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WELCOME TO THE T.D.S. SEMINAR

WELCOME TO THE T.D.S. SEMINAR. Duties and responsibilities. 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.

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WELCOME TO THE T.D.S. SEMINAR

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  1. WELCOME TO THE T.D.S. SEMINAR

  2. Duties and responsibilities • 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

  3. IMPORTANT T.D.S. SECTIONS • 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

  4. T.D.S. on Salaries – Sec.192 • 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

  5. Perquisites Rent-free/leased accommodation Interest-free/concessional loan Use of Movable Assets Transfer of Movable Assets

  6. Exemptions & Deductions • 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

  7. Computation of Total Income • Income from salary allowances, etc minus exemptions u/s.10 • Any other income reported by the employee _________ • Less: Loss from House Property _________ • Gross Total Income _________ • Less: Deductions under Chapter –VIA _________ • Total Income __________ • Tax thereon X • Less: Relief U/s.89(1) Y • Balance tax divided by 12 (X-Y)/12

  8. Common Mistakes • Not estimating the total income and tax • 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 • Entire HRA is allowed

  9. 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

  10. Common Mistakes • 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

  11. Precautions reg. loss from House Property • Computation Statement should contain details like address of the property, whether self-occupied/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

  12. General Principles – TDS on Non-Salary Payments • 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

  13. TDS on Interest (other than Banks)– Sec.194A • 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

  14. TDS on Contract Payments- Sec.194C • 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

  15. TDS on Contract Payments- Sec.194C Exemption from TDS • In case of Contract for Transport of goods if PAN furnished by the payee (w.e.f. 01-10-2009) • Payments in respect of works executed under NREP and RLEGP works (Circular No.502) Scope of Work • Works Contract • Labour Contract • Advertising Contract • Transportation Contract • Catering Contract • Contract for manufacture/supply of products according to specifications by using materials supplied by the contractee (w.e.f. 01-10-2009)

  16. TDS on Contract Payments- Sec.194C Instances of Contract Payments liable for TDS • 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)

  17. 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)

  18. 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)

  19. 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)

  20. 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

  21. T.D.S. on fees for Professional/Technical Services – Sec.194J Scope of the Section • Fees for Professional Services • Fees for Technical Services • Royalty • Payments towards non-compete agreement

  22. 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 • Rendering of managerial, technical or consultancy services • Providing services of technical/other personnel • Does not include consideration chargeable under “Salaries”

  23. T.D.S. on fees for Professional/Technical Services – Sec.194J General information • 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 the reimbursement of expenses (Circular No.715) Instances of payments liable to TDS • 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

  24. TDS on Payments made towards land acquisition – Sec.194LA Payment on account of compulsory acquisition of immovable property (other than Agricultural Land ) under any Law At the time of payment TDS @ 10% Threshold Limit – Rs.1,00,000/- in a financial year

  25. Penal Rate of TDS • 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

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