation as per companies act, NOT as per IT act. 5. MAT not applicable in case of foreign companies prov. Of MAT shall not be applicable in case of (a) Foreign company- resident of a country or specified territory with which india has DTAA and such foreign co. Does not have any P.E (permanent establishment in india ) (b) Foreign to resident of country withwhich india does not have any DTAA and foreign company is not required to seek registration under any companies law *Sec 115 JAA: MAT credit (Added by F.A 2016 W.E.F A.Y ) (a) MAT credit shall be e/f ad sat off upto 10 capital A.Y s (b) MAT 18.5% of book profit (MAT)-Tax as per normal prov. (c) MAT credit can be sat off in the year in which tax as per normal > MAT (18.5% of book profit) (d) MAT credit can be utilized to the extent normal tax exceeds MAT Note: 1. Company to which MAT applies shall be unable to pay advance tax, interest u/s 234 a/b/c 2. Apollo tyres ltd where p & l is prepared as per companies act, the A.O could not recompute profit of company for MAT calculation. He can adjust only adjustment provided in exp 1 of sec 115 JB. Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 12

13 Example of MAT credit P.Y. Tax as per sec Normal Tax Tax payable MAT adjust Actual tax paid MAT credit 115JB(MAT) , ,000 1,00,000-1,00,000 30, ,000 50,000 90,000-90,000 70, ,000 65,000 65,000 25,000 40,000 45, ,000 55,000 55,000 5,000 50,000 40, ,000 90,000 90,000 40,000 50, ,30,000 80,000 80,000-1,30,000 50,000 Alternate Minimum Tax (AMT) AMT is applicable to all assessee except company *SEC 115 JC: Income tax payable by any person higher of: Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 13

14 (i) (ii) Income tax payable as per normal prov. Of income tax. 18.5% of adjusted total income (ATI) (12% surcharge if ATI > Rs. 1 Cr + 3 % cess) Note: 1. Calculation of ATI. Total income (NTI) as per normal prov. Of income tax Add: (i) Deduction u/s 10 AA (SEC) (ii) Deduction u/s 35 AD (13 Business) (iii) Deduction u/c VIA (deduction in respect of income except Sec 80 P) [Sec 80IA to 80RRB] Less: Depreciation allowable as per Sec 32 assuming that deduction u/s 35AD was not allowed on the assets on which deduction u/s 35AD is claimed. ATI xxx xxx xxx xxx xxx xxx 2. Amount shall not be appropriate if ATI. (Adjustment Total Income) is upto Rs. 20 Lakhs in case of individual/huf/aop/boi/artificial judicial person 3. The provision amount apply only if assessee is claiming deduction u/s 10AA,35AD,80IA,to 80 RRB (except80 P) *Sec 115JD: AMT credit Note: a. If AMT> Normal Income Tax then excess. Shall be treated as AMT credit b. AMT credit can be c/f and set off for 10 years. c. Credit can be set off in the year in which regular tax is more than AMT. d. The credit allowed to be set off will be restricted to the difference between the regular income tax computed under normal prov. Of IT and the AMT. e. Assessee can claim AMT credit in such subsequent P.Y. even if AMT is not applicable in subsequent P.Y. 1. All other provisions of income tax Act like advance tax, Interest u/s 234 a/b/c shall apply to assessee 2. Assessee will obtain report from CA for computation of ATI and AMT. Tax Deducted at Source (TDS) (Section 192 to 206) 1. Tax is deducted only if the amount is taxable in hands of Receiver. 2. TDS requirement arise Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 14

15 (i) (ii) At the time of payment or At the time of crediting the account of payee whichever is earlier. But in following cases TDS deducted only at the time of payments: a. Salary b. Winnings c. Maturity of Life Insurance Policy d. Compensation on compulsory acquisition of property 3. All TDS rates are :- Rates i.e. 1%, 2%,5%,10%,etc. But if payment made to NR forign co or payment of salary, surcharge, and edu cess shall be considered. 4. If payee does not finish his PAN to the payer, the TDS rate shall be(sec 206 AA) (i) Rate as per respective section, or (ii) 20% Whichever is higher Sec 206 AA not applicable if payment made NR/foreign co. is respect of - Interest on long term bonds referred in sec 194 LC, and - Any other payment subject to such condition may be prescribed. Section Nature of Payment Payer Payee Rate Additional Notes 192 Salary Any Person Employee Slab Rate 1. Employer shall consider detail of other income & deduction of employee of furnished by employee 2. Employer shall not consider any loss except loss under the head income from house property. 192A Accumulated balance of Provident fund Any Person Employee 10% 1) TDS applicable only if it is taxable in hands of employee. 2) No TDS of amount up to Rs. 50,000 w.e.f. 1/6/ TDS on Interest on Securities 194 TDS on deemed Any Person Domestic Company Any Resident Person 10% 1. No TDS if interest *Paid to LIC, GIC, other insurer *Payable on Govt. securities *DMAT securities Resident 10% 1. No TDS if company paid DDT u/s 1150 means this Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 15

16 Dividend 194A TDS on Interest (other than securities) Any Person other than individual/h UF not liable to tax Audit in last P.Y. Resident Person sec applicable only in case of deemed dividend u/s 2(22)(e) 2. From A.Y if dividend is taxable u/s 115BBDA then company required to deduct TDS. 10% 1. No TDS if a) Int. paid by banks/ co op. bank/ post office up to Rs. 10,000 b) Int. other cases its up to Rs. 5,000 c) Int. paid by firm to partners d) Int. on income tax e) Int. on bank savings A/c f) Int. paid to any bank/ LIC/ UTI/ any insurer Note: bank opting core banking solutions (CBS), then the unit of Rs. 10,000 will not be per branch, but will be per bank/ co-pop. Society g) Int. paid by co-op soc. (other than co-op banks) to its members or to any other co-op society h) Int.paid in respect of certain scheme of post office, Kisan Vikas ratra, india vikas patram P.O. monitery income a/c, P.o. recurring deposits. Payment made by TV channels/ newspaper co. to advt. agency for booking/ procuring/ cancassing for advt. payment is treated as discount & not commission so TDS u/s 194H not applicable Payment made by TV channels/ broadcasters to prod. House for production of content programme *if programme is as per Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 16

17 194D TDS on Insurance commission 194DA TDS on maturity proceeds of a life Ms. Policy 194E TDS on Payment of NR sportsmen/a ssociation/ entertainee Insurance Company Any Person Any Person 194G TDS on Any Person commission on sale of lottery tickets 194H TDS on Any person commission (other than & Brokerage individual/ HUF/ not liable to tax audit in last P.Y.) 194I TDS on Rent Any person (other than individual/ HUF/ not liable to tax audit in last P.Y.) Resident agent Any Resident Person NR sportsmen NR sports association NR entertainee Any Person Any Resident Person Any Resident Person specifications of telecaster/ broadcaster & copyright of content also transfer to telecaster/ broadcaster its work contract TDS u/s 194C applicable *if right of content already produce by prod house is acquires by telecasting or broadcaster No TDS u/s 194C 10% No TDS if commission is up to Rs. 15,000 p.a. w.e.f. 1/6/16 1% w.e.f. 1/6/16 20% + Cess 5% w.e.f. 1/6/16 5% w.e.f. 1/6/16 a) P & M 2% b) La nd & Bui ldi ng, No TDS if: a) Amount exempted u/s 10(10D) b) Amy up to Rs. 1,00,000 Payment for *participation in any game in India i.e. IPL *Advertisement *contribution of any article, news etc. *performance in India No TDS if commission up to Rs. 15,000 p.a. w.e.f. 1/6/16 *No TDS if comm. Up to Rs. 15,000 w.e.f. 1/6/16 *No TDS if comm./ brokerage is related to security likecomm. To u/w, brokerage on public issue etc. *No TDS if rent upto Rs. 180,000 p.a. (if property is owned by more than one then limit of Rs. 180,000 applied to each Co-owner *Non refundable deposits, arrears of rent received, advance rent also eligible for TDS. *if rent is paid to business Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 17

18 194 IA TDS on transfer (purchase) of immovable property (other than rural agri land) 194J TDS on professional services 194 LA TDS on compensation for compulsory acq. Of immo. Prop. 194 LB TDS on interest on infrastructure debt fund 195 TDS on any sum payable to NR or Any person Any person (other than individual/ HUF/ not liable to tax audit in last P.Y.) Any Resident Person Any Resident Person fur nit ure 10 % trust (REFT) in respect of rent of real estate assets as it is exempt u/s 10(23FCA) then TDS not applicable. *Landing & Parking charges paid by airline co. to airport authority- TDS u/s 194C *if rent include municipal taxes No TDS on municipal taxes *the receipt of rent can give declaration u/s 197A in form 15G/15H (Amendment) 1% *No TDS if consideration is fees than Rs. 50 lakhs (actual consideration & not the SDV) *if consideration is Rs. 50 lakhs or more & only part payment is made then TDS applicable on every part payment of consideration 10% No TDS if- *fees for professional services is up to Rs. 30,000 *fees for technical services up to Rs. 30,000 *Royalty up to Rs. 30,000 *Non com. Fee is up to Rs. 30,000 *in case of director fees No limit Note:- limit of Rs. 30,000 applied separately on professional fees, royalty etc. (except director fee) Any person Any person 10% No TDS if compensation is up to Rs. 2,50,000 p.a. w.e.f. 1/6/16 No TDS if compulsory acquisition of rural agriculture land. Infrastructur e debt fund NR Foreign Co. or Any person NR or Foreign Co. 5% Infrastructure debt fund referred in Sec. 10(47) a) DTAA rate or b) Rate in Nature of payment *Int. or *any other sum which is Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 18

19 foreign Co. force chargeable to tax in India (except salary u/s 192, 194B, 194BB, 194E, 194LB, 194LBA) *Some notes related to TDS 1. Any amount includes service tax amount than TDS should not be deducted on such service tax amount. It means TDS should be on net amount. 2. No TDS if payee is central govt., state govt., RBI, statutory corp, any mutual fund(sec 196). 3. Where total income or recipient of income is not liable to tax or taxable at low rates than he can apply to A.O. to issue a certificate for no. deduction lower deduction of TDS in such case, pair shall deduct TDS as per rate specified in certificate (sec 197). 4. Where income of assessee is less than basic exemption than in case of sec 192 A / 193/194A/194D/ 194I assessee can give a self declaration in form no. 15G/H to payer for non deduction of TDS (sec 197).This section is not applicable if recipient is company or firm u/s 194 A if income (192(A)/193/194A/194DA/194I) is more than basic exemption but NTI (total income) is less than basic exemption than sec 194 A is not applicable (except senior citizen) Example- Rent received by Mr. kunal is 3,50,000 and E invested 1,20,000 u/s 80C. Now his NTI is less than basic exemption. Tax payable is NIL. Now in this case, kunal cannot furnish declaration u/s 15G. *Due dates of payment of TDS : If tax deducted During Apr Feb March month *Due date of TDS / TCS return by 7 th of the next month by 30 th April of next F.Y. Quarter ended TDS return TCS return Due date due date 30 th June 31 st July 15 th July 30 th Sept 31 st Oct 15 th Oct 31 st Dec 31 st Jan 15 TH Jan 31 st march 31 st may 15 TH May *Sec 200A : Processing of TDS return ( intimation ) 1. TDS return shall be processed u/s 200A & following adjustment to be made in A. Arithmetical errors in the return can be rectified. Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 19

20 B. In correct claim in return. 2. Intimation shall be sent to deductor specifying the amount of demand or refund. 3. Intimation shall be issued within 1 year from end of financial year in which quarterly return was filed. *Sec 201:If assessee fails to deduct TDS or after deduction fails to pay TDS to Govt then assessee is treated as demand to be assessee is default. He shall be liable to pay interest u/s 220 & penalty u/s 221. *Section 201 (1A) : Late deduction / late payment of TDS. a. Late deduction - 1 % per month or part of a month on amount of TDS from the date on which tax was deducted till date on which such tax is actually deducted. b. Late payment 1.5% per month or part of a month on amount of TDS from the date on which tax was deducted till date on which such tax is actually paid. c. Section 234 E : fees for default in furnishing TDS / TCS return fees is Rs 200 per day for every day during which the failure continues. fees cannot be more than amount of TDS / TCS. Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 20

21 *Tax collected at source ( TCS ) *Section 206 C : seller shall collect tax from buyer at the time of debiting the a/c or receipt of amount of buyer whichever is earlier. Note : Nature of goods TCS Rate A. Alcoholic liquor for human consumption 1% B. Tender leaves 5% C. Timber & any other forest product 2.5% D. Scrap 1% E. Minerals being coal, lignite, or iron ore 1% F. Jewellery & bullion (note1) sec 206 c (10) 1% G. Motor vehicle (note 2) sec 206 c (1f) 1% H. Any other goods or services ( note 3 ) sec 206 c ( 1d) 1% 1. TCS in case of jewellery / bullion is applicable only if seller received consideration in CASH & consideration is more than Rs 200,000 in cash of bullion & Rs 500,000 case of jewellery. 2. TCS in case of motor vehicle is applicable only if consideration is more than Rs 1000, TCS in case of any other goods & services is applicable only if seller record consideration in cash & consideration is more than Rs 2000, TCS not applicable if buyer is government, embassies, consulates, high commissions or institution notified under united nations act, TCS also applies in case of lease or license of parking lot, toll plaza, mine & quarry TCS rate is 2% mine & quarry does not include mine of mineral oil. 6. TCS in case of goods prescribed in point No. (a) to (e) not applicable if goods purchased for personal consumption. 7. TCS is not applicable if buyer is resident & furnish declaration that such goods used in manufacturing of any article or power generation ( except in case of jewellery & building ). 1. Whether TCS applicable in case of sale of motor vehicle by manufactures to dealers / distribution? Ans No, TCS applies only in case of retail sales. 2. Whether TCS applicable in case of each sale of motor vehicle or aggregate value during the P.Y? Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 21

22 Ans TCS applicable if sale consideration > Rs 10 Lakhs it is applicable to each sale & not aggregate value during. 3. Whether TCS on any other goods & services will apply where consideration is partty in cash & partty in cheque & cash is less than 2 Lakhs? Ans No, TCS not applicable when cash is upto Rs 2 Lakh even sales consideration > Rs 2 Lakhs. 4. Whether TCS applicable only to cash component or whole consideration in case of any other goods or services? Ans Only cash component. Compiled By: Nakul Shriwastav, ADHOC CLASSES, 401-C, Silver Mall, Cont: Page 22