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

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

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

Perquisites

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

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

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

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

Correct calculation of HRA exemption

Ex. Basic Pay Rs.20,000, DA Rs.10,000, HRA Rs.4,000, Others Rs.6,000I. 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

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

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

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

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

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

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)

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)

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)

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)

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)

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

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

T.D.S. on fees for Professional/Technical Services – Sec.194J

Meaning of Professional ServicesServices 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”

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

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

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