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6/6/2021
1
By, CA. Cotha S Srinivas,
Pr. SSB & Associates,
Past Chairman SIRC of ICAI
TDS Provisions with Latest Amendments
SICASA BENGALURU 04th June, 2021
6/6/2021
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Topics for Today’s Discussion
IntroductionStages
of TDS
General Aspects of TDS
Latest TDS Amendments
Procedure under TDS
TDS
Charts
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Introduction
: TDS – Tax Deduction at Source :
Tax as per sec. 2(43) Tax means income-tax chargeable under the provisions of this Act
Deduction the act of taking away something (an amount of money) from a total
at Source at the point of origin or issue
The concept of TDS was introduced with an aim to collect tax from the very source of income. As perthis concept, a person (deductor) who is liable to make payment of specified nature to any otherperson (deductee) shall deduct tax at source and remit the same into the account of the CentralGovernment {Surrogate Taxation} Shifting the Burden of paying the tax.
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Introduction
Section Description
4(1)
The Central Act enacts that income tax shall be charged for any Assessment Year {AY}with respect to every personin respect of the total income of the Previous Year {PY}
4(2)
In respect of income chargeable under sub-section (1),income-tax shall be deducted at source or paid in advanceas per provisions of this Act
Chapter XVII Collection and Recovery of Tax
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Introduction
Chapter XVIIHeading Description Sections Covered
A General 190 & 191
B Deduction at source 192 to 206AB
BB Collection at source 206C to 206CCA
C Advance payment of tax 207 to 219
D Collection and recovery 220 to 232
E Omitted 233 & 234
F Interest chargeable in certain cases 234A to 234D
G Levy of fee in certain cases 234E to 234H
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Introduction
190 Deduction at source and advance payment
The total income of an assessee for the previous year is taxable in the relevant
assessment year. Income-tax is recovered from the assessee in the previous year
itself through
Tax deduction at source (TDS),
Tax collection at source (TCS) &
Payment of advance tax
Another mode of recovery of tax is from the employer through tax paid by him
under section 192(1A) on the non-monetary perquisites provided to the
employee.
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Introduction
191 Direct Payment
In the following cases, tax is payable by the assesse directly :-
Income in respect of which tax is not required to be deducted at source;
and
Income in respect of which tax is liable to be deducted but is not actually
deducted.
In view of the provisions of section 191, the proceedings for recovery of tax
necessarily had to be taken against the assessee whose tax was liable to be
deducted, but not deducted.
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Stages of TDS
D
PAYMENT
DEDUCTION
P
R
C
RETURNS
CERTIFICATE
Date of DeductionFew sections only at the time of payment
Credit or payment whichever is earlier
Mode of Payment
Periodicity & Forms
Due Dates
Electronic Payment in challan no. 281
Quarterly in Form 24Q, 26Q, 27Q,
31st Jul, 31st Oct, 31st Jan, 31st May
15th Aug, 15th Nov, 15th Feb, 15th Jun
Due Dates
Due Dates 7th of every month and 30th April
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Stages of TDS
D
PAYMENT
DEDUCTION
P
R
C
RETURNS
CERTIFICATE
Not Deducted2. Penalty U/s. 271C
1. Disallowance of Expd. U/s. 40(a)(i) & (ia)
Deducted not Paid
Not Filed
Not Issued
Disallowance of Expd. U/s. 40(a) and Prosecution U/s. 276B
Penalty U/s. 271H
Fee U/s. 234F
Penalty U/s. 272A
Delay in Filing
Delayed Payment Interest U/s. 200A
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General Aspects of TDS {01 – 06}
Definitions
Sections
Rates
Limit
Covers section 192 to 196D – {38 Deductions}
Mentioned in the respective sections except u/s. 192, 194P, 195
Specified in the respective sections except u/s.195
Respective Sections, Act, Other Acts
Payer Status Nature of Payment is relevant rather than the status of payer
Payee Status Type of Person and Residential Status of Person
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General Aspects of TDS {07 – 12}
Basis of Deduction
Deduction
Lower Deduction
Privileges
On Credit to account of payee OR Payment whichever is earlier
Payee can apply for NIL or Lower Deduction of TDS. Sec 197
Senior Citizens & Persons having less or exempt Income. Sec 197A
TDS is done on Gross Amount excluding GST & other taxes
Reduced Rates @ 75% of Actual Rate u/s. 197B period - {14.05.2020 to 31.03.2021}
TDS as Income TDS is treated as income received as per Sec. 198 except u/s.194N
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General Aspects of TDS {13 – 18}
Exemptions
Exclusions
Exempted Persons
Advance Payment
Central Govt., RBI, Exempted Corporations, etc., Sec. 196
They need to deduct tax if they are making payment to others
If the end payment is subject to TDS, Then Yes
Specific exemption is provided in respective sections beyond limits
Capital Expd. TDS is applicable if the nature of payment is subject to TDS
Punishments Disallowance, Interest, Fee, Penalty, Prosecution
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General Aspects of TDS {19 – 24}
Purchases
Sales
Personal Use
Cash Withdrawal
Expenses were under TDS, Now sales is also under TDS U/s. 194O
Amount spent on personal use was not under TDS, Now 194M
Withdrawing cash from our own account, TDS U/s. 194N
Certain purchases is also subject to TDS U/s. 194Q
Joint Payees If shares are determinate TDS to be done separately
Death of Payee On death of Payee, TDS can be obtained in the name of LR’s
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General Aspects of TDS {25 – 30}
Forms
Rules
Operation
Sur-charge & Cess
Imp. Rules 28, 30, 31A, 31, 37BB
E-Payment, E-Filing, E-Certificate
For payment to Non-Residents tax to include sur-charge and cess
Forms 13, 16, 16A, 16B, 16C, 16D, 15CA, 15CB, 24Q, 26Q, 27Q
Foreign Payments Amount payable in Foreign Currency to be converted Rule 26, 115
Other Income U/s. 192, 194P Other income details have to be considered
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General Aspects of TDS {31 – 36}
TAN
PAN / Aadhar
ITR
Jurisdiction
Compulsorily to be provided – Sec. 206AA
To be obtained for last 2 years from Specified Persons – Sec. 206AB
Jurisdiction of Deductor to be considered for TDS
Required to deduct tax except u/s. 194IA, 194IB, 194M
Rounding Off TDS amount to be rounded off to nearest Rs. 10/-. Sec. 288B
Decimal In returns tax rates can’t be given for more than 2 decimals
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General Aspects of TDS {37 – 42}
Adjustment
Revised Returns
Intimation
Rectification
Returns can be revised any number of times, no due dates
Within 1 year from end of FY in which return is filed Sec. 200A
Intimation rec’d u/s. 200A can be rectified u/s. 154
Any excess TDS made can be adjusted with PY and Next Year
Appeal Order u/s. 201 is Appealable
Assessee Not in
DefaultRule 37BCA and Form 26A
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General Aspects of TDS {43 – 48}
Certification
Time Limit
Winnings in Kind
Carry Forward
To pass order u/s. 201 – 7 or 2 years whichever is later
TDS amount to be paid and the winnings be released
TDS can be carry forward for next year if income is not offered
For Non-resident payment certification in Form 15CB
Month Period of 30 days to be considered not British Calendar
Cheque Pyt. If tax is paid through Cheque, Date of encashment is considered
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General Aspects of TDS {49 – 54}
Doubts in Rates
Planning
Fixed Assets Pur.
Liabilities Repaid
Not Advisable
TDS on Fixed Assets Purchased
TDS for repayment of Liability
TDS to be done at the higher of the rates
Contribution Major Contributor to the Revenue along with Advance tax
Scope for Expansion Yes, 194R to 194Z – another 9 types can be introduced
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Latest TDS Amendments
Section Description
194M Payment of certain sums by certain Individuals or HUF
194N Payment of certain amounts in cash
194O Payment of certain sums by e-commerce operator to e-commerce participant
194P Deduction of tax in case of specified senior citizen
194Q Payment of certain sum for purchase of goods
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Latest TDS Amendments
194M Payment of certain sums by certain Individuals or HUF
Sl. No. Particulars Description
1. Payer Any Individual or HUF
2. Payee Any Resident in India
3.
Type of Payment Payment for contract work (194C) ORCommission or brokerage (194H) ORProfessional services (194J)
4. Time of Deduction Credit to A/c. OR Payment, whichever is earlier
5. TDS Rate 5 %
6. Limit > 50,00,000
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Latest TDS Amendments
➢
Individuals and HUFs (other than those who are required to deduct income-tax
as per the provisions of section 194C or 194H or 194J) are required to deduct tax
in respect of the above sums payable during the financial year to a resident.
➢
The provisions of section 203A containing the requirement of obtaining Tax
deduction account number (TAN) shall not apply to the person required to
deduct tax in accordance with the provisions of section 194M.
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Latest TDS Amendments
194N Payment of certain amounts in cash
Sl. No. Particulars Description
1. Payer Banking Company, Co-op. Society {in Banking Bus.} or P.O.
2. Payee Any Person {includes Non-Resident also}
3. Type of Payment Cash withdrawn from one or more accounts maintained
4. Time of Deduction Payment of cash
5. TDS Rate 2 %
6. Limit > 1,00,00,000 {1 Crore}
7. Effective Date w.e.f. - 01.09.2019
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Latest TDS Amendments
Recipient who has not filed R.O.I. for all of the 3 AY’s relevant to 3 PY’s, for which the time limit
to file R.O.I. u/s. 139(1) has expired, immediately preceding the PY in which cash is withdrawn.
The provisions will be modified as below -
Limit > 20,00,000 { 20 Lakhs}
TDS Rates
Aggregate Withdrawal Amount in PY TDS Rate
Upto 20,00,000 NIL
> 20,00,000 and < 1,00,00,000 2 %
> 1,00,00,000 5 %
Effective from On or after 01.07.2020
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Latest TDS Amendments
The proviso to section 194N provides that no tax is, however, required to be deducted at source on any
payment made to -
1. The Government
2. Banking Co., Co-operative Society and Post Office
3. Any business correspondent of a banking company or co-operative society
4. Any White Label ATM operator of a banking company or co-operative society
5. Such other person or class of persons as notified by Central Government
The deductor has to give information about tax not deducted on the exempted payments made as above
as per Rule 37BA(3A)
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Latest TDS Amendments
Such other person or class of persons as notified by Central Government
1. Cash Replenishment Agencies (CRA’s) and franchise agents of White Label Automated Teller
Machine Operators (WLATMO’s)
2. Commission agent or trader, operating under Agriculture Produce Market Committee
(APMC), and registered under any Law relating to Agriculture Produce Market
3. The authorized dealer and its franchise agent and sub-agent and Full-Fledged Money
Changer (FFMC) licensed by the RBI and its franchise agent.
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Latest TDS Amendments
The CBDT has, vide Press Release dated 30.8.2019, clarified that
➢ Section 194N is to come into effect from 1st September 2019
➢
Hence, any cash withdrawal prior to 1st September 2019 will not be subjected to the TDS under
section 194N.
➢
However, since the threshold of Rs. 1 crore is with respect to the previous year 2019-20,
calculation of amount of cash withdrawal for triggering deduction under section 194N shall be
counted from 1st April 2019.
➢
Hence, if a person has already withdrawn Rs. 1 crore or more in cash up to 31st August 2019 from
one or more accounts maintained with a banking company or a cooperative society or a post
office, TDS @ 2% shall apply on all subsequent cash withdrawals.
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Latest TDS Amendments
194O Payment of certain sums by e-commerce operator to e-commerce participant
Sl. No. Particulars Description
1. Payer E-commerce Operator
2. Payee E-commerce Participant
3. Type of Payment Gross amount paid towards sale of goods or services or both
4. Time of Deduction Credit to A/c. OR Payment, whichever is earlier
5. TDS Rate 1% of Gross Amount
6. Limit> 5,00,000/- in case of Indl. or HUF being an e-commerceparticipant and who has furnished his PAN or Aadhar.
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Latest TDS Amendments
Explanationany amount paid by the end user of goods or services, shall be treated as amount
paid by an e-commerce operator to an e-commerce participant
Being an individual or HUF no deduction under this section shall be made unless,
the amount paid or credited exceeds Rs. 5,00,000/- and such Indl. or HUF has
furnished his PAN or Aadhar number to e-commerce operator.
No deduction of tax shall be made towards any amount received or receivable by an
e-commerce operator for hosting advertisements or providing any other services
which are not in connection with sale or services.
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Important TDS Provisions
Electronic
commerce
means the supply of goods or services or both including digital products, over
digital or electronic network;
E-Commerce
operator
means a person who owns, operates or manages digital or electronic facility or
platform for electronic commerce;
E-Commerce
participant
means a person resident in India selling goods or providing services or both,
including digital products, through digital or electronic facility or platform for
electronic commerce;
Servicesincludes “fees for technical services” and fees for “professional services”, as
defined in the explanation to section 194J.
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Latest TDS Amendments
194P Deduction of tax in case of Resident Specified Senior Citizen
Sl. No. Particulars Description
1. Payer Specified Bank
2. Payee Resident Senior Citizen aged 75 Years or more in PY
3. Type of Payment Pension and Interest Income
4. Time of Deduction To be Notified after receiving declaration from senior citizen
5. TDS Rate Rates in force (Slab Rates)
6. Limit Exemption Limit and Rebate u/s. 87A
7. Benefit No need to file ITR
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Latest TDS Amendments
194Q Payment of certain sum for purchase of goods
Sl. No. Particulars Description
1. Payer Buyer
2. Payee Resident Seller
3. Type of Payment Value or aggregate value for purchase of any goods in any PY
4. Time of Deduction Credit to A/c. OR Payment, whichever is earlier
5. TDS Rate 0.1 %
6. Limit > 50,00,000
7. Definition Buyer means a person whose TO/GR/Sales is > 10 Crores
8. Condition If TDS or TCS is made on this transaction except 206C(1H)
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Procedures under TDS
Section Description
197 Certificate for deduction at lower rate
197A No deduction to be made in certain cases
197B Lower deduction in certain cases for a limited period
198 Tax deducted is income received
199 Credit for tax deducted
200 Duty of person deducting tax
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Procedures under TDS
Section Description
200A Processing of statements of tax deducted at source
201 Consequence of failure to deduct or pay
202 Deduction only one mode of recovery
203 Certificate for tax deducted
203A Tax deduction and collection account number
204 Meaning of person responsible for paying
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Procedures under TDS
Section Description
205 Bar against direct demand on assessee
206AFurnishing of statement in respect of payment of any income to residents without
deduction of tax
206AA Requirement to furnish Permanent Account Number
206AB Special provision for deduction of tax at source for non-filers of income-tax return
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Procedures under TDS
Section Amendments
206AB Special provision for TDS for non-filers of income tax return -
with effect from the 1st day of July, 2021
(1) Tax is required to be deducted under the provisions of Chapter XVIIB,
(2) Sections 192, 192A, 194B, 194BB, 194LBC or 194N are not covered under
this section
(3) Deductee to pay any sum or income or amount to a specified person,
(4) the tax shall be deducted at the higher of the following rates, namely
(i) at twice the rate specified in the relevant provision of the Act; or
(ii) at twice the rate or rates in force; or
(ii) at the rate of five per cent
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Procedures under TDS
Section Amendments
If both provisions of Sec. 206AA and 206AB is applicable, then TDS to be done at
the higher of the two rates provided in these sectionsSpecified
Person for 206AB
(a) A person who has not filed the return of income for past 2 PY’s
(b) Due date for filing return has expired
(c) Aggregate of TDS and TCS in his case is Rs. 50,000/- or more in each of
these two previous years
(d) Non-resident who doesn’t have a PE in India is excluded.
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T D S – C H A R T S
Sections Rate
194Q 0.1 %
194C, 194IA, 194O 1 %
194C, 194I, 194J, 194N 2 %
194D, 194DA, 194G, 194H, 194IB, 194M 5 %
192A, 193, 194, 194A, 194EE, 194I, 194IC, 194J, 194K, 194LA 10 %
194E, 194F 20 %
194B, 194BB 30 %
192, 194P Slab Rate
195 Applicable Rates
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T D S – C H A R T S
Sections Rate Reduced
194C, 194IA, 194O 1 % 0.75 %
194C, 194I, 194J 2 % 1.50 %
194D, 194DA, 194G, 194H, 194IB, 194M 5 % 3.75 %
193, 194, 194A, 194EE, 194I, 194IC, 194J, 194K, 194LA 10 % 7.50 %
194F 20 % 15.00 %
Reduced Rate applicable for deductions made from 14.05.2020 to 31.03.2021
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T D S – C H A R T S
Sections Form
192, 194P 16
192A, 193, 194A, 194B, 194BB, 194C, 194D, 194DA, 194E, 194EE,
194G, 194F, 194H, 194I, 194IC, 194J, 194LA, 194N, 194O, 194Q, 195
16A
194IA 16B
194IB 16C
194M 16D
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Thank You
by, CA. Cotha S Srinivas