CA. Mehul Shah. Payment to Transport Contractors implications under the Income-tax Act Overview of Companies Act Care, Pair, and Share

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1 Payment to Transport Contractors implications under the Income-tax Act 1961 Overview of Companies Act 2013 CA. Mehul Shah B. Com, F.C.A., DISA (ICAI). Care, Pair, and Share

2 The way s not Smooth 03/06/2015 8:24 PM 1

3 Some points in Queue 03/06/2015 8:24 PM 2

4 Overall Knowledge of Laws.. 03/06/2015 8:24 PM 3

5 ..and Business 03/06/2015 8:24 PM 4

6 Be the best.. 03/06/2015 8:24 PM 5

7 .Or be prepared for 03/06/2015 8:24 PM 6

8 Why TDS? More revenue for the Government More number of Assessees covered Minimum expenses on collection of revenue. 03/06/2015 8:24 PM 7

9 Facts ignored by the Government Tax deducted at the instance of the Central Government. Person who deducts tax performs honorary duty to the Government Use of TDS provisions, especially, the penalty provisions as one of the income-tax collection tools 03/06/2015 8:24 PM 8

10 Facts ignored by the Government Person suffering deduction of tax also denied credit at times on technicalities Despite section 205, person who suffers tax deduction is denied credit if the tax deductor does not pay TDS 03/06/2015 8:24 PM 9

11 Some Principles 03/06/2015 8:24 PM 10

12 General Principles Don t take any chances in decision of making TDS If there are two views Deduct or don t deduct, take a safer view no false deductions Cultivate habit of making timely payment of tax deducted /06/2015 8:24 PM

13 General Principles Don t hesitate to take legal opinion TDS certificate Download from the website of NSDL Quarterly Statements (Returns) TDS Additional Fees 03/06/2015 8:24 PM 12

14 General Principles Refund of excess tax deducted at source - Circular No. 790 dated 20 th April 2000 (243 ITR (St.) 58) - Section non-residents Now express Provisions Section 200A Circular No E/257 dated 12th September, 2014 Payment of Tax Deducted under different sections of the Income Tax Act, 1961 Single Challan Payment of Tax Deducted for different Assessment Years Carry forward benefit Different challans used for the purpose of reporting multiple Deductees associated with different branches with same TAN 03/06/2015 8:24 PM 13

15 Some FAQs. Can you compel me to deduct or suffer tax deduction without Assessment? Section 190, Central Government assumes the power of collection of tax in advance notwithstanding the assessment is not made or the tax payable in the next year. 03/06/2015 8:24 PM 14

16 Some FAQs. I would rather pay tax at the time of Assessment... Section 4 - No person liable to deduct tax or suffering deduction under this Chapter can take a plea that no deduction should be made as the tax shall be paid at the time of assessment. 03/06/2015 8:24 PM 15

17 Some FAQs. What if apparently I am exposed to two sections? Should I deduct tax under both sections? Circular 720 dated payment of any sum shall be liable to deduction of tax only under one section. 03/06/2015 8:24 PM 16

18 Some FAQs. What if I ve failed to deduct tax, but the recipient has paid the tax on his own? Section if there is no provision for deduction of tax on a particular payment, or if deduction of tax has not taken place in accordance with the provisions of chapter VIII- B, then the tax has to be paid by the assessee (payee) direct. 03/06/2015 8:24 PM 17

19 Some FAQs. Section 40(a) (ia) Interest, commission or brokerage, rent, royalty or fees for technical services, Payment to contractor With effect from FY All payments 30% of payment disallowed if TDS not paid

20 Section 40(a) (ia) No disallowance if The payee has filed Return of Income Considered such sum as income Paid tax on such income Furnishes Chartered Accountant certificate in form no. 26A

21 Some FAQs. What is the legal position for effecting deduction of tax at source on applicable indirect taxes (more particularly, service-tax)? CIRCULAR NO. 4/2008, DATED Service tax paid by the tenant doesn't partake the nature of income of the landlord. The landlord only acts as a collecting agency for Government for collection of service tax. Recent clarification Circular 1 / 2014 January 13, /06/2015 8:24 PM 20

22 Some FAQs. What are the exemptions while deducting tax? No TDS to be made when payee is: Government; RBI Corporation established by or under Central Act which is exempt from Income Tax by virtue of any law, A mutual fund specified u/s. 10(23D) [Section 196]. 03/06/2015 8:24 PM 21

23 Some FAQs. What is the importance of form 15G / 15H? 15G any person (not being a senior citizen) whose income from particular source does not exceed basic exemption limit. 15H Senior Citizen if tax on estimated total income NIL. 03/06/2015 8:24 PM 22

24 Some FAQs. When do I file 15G / 15H? Within seven days of the next month What if I fail to do so? Penalty of RS. 100 per day, subject to tax deductible. When do I deposit tax deducted? Within seven days of the next month In case of credit / payment in March 30 th April 03/06/2015 8:24 PM 23

25 Some FAQs. What if I fail to do so? 1% p. m. for Non deduction non payment 1.5% p. m. for deduction but non Payment Penalty of 100% of tax in arrears, if tax deducted not deposited Prosecution When do I issue TDS certificates? Within 15 days from due date of filing Q statements 03/06/2015 8:24 PM 24

26 Some FAQs. What if I fail to do so? Penalty of RS. 100 per day, subject to tax deductible. What if I fail to deduct tax? 1% p. m. Penalty of 100% of tax No Prosecution 25 03/06/2015 8:24 PM

27 Some FAQs. When do I file TDS Returns? 24Q Salary / 26Q Others / 27 Non-Residents 1 st Quarter July 15 2 nd Quarter October 15 3 rd Quarter January 15 4 th Quarter May15 (next year) What if I fail to do so? Penalty of RS. 200 per day, subject to tax deductible. 03/06/2015 8:24 PM 26

28 Some FAQs. Any other way to avoid tax deduction? Interest 15G / 15H Other payments Certificate of lower deduction of tax from the Assessing Officer 27 03/06/2015 8:24 PM

29 Some FAQs. What are other requirements? PAN of Deductor and Deductee TAN of Deductor Address of Deductee Challan No. and BSR Code of the bank 28 Date of payment of tax 03/06/2015 8:24 PM

30 Some FAQs. Whether TDS return filed can be revised? Yes If payee makes or delivers a false statement or declaration? If tax sought to be evaded exceeds RS. 1 Lac with rigorous imprisonment for a minimum term of six months and maximum up to seven years and fine. Any other case rigorous imprisonment for minimum term of three months and maximum up to three years and fine (section 277). 03/06/2015 8:24 PM 29

31 From Background to the Subject proper 03/06/2015 8:24 PM 30

32 Section 194C Any person responsible For paying any sum to a resident For carrying out any work At the time of credit or payment whichever is earlier

33 Section 194C Deduct 1% if the payee is individual or HUF Deduct 2% if the payee any person other than individual or HUF Exemption One bill less than RS. 30,000» All bills less than RS. 75,000

34 TDS on Transporters Payment to a contractor doing business of plying, hiring, or leasing goods carriage Position prior to June 1, 2015 Obtain PAN of the Transporter No TDS Report PAN of the Transporter in Q Statements

35 TDS on Transporters June 1, 2015 Amendment in Law Obtain declaration from the Transporter Owns 10 Goods carriages or less at any time during the previous year, and PAN

36 TDS on Transporters Goods Carriage means as defined in the Motor Vehicle Act 1988 Owns v. Hirer Section 44AE Owner as well as Hirer Section 194C - Owner

37 TDS on Transporters 44AE Deeming Provision Owner includes Hirer Necessary to obtain Multiple Declaration? Format of Declaration.

38 TDS on Transporters This is to declare that, we, (Name of the transporter), on the date of this declaration do not own more than 10 goods carriages as defined under the Motor Vehicles Act We also do not use (including our owned goods carriage) more than 10 goods carriages as defined under the Motor Vehicles Act 1988 by taking them on hire or lease on the date of this declaration.

39 TDS on Transporters In view of this, we are not liable to suffer deduction of tax at source in terms of section 194C of the Income-tax Act We undertake to intimate you in case if we own / use more than 10 goods carriages as defined under the Motor Vehicles Act 1988 at any time during the financial year We hereby confirm that till that time, this declaration shall stand valid. Our Permanent Account Number is. We are assessed to tax as Individual / HUF / Firm / Company / AOP / BOI by status.

Tax Deduction at Source FY (AY )

Tax Deduction at Source FY (AY ) Tax Deduction at Source FY 2017-18 (AY 2018-19) CA Pranjal Joshi M.com, F.C.A., DipIFR (ACCA-UK), Cert. Business Valuation (ICAI) M/s Pranjal Joshi & Co Chartered Accountants TDS introduction - Income