Group-10 Ctp Presentation

8/8/2019 Group-10 Ctp Presentation

1/97

DEDUCTION AND COLLECTION OF

TAX AT SOURCE

PRESENTATION ON

BY GROUP 10

Mehul Dhamsaniya(25)

Hiral Joshi (42)

Jyoti Lakhwani (49)

Aarti Meghrajani (62)

Annie Sukhramani (103)

Manish Vasani (116)

10/13/20101 Tolani institute of management studies


2/97

What is the scheme of tax deduction

at source X (29 years) is a businessman. For the financial year

2010-11, his business income is Rs. 8,86,000. Beside,

he has received Rs. 90,000 as interest on fixed deposit

from Punjab national bank on January 31, 2011 (gross

interest earning on fixed deposit: Rs.1,00,000, less tax

deduction at source by bank: Rs. 10,000). He has

deposited Rs. 60,000 in public provident fund.

10/13/2010 2Tolani institute of management studies


3/97

The tax computation

Business income 8,86,000

Bank Interest

Net interest received from bank90,000

Add: Tax deduction at source by bank10,000

Gross interest 1,00,000

Gross total income9,86,000

Less: Deduction under section 80c 60,000

Net income9,26,000

Tax on net income1,31,800

Add: Education cess & secondary & higher secondary

education cess

3,954

Tax liability 1,35,75410/13/2010 3Tolani institute of management studies


4/97

Tax liability 1,35,754

Less: Tax deduction at source by Punjab National Bank 10,000

Net interest paid to X 1,25,754



5/97

Payment covered by TDS scheme like salary (to

resident / non-resident), payment other than salary to

residents (namely interest, dividend, rent, commission

brokerage, lottery winning, winning of races, technical /professional fees, royalty, compensation e.t.c.) and payment

to non-residents / foreign companies.

These provision are



6/97

TDS rate during financial year 2010-11:if the recipient does not furnish his PAN to the deductor, tax will be

deducted (W.E.F April 1, 2010) at the normal rate or at the rate of

20 %, which ever is higher. PAN of the deductee should be

mentioned in any correspondence & document which is exchanged

between the deductor & deductee.

Surcharge on TDS payment during the F.Y 2010-11-surcharge

will be applicable in the case of TDS only when the recipient is a foreign

company and the payment / credit subject to TDS exceed Rs. 1 crore (rate

of surcharge : 2.5 % of TDS). In no other case surcharge will be applicable

for TDS purpose during the F.Y. 2010-11.



7/97

Education cess & secondary & higher education cess during the F.Y

2010-11 -

Education cess (@ 2%) & secondary & higher education cess (@ 1%) will be

applicable only in case of following cases

1. Tax deduction from payment of salary (where recipient is resident or non-

resident).2. Tax deduction from payment / credit of any sum (other than salary) to a non-

resident or a foreign company.

In case of payment / credit (other than salary) to a resident, education cess, e.t.c.

will not be applicable for TDS purpose during the F.Y. 2010-11



8/97

Consequences of default where a person, who is required to deduct tax at source, does not

deduct, or after deducting fail to pay, the whole or any part of tax, as

required by the act, then such person will be deemed to be an

assessee in default in respect of such tax under sec 201 (1). He will

be liable for payment of tax, interest, penalty & prosecution.



9/97

An order under section 201 (1) for failure to deduct the whole or

any part of the tax as required under the act, if the deductee is a

resident tax payer, shall be passed within the timelimit given

below:

1. In case TDS statement is filed by the deductor within 2 year from

the end of the financial year in which statement is filed U/S 200.

2. In case no such statement is filed within 4 year from the end of

the financial year in which payment is made or credit is given.

However an order pertaining to the F.Y 2007-08 (for earlier year )

can be passed at any time up to march 31, 2011.



10/97

WHEN AND HOW TAX IS DEDUCTED AT SOURCE FROM

SALARY (SEC. 192)

Who is payer Employer

Who is recipient Employee

Payment covered Taxable salary of employee

At what time tax is to be deducted at source At the time of payment

Max. amount which can be paid without tax

deduction

The amount of exemption limit (i.e. Rs.

1,90,000 / Rs. 2,40,000 / Rs.1,60, 000 for the

A.Y 2010-11)

Rate of tax deduction at source Normal rate applicable to an individual

When the provision are not applicable ----

Is it possible to get the payment without tax

deduction or with lower tax deduction

The employee can make an application in

form No. 13 to the assessing officer to get a

certificate of lower tax deduction or no tax

deduction.10/13/2010 10Tolani institute of management studies


11/97

The employer may, at the time of deducting tax at source, increase or

decrease the amount to be deducted for the purpose of adjusting any

previous deficiency or excess deduction.

How to compute taxable salary & tax thereon At the time of

deducting tax at source, the person responsible for paying salary should

keep following points in consideration:

EXEMPTION LIMIT No tax is required to be deducted at source

unless the estimated salary exceeds exemption limit. (i.e. Rs.1,90,000 /

Rs. 2,40,000 / Rs. 1,60,000) during the F.Y. 2010-11.



12/97

HOUSERENT ALLOWANCE- Incurring actual expenditure on

payment of rent is a pre-requisite for claiming deduction U/S 10

(13A). The employee should submit a written statement to the

employer pinpointing rent paid by him, name of the landlord, and

the address of the property taken on rent along with rent receipt

given by the landlord.

If House rent allowance is Rs. 3,000 p.m (or less than that), the

employer will give exemption on the basis of a declaration given

by the employee (no need to submit rent receipt). This

concession is only for the purpose of TDS & not for regular

assessment.



13/97

OTHER ALLOWANCES & PERQUISITES Exemption available U/S

10 in respect of other allowances, will be provided by the employer.

The value of perquisites by the way of free residential accommodation

& other perquisites will be determined under rule 3 & should be taken

into account for computing taxable salary.

DONATION BYEMPLOYEEDEDUCTIBLEU/S 80G The

employer should not give any deduction in respect of donation given

by employee to a notified public charitable institute. The tax relief

admissible U/S 80G in respect of such donations will have to be

claimed by the employee at the time of finalization of his assessment.



14/97

OTHER DEDUCTIONSThe employer should also take into

consideration amount deductible U/S 80C, 80CCC, 80CCD, 80CCF,

80D, 80DD, 80E, 80 GG & 80 U.

TAXDEDUCTIBLEThe total salary should be round off to

the nearest multiple of Rs.10, ignoring the fraction. On the

estimated taxable salary, tax during the financial year 2009-10 is

to be calculated at the rates as mentioned on pg. 869



15/97

Tax deduction U/S 192 in some special cases

HOW TO DEDUCT TAXWHEN A PERSON ISEMPLOYED BY

MORETHAN ONEEMPLOYER -

Tax will be deducted on the aggregate salary by one of the employer.

RELIEF U/S 89

This facility is available only if the employer is government or

public sector undertaking or company, co-operative society,

local authority, university, institution or association or body.



16/97

CANEMPLOYER DEDUCT TAXIN RESPECT OF OTHER INCOMES

OFEMPLOYEE

1. The employee may or may not declare his other incomes to the

employer.

2. If the employee wants to declare his other incomes to the employer,

then such information should be given on a plain paper.

3. The employee may declare details of his other incomes and tax

deducted there on by others.

If such information is not submitted to employer byemployee, then employer cannot take into consideration

other incomes of the employee.



17/97

CAN THEEMPLOYER PAY TAXON PERQUISITES

Sub - section (1A) provides that the person responsible for paying any

income in the nature of perquisites (not provided for by way of monetary

payment) referred to in section 17 (2), may pay at his option, tax on the

whole (or part) of such income without making any deduction from salary

payable to employee.

For this purpose, tax shall be determined at the average of income

tax computed on the basis of the tax so paid by employer is not

taxable in the hands of the employee as perquisite.



18/97

Particulars of perquisite & profit in lieu of salary to

be given to employee [sec 192( 2c)]

Any person responsible for paying salary shall furnish to

the person who receives salary a statement giving

particulars of perquisites or profits in lieu of salary

provided to him in form 12 BA (if salary exceeds

Rs.1,50,000).



19/97

WHEN & HOW TAX IS TO BE DEDUCTED AT SOURCE

FROM INTEREST ON SECURITIES (SEC. 193)

Who is payer Payer of interest on securities.

Who is recipient A resident person holding securities.

Payment covered Interest on securities.

At what time tax is to be deducted at source At the time of payment or at the time ofcredit, whichever is earlier.


deduction

----

Rate of tax deduction at source For the financial year 2009-10, TDS rate is 10

% (no surcharge, education cess, e.t.c.)

When the provision are not applicable Interest on central / state government

securities.



Application in form no. 13.



20/97

Securities interest which is not subject to tax

deduction

a) Debenture issued by any co-operative society or anyother institution or authority or a public sector company

notified by the central government.

b) Any security of central / state government. [however

from June 1, 2007, interest exceeding Rs. 10,000 paybleduring the financial year on 8% saving bonds, 2003 (relief

bonds)].

c) Securities beneficial owned by LIC of India or general

insurance cooperation of India or to any other four

companies formed by virtue of the scheme framed under

section 16(1) of the general insurance business act, 1972

or any other insurer and

d) Any listed Demat securities. (W.E.F June 1, 2008 )



21/97

Time of tax deduction At the time of payment or at

the time of credit to the account of the payee or

transfer to interest payable account or suspense

account, whichever comes earlier.



22/97

When tax is not deductible at regular rates

Application to assessing officer in form No. 13

Declaration to the payer in form no. 15 G

Debenture interest up to Rs. 2,500 it is not necessary to deduct tax at

source from any interest on debenture paid to an individual who is resident

in India if the following conditions are fulfilled.

a) The debentures have been issued by a company in which the public

are substantially interested.

b) The debenture are listed in a recognized stock exchange in India;

c) The interest is paid by the company by an account payee cheque; and



23/97

d) The aggregate amount of interest paid or likely to be

paid by the company to the holder of the debentures

during the F.Y. does not exceed Rs. 2,500.

Deep discount bond Tax is deductible at the time of

redemption.



24/97

WHEN & HOW TAX IS TO BE DEDUCTED AT SOURCE

FROM DIVIDENDS (SEC. 194)Who is payer Domestic company

Who is recipient Resident shareholder

Payment covered Deemed dividend U/S 2(22)(e)

At what time tax is to be deducted at source At the time of payment


deduction

-----

Rate of tax deduction at source 10% (no surcharges & education cess)

When the provision are not applicable Dividends covered by section 115 - o



Dividends covered by section 115 o,

Application in form no. 13,

Declaration to the payer in form no. 15G.10/13/2010 24Tolani institute of management studies


25/97

Who is payer Any person paying interest other than

interest on securities

Who is recipient A Resident person

Payment covered Interest other than interest on securities

At what time tax is to be deducted at source At the time of payment or at the time of

credit, whichever is earlier.


deduction

From June 1,2007 tax is not deductible if

payment/credit does not exceed .

Rate of tax deduction at source 10% (no surcharges & education cess)

When the provision are not applicable



As in sec 197 & 197a

WHEN & HOW TAX IS TO BE DEDUCTED AT SOURCE FROM

INTEREST OTHER THAN INTEREST ON SECURITIES (SEC. 194A)



26/97

From June 1,2007

Rs.

Where the payer is a banking company & interest is paid or payable on

time deposit.

10,000

Where the payer is a co-operative society engaged in carrying on a

banking business & interest is paid or payable on time deposit.

10,000

W

here the payer is post office & interest is paid or payable on notifieddeposit scheme with post office (i.e. senior citizen saving scheme, 2004) 10,000

Where the payer is any other person 5,000

When interest is not subject to tax deduction or

subject to lower tax deduction

No tax deduction if interest does not exceed a specified amount



27/97

Interest not subject to tax deduction.

Adjustment in case of short deduction

Payment under a hire purchase agreement



28/97

Issue of certificate of tax deduction

to the recipient

Different payments Forms no

In case of salary payment and aboveprovision 12BA and 16

In case of payment other than salary 16A



29/97

Different situations Time-limits for deposit of

tax

Time limit for issue of

certificate to the recipient

When payer is the

government or when

payment is made on behalf

of the government

Same day In case of salary or insurance

commission within 30 days

from the close of the

financial year. Otherwise

within one month from the

end of the month

when tax is deducted by the

person (other than gov)

under sec.

193,194A,194C,194D,194E,

194G,194H,194-

I,194J,195,196A,196B,196C

and 196D and the amount is

credit to the last date of the

accounting year.

Within two month from last

date of the accounting

year(i.e within 31st may)

Within the two month and

seven of days from the last

date of the accounting year



30/97

When the assessingofficer has permitted

When such payment is

covered by section

194A,194D,194H

When such payment is

payment of salary

July 15, October 15,

January 15,and April 15

June 15, Sep 15

December 15, March 15

Within 14 days of

payment

Within 14 days of

payment

Any other case Within one week from the

last date of the month in

which tax deduction ismade

In case of salary or

insurance commission

within 30 days from theclose of the financial year.

Otherwise within one

month from the end of the

month



31/97

When and how tax is to be deducted at

source from winnings from horse

races(sec.194BB)Who is the payer Any person paying winnings from horse

races

Who is the recipient Any person

Payment covered Winnings from horse races

At what time tax has to be deducted at

source

At the time of payment

Maximum amount which can be paid

without tax deduction

If the amount of payment is Rs 5000 or

less than Rs 5000

Rate of tax deduction at source 30%(no surcharge or education cess)

When the provision are not applicable -------

Is it possible to get the payment without

tax deduction or with lower tax

deduction

Not possible



32/97

when and how tax is to be deducted at

source from payment to contractors or

sub-contractors(sec. 194C)

Who is the payer A specified person

Who is the recipient A resident contractor(contractor includes

sub-contractor)

Rate of tax deduction at source 1% if recipient is an individual/HUF,

otherwise 2%

Payment covered Consideration for any work contract


source

At the time of payment or the time of

credit, whichever is earlier



See Para 276.5


tax deduction or with lower tax

deduction

The recipient can make an application in

form No 13 to the Assessing Officer to

get a certificate of lower tax deduction or

no tax deduction10/13/2010 32Tolani institute of management studies


33/97

Who is deductorA. The central government or state government

B. Any local authorityC. Any corporation established by or under a central, state or provincial act or

D. Any company or

E. Any co-operative society or

F. Any authority, constituted in India by or under any law, engaged either for the

purpose of dealing with and satisfying the need for housing accommodation or for

the purpose of planning, development or improvement of cities, tows and villages

or for both or

G. Any society registered under the societies registration act, or

H. Any trust or

I. Any university or institute declared to be university or

J. Any government of foreign state or foreign enterprise or any association of bodyestablished outside India or

K. Any firm or

L. An individual or HUF or AOP OR BOI(body of person)



34/97

Addition requirement if payer is an

individual/HUF/AOP/BOI

Additional requirement in

the case of an

individual/HUF

Additional requirement in

the case of an AOP/BOI

Payment/credit should be

for business purposes

It should not be exclusively

for personal purposes

No such requirement

Audit of books of account Books of account are liable

to be audited under sec

44AB(a)/(b) during the

financial year immediately

preceding the financial year

in which tax is deductible

Books of account are liable

to be audited under sec

44AB(a)/(b) during the

financial year immediately

preceding the financial year

in which tax is deductible



35/97

Who is recipient(contractor) Before October 1, 2009 different provision were applicable in

case of contractors and sub- contractors. In order to reducethe scope for dispute regarding classification of contract as

sub-contractor, the same TDS structure has been incorporated

for contractors and sub- contractors.

If the recipient is transport contractor (may be an individual,

firm company or any other person) and he or it furnishes his

PAN to the deductor, tax is not deductible with effect form

October 1,2009. transport operator is a person who is in the

business of plying, hiring or leasing of good carriages.



36/97

Meaning of work contract

Sec 194(c) is applicable in respect of consideration for carrying out any works

contract (including supply of labour for carrying out any work) for this purpose,

contract shall include sub-contract

Work as defining in sec 194C- The expression work shall also include the

following-

a) Advertising

b) Broadcasting and telecasting including production of programmers for such

broadcasting or telecasting;

c) Carriage of goods or passengers by any mode of transport other than by railways;

d) catering

e) Manufacturing or supplying a product according to the requirement orspecification of a customer by using material purchased from a person , other than

such customer.



37/97

Payment which are not subject to TDS under sec 194 C-

It includes carrying out any work(where man power is

essential requirement), supply of labour and five services(i.e., advertising,broadcasting and telecasting, carriage of goods/passengers, catering and tailor-made manufacturing when raw material is supplied by buyer). Section 194 C is notapplicable in respect of the following contracts-

1. Other services(i.e. other than 5 service noted above) where no work is performedby the service provider nor any labour is supplied or engaged to do any work aspart of the services so provided or the work so performed, can not be said to be

covered under sec 194C

2. Work shall not include manufacturing or supply product according to therequirement or specified of customer by using raw material purchased from aperson other than such customer, as such a contract is a contract for SALE. Thiswill, however, not apply to a contract which does not entail manufacture or supplyof an article or thing (e.g. a construction contract).

3. Payment to transport operators(i.e. in the course of business of plying, hiring orleasing goods carriages) is not subject to TDS under sec 194C , if the recipientfurnishes his PAN to the payer. Deductors who make payments to transporterswithout deducting TDS(as they have quoted PAN) will be required to intimatethere PAN details to the Income tax department in the prescribed format.



38/97

Other points.

There is no surcharge, education cess or secondary and higher educationcess.

If the recipient is a transport operator and he furnishes his PAN to the

payer, TDS is NIL.

In the case of work contract being manufacturing or supplying product

according to the specification of customer (by using material purchasedfrom such customer), TDS shall be deducted on the invoice value excluding

the value of material purchased from such customers, if such value is

mentioned separately in the invoice.Where the material component has

not been seperately mentioned in the invoice, TDS shall be deducted on

the whole of the invoice value.

Tax is deductible on the entire consideration including service tax, if any



39/97

When tax is not deductible..

Petty cases-

a) The amount of any (single) sum credited or paid (or likely to be paid) to

the contractor does not exceed Rs. 20,000 (30,000 from July 1, 2010) and

b) The aggregate of the amount of such sums credited or paid ( or likely to

be credited or paid) during the financial year does not exceed Rs 50,000( Rs. 75,000 from 1 July 2010)



40/97

When and how tax is to be deducted at source

from insurance commission (sec 194 D)W

ho is the payer Any person paying insurance commission

Who is the recipient A resident person

payment covered Insurance commission

At what time tax has to be deducted atsource

At the time of payment or at the of credit,whichever is earlier



If the amount of payment is Rs. 20,000 or

less than Rs. 20,000

Rate of tax deduction at source 10% (no surcharge and education cess,etc)

When the provisions are not applicable -



The recipient can make an applicable in

form No.13 to the assessing officer to get a

certificate of lower tax deduction or no taxdeduction



41/97

Adjustment not possible

At the time of deducting tax from the insurance commission credited to anagents account, adjustment for any debits made in his account in respect of

excess commission credited or paid to him earlier is not permissible and income

tax must be deducted from the full amount of commission credited to this

account.


h i d d ibl


42/97

when tax is not deductible or

deductible at lower rate

No tax is required to be deducted at source if the insurance commission credited

or paid ( or likely to be credited or paid) during the financial year does not exceed

Rs. 5,000( 20,000 from July 1 2010)

The person receiving insurance commission can make an application in form No 13



43/97

when and how tax is deductible at source from payment to non-

resident sportsmen or sport associations(sec 194 E)

Who is the payer Any person making payment to non-resident

sports man/sports association

Who is the recipient non-resident sports man/sports association

payment covered Payment to non-resident sports man/sports

association

At what time tax has to be deducted at source At the time of payment or at the of credit,

whichever is earlier

Maximum amount which can be paid without

tax deduction

nil

Rate of tax deduction at source 10%

When the provisions are not applicable -



No provision



44/97

payee Nature of income

1. Non resident foreign citizen

sportsmen(including sportsmen)

Income is by way of-

a) Participation in India in any game

(other than card game or gamblingetc)

b) Advertisement or

c) Contribution of articles relating to any

game or sport in India in newspaper,

magazines or journals

2 Non-resident sports association or

institution

Any amount guaranteed to be paid or

payable in relation to any game(but other

than card game, etc) or sport played in

India



45/97

When and how tax is deductible from payments in respected of national

saving scheme (sec 194EE)

Who is the payer Post office


payment covered Payment (principal

+interest) out of national saving scheme,1987

At what time tax has to be deducted at source At the time of payment

Maximum amount which can be paid without

tax deduction

If the amount of payment is Rs 2,500 or less

than Rs 2,500

Rate of tax deduction at source 20%(no surcharge and education cess)

When the provisions are not applicable The payment is made to legal heirs of the

deceased



No provision



46/97

The person responsible for paying any amount(i.e principal and interest)

out of National saving scheme, 1987 should deducted tax at source. It may

be noted that the payment out of National saving scheme, 1992( which

was eligible for the benefit of section 80L and 88) is not subject to taxdeduction at source.

When tax is not deductible- no tax deductible shall be made in following

cases

1. amount payment or aggregate amount of payment in financial year is lessthan 2,500, no tax is deducted

2. Where the payment is made to the heirs of the deceased

assesses(depositor), no tax is deducted at sources.



47/97

TOLANI INSTITUTE OF MANAGEMENT SUDIES10/13/2010 Tolani institute of management studies

WHEN AND HOW TAX IS DEDUCTIBLE

ON PAYMENTS ON ACCOUNT OF

REPURCHASE OF UNITS OF MUTUALFUNDS OR UTI (SEC 194F)

47

Wh i h M l f d UTI


48/97

TOLANI INSTITUTE OF MANAGEMENT STUDIES10/13/2010 Tolani institute of management studies

Who is the tax payer Mutual fund or UTI

Who is the recipient Unit holder under sec 80CCB

Payment covered Payment on account of repurchase of

units-80CCBAt what time tax has to be

deducted at source

At the time of payment

Maximum amount that can bepaid without deduction

Nil

Rate of TDS 20% (excluding surcharge and education

cess)

When provision not applicable _Is it possible to get the

payment at lower/no tax

deduction

No provision

48


49/97


WHEN TAX IS DEDUCTIBLE

FROM COMMISSION- SALE OF

LOTTERY TICKETS (SEC 194G)

49

Who is the tax payer Any person paying commission on sale


50/97


5

Who is the tax payer Any person paying commission on sale

of lottery tickets


Payment covered Commission on sale of lottery tickets

At what time tax has to be

deducted at source

At the time of payment or at he time of

credit whichever is earlier

Maximum amount that can be

paid without deduction

1000 or less than 1000


cess)

When provision not applicable _

Is it possible to get the


deduction

The recipient can make an application

form no.13 to get a certificate of

lower/no TDS50


51/97

10/13/2010

Tolani institute of management studies


AT SOURCE FROM COMMISSION OR

BROKERAGE (SEC 194H)

51

MEANING OF COMMISSION OR


52/97

10/13/2010

Tolani institute of management studies

MEANING OF COMMISSION ORBROKERAGE

Payment is received for the services rendered

(except the service of professionals like doctors etc)

It does not include insurance commission

Indirect payment (comm. retained by the agent)

Here the principal/consignor has to deposit the tax

deductible on the amount of commission income

52

Who is the tax payer Any person paying comm/brokerage


53/97


7

Who is the tax payer Any person paying comm/brokerage

except an individual or HUF whose

books are not required to be audited

Who is the recipient Any resident personPayment covered Commission or brokerage (except

insurance comm)


deducted at source

At the time of payment or at the time of




Rs.5000 or less than Rs.5000


cess)

When provision not applicable _



deduction



lower/no TDS53



54/97


WHEN AND HOW TAX IS DEDUCTIBLEFROM RENT (SEC.194-I)

Rent:-payment is made under any lease, sub-lease, tenancy orany other agreement or arrangement.

Payment is made either for use of any land and

building(including factory building)

It is also applicable in respect of rent paid or payable of

machinery plant equipment, furniture or fittings

Immaterial whether or not such building or asset is owned bythe person to whom the rent is paid.

No tax deduction if the payee is government/local authority.

54

Who is the tax payer Any person paying rent(not being an


55/97


9

Who is the tax payer Any person paying rent(not being an

HUF or a individual whose accounts are

not required to be audited)

Who is the recipient Any resident person

Payment covered Rent


deducted at source





If the payment during the financial year

is Rs.180000 or less than Rs.180000

Rate of TDS 2% for use of any plant/machinery and

10% in case of land and building

When provision not applicable Certificate under form no.13



deduction



lower/no TDS55


56/97

TAX DEDUCTED AT SOURCE

ON FEES FOR PROFESSIONALOR TECHNICAL SERVICES

[SEC.194J]



57/97

Meaning of professional/technical services

The expression professional services has beendefined to mean services rendered by a person in

the course of carrying on legal, medical, engineering

and architectural profession or the profession of

accountancy or technical consultancy or interiordecoration or advertising(i.e. models, artists,

photographers providing services to an advertising

agency) or such other profession as is notified by theboard for the purposes of section 44AA [i.e.

authorized representative, film artist or company

secretary or information technology]10/13/2010 57Tolani institute of management studies


58/97

The expression fess for technical services

means any consideration for rendering any

managerial, technical or consultancy

services. It does not include (a)consideration for any construction,

assembly, or like projects, (b) consideration

for any service provided by machines orrobots, and (c) salary payment.



59/97

Who is the payer Any person (not being an

individual/HUF) who pays/credits

fees for professional/technical

service/royalty, is responsible fortax deduction.

Who is the recipient A resident person.

Payment covered Fees for professional/technical

service/royalty.At what time tax has to be

deducted at source

At the time of payment or at the

time of credit, which ever is earlier.

Maximum amount which can be

paid without tax deduction

If the amount of profession fees

during a financial year is Rs.30000or less than Rs.30000

(technical).Further, if the amount

of royalty during a financial year is

Rs.30000 or less.



60/97

Rate of tax deduction at source 10% (no surcharge and education

cess, etc.) Tax is deductible on

total payment (including servicetax). Even reimbursement of

actual expenditure cannot be

deducted out of the bill amount

in the case of a consolidated bill.

When the provisions are not

applicable

_

Is it possible to get the payment

without tax deduction or with

lower tax deduction

The recipient can make an

application in Form No.13



61/97

Time of tax deduction

Tax shall be deducted at the time of credit of suchsum to the account of the payee or at the time of

payment thereon in cash or by issue of a cheque

or draft or by any other mode, whichever is

earlier.

Where any such sum is credited to any account,

whether called Suspense account or by any

other name, in the books of accounts of theperson liable to pay such sum, such credit shall be

deemed to be credit of such sum to the account

of the payee.10/13/2010 61Tolani institute of management studies


62/97

Amount paid by non-resident

Any fees paid through regular banking channels

to any chartered accountant, lawyer, advocate

or solicitor who is resident in India by the non-resident who do not have any agent or business

connection or permanent establishment in

India may not be subject to provisions of tax

deduction at source under section 194J

Circular No.726,dated October 16, 1995.


P t t h it l b TPA


63/97

Payment to hospital by TPAs

The services rendered by hospitals to various patient are

primarily medical services and, therefore, provisions ofsection 194J are applicable on payments made by Third

Party Administrators(TPAs) to hospitals etc. Further for

invoking provisions of section 194J, there is no stipulation

that the professional services have to be necessarilyrendered to the person who makes payment to hospital.

Therefore TPAs who are making payment on behalf of

insurance companies to hospitals for settlement of

medical/insurance claims, etc., under various schemes

including cashless schemes, are liable to deduct tax at

source under section 194J Circular No. 8/2009, dated

November 24, 2009.10/13/2010 63Tolani institute of management studies


64/97

WHEN AND HOW TO DEDUCT

TAX AT SOURCE FROM PAYMENT

OF COMPENSATION ONACQUISITION OF CERTAIN

IMMOVABLE PROPERTY

[SEC.194LA]



65/97

Who is the payer Any person paying

compensation/consideration enhanced

consideration on account of

compulsory acquisition of any land(not being rural agricultural land) or

building.

Who is the recipient A resident person

Payment covered Compensation/enhanced

compensation/consideration/

enhanced consideration on account of

compulsory acquisition of land (not

being rural agricultural land) orbuilding.


deducted at source

At the time of payment or at the time

of credit, whichever is earlier.10/13/2010 65Tolani institute of management studies


66/97

Maximum amount which can be

paid without tax deduction

If the amount of payment is

Rs.100000 or less than Rs.100000

during a financial year.

Rate of tax deduction at source 10% (no surcharge and education

cess, etc.)


applicable

Payment/credit before October 1,

2004.

Is it possible to get the payment

without tax deduction or withlower tax deduction


application in Form No.13 to theAssessing Officer to get a

certificate of lower tax deduction

or no tax deduction.



67/97

WHEN AND HOW TAX IS TO

BE DEDUCTED AT SOURCEFROM OTHER SUMS

[SEC.195]



68/97


69/97

Rate of tax deduction at

source

See appendix 1 (Pg 869)


applicable

If in the hands of the

recipients, the amount is not

chargeable to tax in India.


payment without tax

deduction or with lower taxdeduction


application to the Assessing

Officer to get a certificate oflower tax deduction or no

tax deduction.



70/97


71/97

No tax is deductible in respect of interest paid or

credited by an offshore banking unit on deposits

made(or borrowings given) after march 31, 2005 by aperson who is non-resident in India.

The person making the remittance to a non-resident is

required to furnish in digital mode an understanding

in form No. 15CA, he will have to obtain a certificate

from a chartered accountant in form no. 15CB. The

purpose of the undertaking and the certificate is to

effectively collect taxes(by way of TDS under section195) at the stage when the remittance is made, as it

may not be possible to recover the tax at a later stage

from the non-residents.



72/97

WHEN AND HOW TAX IS

DEDUCTIBLE FROM UNITS ORLONG-TERM CAPITAL GAIN

UNDER SECTION 196B



73/97

When any income is payable in respect of units

referred to in section 115AB or by way of long term

capital gain arising from the transfer of such units to

an Offshore fund, the person responsible for making

the payment shall, at the time of credit of suchincome to the account of the payee or at the time of

payment thereof in cash or by the issue of a cheque

or draft or by any other mode, whichever is earlier,deduct income-tax thereon at the rate of 10

percent.



74/97

When tax is deductible from income or long term

capital gain from foreign currency bonds / Globle

depository receipts (sec 196C)Who is the payer Any person responsible for paying

income/long term capital gain from

GDR/bonds

Who is the recipient A non-resident person

Payment covered Income /long term capital gain fromGDR/bonds


source


credit, whichever is earlier



-


When the provisions are not applicable Dividend referred to in sec 115O


tax deduction or with lower tax deduction

No provision


When tax is deductible at source from income of


75/97

When tax is deductible at source from income of

Foreign Institutional Investors from securities(sec 196D)Who is the payer Any person responsible for paying

income in respect of securities referredto in section 115AD

Who is the recipient Foreign Institutional Investors

payment covered income in respect of securities referred to

in sec 115AD


source





-


When the provisions are not applicable Dividend referred to in sec 115-O: capital

gain arising from transfer of securities

referred to in sec 115AD

Is it possible to get the payment without No provisions10/13/2010 75Tolani institute of management studies


76/97

Tax deducted-To be treated as income of deductee and

available for tax credit(sec 198&199)

Tax deducted at source is deemed as income of the deductee. Further, the sameamount is available as tax credit in the hands of deductee subject to the followingpropositions

1. Credit for tax deducted at source and paid to the Central Government, shall begiven to the deductee for the assessment year for which some income isassessable.

2.Where tax has been deducted at source and paid to the Central Governmentand the income is assessable over a number of years, credit for tax deducted atsource shall be allowed across those years in the same proportion in which theincome is assessable to tax.

3. If the income on which tax has been deducted is assessable in the hands of aperson other than the deductee, then tax credit will be given to such other personif-

(a) the deductee files a declaration with the deductor(b) the deductor shall keep the declaration in safe custody and reports the tax

deduction in the name of such other person in form nos..16A,26Q,etc.



77/97

Section (197)

Obtaining a certificate of lower rate

from the assessing officer



78/97

1) Tax deductible under section192,193,194a,194c,194d,194g,194h,194-I,194-j,194-k,194la or 195.

2) The recipient can apply Form No.13 to theassessing officer to get certificate authorizing

the payer to deduct tax at lower or deduct notax as may be appropriate.

3) The certificate of lower rate shall be issuedon plain paper directly to the person

responsible for paying income, under theadvice to the applicant.



79/97

Q) How lower rate is determined

Ans) On the basis of the higher of the following

rates

1)Average rate of current year

2)Average of the average rate of preceding 3

years



80/97

Provision of section 197AInterest on

Securities(sec.193)

Dividend

(Sec.194)

Interest other

than intereston securities

(Sec.194A)

National Saving

Scheme(sec.194EE)

Condition 1-Who

is recipient

Other than a

company or

firm

Resident

individual

Other than a

company or firm

Resident

individual

Condition 2-

What is tax on

total of income of

the previous year

Nil Nil Nil Nil

Condition 3- Howmuch is total of

income covered

by section

193,194A and

194EE

The amount ofexemption

limit

The amount ofexemption limit The amount ofexemption limit The amount ofexemption limit



81/97

Notes-

1) Non-tax is deductible. If a declaration issubmitted in duplicate in the prescribedform(form no.15H for a senior citizen and

Form no. 15G for any other person)2) Condition 3 is not applicable up to may

31,2002

3) From April 1, 2003, no tax is deductibleunder section 194 in respce of dividendreferred to in section 115-0.



82/97

Sec.206A

Furnishing of quarterly returns

regarding the details of non-

deduction of tax by certain persons



83/97

It has 2 sub-sections.

Subsection (1)1. The person who is otherwise responsible for

deducting tax at source is a) any bankingcompany b) A cooperative society c) a public

company2. It is responsible for paying to a resident interest

3. Such interest paid or payable during thefinancial year does not exceed Rs.10,000 where

the payer is banking company or co-operativesociety and Rs.5000 where payer is any otherperson.



84/97

Sub- section (2)

1) The payer is a person other than person who

is covered in sub-section (1).

2) Such a person is responsible for paying to a

resident any income which is liable for

deduction of tax at source under section 192to 194LA.



85/97

Sec.200A

Processing of statement of tax

deducted at source



86/97

The following adjustment can be made during

the computerized processing of statement oftax deducted at source:

a) Any arithmetical error in the statement; or

b) An incorrect claim, if such incorrect claim isapparent from any information in the

statement, for example, in respect of rate of

deduction of tax at source where such rate is

not in accordance with the provisions of the

act.



87/97

Sec.206C

Tax collection at source



88/97

1) Who is responsible to collect tax at source

2) Meaning of seller- Seller means the central

government or any local authority or corporation orauthority established by or under a central, state orprovisional Act, or any company or firm or co-operative society

3) Meaning of buyera) A public sector company, the central government, a

state government and an embassy, a High commissionlegation, commission, consulate and the traderepresentation of a foreign state and a club or

b) A buyer in the retail sale of such goods purchased byhim for personal use.



89/97

Q)When tax has to be collected at source

Ans) Tax has to be collected by the seller at the

time of debiting of the amount payable by the

buyer to the account of the buyer or at the

time of receipt of such amount from the buyer

in cash or by issue of cheque/draft or by anyother mode, whichever is earlier.


How to compute tax collected at


90/97

p

source

Nature of goods/nature ofcontract or license or lease

Percentage rate of tax collectionat source

Alcoholic liquor for human

consumption

1

Tendu leaves 5

Timber obtained under foreignlease

2.5

Timber obtained by any mode

other than under a forest lease

2.5

Any other forest produce (not

being timber or tendu leaves

2.5

Scrap 1

Parking lot, toll plaza, mining and

quarrying(other than mining and

quarrying of mineral oil,

petroleum and natural gas)

2



91/97

Notes:

1) Surcharge, education cess and secondary and highereducation cess

2) Meaning of Scrap- Scrap has been defined as waste andscrap from the manufacture or mechanical working ofmaterial which is definitely not usable as such because ofbreakage, cutting up wear and other reasons

a) Waste or scrap arising from packaging materials,newspaper, old machinery scrapped etc. which cannot besaid to arise from manufacture are not covered

b) BY-product generated from the manufacturing process arenot covered as the same could be used as such

3) Buyer exempt from tax- if the income of buyer is exemptfrom tax cannot be collected at source.



92/97

Percentages are applicable on

purchase price



93/97

Goods utilized for manufacturing/ processing

is not subject to tax collection

a) No tax will be collected at source (form

no.27)

b) The manufacture and sale of country liquor is

controlled and supervised by the state excise

authority and liquor is retailed in the same

commercial form as purchased originally.



94/97

Tax collection at lower rate

Deposit of tax



95/97

Issue of certificate- within a period of 1

month in which tax is collected, the person

collecting tax should issue a certificate of taxcollected in form no. 27D.

Quarterly returns to government

Quarterly return not possible before paymentof tax and interest



96/97

Quarterly TCS

Person collecting tax at source Annual TCS return

Company, central government or state

government or a person who is subject to

section 44AB report in the immediately

preceding financial year or in whose case

number of collectee in any quarterlystatement in the preceding financial year

is 50 or more

Computer readable media in form no

27EQ

Any other person Hard copy in form No. 27EQ or computer

readable media



97/97

Documents

Group-10 Ctp Presentation