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Changes in TDS rates in Finance Act-2019
In Finance Budget-2019 two major changes has been made regarding TDS deduction ,first is regarding Increase in cut off limit of Interest from Bank and Post office deposits under section 194A has been increased to Rs 40000/- from Rs 10000 earlier. Second change is regarding increase in cut off limit under section 194-I Tds on Rent ,which has been increased to Rs 240000/- from Rs 180000/- earlier.
1. In section 194A of the Income-tax Act, in sub-section (3), in clause (i), for the words “ten thousand” wherever they occur, the words “forty thousand” shall be substituted.
2. In section 194-I of the Income-tax Act, in the first proviso, for the words “one hundred and eighty thousand rupees”, the words “two hundred and forty thousand rupees” shall be substituted
Surcharge /Cess applicable on TDS/TCS
1.Surcharge on payment made to resident other than salary is not deductible
Surcharge /Cess applicable on TDS/TCS
1.Surcharge on payment made to resident other than salary is not deductible
2.In case of nonresident shall be increased by a surcharge in the case of—
(i) every non-resident being an individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act,—
(a) at the rate of ten per cent. of such tax, where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds fifty lakh rupees but does not exceed one crore rupees;
(b) at the rate of fifteen per cent. of such tax, where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore
rupees;
(ii) every non-resident being a co-operative society or firm or local authority at the rate of twelve per cent. Where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rupees;
(iii) every company other than a domestic company at the rate of two per cent. where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds one crore rupees but does not exceed ten crore rupees;
(iv)every company other than a domestic company at the rate of five per cent. where the income or the aggregate of income paid or likely to be paid and subject to deduction exceeds ten crore rupees.
When tax is to be deducted?
1. At the time of credit or payment, whichever is earlier
l 193- Interest on securities
l 194A- Interest Other than “Interest on securities”
l 194C- Payment to contractors / sub contractors
l 194D – Insurance commission
l 194H – Commission or Brokerage
l 194G- Commission on sale of lottery tickets
l 194I- Rent
2. Before making payment or distribution
1 94- Dividend
3 . At the time of payment
l 192- Salaries
l 194B- Winning from lotteries / crossword puzzles
l 194BB Winnings from horse races
l 194EE – Payment from National Saving Scheme
l 194F Payment for repurchase of units by UTI / mutual funds
l 194 -IA : payment of transfer of immovable property >50 Lakh
l 194LA: Payment of compensation on acquisition of certain immovable property
When Tax is to be collected
1.At the time of Debit of Account or Receipt ,whichever is earlier
l Scrap
l Tendu Leaves
l Timber obtained under a forest lease or other mode
l Any other forest produce not being a timber or tendu leave
l Alcoholic Liquor for human consumption
l Parking Lot, toll plaza, mining and quarrying Minerals, being coal or lignite or iron ore (applicable from July 1,2012)
l At the time of receipt/collection
Sale of motor vehicle > 10 lakh
When date of deduction/Collection is decided then according to point of deduction/collection then due date to deposit is to be decided as under.
Quarterly return Form
Deductor is required to file TDS/TCS return quarterly, however nil return is not mandatory. These returns may be filed at any TIN-FC by paying a small fee. However you may upload original return directly at e filing site free.
1. 24Q : For TDS deducted from Salary Income
2. 26Q : For TDS deducted from all other section except salary & 194IA from resident
3. 27Q : For TDS deducted from Non-resident except salary
4. 27EQ : For Tax collected at source
5. 26QB : For section 194IA separate return is not required ,challan cum return is to be filled on form 26QB (Tax to be deposited within 30 days(wef 01.06.2016)(earlier it was 7 days) from the end of the month in which tax is to be deducted )
Nil TDS return is not mandatory
As per income tax rules/act Nil tds return is not mandatory, however to facilitate the deductors and to update data Govt has provided a facility on Traces website for declaring NIL tds return.
Correction statement of E TDS return
You may file correction return any number of times, No time limit has been defined yet. This return can be filed with TIN-FC .To file the revised TDS return you have to download consolidated FVU file from TDSCPS website The correction return filing facility has not been provided at Income tax India e filing site but we expect that soon it will be made available. However you may correct challan details/tag replace challan/allocation of interest and fees online/move deductee rows from unmatched challan without digital signature at www.tdscpc.gov.in and pan details with digital signature. If short payment of TDS is not settled by Deductor then he cannot download form 16A/16 of that quarter/year.
TDS Certificate
1. Form 16 : For tds deducted from salary
2. Form 16A : For other Tax deductions except salary & 194IA
3. (to be issued within 45 days wef 01.06.2016)(earlier it was 22 days) from the end of the month in which tax is to be deducted )Form 16B : TDS from section 194IA
4. All above form must be downloaded from TDSCPC (TRACES) website .However in case of Form 16 only PART-A is to be downloaded from TRACES website. Earlier this was mandatory for only companies ,Banks and co-operative societies engaged in Banking services with effect from 01.04.2011 through circular number 3/2011.
5. Form 16A downloaded from TDSCPC can be signed manually or can be authenticated through digital signature only.
10. Interest on Late deposit of TDS/TCS & Penalty & Prosecution & other consequences on Non deposit of TDS/TCS
As per income-tax act/rules, interest on late deposit of TDS is payable under the following two circumstances
1. Tax is not deducted , when it was deductible
2. Tax once deducted, is not paid on or before due date
A deductor would face the following consequences if he fails to deduct TDS or after deducting the same fails to deposit it to the credit of Central Government’s account:Consequences if default is made in payment of TDS
· a) Disallowance of expenditure: As per section 40(a)(i) of the Income-tax Act, any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.
However, if tax is deducted or deposited in the subsequent year, as the case may be, the expenditure shall be allowed as deduction in that year.
Similarly, as per section 40(a)(ia), any sum payable to a resident, which is subject to deduction of tax at source, would attract 30% disallowance if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.
However, where in respect of any such sum, tax is deducted or deposited in subsequent year, as the case may be, the expenditure so disallowed shall be allowed as deduction in that year.
The same rule is also applicable on Income from other sources.
· b) Levy of interest: As per section 201 of the Income-tax Act, if a deductor fails to deduct tax at source or after the deducting the same fails to deposit it to the account of Central Government then he shall be deemed to be an assessee-in-default and liable to pay simple interest as follows:
(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
(ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.
· c) Levy of Penalty: Penalty of an amount equal to tax not deducted could be imposed under section 271C. Penalty shall be charged under section 221 if deductor fails to deduct and pay tax to the credit of Central Government. The penalty shall be levied to the extent the Assessing Officer directs, however, the total amount of penalty shall not exceed the amount of tax in arrears.
· d) Prosecution: If a person fails to pay to the credit of the Central Government the tax deducted at source by him he shall be punishable with rigorous imprisonment for a term which shall not be less than three months but which may extend to seven years and with fine.
11 : Late Fees -Penalty on Late filing of TDS return
1. Failure to apply for TAN in time or Failure to quote allotted TAN or Wrong quoting of TAN : Penalty of Rs.10,000 is leviable u/s.272BB
2. Late Filing of TDS-TCS statement: Deductor will be liable to pay by way of fee of Rs 200 per day till the failure to file TDS statement continues. However, the total fee cannot exceed the amount of TDS deductible from which statement was required to be filed.(section 234E) .Further as per section 234E ,Late fees is required to be paid before the filing of TDS/TCS return. Read How to avoid Late fees u/s 234E (read more post related to section 234E)
3. Failure to File TDS return on Time and filling of incorrect statement: New Section for Penalty for non submission of ETDS /ETDS return (section 271H)(applicable from 01.07.2012)
Failure to deliver statement within time prescribed u/s 200 (3) or to the proviso to sub-section (3) of section 206C may liable to penalty which shall not be less than Rs. 10,000/- but which may extend to Rs. 1,00,000/-. No penalty if payment of tax deducted or collected along with fee or interest and delivering the statement aforesaid before the expiry of 1 year from the time prescribed for delivering the such statement. However No penalty shall be imposed u/s 271H if the person proves that there was reasonable cause for the failure.(section 273B)
4. Penalty on Late issue of TDS certificate form 16/Form 16A/form 27D/Form 16B :
If TDS certificate is not issued within due date as prescribed then penalty @ 200 per day may be imposed till the default continues for each default. However, the maximum penalty cannot exceed the amount of TDS deducted for which TDS certificate was required to be issued.
5. Assessee In default (amendment in section 201)
The Deductor will not to be treated as assessee in Default provided the resident payee has furnished his return u/s 139 and has taken into account such amount for computing income in such Return of Income and has paid the Tax Due on the income declared by him in such return of income and furnishes a certificate to this effect, duly certified by a CA, in the prescribed form. This form is yet to be notified.
However, the interest for non deduction of tax would be payable from the date on which such tax was collectible till the date of furnishing of return of income by the resident payee.