CONTENTS CONTENTS BOOK ONE : DEDUCTION OF TAX AT SOURCE DEDUCTION OF TAX AT SOURCE FROM SALARY

Transcription

1 CONTENTS Chapter-heads I-7 BOOK ONE : DEDUCTION OF TAX AT SOURCE 1 DEDUCTION OF TAX AT SOURCE FROM SALARY 1.1 Who is responsible to deduct tax at source in case of income from salary Where salary is payable by other employers also When tax is to be deducted Private arrangement of paying salary tax-free cannot discharge obligation of section Tax deduction not required on judgment debt Furlough pay received in foreign currency is taxable as salary Deduction of tax at source is mandatory from salary Correctness of investment How to compute tax deductible at source When tax payable on perquisites is paid by employer When relief under section 89 is available When income other than salary income is considered by employer Statement of particulars in prescribed form How to make adjustment of excess or deficiency Deduction from provident fund payment Tax deduction and collection account number Deposit of tax to the credit of Central Government Where to deposit tax 10 I-11

2 1.5-2 Time within which tax is to be deposited Payment through challan Claim for refund Issue a certificate for tax deducted at source to employee How to prepare Form No Form No. 16 with digital signature Time limit within which the certificate should be given Issue of duplicate certificate Statement or return of tax deduction to Government Return of tax deduction from contribution paid by the trustees of an approved superannuation fund Annual filing of return Quarterly return By whom return is to be filed Consequences of failure to deduct or pay tax, furnish return, etc Failure to deduct and/or pay tax Failure to comply with provision of section 203A regarding tax deduction account number Failure to issue certificate, or submit return, statement, etc Disallowance of deduction in respect of salary payable to resident Disallowance of deduction in respect of salary payable to non-resident 45 2 HOW TO WORK OUT ESTIMATED SALARY AND QUANTUM OF TAX TO BE DEDUCTED THEREFROM 2.1 What is salary Employer-employee relationship, a pre-requisite Salary and wages are not conceptually different Salary to former/present/prospective employee Salary income must be real and not fictitious When salary is forgone Salary paid tax-free 50 I-12

3 2.2 Basis for deduction of tax at source Different forms of salary and its payment subject to tax deduction at source Advance salary Arrears of salary Leave salary Salary to a partner Salary in lieu of notice period Fees and commission Bonus Gratuity Pension Annuity Annual accretion to the credit balance in provident fund Amount transferred from unrecognised provident fund to recognised provident fund Retrenchment compensation Profits in lieu of salary Remuneration in addition to salary on the basis of work done Voluntary payments to employees Compensation received at the time of voluntary retirement or separation Salary received by a teacher/professor from SAARC Member States Contribution to notified pension scheme by the Central Government or any other employer Decretal amount arising from suit for arrears of salary and wrongful termination of appointment Allowances when subject to tax deduction at source City compensatory allowance House rent allowance Entertainment allowance Special allowance Allowance to Government employees outside India Tiffin allowance Fixed medical allowance 95 I-13

4 2.4-8 Servant allowance Allowance to High Court Allowance received from United Nations Organisation Allowance to foreign technician Allowance to other foreign citizen Compensatory allowance under article 222(2) of the Constitution Sumptuary allowance Allowances received by a teacher/professor from SAARC Member States Sumptuary allowance to serving chairman/ members of UPSC Allowance to retired chairman/members of UPSC Perquisites, amenability to tax deduction at source What is perquisite Perquisite as defined by the Act Perquisites chargeable/not chargeable to tax Valuation of perquisites Sums related to provident funds, amenability to deduction of tax at source Types of employees provident funds Statutory provident fund Recognised provident fund Unrecognised provident fund Public provident fund Tax treatment Contributions to and payment from approved superannuation fund, amenability to tax deduction at source Approved gratuity fund - Tax treatment of the inflow and outflow Computation of salary Standard deduction Entertainment allowance Professional tax or tax on employment Salaries of foreign technicians Salaries of foreign citizens Diplomatic personnel Foreigners on tour Salary received by a ship s crew Remuneration of a foreign trainee 147 I-14

5 2.11A Deductions granted under sections 80C to 80U Deduction in respect of life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc Salient features of section 80C Computation of deduction under section 80C 148 Illustrations A Deduction in respect of pension fund Deduction in respect of contribution to National Pension System of Central Government (NPS) Conditions Consequences if the above conditions are satisfied 158 Illustration A Deduction in respect of subscription to long-term infrastructure bonds B Deduction in respect of investment made under an equity saving scheme Deduction under section 80D in respect of medical insurance premia Conditions Maximum deductible amount 162 Illustrations Deduction under section 80DD in respect of medical treatment of handicapped dependents Conditions Amount of deduction If dependent predeceases the taxpayer 167 Illustrations Deduction in respect of medical treatment under section 80DDB - To what extent available Conditions Amount of deduction Prescribed diseases and certificate from a doctor Deduction in respect of interest on loan taken for higher education Conditions Amount deductible A Deduction in respect of interest on loan taken for residential house property Deduction under section 80G in respect of donation to national funds 172 I-15

6 Maximum limit Other points Deduction under section 80GG in respect of rent paid Amount of deduction Meaning of total income for the purpose of section 80GG 176 Illustration A Deductions in respect of certain donations for scientific research or rural development Deduction in respect of interest on deposits in savings accounts Deduction under section 80U in case of a person with disability Conditions Amount of deduction 181 Illustration Other points When income other than salary income is considered for tax deduction under section When salary received from other employer is considered Rate of exchange for deduction of tax at source on income payable in foreign currency Rates of tax deduction at source during the financial year If PAN is not given by employer Tax rebate under section 87A 185 Illustrations Tax rebate for senior citizen Rebate of income-tax in case of women below 65 years Relief under section Computation of relief when salary has been paid in arrears or in advance 186 Illustration Computation of relief in respect of gratuity 187 Illustration Computation of relief in respect of compensation on termination of employment Computation of relief in respect of payment in commutation of pension 189 I-16

7 Computation of relief in respect of payment of arrears of family pension When can employee reduce the incidence of tax deduction - Certificate for deduction of tax at lower rates How lower rate is determined Validity of certificate Issued to the payer Retrospective certificate not possible Instruction issued by Board Other points Rounding off of income Employee gets credit of tax deducted at source Rules framed by Board Going through the real exercise - Examples on computation of estimated salary and tax to be deducted therefrom under section Illustrations TAX DEDUCTION FROM ACCUMULATED BALANCE OF PROVIDENT FUND DUE TO AN EMPLOYEE 3.1 Person responsible for tax deduction from accumulated balance of provident fund When tax has to be deducted No tax is deductible if payment is less than Rs. 50, Private arrangement of paying accumulated balance of provident fund tax-free is not relevant Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue of certificate of tax deduction Issue of duplicate certificate Quarterly return to the Government Consequences of failure to deduct or pay tax or furnish return 206 I-17

8 3.7-1 Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax-deduction account number Failure to issue certificate or submit return HOW TO COMPUTE TAXABLE PREMATURE WITHDRAWAL OF PROVIDENT FUND AND TAX TO BE DEDUCTED THEREFROM 4.1 When withdrawal from provident fund is subject to the tax deduction under section 192A Rates of tax Payment without tax deduction or with deduction at lower rates Tax credit Rules framed by Board 209 Illustration DEDUCTION OF TAX AT SOURCE FROM INTEREST ON SECURITIES 5.1 Who is responsible to deduct tax at source in the case of interest on securities When tax has to be deducted at source Relevance of identity of deductee under TDS provisions Private arrangement of paying interest on securities as tax-free cannot discharge obligation under section How to compute tax deduction at source Tax deduction account number Deposit of tax to the credit of the Central Government Where to deposit Time of deposit of TDS/TCS Challans for payment Claim for refund Issue of certificate for tax deduction from interest on securities 217 I-18

9 5.6-1 TDS certificate in Form No. 16A Time limit within which the certificate shall be issued Issue of duplicate certificate Return of tax deduction at source from interest on securities Annual return [Rule 37] Quarterly statement TDS deposited Consequences of failure to deduct or pay tax, furnish returns, etc Failure to deduct and/or pay tax Failure to comply with the provision of section 203A regarding tax deduction account number Failure to issue certificates, or submit returns Forfeiture of deduction in respect of interest on securities 220 Illustration HOW TO COMPUTE INTEREST ON SECURITIES AND TAX DEDUCTIBLE THEREFROM AT SOURCE 6.1 Interest on securities - How defined Interest on securities not liable for tax deduction Notified securities TDS on 8 per cent Savings (Taxable) Bonds, What happens when recipient is Government - Interest on securities payable to the Government and certain Corporations TDS on interest on securities - A few typical cases When interest is paid to oneself - Interest on own debentures Interest payable to funds established for the benefits of armed forces Interest to provident funds Deep discount bond Rates for tax deduction at source When can a security holder reduce the incidence of tax deduction 243 I-19

10 6.6-1 Certificate for tax deduction at lower rate or no deduction Declaration under section 197A Payment to certain institution whose income is exempt under section 10(23C) Tax credit to one who pays Rules to be framed by Board Joint owners Beneficial owner DEDUCTION OF TAX AT SOURCE FROM DIVIDEND 7.1 Who is responsible for tax deduction in the case of dividend Who is principal officer What makes one an Indian company What amounts to prescribed arrangements for declaration and payment of dividends in India What is dividend for the purpose of tax deduction When tax is to be deducted Private arrangement of paying dividend tax-free cannot discharge obligation under section Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time within which tax is to be deposited Filing challan for payment Claim for refund Issue a certificate for tax deducted at source to shareholders TDS certificate in Form No. 16A Time limit within which the certificate should be given Issue of duplicate certificate Statement/returns to the Government Annual return Quarterly return of TDS deposited Consequences of failure to deduct or pay tax, furnish returns, etc Failure to deduct and/or pay tax 254 I-20

11 7.8-2 Failure to comply with the provisions of section 203A regarding tax deduction account number Failure to issue certificate, or submit return/ statement HOW TO COMPUTE DIVIDENDS AND TAX DEDUCTIBLE THEREFROM 8.1 Defining dividends Deemed dividend under the Income-tax Act Definition under section 2(22)(e) Accumulated profits Distribution of accumulated profits by way of advance or loan /4 Rates for tax deduction at source during the financial year Dividends payable to Government or certain corporation Deduction of tax at lower rates Certificate for receiving dividend without tax deduction Declaration under section 197A Who gets credit for tax deducted Rules framed by Board DEDUCTION OF TAX AT SOURCE FROM INTEREST OTHER THAN INTEREST ON SECURITIES 9.1 Who is to discharge the responsibility to make tax deduction at source Which interest qualifies for tax deduction at source under section 194A When tax has to be deducted at source When interest is credited to Interest payable account or Suspense account Private arrangement of paying interest tax-free cannot discharge obligation under section 194A How to compute tax deduction at source Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit 267 I-21

12 9.6-2 Time of deposit Payment through challan Claim for refund Issue certificate of tax deduction from interest other than interest on securities Certificates are issued by downloading from TIN website Time limit within which certificate shall be issued Issue of duplicate certificate Return of tax deduction at source Annual return Quarterly return of TDS deposited Quarterly return for payment without tax deduction Consequences of failure to deduct or pay tax, furnish return, etc Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Failure to issue certificate or submit return Forfeiture of deduction in respect of interest other than interest on securities HOW TO COMPUTE INTEREST (OTHER THAN INTEREST ON SECURITIES) AND TAX DEDUCTIBLE THEREFROM 10.1 When a payment can be regarded as interest Conditions When a payment is deemed to be payment of interest for the purpose of tax deduction Rates for tax deduction at source during the financial year When adjustments are called for Treatment of interest other than interest on securities payable to Government or certain corporation Interest other than interest on securities not liable to tax deduction under section 194A(3)/197A If interest does not exceed a specified amount 274 I-22

13 Paid/credited to banks/financial institutions Interest by firm Co-operative society Interest under notified schemes Interest by bank Interest by co-operative society/bank Interest by Government Interest credited on compensation Interest paid on Compensation Zero coupon bonds Interest referred to in section 10(23FC) Interest by offshore banking unit Interest to Tirumala Tirupati Devasthanams Interest to securitisation trust Interest without tax deduction or with deduction at lower rates Certificate for tax deduction at lower rate under section 197(1) Declaration under section 197A Payment to certain institutions whose income is exempt under section 10(23C) To deduct or not - Treatment of some typical cases Interest on deposits in joint names - Manner of tax deduction Interest payment under Land Acquisition Act Interest payable on hundi by buyer to supplier in case of outstation sale of goods - Whether tax to be deducted by the buyer Interest payable by consignors to their commission agent Payment under a hire purchase agreement Who is an individual Interest payable by retail finance service company Cheque discounting charges Payment under a hire purchase agreement Interest on delayed payment of insurance compensation Personal loan of directors routed through company 285 I-23

14 Discounting charges Chit fund Judgment debtor Interest on overdue purchase bills is not interest Loan processing fees Tax deduction on the deposits in banks in the name of the registrar to the Supreme Court/High Court during pendency of litigation Tax deductible even in the case of loss Giving credit for tax deducted Rules to be framed by Board TAX DEDUCTION FROM WINNINGS FROM LOTTERY, CROSSWORD PUZZLE, CARD GAMES OR OTHER GAMES 11.1 Who is responsible for tax deduction in the case of winnings from lottery, crossword puzzle, card game or other game Payments from which deduction is to be made When tax has to be deducted Private arrangement of paying income-tax-free cannot discharge obligation under section 194B Tax deduction account number Deposit of tax in the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue a certificate for tax deducted at source Certificate is issued by downloading from TIN website Time limit Issue of duplicate certificate Annual/quarterly return to the Government Annual return Quarterly return Consequences of failure to deduct or pay tax or furnish return, etc. 291 I-24

15 Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Failure to issue certificate, or submit return Disallowance of expenditure WINNINGS FROM LOTTERY, CROSSWORD PUZZLE, CARD GAME OR ANY OTHER GAME AND TAX TO BE DEDUCTED THEREFROM 12.1 What can be termed as winnings from lottery, crossword puzzle and card game One has to fall back on dictionary meanings and judicial pronouncement Preliminary conditions subject to which tax deduction can be made Some typical situations - How to deal with them Rates for deduction of tax at source during the financial year No deduction at source from payments to Government or certain corporation Giving credit for tax deducted Rules framed by Board TAX DEDUCTION FROM WINNINGS FROM HORSE RACE 13.1 Who is responsible for tax deduction Bookmaker - Meaning of When winnings from horse racing are subject to tax deduction at source When tax has to be deducted Private arrangement of making payment tax-free cannot discharge the obligation Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit 301 I-25

16 Payment through challan Claim for refund Issue of certificate for deduction from winning from horse races Certificates are issued by downloading from TIN website Time limit within which the certificate shall be issued Issue of duplicate certificate Annual/quarterly return of winning from horse race to the Government Annual return Quarterly return Consequences of failure to deduct or pay tax, furnish return, etc Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Failure to issue certificate or submit return Disallowance of expenditure WINNINGS FROM HORSE RACE AND TAX TO BE DEDUCTED THEREON 14.1 Meaning of horse race When winnings from horse race are subject to tax deduction Rates at which deduction of tax is to be made at source during the financial year No deduction of tax from winnings payable to the Government/certain corporation Credit for tax deducted Rules framed by Board TAX DEDUCTION FROM PAYMENT TO CONTRACTORS 15.1 Person responsible for making deduction at source under section 194C 308 I-26

17 Payment to a resident contractor When tax has to be deducted at source When amount is transferred to Suspense account Private arrangement of making payment to contractor/sub-contractor without tax deduction cannot discharge the obligation under section 194C How to compute the amount of tax deduction Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue of certificate of tax deduction Certificates are issued by downloading from TIN website Time limit within which certificate shall be issued Issue of duplicate certificate Annual and quarterly returns of tax deducted at source Annual return Quarterly return Consequences of failure to deduct or pay tax, furnish return, etc Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Failure to issue certificate or submit return Forfeiture of deduction in respect of payment to contractors/sub-contractors WHAT CONSTITUTES A PAYMENT TO CONTRACTOR/ SUB-CONTRACTOR AND HOW MUCH TAX IS TO BE DEDUCTED THEREFROM 16.1 Payment to contractors/sub-contractors When such payments are subject to tax deduction 314 I-27

18 When such payments to contractors are not subject to tax deduction at source Work contract and contract for supply of labour for works contract - Meaning of Work as defined in section 194C Work contract or sale of goods Tests to determine whether a contract is work contract Emerging conclusion Examples of work contracts and contracts for sale of goods Judicial pronouncements Rates for tax deduction at source during the financial year Other points Clarifications from the Board Advertising contract Broadcasting/telecasting contracts Payment made to travel agent/or an airline Does catering include serving food in restaurant Payment of hire charges Payment to an electrician Maintenance contracts Fixed deposit commission Procurement of orders Reimbursement Bidi manufacturing National Rural Employment Programme Bus contractor Road transporters Tax deduction when material is supplied to contractor Contract on piece rate basis Payment to Government and certain corporations Certificate for tax deduction at lower rates Time limit for soliciting the favour Credit for tax deduction Rules framed by Board 337 I-28

19 17 TAX DEDUCTION FROM INSURANCE COMMISSION 17.1 Person responsible for tax deduction from insurance commission When tax has to be deducted No tax is deductible if payment during a financial year does not exceed Rs. 15, Private arrangement of paying commission tax-free is not relevant Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue of certificate of tax deduction Certificates are issued by downloading from TIN website Time-limit within which certificate shall be issued Issue of duplicate certificate Annual and quarterly returns of tax deducted at source Annual return Quarterly return Consequences of failure to deduct or pay tax, furnish return, etc Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Failure to issue certificates or submit return Disallowance of expenditure HOW TO COMPUTE INSURANCE COMMISSION AND TAX TO BE DEDUCTED THEREFROM 18.1 What qualifies as insurance commission for the purpose of tax deduction at source 343 I-29

20 Conditions to attract section 194D Rates at which tax is to be deducted at source during the financial year No tax deduction when payments are to Government and certain corporation Circumstances in which no deduction or deduction at lower rate is possible Certificate for tax deduction at lower rate under section 197(1) Declaration under section 197A Credit given to person on whose behalf tax is deducted Rules framed by Board TAX DEDUCTION FROM PAYMENT IN RESPECT OF LIFE INSURANCE POLICY 19.1 Person responsible for tax deduction When tax has to be deducted No tax is deductible if payment during a financial year is less than Rs. 1,00, Private arrangement of paying commission tax-free is not relevant Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue of certificate of tax deduction Certificates are issued by downloading from TIN website Time-limit within which certificate shall be issued Issue of duplicate certificate Annual and quarterly returns of tax deducted at source Annual return Quarterly return Consequences of failure to deduct or pay tax, furnish return, etc. 351 I-30

21 Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax-deduction account number Failure to issue certificates or submit return Disallowance of expenditure HOW TO COMPUTE TAX TO BE DEDUCTED FROM PAYMENT IN RESPECT OF LIFE INSURANCE POLICY 20.1 What qualifies as payment in respect of life insurance policy for the purpose of tax deduction at source under section 194DA When exemption is available under section 10(10D) Rates at which tax is to be deducted at source during the financial year Circumstances in which no deduction or deduction at lower 353 rate is possible 20.4 Credit given to person on whose behalf tax is deducted Rules framed by Board DEDUCTION OF TAX AT SOURCE FROM NATIONAL SAVINGS SCHEME 21.1 Who is responsible to deduct tax When tax is to be deducted How to compute amount of tax deducted at source Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue of certificate for tax deduction Certificates are issued by downloading from TIN website Time limit within which the certificate shall be issued 357 I-31

22 Issue of duplicate certificate Annual and quarterly return to the Government Annual returns Quarterly return Consequences of failure to deduct or pay tax or furnish return Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Failure to issue certificate or submit return Disallowance of expenditure HOW TO COMPUTE AMOUNT REFERRED TO IN SECTION 80CCA(2)(a) AND TAX TO BE DEDUCTED THEREFROM 22.1 Payments referred to in section 80CCA(2)(a) What is the scheme of section 80CCA Payments subject to tax deduction under section 194EE Rate of tax in force during the financial year Payment without tax deduction under section 197A Mode of submission of Form No. 15G/15H by payer of income to income-tax authorities Tax credit Rules framed by Board DEDUCTION OF TAX AT SOURCE ON ACCOUNT OF REPURCHASE OF UNITS BY MUTUAL FUNDS OR UNIT TRUST OF INDIA 23.1 Who is responsible to deduct tax When tax is to be deducted Private arrangement to pay income free of tax How to compute amount of tax deducted Tax deduction account number Deposit of tax to the credit of the Central Government Where to deposit 364 I-32

23 Time of deposit Payment through challan Claim for refund Issue of certificate for tax deduction Certificates are issued by downloading from TIN website Time-limit within which the certificate shall be issued Issue of duplicate certificate Annual and quarterly returns to the Government Annual return Quarterly returns Consequences of failure to deduct or pay tax or furnish return Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Failure to issue certificate or submit return Disallowance of expenditure HOW TO COMPUTE AMOUNT REFERRED TO IN SECTION 80CCB(2) AND TAX TO BE DEDUCTED THEREFROM 24.1 Payments affected by section 194F What is the scheme of section 80CCB Payments subject to tax deduction under section 194F Illustration Rate of tax in force during the financial year Deduction of tax at lower rate Tax credit Rules framed by Board 369 I-33

24 25 DEDUCTION OF TAX AT SOURCE FROM COMMISSION ON SALE OF LOTTERY TICKETS 25.1 Who is responsible to deduct tax at source When tax is deducted at source When amount is credited to suspense account Private arrangement to pay commission free of tax How to compute tax deduction at source under section 194G Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue of certificate of tax deduction Certificates are issued by downloading from TIN website Time-limit within which certificate shall be issued Issue of duplicate certificate Annual and quarterly return to the Government Annual return Quarterly return Consequences of failure to deduct or pay tax or furnish return Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Failure to issue certificate or submit return Disallowance of expenditure 374 I-34

25 26 HOW TO COMPUTE COMMISSION ON SALE OF LOTTERY TICKETS AND TAX DEDUCTIBLE THEREFROM 26.1 When a payment is affected by section 194G Rates for tax deduction Deduction of tax at lower rate Tax credited Rules framed by Board TAX DEDUCTION FROM COMMISSION OR BROKERAGE 27.1 Person responsible for tax deduction from commission/ brokerage When tax has to be deducted No tax is deductible if payment during a financial year does not exceed Rs. 15, Private arrangement of paying commission taxfree is not relevant Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue of certificate of tax deduction Certificates are issued by downloading from TIN website Time limit within which the certificate shall be issued Issue of duplicate certificate Annual and quarterly return to the Government Annual return Quarterly return Consequences of failure to deduct or pay tax or furnish return 382 I-35

26 Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Failure to issue certificate or submit return Forfeiture of deduction in respect of commission/ brokerage HOW TO COMPUTE COMMISSION OR BROKERAGE AND TAX TO BE DEDUCTED THEREFROM 28.1 When commission/brokerage is subject to the tax deduction under section 194H Brokerage/commission covered by section 194H Professional services excluded Commission judicially defined Brokerage judicially defined Commission and service are two essential elements Commission retained by consignee - Is it subject to tax deduction Turnover commission by RBI Trade discount is different Discount on SIM offered by Cellular telephone network provider to distributors Advertisement Commission paid by Doordarshan Other judicial rulings Conclusions Rates of tax No tax deduction when recipient is Government and certain corporations Payment without tax deduction or with deduction at lower rates Certificate for tax deduction at lower rate under section 197(1) Turnover commission payable by Central Government Tax credit Rules framed by Board 394 I-36

27 29 TAX DEDUCTION FROM RENT I Person responsible for tax deduction from rent When tax has to be deducted No tax is deductible if payment during a financial year does not exceed Rs. 1,80, Private arrangement of paying rent tax-free is not relevant Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through Challan Claim for refund Issue of certificate of tax deduction Certificates are issued by downloading from TIN website Time limit within which the certificate shall be issued Issue of duplicate certificate Annual and quarterly return to the Government Annual return Quarterly return Consequences of failure to deduct or pay tax or furnish return Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax-deduction account number Failure to issue certificate or submit return Forfeiture of deduction in respect of rent HOW TO COMPUTE RENT AND TAX TO BE DEDUCTED THEREFROM 30.1 When rent is subject to the tax deduction under section 194-I 401

28 30.2 Rent covered by section 194-I Rent as defined in section 194-I Broad inferences Rates of tax No tax deduction when recipient is Government and certain corporations No tax deduction if recipient is exempt under section 10(23C) No tax deduction if recipient is real estate investment trust Deduction of tax at lower rates Certificate for receiving rent without tax deduction Declaration under section 197A Tax credit Rules framed by Board DEDUCTION OF TAX AT SOURCE FROM CONSIDERATION PAYABLE FOR ACQUISITION OF IMMOVABLE PROPERTY OTHER THAN AGRICULTURAL LAND IN RURAL AREA 31.1 Who is responsible for tax deduction at source under section 194-IA When tax has to be deducted at source Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue a certificate for tax deducted at source Certificates are issued by downloading from TRACES Portal Time limit within which the certificate should be given Issue of duplicate certificate Annual and quarterly return to the Government 414 I-38

29 31.7 Consequences of failure to deduct or pay tax, furnish returns, etc Failure to deduct and/or pay tax Failure to issue certificate, or submit return/ statement Forfeiture of deduction HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF CONSIDERATION FOR ACQUISITION OF ANY IMMOVABLE PROPERTY 32.1 Income subject to tax deduction under section 194-IA Immovable property Agricultural land Rural area in India Rate for tax deduction at source during the financial year Consideration payable to Government or certain corporation Certificate of tax deduction at lower rate Who gets credit for tax deducted Rules framed by Board TAX DEDUCTION FROM PAYMENT OF RENT BY CERTAIN INDIVIDUALS AND HUFs 33.1 Person responsible for tax deduction under section 194-IB When tax has to be deducted No tax is deductible if rent does not exceed Rs. 50,000 per month Private arrangement of paying tax-free rent is not relevant Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund 422 I-39

30 33.5 Issue of certificate of tax deduction Issue of duplicate certificate Return to the Government Consequences of failure to deduct or pay tax or furnish return Failure to deduct and/or pay tax Failure to issue certificate or submit return Forfeiture of deduction HOW TO COMPUTE TAX DEDUCTIBLE FROM RENT UNDER SECTION 194-IB 34.1 Rent subject to tax deduction under section 194-IB Rates of tax deduction during the financial year Payment without tax deduction or with deduction at lower rates Consideration payable to Government or certain corporation Tax credit Rules framed by Board TAX DEDUCTION FROM PAYMENT UNDER SPECIFIED AGREEMENT 35.1 Person responsible for tax deduction from payment under specified agreement When tax has to be deducted Private arrangement to pay consideration free of tax Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue of certificate of tax deduction Issue of duplicate certificate Quarterly return to the Government Consequences of failure to deduct or pay tax or furnish return Failure to deduct and/or pay tax 428 I-40

31 Failure to comply with the provisions of section 203A regarding tax-deduction account number Failure to issue certificate or submit return HOW TO COMPUTE CONSIDERATION WHICH IS SUBJECT TO TAX DEDUCTION UNDER SECTION 194-IC 36.1 When payment under specified agreement is subject to tax deduction under section 194-IC Specified agreement under section 45(5A) Rates of tax Payment without tax deduction or with deduction at lower rates Tax credit Rules framed by Board DEDUCTION OF TAX AT SOURCE FROM FEES FOR TECHNICAL OR PROFESSIONAL SERVICES OR ROYALTY 37.1 Who is responsible for tax deduction in the case of fees for technical or professional services or royalty Director s fees subject to TDS under section 194J from July 1, When payment/credit by an individual/huf is subject to TDS under section 194J When tax has to be deducted at source When fees is credited to suspense account Private arrangement of paying fees for technical or professional services or royalty tax-free cannot discharge obligation under section 194J Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time of deposit Payment through challan Claim for refund Issue a certificate for tax deducted at source 436 I-41

32 Certificates are issued by downloading from TIN website Time limit within which the certificate should be given Issue of duplicate certificate Annual and quarterly return to the Government Annual return Quarterly return Consequences of failure to deduct or pay tax, furnish returns, etc Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax-deduction account number Failure to issue certificate, or submit return/ statement Forfeiture of deduction in respect of technical/ professional fees/royalty HOW TO COMPUTE FEES FOR PROFESSIONAL AND TECHNICAL SERVICES AND ROYALTY AND TAX DEDUCTIBLE THEREFROM 38.1 Professional/technical services What is professional services Technical services Royalty as defined in Explanation 2 to section 9(1)(vi) When payments for professional/technical fees, royalty, director s fees are covered by section 194J Other points Rates for tax deduction at source during the financial year Reimbursement of expenditure - Whether subject to TDS Fees for professional services/technical services or royalty payable to Government or certain corporation Certificate of tax deduction at lower rate Time limit for soliciting the favour Who gets credit for tax deducted Rules framed by Board 450 I-42

33 39 DEDUCTION OF TAX AT SOURCE FROM PAYMENT OF COMPENSATION ON ACQUISITION OF IMMOVABLE PROPERTY 39.1 Who is responsible for tax deduction at source under section 194LA When tax has to be deducted at source Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time within which tax has to be deposited Claim for refund Issue a certificate for tax deducted at source Certificates are issued by downloading from TIN website Time-limit Issue of duplicate certificate Statement/return to the Government Annual return Quarterly return Consequences of failure to deduct or pay tax, etc Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF COMPENSATION ON ACQUISITION OF IMMOVABLE PROPERTY 40.1 Income subject to tax deduction under section 194LA Rates for tax deduction at source during the financial year Income is payable to Government or certain corporation Deduction of tax at lower rates Certificate for receiving such without tax deduction or with deduction at lower rate Who get credit for tax deducted Rules framed by Board 457 I-43

34 41 DEDUCTION OF TAX AT SOURCE FROM INCOME BY WAY OF INTEREST FROM INFRASTRUCTURE DEBT FUND 41.1 Who is responsible for tax deduction at source under section 194LB When tax has to be deducted at source Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time within which tax has to be deposited Claim for refund Issue a certificate for tax deducted at source Certificates are issued by downloading from TIN website Time-limit Issue of duplicate certificate Statement/return to the Government Annual return Quarterly return Consequences of failure to deduct or pay tax, etc Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF INTEREST ON INFRASTRUCTURE DEBT FUND 42.1 Income subject to tax deduction under section 194LB Rates for tax deduction at source during the financial year Deduction of tax at lower rate Who get credit for tax deducted Rules framed by Board 463 I-44

35 43 DEDUCTION OF TAX AT SOURCE FROM INTEREST ON UNITS OF BUSINESS TRUST 43.1 Who is responsible for tax deduction at source under section 194LBA When tax has to be deducted at source Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time within which tax has to be deposited Claim for refund Issue a certificate for tax deducted at source Certificates are issued by downloading from TIN website Time-limit Issue of duplicate certificate Statement/return to the Government Annual return Quarterly return Consequences of failure to deduct or pay tax, etc Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Forfeiture of deduction in respect of payment of interest HOW TO COMPUTE TAX DEDUCTIBLE FROM PAYMENT OF INTEREST ON UNITS OF BUSINESS TRUST 44.1 Income subject to tax deduction under section 194LBA Rates for tax deduction at source during the financial year Deduction of tax at lower rate Who get credit for tax deducted Rules framed by Board 469 I-45

36 45 DEDUCTION OF TAX AT SOURCE FROM INCOME IN RESPECT OF UNITS OF INVESTMENT FUND/SECURITISATION TRUST 45.1 Who is responsible for tax deduction at source under section 194LBB/194LBC When tax has to be deducted at source Tax deduction account number Deposit of tax to the credit of Central Government Where to deposit Time within which tax has to be deposited Claim for refund Issue a certificate for tax deducted at source Certificates are issued by downloading from TIN website Time-limit Issue of duplicate certificate Statement/return to the Government Annual return Quarterly return Consequences of failure to deduct or pay tax, etc Failure to deduct and/or pay tax Failure to comply with the provisions of section 203A regarding tax deduction account number Forfeiture of deduction in respect of payment of interest HOW TO COMPUTE TAX DEDUCTIBLE FROM INCOME IN RESPECT OF UNITS OF INVESTMENT TRUST/SECURITISATION TRUST 46.1 Income subject to tax deduction under section 194LBB/194LBC Rates for tax deduction at source during the financial year Certificate for tax deduction at lower rate (applicable with effect from June 1, 2016) Time-limit for soliciting the favour 475 I-46