TDS

Forms for TDS,15G, 15H, and EPF Withdrawal Forms 19, 20, 10C, 10D, 51F

Forms for TDS,15G, 15H, and EPF Withdrawal Forms 19, 20, 10C, 10D, 51F

Form 15G and Form 15H – Avoid TDS

TDS stands for “Tax Deducted at Source.” On October 15, 2015, the Income Tax Department reported a new plan of action for Form 15G and Form 15H. This article will focus on the fundamental changes that happened in Form 15G and Form 15H.

What is Form 15G And Form 15H?

Form 15G and Form 15H forms are self-declaration forms that we have to submit to the bank. These are the requesting form for not deducting the TDS (Tax Deducted at Source) on interest income as their income is below the BEL (Basic Exemption Limit). These forms will be filled online by visiting the bank’s website.

Note-Bank would ask you for the PAN card during the form submission, either online or offline.

  • A UIN (Unique Identification Number) has been allotted to the person who will make the payment by Deductor.
  • TDS Quarterly statements were maintained by Deductors that whether or not any TDS will be deducted along with the UIN.
  • These Deductors do not require any hard copy of Form 15G and Form 15H for submission.
  • Deductors monitored form 15G and Form 15H for seven years from the financial year in which these are received.

Who can Submit Form 15H and 15G?

Form 15H is specifically for the person above or equals to age 60, and any age group can submit that of Form 15G.

Form 15G Form 15H
Residential with age less than 60 Resident with age greater than 60 (i.e., a senior citizen)
Tax is equaled to NIL Tax is equaled to NIL
Interest is less than BEL (which is 2.5 lakhs for the year 2021-22) NIL
Nonresident can’t claim the benefits of Form 15G and Form 15H NIL

When will We Have to Submit Form 15G & Form 15H?

These forms are valid for one financial year, so we have to submit this form every year. At the beginning of the financial year, these forms (Form 15G and Form 15H) have to be submitted. Submitting the form at the beginning of the financial year, the bank does not deduct any TDS (Tax Deducted at Source) on our interest.

The government has considered the pandemic situation and extended the dates for submitting Form 15G  and Form 15H from 01-04-2020 till the first week of July 2020.

Where Else can we Submit Form 15G and Form 15H?

We can submit:-

  1. TDS on EPF Withdrawal.
  2. TDS on Post Office
  3. TDS on rent
  4. LIC Premium
  5. TDS on Corporate Bonds
  6. TDS on Insurance Commission

EPF Withdrawal Form

We used the form to withdraw our EPF amount called EPF (Employee Pension/Provident Scheme) Withdrawal Form. We need to submit the paper for taking our EPF amount.

Documents Required: –

Aadhaar Card and PAN Card.

  • If you are unemployed for at least two months, you can withdraw your EPF amount. And if you get a new job within two months, you can transfer your PF account to the new account.
  • Suppose you are unable to get a new job after 36 months from leaving the company. In that case, you can apply for the settlement before 36 months because after a while, your interest will not be counted, and you gain zero interest on your EPF amount, and the account will be inoperative.
  • If an employee passes away in between the terms, then his or her family can claim the EPF amount.
  • You can take the claim of your EPF (Employee Pension Scheme) after retirement.

Before withdrawing the EPF, any individuals can make use of the EPF Balance SMS check option to check their EPF balance and withdraw the amount accordingly.

How to Withdraw EPF?

There are various ways to claim your EPF.

Form 19

By filling the Form 19, the employee can withdraw both EPF, employee, and employer contributions.

The employee can withdraw the lump-sum amount of his or her EPF; they can request settlement if they want.

For settlement of their respective EPF account, Form 19 has to fill by them. After that, they can withdraw all their funds from their EPF account.

This form consists of 2 pages that require your basic details:-

  1. Name
  2. Father’s Name/ Husband’s Name (for married woman)
  3. DOB
  4. Name of the organization
  5. Account Number & UAN
  6. Date of Joining
  7. Date of Leaving
  8. Reason for Leaving
  9. Postal Address (Same as given in Aadhaar)
  10. PAN Number
  11. Mode of Payment
  12. Signatures

There are some prerequisites for filling the Form 19:-

  • You need to visit the EPF member portal and activate your UAN.
  • Link all your essential documents with the UAN like, Aadhaar, PAN, Account, and Mobile Number.
  • If Form 19 is not displayed, you are not eligible for the final settlement of your PF Account.

However, if you are not eligible for Form 19, you can find Form 10C and Form 10D as well.

Form 10C and Form 10D

As we already see, Form 10C and Form 10D will be filled in the substitution of Form 19 Unavailability.  Both Form 10C and Form 10D have different functions.

  • If you are filing Form 10C, this is for pension withdrawal
  • And if you are filling Form 10D, then it is for monthly pension.

2.1 Form 10C

If you have worked with an organization for more than ten years, you will get a Scheme Certificate. This Scheme Certificate helps you to get the benefits of the Pension Fund withdrawal process through Form 10C.

Form 10C contains four pages that require basic details:-

  1. Name
  2. DOB
  3. Father’s Name or Husband’s Name (for married women).
  4. Name and Address of Your last Organization.
  5. Office establishment details
  6. Date of Joining
  7. Date for leaving
  8. Reason for leaving
  9. Accept Scheme Certificate instead of withdrawal benefits
  10. Details of Family –
    1. Name
    2. DOB
    3. Relationship with the member
    4. Name of the guardian (for minors)
    5. Details of the member and nominee

In case of death of the member after the age of 58 years

  1. Payment mode
  2. Whether you are applying to avail pension under EPS, 1995
  3. Signature (along with the organization’s seal)
  4. Advance Stamp Receipt – settlement receipt for pension in the savings account
  5. Employee Scheme Certificate

Age
EPS FORM Benefits
<50 <10 10C Withdrawal + Scheme Certificate
<50 >10 10C Scheme Certificate (No Withdrawal Benefit)
>50 & <58 >10 10C 10D Scheme Certificate or reduced Pension
>50 & <58 <10 10C Withdrawal and Scheme Certificate
>58 <10 10C Withdrawal
>58 >10 10D Pension

2.2 Form 10D

Employees have already been enrolled for EPS (Employee Pension Scheme). Form 10D is a pension withdrawal form after the age of 58. Form 10D is filling after retirement and has to submit in the office of EPFO. The employer can fill the document itself, but the only mode available for filling Form 10D is offline. In case of the death of the employer, the nominee will have to fill the form.

There are various type of pensions which can be claimed with the help of Form 10D:-

  • Superannuation Pension
  • Reduced Pension
  • Disablement Pension
  • Widow &Amp; Children Pension
  • Orphan Pension
  • Nominee Pension
  • Dependent Parent
  • Form 10D will be filled by the employer itself and has to verify with the last organization officer.
  • Documents required documents are enlisted on Form 10D.
  • The employer has to submit Form 10D to its regional office after that verification.
  • EPF officer cross-checks the documents and initiates the process.

Form 20

If the employee dies in between the terms, then Nominee or Beneficiary or Legal applicant can apply for the EPF. In this kind of accidental case, the final settlement can be done by filling the Form 20.

Under the EDLI Scheme and EPS Scheme (for the widow, orphan pension), the family member has the insurance covered up to 6 lakhs. Somebody can also claim Form 20 in place of a minor or a lunatic.

There is only one way you can fill Form 20, and that is OFFLINE.

Note (Documents)– A death certificate is mandatory while filling the form.

How to Fill the EPF Form 20?

Any family member can fill the form and submit it to the EPF Commissioner’s office with all the required documents.

The following information does require at the time of submission:-

  1. Name
  2. Father’s Name or Husband’s Name (for married women)
  3. Name and Address of the Organization
  4. EPF Account Number
  5. Date of Leaving
  6. Date of Death (dd/mm/yyyy)
  7. Marital status (on the day of his/her death)
  8. Canceled Cheque
  9. EPF Form 51 F
  10. EPF Form 10C
  11. EPF Form 5 ID
  12. Guardianship Certificate

(It consists of a total of 3 pages)

Form 51 F or Form 5 IF

Form 51 F is filled by the employee’s family member (legal) to claim the insurance after the deceased of the active employer.

The Particulars in respect of the deceased member

  1. Name of the Deceased member
  2. Father’s Name or Husband’s name (for married woman)
  3. Date of Death
  4. Name and Address of the last Organization
  5. Provident Fund Account No

Details of the Claimant/Guardian

  1. Name
  2. DOB
  3. Relation with the deceased
Age EPS EPF Form Claim Methods
<58 and working 10D 51 F Monthly pension by 10D and EDLI Insurance by 51 F
<58 and not working 10D Monthly pension by Form 10D
>58 and working >10 10D 51 F Monthly pension by 10D and EDLI Insurance by 51 F
>58 and working <10 10C 51 f Withdrawal by 10C and EDLI Insurance by 51F
>58 and not working >10 10D Pension by 10D
>58 and not working <10 10C Withdrawal

 

Forms for TDS,15G, 15H, and EPF Withdrawal Forms 19, 20, 10C, 10D, 51F Read More »

Understanding Form 26AS

Understanding Form 26AS | Objective, Parts, Format and How To Download?

Understanding Form 26AS: Annual Statement or in short, Form 26AS, is a record that includes all tax-related information such as TDS, Tax Refund, and more linked with PAN. Tax Credit Statement illustrates how much of tax government has received and merged from numerous sources like pension, interest, salary, and others. The new format of Form 26AS involves more details like the Aadhaar card, email ID, and address. It is one of the vital documents that one needs to submit while filing the income tax return. So before filing ITR, the taxpayer should check the Form 26AS adequately for a certain financial year as it acts as a record that accurate taxes are deposited into the government account. Readout below to know more about the purpose of Form 26AS, its structure, and how to download it online.

What is the Objective of Form 26AS?

Form 26AS is an annual statement issued under Section 203AA of the Income Tax Act. It gets updated when tax-related transactions like Advance Tax paid, TDS Deducted, or others are reported for the financial year. The tax credit statement serves as one of the crucial income tax documents as:

  • It captures information regarding taxes paid and other transactions conducted by the taxpayer.
  • It gives a record of the tax paid by an individual in the annual income tax return (ITR).
  • It provides proof concerning deduction and collection of tax on the behalf of the taxpayer.
  • It confirms that accurate tax has been deducted by multiple entities and deposited into the account of the government.
  • With Form 26AS, it is not essential to attach the TDS certificate photocopy along with ITR.

Parts of Form 26AS Structure

Annual Tax Statement or Form 26AS involves the following parts:

PART A- Details Regarding Tax Deducted at Source (TDS)

This section provides the information regarding the TDS deducted from pension income or salary and TDS deducted on interest income by banks. The deductions are shown as a distinct table. Entries in these tables follow reverse chronological order. It is vital to verify that all the entries match the entries in Form 16/16A along with the transaction date and booking status. If the entry in booking status is F signed then it means payment details of TCS/ TDS deposited in the bank have matched with the payment details provided in TCS/TDS statement filed. On the contrary, U entry in the status of booking shows details are unmatched.

The deductor refers to the entity that deducts tax on the behalf of the taxpayer while making the payment. If one has any query regarding entry in Part A, then they have to contact the deductor for clarification and required correction. Part A has further two sections namely Part A1 and Part A2.

PART A1- Details Regarding Tax Deducted at Source (TDS) for 15G/ 15H

This section demonstrates transactions in those financial institutions where one has submitted Form 15G/ 15H such as banks. As one has submitted 15G/ 15H, which means TDS would be zero. This part allows taxpayers to keep a track of all the interest gain that has not been taxed. If an individual has not submitted the 15G/ 15H form, then it will illustrate No Transactions Present as there is null entry in this section. One should contact the buyer or deductor if find any discrepancy to make essential corrections.

PART A2- TDS Details on Sale of Immovable Property

This section involves the details of TDS on the sale of immovable property under the Income Tax Act Section 194(IA). The details provided in this part are beneficial for the property seller as proof that the exact TDS has been deducted and deposited.

PART B- Details Regarding Tax Collected at Source

The seller collected the TCS from the buyer for certain categories. It involves scrap, Toll plaza, Parking Lot, and others. The rate of Tax Collected at Source is different for each category, and one has to submit it to the government. If the seller has not collected any tax, then this part will display No Transactions Present as there are no entries.

PART C- Details of Tax Paid

This section covers the paid Advance Tax or Self Assessment Tax. Whenever the taxpayer deposits their Advance Tax or Self Assessment Tax directly to the bank, the bank upload this information within three days once a cheque is cleared. For the Advance Tax, 0021 is used as individual major code and 100 as minor codes. 300 code is for Self Assessment Tax.

PART D- Details of Paid Refund

This section involves the details regarding any tax refunds received by an individual in that assessment year. If the taxpayer has not received any tax refund, then this part will display No Transactions Present due to null entries in this section.

PART E- Details of Transaction Regarding Annual Information Return 

When anyone makes some high-value transactions such as mutual funds or property investment, then banks report it to the income tax department and other authorities through AIR. Earlier the transaction limit to get reported in Form 26AS was 2 lakhs; however, after June 1, 2020, it has been increased to 10 lakhs.

PART F- Details of Tax Deducted on Sale of Immovable Property Under Income Tax Act 

This section offers a record of tax transactions for the property buyer. One has to contact NSDL or the concerned bank branch if find any discrepancy between the amount deposited and displayed in Form 26AS.

PART G- Details of Tax Defaults

This section displays the information about the tax defaults and processing of statements. It involves the details regarding the interest of TDS payments defaults, deduction default, financial year, interest under Section 220(2), and total default.

Latest Format of Form 26AS

  • Personal Details: The earlier format of Form 26AS involved only the address picked from the PAN Card. However, the new format shows information regarding data of birth, Aadhaar number, mobile number, email ID, and address of the individual.
  • Taxes and Proceedings Information: The Income Tax Department provides outstanding demand details. This type of information helps taxpayers determine whether the same demand is disputed or outstanding. Apart from it, ITD offers details of all income tax proceedings which have been completed and those which are pending. Such information is helpful for individuals to remain updated about the appeals.
  • Financial Transactions Details: The updated Form 26AS involves the details related to stated financial transactions. It covers selling and buying of shares, payment of credit card bills, real estate, cash deposits, pre-paid instruments by RBI, and more.

How to Download Annual Tax Statement (Form 26AS)?

One can download Form 26AS online on the TRACES website or through the net banking facility of official banks. Visit the income tax filing website and log in by entering ITD login and password. In case, if anyone does not have an account, then they have to register first.

  • Enter the User ID, password, the captcha code in the box provided, and then hit on Login.
  • Click on the ‘My Account’ section appearing on the right side and then tab the ‘View Form 26AS’ option in the dropdown.
  • Once clicked on the ‘Confirm’ option, it will redirect to the TRACES website.
  • Select the box appearing on the screen, which asks if an individual agrees to the usage and acceptance of Form 16/16A, and then hit on Proceed.
  • Click on the link hyperlinked as View Tax Credit to view Form 26AS.
  • Select the Assessment Year and the format to see the Form. One can choose the HTML format to see it online or PDF format for downloading. After that, enter the Verification Code in the below-given box and then tap on View/ Download.

Conclusion

Form 26AS contains a detailed report about the taxes deducted and deposited. One can open and download the form by entering the Date of Birth as a password in DDMMYYYY format. Only a registered PAN holder has the right to view their Form 26AS through their bank and income tax statement.

Understanding Form 26AS | Objective, Parts, Format and How To Download? Read More »

What Is Section 194D

What Is Section 194D? | TDS from Insurance Commission

Section 194D: According to Section 194D, any payment made as remuneration in the form of commission or for procuring insurance business which includes renewal, the revival of policies, or continuation of insurance business. TDS must be deducted while crediting the money to the payee’s account or while making payment in cash, draft, cheque, or any other modes.

The amount of TDS is deductible only when the payable amount or the amount paid or the aggregate amount of such income paid or credited exceeds ₹15,000 during the financial year.

  • Time And Limit of Deduction
  • Under Section 194D Threshold Limit And TDS Rate
  • Time And Limit of Deduction

    TDS is to be deducted whichever is earlier, which are as follows:

    • While the commission is credited to the payee’s account.
    • While the payment is made in the cheque, draft, cash, or other modes.

    There are different rates based on the type of payee. According to section 194D, the rates are as follows:

    • For individuals, tax is to be deducted at 5%
    • For domestic companies, tax is to be deducted at 10%.

    Under Section 194D Threshold Limit And TDS Rate

    Basis Before June 1, 2016 From June 1, 2016
    Threshold limit ₹20,000 ₹15,000
    When PAN is furnished 10% 5%
    When PAN is not furnished 20% 20%

     

    What Is Section 194D? | TDS from Insurance Commission Read More »

    TDS on Salary to Directors Under Section 194J (1) (ba)

    TDS on Salary to Directors Under Section 194J (1) (ba)

    What is Section 194J (1) (ba)?

    Section 194J now features a new provision 1(ba) that expands the gross TDS calculation to include every remuneration granted to a company’s directors.

    This provision came into effect on July 1, 2012. TDS At 10% is to be charged from any payment made to Directors of companies with the notice on July 1, 2012, as according to newly included clause 1(ba) in Section 194J. This provision is as described in the following:

    Section 194J(1)(ba) states explicitly that any remuneration, fees, or commission payable to a corporation’s director other than those eligible for deduction of taxes under Section 192, is subject to TDS.

    What are the Key Points of this Section’s Assessment?

    • This provision will extend solely to payments made by a corporation to its directors and therefore will not extend in any other situations.
    • This section does not pertain if the tax is deductible under Section 192, i.e., wage income. When there is an employer-employee link, such remuneration falls under Section 192. For example, executive directors are given remuneration and are not legally entitled to any other expenses such as sitting fees, etc.
    • If a director is a non-resident director, TDS should be collected following Section 192 if it is deductible under the category salaries; alternatively, TDS must be charged under Section 195.

    What are the Different Types of Payments Covered by this Section?

    This section 194J(1)(ba) includes the following categories:

    • Fees for attending meetings
    • Remuneration
    • Commission
    • Brokerage
    • Sitting Fee

    What is a Sitting Fee?

    Sitting fees are the charges levied to directors for having attended board meetings or committee meetings, as the occasion may be suitable.

    What is the TDS Rate?

    TDS Rate on Salary to directors is levied at 10percent of the total amount.

    What Exactly is the Threshold Limit for this Clause?

    There is no possible option of a threshold limit. Since there’s no threshold limit, the tax must always be collected even when the total payment for the year is as meager as Rs 100.

    For Greater Comprehension, Consider The Following Example

    XYZ Ltd. paid Rs. 40,000/- per month to Mr. A, the company’s executive director, and Rs. 20,000/- each year for sitting fees. Given Mr. A is an executive director of the firm, no TDS is deemed necessary to be collected from his monthly compensation payment.

    Consequently, TDS of Rs.2,000/- would be deducted under Section 194J for the director’s sitting costs.

    TDS on Salary to Directors Under Section 194J (1) (ba) Read More »

    TDS on Sale of Immovable Property, Section 194-IA, Form 26QB 

    TDS On Sale Of Property: Tax Deducted at Source (TDS) is the tax that is to be deducted on some expenses and payments. It is the tax that is deposited with the government annually and systematically. Immovable property is any land (other than agricultural land) or any building or part of a building. Read on the article to find more about How TO Claim TDS On Sale Of Property

    Meaning of Agricultural Land

    The land is not treated as agricultural land when:

    • It has a population of less than 10,000 within the jurisdiction of the Municipality or
    • It is situated in any area within below given distance measured:
    The population of the Municipality Distance from Municipal limit
    More than 10,000 but does not exceed 1,00,000 Within 2 km
    More than 1,00,000 but does not exceed 10,00,000 Within 6 km
    Exceeding 10,00,000 Within 8 km

    How to Pay TDS and File Form 26QB_

    TDS Rate On Sale Of Property Applicability

    On the 1st of June 2013, the Finance Act 2013 inserted the Section194-IA. An individual purchasing any immovable property (except agricultural land) from a resident is required to pay TDS on sale of property @ 1% of the amount payable. This means that the TDS rate for the sale of immovable property is deducted at 1%.TDS is exempted when the property value is below Rs.50 Lakhs. In addition to this, TDS is required to be deducted from every immovable property like commercial property, industrial property, and residential property.

    Exceptions

    • Section 194-LA regarding compulsory acquisition is applicable when provisions of this section are not.
    • TDS is to be deducted under Section 195 based on capital gains if the seller is a non-resident or NRI and not under this section.
    • TDS is deducted on installments paid on or after 1st June 2013 for construction buildings properties and no TDS is deducted on installments paid before 1st June 2013.

    Rate of TDS

    TDS on sale of a property is deducted @1% on the amount payable to the seller of the property. TDS is deducted @20% if the PAN number of the seller is not available.

    Threshold Limit

    No TDS on sale of a property is deducted when the value of the property is below Rs.50 Lakhs. When the value of a property is Rs.50 Lakhs or more then the TDS is deducted on the whole amount and not just the exceeding amount. TDS On Sale Of Property reduced.

    Time of Deduction

    Tax is to be deducted at the time of the credit of such sum to the account of the transferor or at the time of payment of such sum in cash or issued cheque or draft or by any other mode whichever comes first.

    TDS on sale of a property is to be deducted from the first installment if the value of the property is more than Rs.50 Lakhs and then each and every installment. The buyer should not wait for the aggregate value of installments to exceed Rs.50 Lakhs as it is not right. If the buyer took a loan to pay the seller, it is still considered as tds on sale of property payment and TDS is to be deducted. The EMI payment date of the buyer to the bank is irrelevant.

    TDS On Sale Of Property Due Date and Form 26QB

    The buyer of the property has to file Form 26QB which is a declaration statement within 30days from the end of the month in which the payment has to be made. A separate TDS deduction is not to be filed. Form 26QB is filled online and manual submission is not allowed.

    Other Points

    • TDS on sale of a property is to be deducted on each installment and for each deduction a separate Form 26QB is to be filled.
    • Form 26QB is filled for one seller and one buyer combination.
    • Tax Deduction and Collection Account Number (TDCAN) is not required by a person deducting tax under this TDS On Sale Of Property section.

    How to Pay TDS and File Form 26QB?

    Form 26QB is a declaration statement and hence, it’s not possible to pay TDS without filling this form and vice versa.

    These are the steps on how to fill the Form 26QB;

    1. Search for the link –  https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
    2. Now click on Form 26QB and if you have a demand notice from the income tax department then click on it for TDS on property.

    e-Payment of Taxes

    Sections of TDS and File Form 26QB

    Here, the form will have various sections as follows:

    • Tax Applicable: If the buyer is a company select corporate tax if not then income tax.
    • Type of Payment: TDS on sale of the property will be selected by default.
    • Status of seller: Option resident is to be selected here and in case the seller is an NRI, form 27Q is to be filled.
    • Pan and Address: The PAN and address of the buyer and seller is to be entered along with the complete address of the transferred property.
    • Amount Paid: The total amount paid to the seller is entered in the form. If the payment is made in installments, the amount of installments is entered in Form 26QB.
    • TDS @1% will automatically be filled on the amount paid based on PAN the number entered above.
    • If the payment is to be made by internet banking or debit cards, select the e-tax  Option. Select the following date for payment using authorized bank branches.
    • Enter the confirmation code and then proceed by clicking on the proceed button.
    • The name of the purchase and seller will be shown on the next page along with all the details shown on the previous screen. Cross-check all the information and then click on confirm.
    • In case any changes are to be made in the challan filed, an acknowledgment number will be generated. You will be redirected to the internet banking site if you immediately select the e-tax option or else a challan will be generated which can be deposited in any authorized bank.
    • When the TDS will be deducted then only the return can be considered as submitted.

    TDS Certificate in Form 16B is to be Seller

    Now, within 15 days from filing Form 26QB, the TDS certificate in Form 16B is to be provided to the seller by the buyer. The form is to be downloaded from the website of traces.

    Consequences of Non-Payment and Non-Filing of Form 26QB

    • Interest for TDS not deducted: Interest @1% is charged per month for the period from the date on which TDS is deductible to the date on which TDS is collected. Interest on Late Payment of TDS on Sale of Property.
    • Interest for TDS deducted but not paid: Interest @1% is charged per month for the period from the date on which TDS is collected to the date on which TDS is paid.
    • Penalty for late filing of Form 26QB: Penalty for late filing of Form 26QB is payable @Rs.200 along with the interest penalty. The penalty amount cannot exceed the number of TDS to be deducted. Under Section 271-H, an additional penalty of Rs.10,000 to Rs.1,00,000 is to be paid if the default continues for more than one year.

    TDS on Sale of Immovable Property, Section 194-IA, Form 26QB  Read More »

    How to Download & Install TRACES Web Socket Emsigner

    How to Download & Install TRACES Web Socket Emsigner

    How to Download & Install TRACES Web Socket Emsigner: TRACES is the online platform offered for the administration and implementation of TDS and TCS. For Registering DSC on TRACES or for the KYC validation using the DSC, it is compulsory to download and install the WebSocket emSigner. Thus, the deductor should download the WebSigner Utility from their account on TRACES.

    What is TRACES Website?

    TDS Reconciliation Analysis and Correction Enabling System, abbreviated for TRACES, is an online platform offered by the Indian Income Tax Department at the website – www.tdscpc.gov.in. The TDS return processing takes place online with a dashboard, and the status of filings and tremendous demand is shown therein. TRACES Emsigner – Download & Install

    How to Download and Install Emsigner

    The steps to download and install designer for digital signing on TRACES portal.

    Step-1: Login to TRACES WEBSITE

    Step-2: Fill in the User ID, the Password and the TAN number of the deductor.

    Step-3: Go to the download tab, click on ‘Requested Download’. After that, the following screen appears. Select ‘Click here for downloading the utility.

    Webdesigner Of TRACES Setup V2.0

    Step-4: Click on the ‘Traces WebSigner Setup V2.0’ for downloading the Emsigner setup.

    Step-5: Click on the ‘Run’ option. After the completion of the installation process, please click the ‘Finish’ option.

    Installation Guide for TRACES EmSigner

    Step-6: Complete the process of installation. Make sure that the following process is completed.

    • Download the WebSigner Setup on the local system
    • Please make sure to install the JRE 7 or above (version 32-bit only) on the machine
    • Make sure to Unzip the file that you have downloaded.
    • Click on the setup file and select the “Install” option in order to start the process of installation.
    • Finish the process step by step by clicking the ‘Next button
    • Click on Finish
    • Go to the start menu and click on emSigner to start the service

    Error in Establishing a Connection with the TRACES Web-socket Designer

    The above is going to be resolved if the TRACES EmSigner has been loaded. Before the digital signature, click on the option “Run as administrator” in the start-up panel of windows.

    Step-7: After that, one can choose to register their DSC on the TRACES Portal. After Logging in to Traces and Click on the ‘Profile’ Tab and the ‘Signature’ Tab. Choose the DSC certificate and enter the DSC password.

     

    How to Download & Install TRACES Web Socket Emsigner Read More »

    TDS on Transportation Charges

    TDS on Transportation Charges | Points Regarding TDS Under Section 194C

    TDS on Transportation Charges: Confusion regarding the application of Section 194C has been observed amongst people. Section 194C focuses on TDS on the contract during payment to the transporter. This might result from various amendments through the years related to the specific points 194C(6) and 194C(7). The summarization of the details of Section 194C is discussed below.

    Points Regarding TDS Under Section 194C

    • This revised sub-section is applicable with effect from April 1st, 2015.
    • The transporter for the sub-sections mentioned is the person handling plying, hiring, or leasing assets carriages.
    • The advantage of non-deduction of tax is available only for small transportation operators owning less than ten goods carriages.

    Therefore, if the transporter having not more than ten goods carriages through the year, provides his PAN and the declaration, then, being a payer, they don’t have to deduct his TDS.

    But suppose the transporter was owning more than ten goods carriages at any time during the year. Then, as payers, they must deduct TDS during payment of charges to goods transporter at the price of 1% or 2% depending on the case and status of the transport contractor.

    Note: The TDS rate of 1% and 2% will decrease to 0.75% and 1.50%, respectively, through the period from the month of May 14th, 2020, to the month of March 31st, 2021.

    • The person accountable for paying or charging any amount to such transporters shall furnish a declaration along with their PAN to the income tax authority.

    Under Section 194C, the specified persons must deduct income tax:

    • Central/State Government employee
    • Co-operative society/Statutory corporation
    • Housing/Town development authority
    • Registered society
    • Trust/Local authority
    • University
    • Foreign Government/Enterprise/Association
    • Individual/Association of persons gross receipts Rs. 1 crore during the preceding financial year.

    Is TDS applicable on transportation charges?

    What is TDS on Transportation (Freight)? According to Section 194C, any payment made to a transporter is subject to TDS deduction on freight charges. The payer must reduce the income tax amount before transferring the fee.

    What is the TDS on transportation?

    Section 194C of Income Tax Act is amended to include TDS deduction of 1 % for individuals and Hindu Undivided Families owning more than 10 goods carriage, and at the rate of 2% in case of other payees.

    What is the TDS limit for transporter?

    TDS on transporter

    C:\Users\OBUL\Desktop\What is the TDS limit for transporter.png

    Is transporter in TDS return?

    As per Income tax act 194C, TDS is not required to be deducted on payments made to transporter If PAN number has been provided to the deductor. To incorporate nil rate transporter entries in E-TDS return by inserting a tag “T” in remarks in 26Q.

    Is TDS applicable on vehicle insurance?

    Most times people choose their insurance via agents, brokers, etc. In such cases, the insurance commission or any other remuneration/reward received by such agents, brokers etc., are subjected to Tax Deducted at Source (TDS) as dictated under Section 194D of the Income Tax Act.

    TDS on Transportation Charges | Points Regarding TDS Under Section 194C Read More »

    TDS Practical Guide with Examples

    Tax Deducted Source (TDS) | Practical Guide with Examples

    TDS: TDS stands for Tax Deducted Source. In the TDS system, individuals responsible for making payment for specified services such as brokerage, professional consultancy, commission, etc., are required to subtract a fixed percentage from the amount.

    About TDS

    The like deducted amount (which is called TDS) have to be deposited to the government by the deductor (person who is deducting tax) on behalf of the deductee (person who is providing services), which deductee can claim as Income Tax Paid at the time of filing his Income Tax Return.

    • For example, ABC Pvt Ltd has to pay Rs 1,00,000 to Mr XYZ for a professional fee. TDS rate specified on the professional cost is 10%. The TDS needed to be deducted 10% on Rs 1,00,000, which equals Rs 10,000, and the Net payment to Mr XYZ is TDS Deducted from the Gross Amount that equals Rs 1,00,000 – Rs 10,000 and gives Rs 90,000. So, the TDS to be deposited to the Government by ABC Pvt Ltd is Rs 10,000.

    TDS can also be deducted from salary. The calculation of tax subtractable is different in the case of wages since TDS is not deductible as a fixed percentage but according to a specific method under section 192.

    Persons Who Are Required to Deduct TDS

    The government has notified the persons mentioned below, who are required to subtract TDS for the services specified:

    1. An Individual and HUF is needed to deduct TDS on the selected services if they are involved in:
    2. Any business having a turnover of Rs 1 crore or above during the last financial year.
    3. A professional with receipts of Rs 50 lakh or above during the previous financial year must get books of account audited under section 44AB.

    Exception

    1. If a person is required to get his books of account audited due to reporting the net profit, which is lower than 8% of the business’s turnover (according to Section 44 AD). According to Section 44ADA, 50% of the gross receipt in professional services; is not required to subtract TDS.
    2. Other persons apart from Individual and HUF include Private Limited Company, Partnership Firm, Co-operative Society, LLP, etc.

    Exception for Individual and HUF

    The cases below are also required to deduct TDS:

    1. In the case of the Purchase of immovable property where the consideration paid for the property is more than Rs 50 Lakh (as per Section 194IA).
    2. The rent paid for building exceeding or land exceeds Rs 50,000 per month (according to Section 194IB). Only those Individuals or HUF are covered, which are not required to deduct TDS as per the point mentioned above (as per section 194IB). If an individual is covered as per point (a), they must deduct TDS under section 194I and not section 194IB.
    • The only two cases in which a non-business is also required to deduct TDS are mentioned above.

    What is TAN? Its Requirement and Exception

    The Tax Deduction and Collection Account Number (TAN) is a unique ten-digit alphanumeric number allotted to the deductor or collector of TDS. It is furnished to identify every deductor.

    Each individual who is required to deduct TDS should apply for TAN. TAN is needed to be quoted on all TDS payment challans, TDS certificates & TDS returns. You can use Form 49B in any NSDL office, or you can also apply online for TAN from the NSDL website.

    Penalty – The penalty of Rs. 10,000 on failing to apply for TAN or quoting TAN in payment challans, TDS return and TDS certificates.

    The Time Limit to get a TAN

    No specified time limit is given for getting TAN. However, you should apply for TAN when you become liable to deduct the TDS of any person since TDS payment and return filing cannot be accomplished without TAN.

    Notes

    • A separate TAN is not required to obtain TCS.
    • If you have made any payment above the threshold limit and TDS is required to be deducted, you must apply for the TAN. For example, if you certify as a Private Limited Company and do not make any payment on which TDS is required to be deducted, there is no need for a TAN.

    Exception

    TAN is not required if TDS is deducted for Purchase of Immovable property (Section 194IA) or rent paid (Section – 194IB). Deductor has to use their PAN for the TDS payment and for filing returns.

    Tax Deducted at Source

    When to Deduct TDS?

    The time of deducting TDS depends on the nature of the payment. TDS is required to be removed at the time of actual payment only, not on a due or accrual basis in the following cases:

    1. Salary
    2. The Payment of the assembled balance of the Employee’s Provident Fund.
    3. Victory from lottery or crosswords puzzle.
    4. Win from horse races.
    5. The Payment in respect of life insurance policy to the policyholder.
    6. The Payment for deposits under the National Saving Scheme.
    7. The Payment on account of repurchase of units by Mutual Funds or Unit Trusts of India.
    8. The Payment of compensation on compulsory acquisition of specified immovable property.

    During the time of credit of such income to the payee’s account or at the time of actual payment, whichever is earlier in case of all other payments (such as commission, profession fee, consultancy etc.) except the payments mentioned in the above point.

    Note: TDS must be deducted from the beginning if it is likely that the total amount will exceed the threshold limit during the financial year.

    For example: if you have a professional service contract amounting to Rs 2,00,000 and the first payment is due in April, adding up to Rs 13,000. If so, TDS is required to be deducted at 10%, as it is likely that the total amount will exceed the threshold limit.

    The Threshold Limits and Nature of Payments

    The points below summarize the nature of the transaction where TDS is required to be subtracted if the amount exceeds the threshold limit, together with the applicable rates of TDS for payments commonly used.

    TDS Amount Calculation

    TDS needs to be subtracted from the total amount if such amount exceeds the threshold limit specified for that particular nature of transactions.

    Few examples which will help in understanding the calculation of TDS

    Example 1 – Service provided by an individual contractor ‘A’ to a partnership firm ‘B’. The contractor during the year is being paid as per the payment that follows.

    Payment 1 is Rs 32,000

    Payment 2 is Rs 24,000

    Payment 3 is 60,000.

    Solution:

    When Payment 1 is Rs 32,000: the TDS is required to be deducted at 1% as the sum exceeds the threshold limit of Rs 30,000 in a single payment. After deduction, the net payment to ‘A’ will be Rs 31,680, with a TDS of Rs 320 (32000 * 1%).

    If Payment 2 being Rs 24,000: no TDS is required to be deducted as the single payment is less than Rs 30,000, and the total payment made during the year will be Rs 56,000 (32,000 + 24,000), which is also less than the threshold limit of RS 75,000.

    If Payment 3 is 60,000: the TDS should be deducted at 1% on the gross amount as the total payment in the year surpasses Rs 75,000.

    The total TDS required to be deducted is Rs 840 (24,000 * 1% + 60,000 * 1%) at the time of making payment of Rs 60,000. Net payment is to be made to ‘A’, which is Rs 59,160.

    Example 2 – If contractor A is a Partnership Firm in place of the individual.

    Solution:

    If Payment 1 is Rs 32,000, then TDS is required to be deducted at 3% as the sum exceeds the threshold limit of Rs 30,000 in a single payment. The net payment that needs to be paid to ‘A’ is Rs 31,360, after deduction of TDS of Rs 640.

    If payment 2 is Rs 24,000: No TDS is required to be deducted as the single payment is less than Rs 30,000, and the total payment made during the year will be Rs 56,000 (32,000 + 24,000), which is also less than the threshold limit of RS 75,000.

    If payment 3 is 60,000: the TDS at the rate of 2% must be deducted from the total amount as the annual payment in the year exceeds Rs 75,000.

    The total TDS required to be deducted is Rs 1680 when making a payment of Rs 60,000. The net revenue to be made to ‘A’ will be Rs 58,320.

    Payment And Return Filing

    Persons deducting TDS must deposit the TDS amount to the government and file quarterly returns with the TDS details removed.

    TDS Deposit

    The TDS deducted in salary or non-salary must be deposited within seven days from the end of the month in which TDS is deducted. However, TDS deducted in March is required to be deposited on or before 30 April.

    The due date for deducting TDS under sections 194IA & 194IB – 30 days from the end of the month in which TDS is deducted.

    Notes:

    TDS is required to be deposited using challan or form:

    (Section 194IA) TDS on Purchase of property of Form 26QB

    (Section 194IB) TDS on rent of the property of Form 26QC

    Challan No./ITNS 281 for other TDS payments.

    • TDS can be deposited in any Authorized bank or online.
    • E-payment is compulsory for companies, and a person must get his books of account audited under section 44AB.
    • A separate challan needs to be entrusted for each nature of payment for which TDS is subtracted.

    For example, you must deposit two forms for each section if TDS is deducted on the contractor fee and a professional fee.

    TDS Return

    A quarterly TDS return is required to be filed by the deductor. For filing return as different return forms are specified below:

    • In the case of Form 24Q for salary, the deductee can be a resident or non-resident.
    • In the case of Form 26Q, apart from salary, the deductee should be a resident.
    • In the case of Form 27Q, apart from salary, the deductee can be a non-resident, not an Ordinary Resident, or a Foreign Company.
    • In the case of Form 26QB for immovable property, the deductee should be a resident.
    • In the case of Form 26QC for Payment of Rent, the deductee should be a resident.

    For the following Quarters; the due date for Form 24Q or 26Q are:

    • Apr to Jun: 31 July
    • July to Sep: 31 October
    • Oct to Dec: 31 January
    • Jan to Mar: 31 May

    For the following Quarter; the due date for Form 27Q is:

    • Apr to Jun: 15 July
    • July to Sept: 15 October
    • Oct to Dec: 15 January
    • Jan to Mar: 15 May

    Form 26QB and 26QC: It is a challan cum TDS statement that is needed to be filed under 30 days from the end of the month in which TDS needs to be deducted.

    TDS - Tax Deducted at Source

    TDS Certificate

    TDS Certificate shows the amount of tax that the deductor has deposited. Deductor is required to issue a TDS certificate to the deductee within the specified time limit given in the below table. Such certificates have to be generated online using TRACES websites only. Deductor is required to deposit tax and file TDS returns to the government before requesting a certificate from TRACES.

    Nowadays, individuals can quickly check the tax deposited via 26AS, so the importance of such a certificate has been reduced. However, it is better to collect the certificate from the deductor to make sure TDS has been deposited along with the correct reporting of the Deductee PAN.

    The Nature of Payment and Due Dates

    • Form 16 for TDS on Salary: to be paid on or before 31 May of the financial year.
    • Form 16A apart from Salary: Within 15 days from the due date of furnishing TDS return.
    • Form 16B for Purchase of Immovable Property: Within 15 days of turning return cum challan (Form 26QB).
    • Form 16C for TDS on rent: Within 15 days of turning return cum challan (Form 26QC).

    Provisions for Penalty

    Under TDS, various penalties are applicable on the deductor, such as:

    Interest on late payment of TDS to Government

    Interest is chargeable on short payment/late payment of TDS. There can be the following scenarios:

    • When TDS is not deducted: The interest rate of 1% every month or part thereof for the period starting from when TDS is deductible or collectible until TDS or TCS is deducted/collected.
    • If TDS is deducted, but payment is made late: The interest rate of 1.5% monthly or part thereof starts when TDS is deducted or collected until TDS /TCS is paid.

    The calendar month is considered in calculating interest; therefore, you have to pay interest for two months if you delay the payment by one day. For example, if TDS is deducted in July and deposited on 8 August, you must pay interest for two months, i.e., July and August. The total interest payable will be 3%.

    Penalty on the wrong/late filing of TDS return:

    • Rs 200 per day as a Late filing fee (section 234E).
    • The penalty of Rs. 200 per day is payable for any delay in furnishing the TDS statement.
    • The total late filing fees should not surpass the total amount of TDS reported in return.
    • A Penalty ranging Rs 10,000 to Rs 1,00,000 (section 271H).
    • Delay in filing TDS statement for more than a year from the due date of filing such TDS return.
    • If a TDS statement is not filed within a year from the due date of furnishing of TDS return, a minimum penalty of Rs 10,000 to Rs 1,00,000) can be levied. The liability under this section will be in addition to the late filing fee under section 234E.
    • Incorrect furnishing details in the statement filed like PAN, Challan and TDS Amount, etc. – Section 271H also covers filing faulty TDS/TCS return cases. Similarly, a minimum penalty of Rs 10,000 (which can go up to Rs 1,00,0000) can be levied.

    Penalty on late issuing of TDS Certificate: A penalty of Rs 100 per day shall be payable for any delay in issuing the TDS certificate. The total late issuing fees should not exceed the total amount of TDS reported in return.

    Utility to Check the Amount Deducted and Credited to Deductee’s Account

    You can quickly check the number of TDS that has been deducted from your receipts/incomes online.

    • Step 1: Go to income tax India e-filing.
    • Step 2: Then, for the income tax account, Log in or register.
    • Step 3: Select the option ‘View Form 26AS’ (Tax Credit) available under My Account.
    • Step 4: You will automatically be redirected to the TRACES website, where you are required to select the Assessment Year for which you want to check the TDS amount.

    Details of Form 26AS

    • Tax deducted at source
    • The tax collected at the source
    • Advance or Self-assessment tax deposited by the assessee
    • Income tax refund issued by IT Department
    • Annual Information Return (AIR) of high-value transaction

    Request for Non-Deduction or Lower Deduction

    You can request the tax deductors not to deduct tax if your income stands below the basic exemption limit. The two ways of doing this are: –

    Filing Form 15G/15H

    • A resident individual or HUF can file a declaration in Form 15G/15H for non-deduction of TDS. In this declaration, the deductee declares that his income is below the basic exemption limit at a particular financial year; no TDS should be deducted.
    • The deductee is required to file this declaration for each financial year.

    Note: Form 15G applies to an individual, and Form 15H applies to senior citizens.

    Application in Form 13 to Assessing Officer

    Anyone can apply for a certificate for non-deduction or lower deduction to his assessing officer. If satisfied, a certificate to the deductee will be issued by the Assessing Officer.

    Applying for a Refund

    The only refund, i.e., Income Tax Refund, is an excess of tax already paid by TDS, TCS, advance tax or self-assessment tax less tax on your total income. You can get an additional tax refund only after filing your income tax return for that particular year.

    In other words, there are no other methods to get a refund other than by filing an Income Tax Return.

    Tax Deducted Source (TDS) | Practical Guide with Examples Read More »

    TDS on DIvidend on Section 194

    TDS On Dividend Section 194 | Exemption Limit, TDS Rate

    TDS on Dividend Section 194: Deducting tax at source is required of the principal officer of an Indian company or a corporation that has made the requisite arrangements for the declaration and payment of any dividend (including dividends on preference shares) to a shareholder who is a resident of India. On this page, let’s learn everything about TDS on Dividend Section 194k in detail.

    TDS On Dividend Threshold Limit

    If the dividend is paid by any method other than cash, there is no deduction up to Rs. 5000. So the dividend threshold limit on TDS is Rs. 5000/-

    When TDS Under Section 194 Is Deducted?

    Tax is deducted at the time of crediting the money to the payee’s account or at the time of payment, whichever comes first. This means before making a dividend payment, any TDS applicable must be deducted.

    When TDS on Dividend Is Not Applicable?

    TDS is not required to be deducted if the following conditions are met:

    • Form 15G or 15H is used to declare dividends covered by section 115-O.
    • The amount of dividend paid or projected to be paid to a shareholder in a financial year does not exceed Rs. 2,500, and it is paid by account payee cheque.
    • Any dividend due to LIC, GIC, or any of their subsidiaries or any other insurer in respect of shares in which they possess or have a full beneficial stake.

    TDS Rate on Dividend Section 194

    The tax will be deducted at a rate of 10%. (7.5 percent w.e.f. 14.05.2020 to 31.03.2021). TDS will be deducted at a rate of 20% if the income recipient does not provide his PAN to the deductor.

    Details TDS Rate
    PAN Card Provided 10%
    No PAN Card Provided 20%

    Also, under Section 197, an assessee might request no TDS or a lower rate of TDS from the assessing officer.

    TDS on Dividend for Resident Shareholders

    • If the dividend amount exceeds INR 5,000, the tax rate is 10% (now decreased to 7.5%)
    • In the absence of a PAN, the tax rate is 20%.
    • If Form 15G/15H is submitted, there is no TDS.
    • TDS is not required for certain insurance companies/mutual funds and AIFs.

    TDS on Dividend for Non-Resident Shareholders

    • TDS Rate: 20% plus applicable surcharges and cess, or DTAA rates, whichever is more beneficial.
    • Surcharges are limited to a maximum of 15%.
    • TRC must be secured with a statement of PPT, beneficial ownership, and the absence of PE/POEM in India.

    Note: The above pointers are applicable only for non-resident shareholders other than FPI.

    TDS on Dividend for FPI

    The TDS rate for FPI’s is 20% along with applicable surcharges and cess.

    Compliance Requirements Under TDS Dividends

    • In the event of any payments to non-residents, filing TDS returns and issuing TDS certificates (Form 15CA) is required.
    • If a payment to a non-resident exceeds INR 5 lakhs, a CA certificate on Form 15CB is required.

    FAQ’s on TDS on Dividend Section 194

    Question 1.
    Is TDS is applicable to dividends?

    Answer:
    Yes, due to the elimination of the Dividend Distribution Tax (DDT), dividend income becomes taxable in the hands of investors, and tax deduction at source (TDS) becomes applicable on dividend payout under Section 194 of the Income Tax Act.

    Question 2.
    How can I claim TDS on dividends?

    Answer:
    Yes, the deductee can claim credit for the tax deducted on Form 16A when submitting an income tax return.

    Question 3.
    How can I claim TDS exemption in dividends every financial year?

    Answer:
    Form 15G can be submitted to the corporation or mutual fund paying the dividend by a domestic individual whose projected annual income is below the exemption limit to claim the TDS.

    TDS On Dividend Section 194 | Exemption Limit, TDS Rate Read More »

    TDS Payment And Interest On Late Payment

    TDS Payment And Interest On Late Payment | Due Dates, Late Filing Fees

    TDS Payment And Interest On Late Payment: An employer’s TDS compliance requirements do not end with the deduction of taxes from salary. It is important for an employer will have to file quarterly TDS returns for tax deducted from pay. TDS Returns are quarterly statements provided by deductors to the Income Tax (IT) department. It keeps track of all TDS-related transactions over the course of a quarter.

    The filing of TDS returns is not as simple as it appears. The IRS may issue a notice if there is any omission or misstatement of information. In this article, let’s understand how TDS payment is made and what is the interest attracted for late paying of TDS.

    TDS Return Filing Due Date for FY 2020-21

    The TDS payment due date for March 2021 has been extended due to the spread of the COVID-19 situation in the country. The extended TDS return due dates are tabulated below:

    Month of Deduction Quarter Ending The due date for all deductors to pay TDS via challan(including govt. deductors) Due Date for filing of Return for the financial year 2020-21 for all the deductors
    April 30th June 7th May 31st March 2021
    May 7th June
    June 7th July
    July 30th September 7th August 31st March 2021
    August 7th September
    September 7th October
    October 31st December 7th November 31st Jan 2021
    November 7th December
    December 7th Jan
    January 31st March 7th Feb 31st May 2021
    February 7th March
    March 7th April (for govt. deductors)
    30th April (for other deductors)

    How To Pay TDS Online?

    Follow the steps as listed below to pay TDS through the e-tax payment system:

    • Step 1: Visit the official website of ePayment for TIN – Click Here
    • Step 2: Move to the section “TDS/TCS” and click on “Proceed“.

    tin website for tds payment

    • Step 3: A new page will open. Now enter all the details such as Tax Applicable (Tax Deducted/Collected At Source From), Payment Type, Mode of Payment, Tax Deduction Account No, Address and other details.
    • Step 4: A confirmation page would appear when the data is submitted. Now the taxpayer should validate the information given in the challan.
    • Step 5: Once the information is validated by the taxpayer, the page will be redirected to the bank’s net-banking page, where the payment will be made, as specified in the challan.
    • Step 6: Now the taxpayer will have to visit his/her bank’s net-banking page using the user-id and password provided by the bank to make the TDS payment.
    • Step 7: A challan counterfoil including the Challan Identification Number (CIN), payment details, and the bank name via which the e-payment was made would be provided after a successful TDS Payment. The counterfoil will act as evidence for the TDS payment made.
    • Step 8: After a week of making the TDS payment using the CIN produced, you can check the status of the challan via the NSDL-TIN website’s “Challan Status Inquiry.”

    Late Fees for TDS Return

    One will be fined Rs 200 each day (two hundred) till your TDS return is filed under Section 234E as TDS late payment fee. That is one will have to pay this fine for each day you are late until the fine equals the amount you are required to pay as TDS.

    TDS Late Fee Payment Online Example:

    If your payable TDS amount is Rs 5000 on May 13th, and you file your Q1 return on November 17th instead of July 31st. Counting to the 17th of November, the delay is 105 days.

    So Rs 200 x 105 days = Rs 21,000;

    But while this is larger than Rs 5000, you will only have to pay Rs 5000 as a late filing fee. In addition, you must pay interest for late TDS deposits.

    What Is Interest On The Late Deduction Of TDS?

    You must pay interest under Section 201(1A) if you fail to deposit TDS after deduction on time. From the date TDS was deducted to the actual date of deposit, interest is calculated at a rate of 1.5% per month. It’s important to note that this is should be determined on a monthly basis rather than by the number of days, thus a partial month counts as a full month.

    Section Default Nature Due to COVID-19, interest subject to TDS/TCS amount has been reduced Period for which interest is to be paid
    201(1A)(i) Tax is not deducted at source, in full or in part. 1% per month From the time when taxes are deductible until the time when they are really deducted
    201(1A)(ii) Non-payment of tax, in whole or in part, after deduction of tax 1.5% per month
    Only for due dates between March 20 and June 29, 2020, 0.75% per month or part of a month will be charged for remittance delays beyond the due date.
    If the balance is not paid before the 30th of June, a standard interest of 1.5% will be charged.
    From the date of deduction to the date of payment

    TDS Payment Penalty

    As a consequence of the lockdown, the government has waived all penalty provisions for the period between March 20th and June 30th, 2020, in accordance with Ordinance 2020.

    However, a penalty equal to the amount that was deducted/collected or remitted may be levied within the normal course of business.

    Prosecution of Section 276B

    If a person fails to pay to the Central Government’s credit: he shall be punished with rigorous imprisonment for a term not less than three months but not more than seven years and a fine for the tax deducted at source as required by or under the requirements of Chapter XVII-B.

    Penalty for Late Filing of TDS Return

    1. Fee for late filing (Section 234E): Until the TDS Return is filed, the deductor must pay INR 200. The penalty, however, should not exceed the amount of TDS for which a statement filing was necessary.
    2. Penalties (Section 271H): An individual who fails to file the TDS statement by the due date shall be subject to a minimum penalty of INR 10,000, which may be increased to INR 1,000,000 under this section. This penalty is in addition to the late filing charge imposed by Section 234E.

    Note: Section 271H will also cover the cases of incorrect TDS Return Filing.

    No Penalty Under Section 271H For TDS

    If an individual meets the following conditions, no penalty under Section 271H will be imposed in the case of a late TDS/TCS return filing:

    • Late TDS return filing fees and interest (if any) to be paid to the credit of the Government
    • TDS/TCS return to be filed before the expiry of a one-year period from the stated due date
    • TDS/TCS return to be filed before the expiration of a one-year period from the specified due date

    FAQs On TDS Interest And Penalty

    Question 1.
    What is the interest for late payment of TDS?

    Answer:
    The interest rate will be calculated at 1.5% per month from the date of the deduction of TDS on the current deposit date.

    Question 2.
    Is there any penalty for the revised TDS return?

    Answer:
    Yes, a minimum of Rs.10,000 and a maximum of Rs.1.00,000 penalty may be levied if the deductor/collector files the wrong TDS/TCS return.

    Question 3.
    What is the late filing fee for payment of TDS?

    Answer:
    Until the TDS Return is filed, the deductor must pay INR 200. However, the TDS late filing fee should not exceed the actual TDS amount to be filed.

    TDS Payment And Interest On Late Payment | Due Dates, Late Filing Fees Read More »

    Section 194H TDS on Commission & Brokerage Analysis

    Section 194H TDS on Commission & Brokerage Analysis

    Section 194H TDS on Commission & Brokerage Analysis: As per Section 194H, any person who is not an individual or a Hindu Undivided Family and is responsible for paying any income by the way of commission(not being commission as referred to in section 194D) or brokerage to a person for his services(not being professional services) shall deduct income-tax thereon at the rate of 5%, at the time of credit of such income to the account of the payee or any other account by cash, cheque, draft or any other mode of transaction.

    Commission or brokerage includes direct or indirect payment received or receivable by a person acting on behalf of another person. The payment may be received for:

    • Any services rendered that do not come under professional services.
    • Any service in the course of selling and buying of goods or materials.
    • Any service in relation to the transaction of assets or valuable article. This does not include securities.

    The following transaction related to securities do not attract TDS deduction under Section 194H:

    • Brokerage or commission paid to underwriters.
    • Brokerage or  sub-brokerage paid on the public issue of securities
    • Brokerage paid on stock exchange transaction of securities.

    Table of Content

    Deductions Under 194H

    Any person who is responsible for paying any income by way of commission or brokerage shall deduct income-tax thereon. This is only applicable to persons other than individuals or Hindu Undivided families.

    TDS Deduction Under Section 194H

    An individual or HUF is liable for deduction of TDS under section 194H if the total sales, gross receipts or annual turnover exceed:

    • Rupees One crore, in case of a business during the financial year immediately preceding the year in which the commission is to be credited or paid.
    • Rupees Fifty lakh, in case of an individual during the financial year immediately preceding the year in which the commission is to be credited or paid.

    The deduction is made at the time of credit of such payment through cash, cheque, draft or any other mode of transaction to the account of the payee or any other account, which may be termed as a suspense account or by any other name at the time of translation.

    The rate at which tax deduction under TDS is made is 5%, but w.e.f 14/05/2020 to 31/03/2021 this was reduced to 3.75%. This rate is not subject to any additional charge such as surcharge or health and education cess (@4%)and is deducted at a basic rate at the source. However, in case if the PAN is not quoted by the deductee, the rate at which tax deduction is made will be 20%.

    The deduction has to be deposited on or before the 7th of next month for tax deducted from April to February and for tax deductions made in the month of March, the last day to deposit the deduction is 30th April.

    TDS deductions under 194H are not applicable in the following cases:

    1. If the amount or aggregate amounts of such income exceed Rs.15000, to be paid during the financial year, then no deductions are made under this section.
    2. No tax deductions are to be made brokerage or Commission fees are paid by BSNL/MTNL to their public call office franchise.
    3. An application to the assessing officer for deduction of tax at NIL or lower rate under section 197:
    • Validate the PAN of the deductee by submitting the 197 certifications.
    • A valid certificate for the PAN, section, rate and the financial year must be mentioned in the statement field.
    • The correct certificate number should be mentioned in the statement.

    Additional Pointers regarding TDS Deduction Under Section 194H

    • Any commission or supplementary commission received by travel agents from airlines is liable to TDS deduction under section 194H at the source.
    • Any discounts that are given under pre-paid scheme of getting a connection by a mobile cellular operator to its distributors in the course of selling SIM cards do not attract TDS deduction under section 194H.
    • Any advertise commission paid by Doordarshan to its agents or advertising agencies is subject to  TDS deduction under section 194H.
    • TDS deduction under section 194H is not applicable to discounts given to stamp vendors on bulk purchases.
    •  Payments made by television channels/newspapers to advertising agencies for booking or procuring of or canvassing of advertisement is defined as trade and not commission. Therefore, it does not attract any TDS deduction under section 194H.
    • Commission paid to an agent as bank guarantee commission is not applicable for  TDS deduction under section 194H as it is a banking charge for providing service and not commission.
    • Target incentive paid to dealers for the purpose of increasing sales does not attract TDS deduction under section 194H and therefore assess does not need to deduct tax at the source.
    • Any discount offered to distributors for promotion of sales does not attract  TDS deduction under section 194H.

    Section 194H TDS on Commission & Brokerage Analysis Read More »