TDS & TCS Recent Updates & Amendments.

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1 TDS & TCS Recent Updates & Amendments. By. CA. Tarun Jain. B.com, FCA. Synopsis of Discussion Amendments in Finance act Amendment to Section 206AA New provisions relating to TCS Other Miscellaneous matters

2 Amendments in Finance act 2016 Changes in rates & threshold limits. New payment included for TDS Section 194LBC Changes in Rates & Threshold Limits Particulars Upto From Nature of Payment Section Threshold Rate Threshold Rate Salary 192 As per the prescribed rates applicable to Individual Payment of accumulated balance Provident Fund Scheme, A 30,000/- 10% 50,000/- 10% Interest on securities 193 5,000/- 10% 5,000/- 10% Interest other than Interest on Securities 194A 10,000/- 10% 10,000/- 10% Dividends (Other than 115O Dividends) 194 2,500/- 20% 2,500/- 20% Winning from Lotteries & Puzzles 194B 10,000/- 30% 10,000/- 30% Winnings from horse race 194BB 5,000/- 30% 10,000/- 30% Payment to Contractors (Individual / HUF) 194C 30,000/- 1% 30,000/- 1% or or Payment to Contractors (Others) 194C 2% 2% 75,000/- P.A. 1,00,000/-P.A.

3 Changes in Rates & Threshold Limits Particulars Upto From Nature of Payment Section Threshold Rate Threshold Rate Insurance Commission 194D 20,000/- 10% 15,000/- 5% Payment in respect of life insurance policy 194DA 1,00,000/- 2% 1,00,000/- 1% Payment in respect of Deposit of NSC 194EE 2,500/- 10% 2,500/- 10% Commission on sale of Lottery Tickets 194G 1,000/- 10% 15,000/- 5% Commission & Brokerage 194H 5,000/- 10% 15,000/- 5% Rent - Land & Building 194Ib 1,80,000/- 10% 1,80,000/- 10% Rent - Plant & Machinery 194Ia 1,80,000/- 2% 1,80,000/- 2% Professional Fees & Technical Services 194J 30,000/- 10% 30,000/- 10% Immovable Property other than Agri Land 194IA 50,00,000/- 1% 50,00,000/- 1% Payment of compensation on acquisition of certain immovable property 194LA 2,00,000/- 10% 2,50,000/- 10% Sections Inserted / Omitted Section Type Particulars 194K Omitted Income in respect of units 194L Omitted Payment of compensation on acquisition of capital asset. 194LBC Inserted Payment of any Income in respect of investment in securitization trust (Section 115TCA) 25% - Payment to Individual / HUF 30% - Payment to Others

4 Filing of TDS Quarterly Returns AY Rule No. Form No. Particulars Periodicity Due Date 31A 24Q Quarterly statement of TDS on Salary u/s 192 Quarterly Apr Jun: 31 st July 26Q Quarterly statement of TDS on Other than Salary 27Q Quarterly statement of TDS on payment to Non Residents u/s 195 Jul Sep: 31 st Oct Oct Dec: 31 st Jan Jan Mar: 31 st May 31AA 27EQ Quarterly Statement of TCS u/s 206C Apr Jun: 15 th July Jul Sep: 15 th Oct Oct Dec: 15 th Jan Jan Mar: 15 th May 31A 26QB Return cum Challan for TDS u/s 194-IA 30 Days from the end of the Month in which the deduction is made. Form 26B Claim for Refund of TDS Sub Rule 3A of Rule 31A provides: A claim for refund, for sum paid to the credit of the Central Government under Chapter XVII-B, shall be furnished by the deductor in Form 26B electronically under digital signature in accordance with the procedures, formats and standards specified under sub-rule (5)

5 Section 206AA PAN Requirement to furnish Permanent Account Number: Every person entitled to receive any sum or income on which TDS is required shall furnish the PAN to the deductor. If PAN is not furnished TDS shall be higher of the following: Rate as per the relevant provisions Rates in force 20% Section 206AA PAN Exemption from the application of the provision has been granted WEF : payment of interest on long-term bonds as referred to in section 194LC any other payment subject to such conditions as may be prescribed. CBDT notifies Rule 37BC Relaxation from deduction of tax at higher rate under section 206AA (Not. No. 53/2016 dated )

6 Rule 37BC & Section 206AA Payments to Non Resident (not being a company) or Foreign Company OF Interest, Royalty, Fees for Technical Services, Payment for transfer of Capital Asset AND not having a PAN Provisions of 206AA shall not apply IF Deductee furnishes the prescribed document / Information Rule 37BC & Section 206AA Prescribed document / Information Name, id, contact number address in the country or specified territory outside India of which the deductee is a resident Tax Residency Certificate from Other Country Tax Identification Number of the deductee in the country or specified territory of his residence Structural changes in form 27Q to incorporate the reporting of the aforesaid information.

7 TDS on Salary CBDT issues an annual circular clarifying the matters relating to TDS on salary income. For AY , CBDT has recently issued the annual TDS circular 1/2017 dated This Circular is very handy on the applicable procedure on various scenarios for TDS on salary. New Forms & Rules relating to Salary TDS Form Rule Particulars 10BA 11B Declaration for claim of deduction u.s 80GG towards payment of house rent for self occupation 12BB 26C Furnishing of evidence of claims by employee for deduction of tax under section 192 (WEF )

8 Form 12BB Rule 26C Furnishing of evidence of claims by employee for deduction of tax under section 192 Sl. No Nature of Claim Evidence or particulars 1 HRA Name, address and permanent account number of the landlord / landlords where the aggregate rent paid during the previous year exceeds rupees one lakh. 2 LTA Evidence of expenditure. 3 Housing Loan Interest 4 Deduction under Chapter VI-A. Name, address and permanent account number of the lender. Evidence of investment or expenditure CONSEQUENCES OF NON COMPLIANCE OF TDS / TCS Section 40(a)(i) & (ia) Penal Provisions Disallowance of expenditure against the business income -Payment to non residents 100% of expenditure -Other payments 30% of expenditure 201 Interest on delayed payment of TDS 1.0% Per Month - for delay in deduction of TDS 1.5% per month for delay in payment of TDS. 234E 272A(g) Late fee (not penalty) of Rs. 200/- per day for delay in filing of the returns beyond due date. Penalty of Rs. 100/- per day for delay in issuance of TDS Certificates 272A(k) 271H Penalty of Rs. 100/- per day for delay in filing of filing of TDS returns Penalty ranging from Rs.10,000/- to Rs. 1,00,000/- for failure to file the TDS return or Furnishing of incorrect information in the return.

9 Amount not deductible: Section 40(a)(i) Section 40: Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession", (a) in the case of any assessee: (i) any interest, royalty, fees for technical services or other sum chargeable under this Act, which is payable, (A) outside India; or (B) in India to a non-resident, not being a company or to a foreign company, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139: Amount not deductible: Section 40(a)(ia) Section 40 Notwithstanding anything to the contrary in sections 30 to 38, the following amounts shall not be deducted in computing the income chargeable under the head "Profits and gains of business or profession", (a) in the case of any assessee: (i) (ia) thirty per cent of any sum payable to a resident, on which tax is deductible at source under Chapter XVII-B and such tax has not been deducted or, after deduction, has not been paid on or before the due date specified in sub-section (1) of section 139 :

10 Second Proviso to Section 40(a)(ia) Second Proviso to Section 40(a)(ia) Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso. [inserted by Finance Act, 2012, w.e.f ] Proviso to sub section (1A) of Section 201 According to Proviso to section 201(1A) any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of chapter XVII-B,.on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso of section 201(1), as the conditions mentioned therein have been satisfied & the deductor has furnished form no. 26A certified by a chartered accountant, then the 1% for every month or part of the month shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident.

11 MISCELLANEOUS TREATMENT OF SPECIAL PAYMENTS WITHOUT TDS Particulars Flag used in TDS returns Lower / No deduction for certificate u/s 197 No deduction for declaration u/s 197A No deduction for transporters having PAN U.s - 94C(6) No TDS for Payment for Software U.s 194J (Notification No. 21/2012) ( onwards) No deduction due to payment below threshold limit. Lower TCS for certificate u/s. 206C(9) A B T S Y X Interest under section 201(1A) [WEF ] Section Rate of Interest From 201(1A)(i) 1.00 % P.M Date of Payment Date of deduction 201(1A)(ii) 1.50 % P.M Date of deduction Date of payment of tax To Note: Interest applicable in case the payment of tax is beyond the due date of payment. Three dates are crucial for the calculation of the Interest payable Date of payment of amount / Income Date of deduction of tax Date of payment of tax TO Ensure the three dates are properly captured in the deduction register for proper calculation of the interest at the time of processing

12 Section 206C Tax Collection at Source Sub Section Nature of Transactions Rate 206C(1) Alcoholic Liquor for human consumption 1.00 % Tendu leaves 5.00 % Timber obtained under a forest lease 2.50 % Timber obtained by any mode other than a forest lease 2.50 % Any other forest produce not being timber or tendu leaves 2.50 % Scrap 1.00 % Minerals, being coal or lignite or iron ore 1.00 % 206C(1C) Lease or License Fees for Parking Lot 2.00 % Lease or License Fees for Toll Plaza 2.00 % Royalty or License fees for Mining & Quarrying 2.00 % Section 206C Tax Collection at Source Sub Section Nature of Transactions Rate 206C(1D) Sale of Bullion (exceeding Rs Lakhs) 1.00 % Sale of Jewellary (exceeding Rs Lakhs) 1.00 % Sale of other goods (exceeding Rs Lakhs) 1.00 % Providing any service (exceeding Rs Lakhs) 1.00 % 206C(1F) Sale of motor vehicle (exceeding Rs Lakhs) 1.00 % Note: No TCS if TDS has been deducted under any provisions of the Chapter XVII-B. TCS u.s 206C(1D) applicable only if any part of the consideration is received in Cash.

13 Section 206C Tax Collection at Source The Seller for the purpose of Section 206C is: Central or state Government Local Authority, Corporation or authority established under any law Any company, firm or co-operative society Individual / HUF (Liable for audit u.s 44AB) Section 206C Tax Collection at Source CBDT ISSUED CIRCULAR NO. 22 & 23 OF 2016 TO CLARIFY VARIOUS MATTERS RELATING TO APPLICABILITY OF PROVISIONS OF TCS.

14 Section 206C TCS Q&A Q: Mr. A, a diamond dealer, sold loose diamonds for Rs lakhs. The buyer paid the entire amount in Cash. Is TCS Applicable? A: TCS is applicable as Jewellary includes precious & semi precious stones. [As per Explanation to Section 2(14)(ii)] Section 206C TCS Q&A Q: Mr. A, a Jeweller, sold Gold Jewellary for Rs. 6 lakhs. The buyer paid cheque for Rs. 3.5 Lakhs and balance Rs.2.5 Lakhs in Cash. On what amount is TCS Applicable? A: TCS is not applicable as cash collected is less than 5 Lakhs. [As per CBDT Circular]

15 Section 206C TCS Q&A Q: Goods sold for Rs lakhs. Paid by Cheque Rs Lakhs & Cash Rs Is TCS Applicable and on what amount? A: TCS is applicable as cash collected is more than Rs.2.00 Lakhs and is applicable on Rs only. (As per CBDT Circular) Section 206C TCS Q&A Q: Mr. A, a chartered accountant, sold personal gold jewellary for Rs lakhs in cash. Is TCS Applicable? A: TCS is not applicable as gold Jewellary is not held as goods by the seller.

16 Section 206C TCS Q&A Q: A motor car dealer sold a Motor Car for Rs lakhs. Paid by Cheque Rs Lakhs & Cash Rs What is the amount & rate for TCS applicability? A: TCS on sale of vehicle of value exceeding Rs.10 Lakhs is applicable irrespective of the mode of payment. Hence 1% applicable on entire amount of Rs. 15 Lakhs. (As per CBDT Circular) Section 206C TCS Q&A Q: Car Sold for Rs lakhs by the Director of the company. Paid by Cheque Rs Lakhs & Cash Rs.5.00 Lakhs. What is the amount & rate for TCS applicability? A: TCS is applicable only to specified buyers. In case of Individual TCS applicable only if subject to audit u.s 44AB.

17 Section 206C TCS Q&A Q: Mr. A (Textile dealer) sold his personal Car for Rs lakhs and received the entire consideration in Cheque. Is TCS applicable on this transaction? A: TCS in relation to sale of Motor Vehicle is applicable even if those are not held as trading goods. TCS is applicable only if the individual is subject to audit u/s 44AB. Section 194J Payment for Software Q: Mr. XYZ Limited purchases a ERP Software for Rs lakhs. Is TDS applicable on this transaction? A: Payments for software are covered by u/s 9 as royalty. Section 194J covers payment towards royalty and hence TDS u.s 10% is applicable.

18 THANK YOU D Tarun Jain B.COM, FCA.