Transcript WELCOME TO THE T.D.S. SEMINAR RANGE

WELCOME
TO THE
T.D.S. SEMINAR
Duties and responsibilities
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Obtain TAN
Deduct tax properly from various payments
as per Chapter XVII of the IT Act
Deposit tax within due date
File Quarterly e-TDS return
Issue TDS certificate in Form No.16/16A
IMPORTANT T.D.S. SECTIONS
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Section 192 – T.D.S. on Salaries
Section 194A – T.D.S. on Interest
Section 194C – T.D.S. on Contract Payments
Section 194H – T.D.S. on Commission
Section 194 I – T.D.S. on Rent
Section 194J – T.D.S. on Payment for
Professional/Technical Services
Section 194LA- TDS on compensation towards land
acquisition
T.D.S. on Salaries – Sec.192
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Estimate the taxable income and compute
the tax payable
Find out the average rate of tax
Deduct tax at the average rate at the time of
payment of salary
Perquisites
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Rent-free/leased accommodation
Interest-free/concessional loan
Use of Movable Assets
Transfer of Movable Assets
Exemptions & Deductions
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Sec.10(13A) – H.R.A.
Sec.10(14) – Transport Allowance etc.
Sec.80C – LIC Premiums, GPF, NSC, Tuition Fee,
Housing Loan repayment, 5 year Term Deposit,
Specified Funds
Sec.80CCC – Annuity Plans of LIC etc.
Sec.80D – Medical Insurance Premium
Sec.80DD – Treatment of handicapped dependant
Sec.80E – Interest on Education Loan
Sec.80G – Donations
Sec.80U – Physically Handicapped assessees
Sec.89(1) – Relief when arrears received
Computation of Total Income
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Income from salary allowances,
etc minus exemptions u/s.10
Any other income reported
by the employee
Less: Loss from House Property
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Gross Total Income
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Less: Deductions under Chapter –VIA
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Total Income
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Tax thereon
Less: Relief U/s.89(1)
Balance tax divided by 12
X
Y
(X-Y)/12
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Common Mistakes
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Not estimating the total income and tax
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Making nominal deductions initially and postponing
bulk of TDS to the end months
Deduction u/s 80DDB is allowed indiscriminately
though not authorized as per CBDT Circular
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Entire HRA is allowed
Correct calculation of HRA exemption
Ex. Basic Pay Rs.20,000, DA Rs.10,000, HRA Rs.4,000, Others Rs.6,000
I. Rent Paid Rs. 3,000
(i) HRA
Rs. 4,000
(ii) Rent paid minus 10%
of Salary +DA*
Rs.
0
(iii) 40% of Salary+DA*
Rs. 12,000
EXEMPTION
RS.
0
II. Rent paid Rs. 5,000
(i) HRA
Rs. 4,000
(ii) Rent paid minus 10%
of Salary +DA*
Rs. 2,000
(iii) 40% of Salary+DA*
Rs. 12,000
EXEMPTION
RS. 2,000
III. Rent paid Rs. 8,000
(i) HRA
Rs. 4,000
(ii) Rent paid minus 10%
of Salary +DA*
Rs. 5,000
(iii) 40% of Salary+DA*
Rs. 12,000
EXEMPTION
RS. 4,000
*Salary includes DA because terms of employment provide for payment of DA
Common Mistakes
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Rent receipts not obtained in the case of HRA >
Rs.3,000/Arrears credited to GPF not being considered for
the purpose of TDS
Evidences in respect of investments not being
obtained
Loss from House property and HRA are
simultaneously allowed
Computation statements and evidences not
obtained while allowing loss from house property
Precautions reg. loss from House
Property
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Computation Statement should contain details
like address of the property, whether selfoccupied/let-out, Municipal taxes paid and
interest on borrowed capital
Loss from SOP is allowable only up to Rs.30000
Higher loss up to Rs.150000 is admissible only if
loan is taken on or after 1/4/99 and
construction/purchase is within 3yrs.
Higher loss from SOP up to Rs. 150000 not
admissible on loan taken for renovation/repairs
General Principles – TDS on NonSalary Payments
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TDS at the time of payment/credit (Other than
Sec.194LA)
Advance payments liable to TDS
Payments to Govt., RBI, Mutual Funds and
Corporations established under Central Law whose
income is exempt – No TDS
Payments to Notified Bodies – No TDS (Circular
No.4 of 2002)
Certificate of non-deduction/lower deduction u/s.197
Adjustment of excess deduction – during the same
financial year in respect of the same person –
applicable only to TDS on Salary & Interest
TDS on Interest (other than Banks)–
Sec.194A
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Rate of TDS – 10%
Threshold limit – Rs.5,000/- (Rs.50,000/- in
case of Interest on Compensation awarded
by Motor accident claims Tribunal)
TDS on Gross Interest Payments
Interest paid to Banks, LIC, UTI, Insurance
Companies and Notified Institutions –
Exempt from TDS
TDS on Contract Payments- Sec.194C
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Payments made for carrying out works
contract – liable to TDS
Rate of TDS – 1% in the case of
Individuals/HUF and 2% for other entities
Threshold Limits – Rs.30,000/- for each
contract and Rs.75,000/- in aggregate (w.e.f.
01-07-2010)
TDS on gross payments
TDS on Contract Payments- Sec.194C
Exemption from TDS
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In case of Contract for Transport of goods if PAN furnished by the payee (w.e.f.
01-10-2009)
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Payments in respect of works executed under NREP and RLEGP works
(Circular No.502)
Scope of Work
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Works Contract
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Labour Contract
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Advertising Contract
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Transportation Contract
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Catering Contract
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Contract for manufacture/supply of products according to specifications by
using materials supplied by the contractee (w.e.f. 01-10-2009)
TDS on Contract Payments- Sec.194C
Instances of Contract Payments liable for TDS
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Contracts for putting up a hoarding
Payments made to clearing and forwarding agents
Payments made to couriers
Payment of freight by the consignee on “freight to pay” basis
Payments towards sponsorship for debates, seminars and other
functions held in colleges, schools and associations
Payments towards advertisements issued in the souvenirs
Payments towards routine and normal maintenance contracts
including supply of spares
Payments to cold storage towards cooling charges (Circular No.1 of
2008)
TDS on Commission/Brokerage –
Sec.194H
Meaning of Commission/Brokerage
 Payment to a person acting on behalf of the payer
for the services rendered (other than professional
services) including services in the course of
buying/selling of goods
 Principal – Agent relationship is sine-qua-non
 Rate of TDS – 10%
 Threshold Limit – Rs.5,000/- p.a. (w.e.f. 01.07.2010)
TDS on Rent – Sec.194 I
Meaning of Rent
 Any payment under lease/sub-lease/tenancy or any
other agreement for use of land, building, plant,
machinery, equipment, furniture and fittings,
either separately or together and whether owned by
the payee or not
Rate of TDS
 2% for use of plant, machinery or equipment
 10% for the use of other assets (w.e.f. 01.07.2010)
Threshold Limits
 Rs.1,80,000/- p.a. (w.e.f. 01.07.2010)
TDS on Rent – Sec.194 I
General Principles
 In the case of jointly owned property, the threshold
limit would apply in respect of each co-owner, if their
shares are definite and ascertainable
 No tax deductible on Muncipal Taxes, Ground Rent
etc. borne by the tenant (Circular No.718)
 No TDS on Service Tax component payable along
with the rent (Circular No.4 of 2008)
TDS on Rent – Sec.194 I
Instances of Payments liable for TDS
 Space for hoarding taken on lease and sub-let(Circular No.715)
 Ware housing charges (Circular No.718)
 Hotel accommodation taken on a regular basis (Circular No.715
& Circular No.5 of 2002)
 Rent for hiring of exhibition grounds or exhibition halls
 Composite arrangements for use of premises and provision of
other services where service charges not specifically defined
(Circular No.715)
 Non refundable deposit whether interest bearing or not (Circular
No.718)
 Advance rent, premium for lease are also liable to TDS
T.D.S. on fees for Professional/Technical
Services – Sec.194J
Scope of the Section
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Fees for Professional Services
Fees for Technical Services
Royalty
Payments towards non-compete agreement
T.D.S. on fees for Professional/Technical
Services – Sec.194J
Meaning of Professional Services
Services rendered by a person in the course of carrying on
 Legal Profession
 Medical Profession
 Engineering or Architectural Profession
 Accountancy profession
 Technical consultancy
 Interior decoration
 Advertising
 Authorized representative
Meaning of Technical Services
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Rendering of managerial, technical or consultancy services
Providing services of technical/other personnel
Does not include consideration chargeable under “Salaries”
T.D.S. on fees for Professional/Technical
Services – Sec.194J
General information
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Rate of TDS – 10%
Threshold Limit – Rs.30,000/- p.a. (w.e.f. 01.07.2010)
TDS to be made on gross payment including
reimbursement of expenses (Circular No.715)
the
Instances of payments liable to TDS
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Payments to Surveyors, Approved Valuers
Payments to Landscape Consultants, Decoration Consultants
Payments for Satellite rights/TV rights of films
Payments to Hospital for rendering medical services
TDS on Payments made towards
land acquisition – Sec.194LA
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Payment on account of compulsory acquisition of
immovable property (other than Agricultural Land )
under any Law
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At the time of payment
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TDS @ 10%
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Threshold Limit – Rs.1,00,000/- in a financial year
Penal Rate of TDS
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If PAN not furnished by the deductee or if
invalid/incorrect PAN is furnished – TDS to
be made @ 20%
Applicable w.e.f. 01-04-2010
15G/15H Forms are invalid if furnished
without valid/correct PAN