D TARUN JAIN

TDS & TCS – Recent Updates & Amendments.

By. CA. Tarun Jain. B.com, FCA.

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Synopsis of Discussion

• Amendments in Finance act 2016.

• Amendment to Section 206AA

• New provisions relating to TCS

• Other Miscellaneous matters

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Amendments in Finance act 2016

• Changes in rates & threshold

limits.

• New payment included for TDS

– Section 194LBC

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Particulars Upto 30-5-2016 From 1-6-2016

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,1952

192A 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/-

or

75,000/- P.A.

1% 30,000/-

or

1,00,000/-P.A.

1%

Payment to Contractors (Others) 194C 2% 2%

Changes in Rates & Threshold Limits

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Particulars Upto 30-5-2016 From 1-6-2016

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%

Changes in Rates & Threshold Limits

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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

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Filing of TDS Quarterly Returns – AY 2017-18

Rule

No.

Form

No.

Particulars Periodicity

Due Date

31A 24Q Quarterly statement of TDS on Salary u/s 192 Quarterly

Apr – Jun: 31st July

Jul – Sep: 31st Oct

Oct – Dec: 31st Jan

Jan – Mar: 31st May

26Q Quarterly statement of TDS on Other than Salary

27Q Quarterly statement of TDS on payment to Non

Residents u/s 195

31AA 27EQ Quarterly Statement of TCS u/s 206C Apr – Jun: 15th July

Jul – Sep: 15th Oct

Oct – Dec: 15thJan

Jan – Mar: 15th 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.

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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)”

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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%

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Section 206AA – PAN

Exemption from the application of the provision

has been granted WEF 1-6-2016:

– 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 24-6-2016)

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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

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Rule 37BC & Section 206AA

Prescribed document / Information

Name, e-mail 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.

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TDS on Salary

• CBDT issues an annual circular clarifying

the matters relating to TDS on salary

income.

• For AY 2017-18, CBDT has recently

issued the annual TDS circular 1/2017

dated 2-1-2017.

• This Circular is very handy on the

applicable procedure on various

scenarios for TDS on salary.

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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 1-6-2016)

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Form 12BB – Rule 26C

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

Name, address and permanent account

number of the lender.

4 Deduction under

Chapter VI-A.

Evidence of investment or expenditure

Furnishing of evidence of claims by employee for deduction of tax under

section 192

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CONSEQUENCES OF NON COMPLIANCE OF TDS / TCS

Section Penal Provisions

40(a)(i) &

(ia)

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 Late fee (not penalty) of Rs. 200/- per day for delay in filing of the

returns beyond due date.

272A(g) Penalty of Rs. 100/- per day for delay in issuance of TDS Certificates

272A(k) Penalty of Rs. 100/- per day for delay in filing of filing of TDS returns

271H 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.

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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:

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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 :

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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. 1-4-2013]

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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 interest @ 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.

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MISCELLANEOUS

• TREATMENT OF SPECIAL PAYMENTS WITHOUT TDS

Particulars Flag used in TDS

returns

Lower / No deduction for certificate u/s 197 A

No deduction for declaration u/s 197A B

No deduction for transporters having PAN U.s - 94C(6) T

No TDS for Payment for Software U.s 194J

(Notification No. 21/2012) (2012-13 onwards) S

No deduction due to payment below threshold limit. Y

Lower TCS for certificate u/s. 206C(9) X

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Interest under section 201(1A) [WEF – 1-7-2010]

Section Rate of

Interest

From To

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

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

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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 %

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Section 206C – Tax Collection at Source

Sub

Section

Nature of Transactions Rate

206C(1D) Sale of Bullion (exceeding Rs. 2.00 Lakhs) 1.00 %

Sale of Jewellary (exceeding Rs. 5.00 Lakhs) 1.00 %

Sale of other goods (exceeding Rs. 2.00 Lakhs) 1.00 %

Providing any service (exceeding Rs. 2.00 Lakhs) 1.00 %

206C(1F) Sale of motor vehicle (exceeding Rs. 10.00 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.

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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)

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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.

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Section 206C – TCS – Q&A

Q: Mr. A, a diamond dealer, sold loose

diamonds for Rs. 50.00 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)]

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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]

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Section 206C – TCS – Q&A

Q: Goods sold for Rs. 5.00 lakhs. Paid by

Cheque Rs. 2.90 Lakhs & Cash Rs. 2.10.

Is TCS Applicable and on what amount?

A: TCS is applicable as cash collected is

more than Rs.2.00 Lakhs and TCS @1% is

applicable on Rs. 2.10 only.

(As per CBDT Circular)

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Section 206C – TCS – Q&A

Q: Mr. A, a chartered accountant, sold

personal gold jewellary for Rs. 5.00 lakhs in

cash.

Is TCS Applicable?

A: TCS is not applicable as gold Jewellary

is not held as goods by the seller.

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Section 206C – TCS – Q&A

Q: A motor car dealer sold a Motor Car for Rs.

15.00 lakhs. Paid by Cheque Rs. 12.00 Lakhs &

Cash Rs.3.00. 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)

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Section 206C – TCS – Q&A

Q: Car Sold for Rs. 20.00 lakhs by the Director of

the company. Paid by Cheque Rs. 15.00 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.

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Section 206C – TCS – Q&A

Q: Mr. A (Textile dealer) sold his personal Car for

Rs. 15.00 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.

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Section 194J – Payment for Software

Q: Mr. XYZ Limited purchases a ERP Software for

Rs. 5.00 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 194J @ 10% is

applicable.

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D TARUN JAIN

THANK YOU

D Tarun Jain B.COM, FCA.