WELCOME TO THE T.D.S. SEMINAR

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WELCOME TO THE
T.D.S. SEMINAR

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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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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

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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

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Perquisites

• Rent-free/leased accommodation
• Interest-free/concessional loan
• Use of Movable Assets
• Transfer of Movable Assets

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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

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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

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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

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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 SalaryDA 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 SalaryDA 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 SalaryDA Rs. 12,000
• EXEMPTION RS. 4,000
• Salary includes DA because terms of employment
  provide for payment of DA

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Common Mistakes

• Rent receipts not obtained in the case of HRA gt
  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

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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

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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

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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

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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

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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)

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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)

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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)

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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)

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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)

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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

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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

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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

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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

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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 _at_ 10
• Threshold Limit Rs.1,00,000/- in a financial
  year

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Penal Rate of TDS

• If PAN not furnished by the deductee or if
  invalid/incorrect PAN is furnished TDS to be
  made _at_ 20
• Applicable w.e.f. 01-04-2010
• 15G/15H Forms are invalid if furnished without
  valid/correct PAN