What is TDS?

1. What is TDS?

Answer : TDS means Tax Deducted at Source. It is the amount withheld from payments of various kinds such as salary, rent payment,  commission etc. This withheld amount can be adjusted against tax due of deductee.


2. Who shall deduct tax at source?

Answer : Every person responsible for making payment of nature covered by TDS provisions of Income Tax Act shall be responsible to deduct tax.

 


3. When income is assessed in the hands of person other than deductee, say in case of  minor/or in case of assets held in the name of partner on behalf of the firm, how the person in whose hand income is assessed will get credit of TDS?

Answer : TDS credit is given by the dept on the basis of information furnished by the ‘Deductor’ through TDS Return.

In order to get the Credit of TDS in the Name of other person the deductee has to file a declaration with the Deductor, and the Deductor has to report the tds in the name of other person for that a declaration has to be filed by deductee stating following information.

1) The Name, Address, PAN of the Person to Whom Credit is to be given.

2) Payment or Credit in relation to which the credit has to be given to the other person.

3) Reasons for giving credit to other person.

The Deductor has to keep the declaration in his Custody.

On the basis of declaration the Deductor has to issue the TDS certificate in favour of the Third person and file TDS return accordingly.

So that third person will get the TDS credit in his tax return.

Please refer refer rule 37BA for further guidance.

 


 4. Is surcharge & education cess applicable on TDS in case of TDS under the provisions of the DTAA? 

Answer : For the purposes of TDS as applicable in case of payments to Non-residents Section 2(37A) read with section 195 of the Income tax Act provides for the tax rates as: 

a) the rate or rates of income-tax specified in this behalf in the Finance Act of the relevant year ; or

b) the rate or rates of income-tax specified in an agreement entered into by the Central Government under section 90, or an agreement notified by the Central Government under section 90A, whichever is applicable by virtue of the provisions of section 90, or section 90A, as the case may be.

As per the provisions of section 90(2), in case of remittance to non-residents, the tax should be deducted at the rate provided in the Finance Act of the relevant year or at the rate provided in the DTAA if any, whichever is more beneficial to the assessee. Education Cess and Surcharge are prescribed under the Income Tax Act, 1961 and not mentioned under DTAAs. Therefore, when the tax is deducted under DTAAs on payment to a non-resident and no education cess and surcharge is applicable. However when the rates under the Income Tax Act are more beneficial as compared to DTAA then tax has to be deducted including Surcharge & Education Cess. 


5. Will expenses be disallowed u/s 40(a)(ia), if deductee have paid tax (i.e. deductor has failed to deduct the tax and the deductee has paid the due tax?


Answer : As per provision of section 40(a), if the payment made on which provision for TDS are applicable, without deduction of tax at source or after the tax deducted at source, not paid, such payments will not be allowed as business expenditure in computation of total income chargeable to tax.

The finance Act, 2012 has amended section 40(a). This amendment is effective from 1st April, 2013 and will apply from the Assessment year 2013-14. , After amendment it is enacted that if the payee fullfills the conditiones specified in sec 201,

Then the assessee will not treated as Assessee-in-default, consequently no disallowance of expenditure shall be made. This provision is applicable when payment is made to a resident only. In other words if the payment is made to non-resident, this amended provision is not applicable.


6. Is TDS needed from reimbursement of expenses made to the consultants, u/s 194J?

The applicability of tds is purely depend on the nature of bill raised by the professional, if a bill is inclusive of fees and reimbursement of expenses then as per circular no 715 dt 8-8- 95 tds should be on gross amount including reimbursement.

If there are two separate bills one exclusively for reimbursement of expenses then on such bill no need to make TDS , You can get support from the case ITO v. Dr. Willmar Schwabe  reported in 3 SOT 71


7. 40(a)(ia) TDS Disallowance: CBDT Circular to clarify various recent judgements

The CBDT has analysed the controversy made by recent judgements on the question whether the term “payable” in s. 40(a)(ia) includes the amounts that have already been paid during the year or it refers only to the amounts outstanding as at the end of year. In this regards the CBDT has issued a Circular No. 10/DV/2013 dated 15.12.2013 in which it is noted that while the Special Bench of the Tribunal in Merilyn Shipping 136 ITD 23 (SB) and the Allahabad High Court in Vector Shipping has taken the view that the disallowance in s. 40(a)(ia) does not apply to amounts that are already paid, however a contrary view has been taken by the Calcutta High Court in Crescent Export Syndicate/Md. Jakir Hossain Mondal and the Gujarat High Court in Sikandarkhan Tunvar.

The CBDT has expressed the view that the disallowance u/s 40(a)(ia) would apply even to the amounts that have already been paid during the year. Further, it is also clarified that if the High Court takes a view contrary to that taken by the CBDT, the CBDT’s view would not apply in jurisdiction of that high court. Further circular has mentioned steps should be taken to decide whether a SLP should be filed or legislative amendments make.


8. Can TDS return be uploaded by using digital signature?

Nowadays digital signature is becoming must for various reasons. With the facility of filing online TDS return  the same  can be used for filing tds return, Not only that when any establishment is having separate TAN  NO. for each branch then return of all branches can be filed with single digital signature.

The only condition is before using this digital signature it must be "registered" with NSDL.

The NSDL has prescribed  some procedure for registration which needs to be compiled with. User has the option to make advance Payment of , return processing charges. It will be deducted as and when the return is being uploaded.  It is best convenient mode for filing return and avoiding all hassles of physical  filing.


9. Why Mismatch of TDS/TCS Payment Claimed byTax Payee?

Most of the time the assessee has been denied for the credit of their TDS amount because of the mismatch in the Tax department records. It is very crucial to know why this mismatch happens. There are three major Parties involved in the process of TDS, due to their omission & commission Tax Payee (Deductee) is being denied for the credit of TDS.


1. Mistakes from the deductor
2. Mistakes from the deductee and
3. Mistakes from banks.

Click here for more details 


10. Interim stay on levy of fee u/s 234E i.e. Rs. 200 per day for failure to file TDS Return

S. 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs.200/- for each day’s delay in filing the statement of  TDS or TCS. The constitutional validity of s. 234E has been challenged in the Kerala High Court. Vide an interim order dated 18.12.2013, the High Court has admitted the Petition and granted a stay of proceedings for a period of two months

Ref: Narath Mapila LP School vs. UOI (Kerala High Court)


11. No more TDS on service tax component 

CBDT has issued a circular  on applicability of TDS on service tax component comprised in the payment to resident. As per circular if you have indicated service tax amount separate in your agreement & bill, you will need not to deduct TDS on Service tax component. This circular is applicable on payments covered under provision of chapter XVII-B – Deduction at Source

Circular NO .1 / 2014  dt.13/01/2014

Click here for more details 


12. Must carry original documents at PAN facilitation centres for verification while applying for PAN 

Recent CBDT circular make it mandate for Counters of PAN facilitation centres to ask for production of original copies of proof of identity, proof of address, and date of birth documents, to every PAN applicant; Self-attested copies of proof of identity, proof of address and date of birth document attached with PAN application form will be verified vis-a-vis their original documents at the time of submission of PAN application; Original documents not to be retained by the facilitation centre, but to be returned back to applicant after verification;

Changes effective from February 3, 2014

Click here for more details 

 


13. New Norms for Verifying Original Documents for PAN allotment is put on hold

CBDT has decided to put on hold the recently notified norm for issuance of PAN card. New norms were requiring verification of original documents while applying for PAN at PAN facilitation centre. The new norms were to come into force from February 3, but as per press release by ministry of finance as 30th January, 2014, CBDT has decided to keep in abeyance the decision to change the procedure for PAN allotment till further orders. In the meantime, it also clarifies that the old procedure of PAN application and allotment shall continue. 

Please click here to see press release by ministry of finance. 


14. Karnataka high court grants interim stay on enforcement of notices for levy of fee for failure to file TDS statement

Following Kerala High Court stay on levy of fee u/s 234E, Karnataka High Court also grants interim stay on enforcement of notices.  S. 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day’s delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). The constitutional validity of s. 234E has been challenged in the Karnataka High Court. Vide an interim order dated 19.02.2014 the High Court grants interim stay on enforcement of notices.

Ref: Adithya Bizorp Solutions India Pvt. Ltd vs. UOI (Karnataka High Court)


15. In case the deal gets cancelled and at the time of booking the purchaser deducts TDS and deposited the same to the Govt account then, how is it possible for a purchaser to claim for such TDS refund??

Incase of credit/refund gets cancelled deal, there is no mechanism is provided in the scheme of TDS for refund of the TDS deducted erroneously No refund will be given to the purchaser and as per sec 199 credit of TDS can be claimed by the seller only when he will offer his income for taxation.
Since deal is cancelled seller can't offer income for tax so he will also not get credit for tax deducted on his name.
 

16. In case a property has been given for re development and the builder would be paying us a certain amount, would TDS u/s 194IA  be deducted on the amount to be paid to us.
 
The TDS is totally depends upon nature of agreement how it is defined.
In Normal course redevelopment cases the right of development is exchanged for money or constructed area
and in sec 2(47) of income tax act covers any exchange of rights in property.
 
And Sec 194IA says."Responsible for paying by way of consideration for TRANSFER of any immovable property (other than agricultural land ). Since transfer includes exchange of rights so for redevelopment cases the TDS provisions will be applicable)

 
17.TDS u/s 194 LA claimable? If Claimable under which head. Rs.460000 Compensation received from Government under land acquisition and TDs Deducted Rs.46000/-

Any Tax Deducted under the TDS provision is a part of Tax paid on behalf of the assessee. Since it is tax paid on behalf of the assessee. There is no bar in claiming credit of TDS even tax is deducted U/s194LA. The precaution you need to take it as per sec 199 the credit of TDS will be allowed only in the year which the income is offered for taxation .To conclude the credit of TDS paid U/s 194 LA can be claimed by the assessee in his tax return. 

 

18.New company can apply PAN/TAN with form INC-7- No other form required

Now you can apply for TAN (Tax deduction account no.) and PAN (Permanent account no.) of a company at the time of incorporation of company itself in form no INC-7 

Please refer CBDT Notification No 38/2015.

The necessary amendment are made in Rule 114 of the Income Tax act.



 

 

 

 

 

Whats New

The CPC TDS has issued a circular to all banking companies to incorporate all payments of interest

TDS FROM SALARIES DURING THE F.Y. 2013-14 U/S 192 OF THE IT ACT, 1961.


CBDT Instruction Regarding Unmatched TDS Challans In Form 26AS

Pursuant to the judgement of the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273, the CBDT has issued Instruction No. 11 of 2013 dated 27.08.2013


Non-resident referred to in Section 194LC will not be penalised for not having a PAN

By virtue of Section 206AA, if PAN of the recipient is not available, tax is deductible either at the normal rate or at the rate of 20%, whichever is higher.


While filing TDS return if you have made any error in challan details or in PAN details then,

While filing TDS return if you have made any error in challan details or in PAN details then,


CBDT has issued a circular on applicability of TDS on service tax component comprised

CBDT has issued a circular on applicability of TDS on service tax component comprised


The CPC TDS has issued a circular to all banking companies to incorporate all payments of interest

TDS FROM SALARIES DURING THE F.Y. 2013-14 U/S 192 OF THE IT ACT, 1961.


CBDT Instruction Regarding Unmatched TDS Challans In Form 26AS

Pursuant to the judgement of the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273, the CBDT has issued Instruction No. 11 of 2013 dated 27.08.2013


Non-resident referred to in Section 194LC will not be penalised for not having a PAN

By virtue of Section 206AA, if PAN of the recipient is not available, tax is deductible either at the normal rate or at the rate of 20%, whichever is higher.


While filing TDS return if you have made any error in challan details or in PAN details then,

While filing TDS return if you have made any error in challan details or in PAN details then,


CBDT has issued a circular on applicability of TDS on service tax component comprised

CBDT has issued a circular on applicability of TDS on service tax component comprised


The CPC TDS has issued a circular to all banking companies to incorporate all payments of interest

TDS FROM SALARIES DURING THE F.Y. 2013-14 U/S 192 OF THE IT ACT, 1961.


CBDT Instruction Regarding Unmatched TDS Challans In Form 26AS

Pursuant to the judgement of the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273, the CBDT has issued Instruction No. 11 of 2013 dated 27.08.2013


Non-resident referred to in Section 194LC will not be penalised for not having a PAN

By virtue of Section 206AA, if PAN of the recipient is not available, tax is deductible either at the normal rate or at the rate of 20%, whichever is higher.


While filing TDS return if you have made any error in challan details or in PAN details then,

While filing TDS return if you have made any error in challan details or in PAN details then,


CBDT has issued a circular on applicability of TDS on service tax component comprised

CBDT has issued a circular on applicability of TDS on service tax component comprised


The CPC TDS has issued a circular to all banking companies to incorporate all payments of interest

TDS FROM SALARIES DURING THE F.Y. 2013-14 U/S 192 OF THE IT ACT, 1961.


CBDT Instruction Regarding Unmatched TDS Challans In Form 26AS

Pursuant to the judgement of the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273, the CBDT has issued Instruction No. 11 of 2013 dated 27.08.2013


Non-resident referred to in Section 194LC will not be penalised for not having a PAN

By virtue of Section 206AA, if PAN of the recipient is not available, tax is deductible either at the normal rate or at the rate of 20%, whichever is higher.


While filing TDS return if you have made any error in challan details or in PAN details then,

While filing TDS return if you have made any error in challan details or in PAN details then,


CBDT has issued a circular on applicability of TDS on service tax component comprised

CBDT has issued a circular on applicability of TDS on service tax component comprised


The CPC TDS has issued a circular to all banking companies to incorporate all payments of interest

TDS FROM SALARIES DURING THE F.Y. 2013-14 U/S 192 OF THE IT ACT, 1961.


CBDT Instruction Regarding Unmatched TDS Challans In Form 26AS

Pursuant to the judgement of the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273, the CBDT has issued Instruction No. 11 of 2013 dated 27.08.2013


Non-resident referred to in Section 194LC will not be penalised for not having a PAN

By virtue of Section 206AA, if PAN of the recipient is not available, tax is deductible either at the normal rate or at the rate of 20%, whichever is higher.


While filing TDS return if you have made any error in challan details or in PAN details then,

While filing TDS return if you have made any error in challan details or in PAN details then,


CBDT has issued a circular on applicability of TDS on service tax component comprised

CBDT has issued a circular on applicability of TDS on service tax component comprised


The CPC TDS has issued a circular to all banking companies to incorporate all payments of interest

TDS FROM SALARIES DURING THE F.Y. 2013-14 U/S 192 OF THE IT ACT, 1961.


CBDT Instruction Regarding Unmatched TDS Challans In Form 26AS

Pursuant to the judgement of the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273, the CBDT has issued Instruction No. 11 of 2013 dated 27.08.2013


Non-resident referred to in Section 194LC will not be penalised for not having a PAN

By virtue of Section 206AA, if PAN of the recipient is not available, tax is deductible either at the normal rate or at the rate of 20%, whichever is higher.


While filing TDS return if you have made any error in challan details or in PAN details then,

While filing TDS return if you have made any error in challan details or in PAN details then,


CBDT has issued a circular on applicability of TDS on service tax component comprised

CBDT has issued a circular on applicability of TDS on service tax component comprised


The CPC TDS has issued a circular to all banking companies to incorporate all payments of interest

TDS FROM SALARIES DURING THE F.Y. 2013-14 U/S 192 OF THE IT ACT, 1961.


CBDT Instruction Regarding Unmatched TDS Challans In Form 26AS

Pursuant to the judgement of the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273, the CBDT has issued Instruction No. 11 of 2013 dated 27.08.2013


Non-resident referred to in Section 194LC will not be penalised for not having a PAN

By virtue of Section 206AA, if PAN of the recipient is not available, tax is deductible either at the normal rate or at the rate of 20%, whichever is higher.


While filing TDS return if you have made any error in challan details or in PAN details then,

While filing TDS return if you have made any error in challan details or in PAN details then,


CBDT has issued a circular on applicability of TDS on service tax component comprised

CBDT has issued a circular on applicability of TDS on service tax component comprised


The CPC TDS has issued a circular to all banking companies to incorporate all payments of interest

TDS FROM SALARIES DURING THE F.Y. 2013-14 U/S 192 OF THE IT ACT, 1961.


CBDT Instruction Regarding Unmatched TDS Challans In Form 26AS

Pursuant to the judgement of the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273, the CBDT has issued Instruction No. 11 of 2013 dated 27.08.2013


Non-resident referred to in Section 194LC will not be penalised for not having a PAN

By virtue of Section 206AA, if PAN of the recipient is not available, tax is deductible either at the normal rate or at the rate of 20%, whichever is higher.


While filing TDS return if you have made any error in challan details or in PAN details then,

While filing TDS return if you have made any error in challan details or in PAN details then,


CBDT has issued a circular on applicability of TDS on service tax component comprised

CBDT has issued a circular on applicability of TDS on service tax component comprised