TDS

Online Correction Facility to Add/Modify Deductee in TDS Return: TRACES or the TDS Reconciliation Analysis and Correction Enabling System of the Income Tax Department provides online correction of already filed TDS returns. If you need to modify your TDS returns after submission, this article will help you file revised TDS returns.

• The Provision of Online Correction to Modify or Add Deductee Details in TDS Return
• Advantages of Online Correction
• Step by Step Process to Add or Modify Deductee Details in TDS Return
• Status of Request or Process being showed during Online Correction

The Provision of Online Correction to Modify or Add Deductee Details in TDS Return

Filing for TDS returns is a necessary process that needs to be completed and submitted for each quarter in a fiscal year.

The following corrections can be made in an existing filed TDS return –

• PAN correction
• Challan correction
• Resolution for overbooks challan (move a deductee row from challan)
• Add a new challan to statement
• Addition or deletion of salary details
• Addition or modification of deductee details
• Any personal information

The online feature enables to add or modify any deductee details if the deductor –

1. Wants to make modifications in deductee details.
2. Intends to add a new deductee row against a challan with an available balance.

Note: This functionality is available from F.Y 2013-14 onwards with DSC.

Advantages of Online Correction

The online correction feature is handy as –

1. TRACES charges no fee for online correction.
2. One can instantly start working, and the correction is generally processed in 24 hours.
3. All the modifications can be done online, and no extra software is required.
4. A specific correction mechanism is available for each error that makes the process hassle-free for the users.

Step by Step Process to Add or Modify Deductee Details in TDS Return

Step 1: Login into the TRACES website.

Step 2: Select option Defaults followed by Request for correction.

Step 3: Choose the period for which you want to file the correction. Use the option of Online in the Correction Category and click on Submit.

Step 4: The system generates a request number. Select Go to Track Correction Request or select option Defaults, followed by Track Correction Request.

Step 5: A list of all the corrections along with their status get displayed. Click on the option of Available to work on the correction request.

Step 6: Choose the KYC option (digital signature or without digital signature).

Step 7: Once the validation is completed, you get an authentication code that will be used to validate the KYC again, and it will work only on the same day of the same financial year. Finally, click on Proceed with Transaction button.

Step 8: Select the option of Modify/Add Deductee Details under Type of Correction and click on the View Details button.

Step 9: There are three options on the top of the screen –

• Default Deductees
• All Deductees
• Add New Deductees

Step 10: Default deductees show those deductees who have any defaults. Select a specific row and click on Edit Deductee Row to make changes.

Step 11: All the details relevant to the row are shown below. Make the changes required in the record and click on the Save button. The following changes can be made in the deductee records –

• PAN of the deductee
• Date of payment or credit
• Amount paid or credited
• The section under which TDS deducted
• Date of deduction
• The TDS deduction rate
• Tax
• Surcharge
• Education Cess
• Reason for non-deduction, lower-deduction, grossing up or higher deduction

Step 12: In the All Deductee option, all the records which have been updated show in highlighted row colour.

Step 13: The Add New Deductee tab can be used to add a new deductee. Once you click on the New Deductee tab, it will display all the challan with the available balance. Select the challan (with available credit)

and click Add Deductee Row button.

Step 14: Enter the following details for the new deductee and click on the Save button.

• Deductee Code (01 for a company and 02 for apart from a company)
• Details of PAN
• Date of payment or credit
• Amount paid or credited
• Section
• Date of deduction
• Total tax deducted
• Total tax deposited
• The TDS deduction rate
• Reason for non-deduction, lower-deduction, grossing up or higher deduction

Step 15: Once all the modifications are done, click on Submit to Admin button.

Step 16: Admin can now submit the modified statement for processing from the option Defaults followed by Ready for Submission. Admin can select the option to cancel the statement as well.

Step 17: The user can then check the status of the statement submitted. To track the status, click on the Defaults option, followed by Track Correction Request.

Status of Request or Process Being Showed During Online Correction

• Requested: When a request for correction is submitted by the user.
• Initiated: The request is under processing by TRACES.
• Available: The request for correction is accepted, and the statement is now available for modifications.
• Failed: Request cannot be completed due to a technical error. However, the user can re-submit the request for the exact details.
• In Progress: The user is currently working on the statement.
• Submitted to Admin User: Sub-user or Admin User has submitted correction statement to Admin User.
• Submitted to ITD: When the Admin User submits the corrected statement to ITD for processing.
• Processed: Statement is being processed by TRACES (either for defaults or for Form 26AS).
• Rejected: Statement is rejected after processing by TRACES. Also, the rejection reasons are shown in the ‘Remarks’ column.

TDS Return Due Date, Penalty and Forms: The TDS Return is a quarterly statement submitted to the Income Tax Department by the deductor that includes PAN and other details.

• Due Date for TDS Return Filing
• Forms for the Submission of TDS Statements
• Late or Wrong Filing on TDS Return and its Consequences

Due Date for TDS Return Filing

(Valid from First Quarter Of 2016-2017)

• Quarter April 1st to June 30th June
• Last date of filing the return: July 31st
• Quarter July 1st to September 30th
• Last date of filing the return: October 31st
• Quarter October 1st to December 31st
• Last date of filing the return: January 31st
• Quarter January 1st to March 31st
• Last date of filing the return: May 31st

(Valid till the fourth Quarter Of 2015-2016)

• Quarter April 1st to June 30th June
• Last date of filing the return: July 15th
• Quarter July 1st to September 30th
• Last date of filing the return: October 15th
• Quarter October 1st to December 31st
• Last date of filing the return: January 15th
• Quarter January 1st to March 31st
• Last date of filing the return: May 15th

Forms for Submission of TDS Statements

Form 24Q: Tax deduction from salary under section 192

Form 27Q: Tax deduction when deductees are non-resident (not being a company), foreign company and persons who are not ordinarily resident

Form 26Q: Tax deduction in any other case

TDS return shall be filed electronically for the assessee below:

• Office of the Government.
• A Corporate assessee.
• Individual who must get his accounts audited under section 44AB in the previous financial year.
• Number of deductees’ records in quarterly statements for any quarter of the previous financial year is seen to be equal to or more than fifty.

Late or Wrong Filing on TDS Return and its Consequences

Section 234E: Late filing fee of Rs 200 per day 

1. Persons shall pay a penalty of Rs. 200 per day for any delay in producing the TDS statement. This penalty is also applicable in supplying form 26 QB, which is a challan cum statement in case of purchase of the immovable property.
2. The total of the late filing fees should not exceed the total amount of TDS made for the quarter.

Section 271H: A Penalty of Rs 10,000-Rs 1,00,000 

1. Delay in filing TDS statement for more than a year from the due date of filing of such TDS return. If the TDS statement is not filed under a year from the due date of producing the TDS return, then a minimum penalty of Rs 10,000 (can rise 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.
2. 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 (can rise to Rs 1,00,0000) can be levied.

How to Check the TDS Credit in your Account?: When it concerns completing your taxes, Form 26AS, or your tax credit statement, is amongst the most crucially important documentation. It holds all the specifics about the tax deducted at the source (TDS).

What are the Steps to Determine TDS Credit?

Guide to getting Form 26AS using your income tax department account:

• Step 1: Visit the official portal of income tax, i.e.,  https://www.incometax.gov.in/iec/foportal/.
• Step 2: Press the ‘Login’ button.
  • Enter your Login Credentials. To complete the login procedure, you must provide your PAN’s Aadhaar number. You should firstly wrap up the registration prior you can log in.
• Step 3: Once you’ve entered your Login Credentials, click the ‘Continue’ option and the Select ‘e-file’ option.
  • After which, click ‘Income Tax Returns’ followed by ‘View Form 26AS’.
  • Next, press the ‘Confirm’ box.
• Step 4: On the subsequent tab, tap the ‘Proceed’ box.
  • Now, pick the ‘View Tax Credit (Form 26AS)’ option.
  • Next, click the ‘View Type’ and ‘Assessment Year’ for which you would like to check the TDS submitted by the deductor.
  • To eventually finish the procedure, click on the ‘View/Download’ option.

Form 15G and Form 15H: Form 15G is a declaration filed by the bank on behalf of fixed deposit holders who are less than 60 years of age. According to income tax rules, it is mandatory for banks to deduct TDS when the amount of interest for recurring deposit and fixed deposit is more than ₹10,000 in a financial year. The TDS limit has been increased to ₹40,000 from the financial year 2019-2020. The person also needs to furnish PAN while filing Form 15G. If Form 15G is not submitted initially, TDS deducted needs to be claimed while filing an Income Tax return.

Form 15H is a declaration by individuals aged 65 years or more to claim relief from TDS deductions for income from interest. It is to be submitted to the bank before the first interest is credited. It should be submitted when the amount of interest from one branch exceeds ₹10,000.

• Introduction To Form 15G And 15H
• Basic Differences Between Form 15G And 15H
• Example To Understand Who Can Submit Form 15G And Form 15H
• Validity Of Form 15G And 15H
• Steps To Be Taken If TDS Had Already Been Deducted
• How To Submit Form 15G And 15H Online?
• Penalty For Filing Form 15G And 15H

Introduction To Form 15G And Form 15H

According to Section 194A, TDS is deducted at the rate of 10% from income on interest from fixed deposit, recurring deposit etc., other than interest on securities. Failure to furnish PAN will attract a 20% tax rate. Therefore, banks deduct TDS at the rate of 10% on income from interest if the amount exceeds ₹10,000 in a financial year.

For assesses who are not liable for TDS deduction as their interest income is within the limit, Form 15G and 15H are introduced u/s 197A and Rule 29C.

For TDS on EPF withdrawal, post office deposits, income from corporate bonds and insurance commission, Form 15G or 15H can be filed under section 194D. For TDS on rent Form, 15G or 15H can also be filed from the financial year 2016-17.

Basic Differences Between Form 15G And Form 15H

Form 15G

• It can be submitted by a resident individual, HUF or trust.
• It can be submitted by an individual whose age is less than 60 years.
• It can be submitted while tax on estimated income for the current year is nil.
• It can be submitted only when the interest amount and other income from all sources do not exceed the basic exemption limit of ₹250,000 for the financial year.

Form 15H

• It can be submitted only by a resident individual and not by HUF, who is above the age of 60 years or completes the age of 60 years during the financial year.
• It can be submitted while tax on estimated income for the current year is nil.
• It can be submitted even when total income from all sources exceeds the basic exemption limit of ₹300,000 for senior citizens and ₹500,000 for super senior citizens for the financial year.

Example To Understand Who Can Submit Form 15G And Form 15H

Income Of	A	B	C	D
Age	20	25	65	68
Salary	170,000	90,000	180,000	0
Fixed Deposit Interest Income	60,000	270,000	70,000	340,000
Total Income before deductions	230,000	360,000	250,000	340,000
Section 80C deductions	0	120,000	0	100,000
Taxable Income	230,000	240,000	250,000	240,000
Minimum Exempt Income	250,000	250,000	300,000	300,000
Eligible to submit Form 15G	Yes	No	Yes	Yes
Eligible to submit Form 15H	No	No	Yes	Yes
Explanation	A can submit Form 15G as the taxable amount and income from all sources are below the exemption limit of ₹250,000	B cannot submit Form 15G as the income earned from interest is more than the exemption limit of ₹250,000	C can submit Form 15H as the tax calculated on total income is nil and the age is more than 60 years.	D can submit Form 15H as the tax computed on total income is nil and the age is more than 60 years. The person can fill the form even if the amount of income earned from interest is more than the basic exemption limit.

Validity Of Form 15G And 15H

Form 15G and 15H have a validity of one financial year and need to be submitted every year. If an individual submits these forms at the beginning of the financial year, then TDS will not be deducted bank on the income from interests.

Steps To Be Taken If TDS Had Already Been Deducted

If TDS has already been deducted before submitting the forms, an individual can claim such TDS while filing an income tax return. The deducted TDS will be provided in Form 16A through a TDS certificate. The interest earned on a fixed deposit is credited at the end of the year. The deducted TDS is to be claimed while filing the income tax return in the same year and cannot be carried forward.

How To Submit Form 15G And 15H Online?

There is no need to fill forms 15G and 15H manually. An individual can fill the forms online simply by logging in to his/her net banking account, then download the already pre-filled form, print it and submit the form to the bank after signature.

Penalty For Filing Form 15G And 15H

According to Section 277 of the Income Tax Act, a wrong or false declaration in form 15G or 15H will attract a penalty. The prosecution includes imprisonment, which can vary from three months to two years, along with a fine. The imprisonment term may be extended to seven years along with a fine if the tax evaded exceeds ₹25 lakh.

Cases When A Person Becomes Ineligible Afterwards

In such instances in which you meet all the criteria at the beginning of the year and submit form 15G or 15H. But afterward, you earn unexpected income and do not meet the specified criteria, then a 15G or 15H withdrawal application needs to be submitted. The bank will deduct TDS from the account on the next payment.

Other Points

• While submitting form 15G or 15H, an individual needs to submit PAN to the deductor or else the TDS to be deducted at the rate of 20%.
• Interest income is calculated on the basis of accrual and not on a due or payment basis.
• A written acknowledgement is to be taken while submitting such forms to avoid any inconveniences.
• A copy of such forms is to be submitted to the Commissioner of Income Tax on or before the 7th of next month by the payer of income.

TDS Payment Google Ads Facebook Advertisement: Google and Facebook are now the most popular platforms for digital advertising. Within a contract of advertisement between the payer and Google India or Facebook India, the advertisements are published on digital media and payments are made. As per present Indian Tax Laws, tax is deductible on such payments under section 194C of the Income Tax Act 1961, which will be discussed in this article.

• How TDS on payment to Google and Facebook advertisements work?
• Google India PAN Details
• How and when to send a TDS Certificate?

How TDS on Payment to Google and Facebook Advertisements Work?

Google or Facebook publishes advertisements on various digital modes with an agreement between the advertiser and Google or Facebook.

On every billing period, Google issues an invoice and deducts the total billed amount from the pre-set mode of payment by credit card or debit card followed by an invoice released to the customer. The amount so debited by Google or Facebook is not net of TDS but the gross amount of the bill; hence there is no way of deducting TDS from such auto payment.

Consequently, the advertisers are compelled to pay the TDS amount out of their own pockets to the government account. The advertisers then have to submit the TDS certificates to Google or Facebook, and then the amount will be credited back to the ad account as credit.

The TDS rate under section 149C of the ITA 1961 is 2%, with no service tax or education cess applicable.

Google India PAN Details

The Permanent Account Number (PAN) of Google is AACCG0527D, and the registered address for the TDS Certificate is:

Google India Pvt Ltd.

No.3, RMZ Infinity, Tower E,

Old Madras Road, 4th & 5th Floor,

Bangalore – 560 016

India

How and When to Send a TDS Certificate?

To send a TDS certificate, you can use the online Google platform or submit the certificate along with a letter that mentions the Google Ads Customer ID on it by courier to this address of Google India:

Google India Pvt Ltd.,

9th Floor, Building 8, Tower C,

DLF Cyber City, DLF Phase 2,

Gurgaon, Haryana

122002 India

After sending the TDS certificate, you will need to contact them through email and provide the following documents and details to get your credit to your ad account:

1. A digitally signed copy of the TDS certificate (electronically signed or a PDF scan).
2. Courier delivery receipt details.

Note: For Google, the TDS certificate for the previous FY should be sent before 30th April of the current FY, and no certificate would be accepted after the specified date for the same.

TDS On Rent: Provisions of this section are applicable from 1st June 2017. From 1st June 2017, a new division, 194IB, has been introduced. It deals with the tax deducted at the source of rent payment. This new section has mandated certain HUF or individuals that any rent paid under a Joint Development Agreement (JDA) to the landlord for the use of any building or land or both has to deduct TDS. When the asset owner and developer come into an agreement, it is known as a joint development agreement. The Government introduced the Provisions of TDS through section 194I, 194IB and 194IC to keep track of all the payment activities relating to assets or commercial spaces, personal spaces and equipment, etc., as transactions relating to such activities have increased considerably.

• Requirements to Deduct TDS Under Section 194IB
• Rate of TDS – TDS Deductible on Rent Paid or Payable is Fixed at the Rate of 5%
• Procedure to Fill Challan cum Statement in Form 26QC
• Required Details to Fill Form 26QC
• Furnishing The New Form: Form 16C
• Types of Penalties
• Interests for Late Payment of TDS
• Section 194I vs Section 194IB

Requirements to Deduct TDS Under Section 194IB

• HUF and individuals whose turnover or gross receipts are not exceeding ₹ 10 million or ₹ 50 Lakh in profession or business and are therefore not required to audit his books of accounts under section 44AB.
• HUF and Individual whose reporting profits are lower than the speculative profits and are required to audit their accounts under Points (c), (d), or (e) of section 44AB
• In other words, only HUF and Individuals whose accounts are audited because of turnover or gross receipts higher than the set-out limits are not covered under this section. All other HUFs and individuals are covered under this section.

Other Points:

• Under section 194IB, coverage is provided to the person who doesn’t have any income or salaried person.
• Partnership firm, company, BOI and AOP are not covered under this section and are therefore required to deduct TDS from rent under section 194I.

Rate of TDS – TDS Deductible on Rent Paid or Payable is Fixed at the Rate of 5%

Payment Covered

Payment exceeding ₹50,000 per month as rent to the landlord (who is a resident) for the use of any building or land or both are liable for a tax deduction.

Other Points:

• Under this section, any payment made under tenancy, lease, sublease or any arrangements or agreements for the use of any building or land or both are covered.
• Refundable security deposit made by tenant as rent to the landlord when taking property to be covered under this section.
• Under section 194I, rent payments made for furniture and fittings, equipment, plant and machinery are covered.
• TDS is deductible under section 195 if any payment is made to a non-resident.

Due Date of Payment:

Payment is to be made by the tenant within 30 days from the end of the month on which deduction is made using Form 26QC, which is a challan cum statement. For example, payment is to be made by 30th April if the deduction is made in March.

Other Points:

• If a person vacates one house and moves to another and the rent of both houses is more than ₹ 50,000, then Form 26QC is to be made twice a year for each property owner. In simpler words, Form 26QC is to be duly filled by each tenant for a unique tenant-landlord combination for the respective share. For example:-
• Only one Form is asked to be filled in the case of a single tenant and a single landlord.
• In the case of single-tenant and two landlords, they must fill two forms for respective shares.
• In the case of two tenants and two landlords, they must fill four forms for respective shares.
• As deduction is required once a year, payment is required to be deposited to Government only once a year. However, if the tenant must file more than one Form, separate payment should be made for each Form.

Time of Deduction:

TDS should be deducted only once a year and not every month. TDS is to be deducted earlier from the following:-

• At the time of credit of rent in the form of cash or cheque to the payee’s account for March or the last month of tenancy, if the property is vacated during the year as the case may be.
• At the time of payment of rent in the form of cash or cheque to the payee for March or the last month of tenancy, the property is vacated during the year, as the case may be.
• When the payment is made on the same day by or on behalf of the Government.

However, suppose the details of PAN is not furnished by the person receiving rent. In that case, TDS is deductible at the rate of 20%, which is again subjected to the maximum limit of the amount of rent payable for March or the tenant’s last month, as the case may be.

No Requirement of TAN Number:

Such a person does not require a TAN number to deduct and deposit TDS to Government.

Special Considerations:

• Warehouse charges are liable to TDS u/s 194I.
• Security deposit paid to an asset owner is not liable to TDS unless the amount is adjusted against rent which becomes susceptible to TDS u/s 194I.
• Under an agreement, if accommodation to any hotel is taken regularly, it becomes liable to TDS payment.

Procedure to Fill Challan cum Statement in Form 26QC

Rule 31A of Income-tax rules states that ‘a challan cum statement in Form 26QC is to be filed within 30 days from the end of the month in which deduction under this section is made.’

Required Details to Fill Form 26QC

• PAN of landlord and tenant’s PAN
• Address of both landlord and tenant
• Address of let out Property
• The total amount of rent payable
• Rent paid or payable for March or the last month of tenancy
• Period of Tenancy
• Date of tax deduction
• Interest or late fees payable
• Payment can be made through net banking when filing form 26QC or can be made afterwards using an e-payment gateway at a subsequent date or visit any Authorized bank branch after filing form 26QC.

Furnishing The New Form: Form 16C

A new certificate of TDS has been issued by the Government of India. This Form comes as the new 16C From, which shows the number of TDS that will be deducted from the rent. This reduction will be made at the rate of 5% by the individuals or HUF. This Form is to be given to the landlord by the tenant after generating it from the TRACES website. This Form is quite similar to Form 16, issued for salary, or Form 16A, which is issued for other payments.

The time frame that is allowed for the certificate issue is usually 15 days. This 15 days of time starts from the due date when a tenant files Form 26QC. This gives the tenant an entire window of 45 days from the month-end. If the landlord wishes to cross-examine the tax details, he can easily do so in his 26AS Form.

Example 1:

Let Mr. X be living in a 3BHK house. The rent payable for the penthouse is INR 75,000 every month. The financial institutions will deduct the TDS at the rate of 5% before the tenant pays rent to his landlord. Therefore, every month the TDS deducted will be INR 3750 on the rent INR 75,000. Thus, Mr. X will be spending a rent of INR 71,250, and the TDS that is deducted will go straight to the Government.

Example 2:

If the agreement of rent between tenant and landlord is spread across two financial years (FY):

The tenant, Mr. Y, has a tenancy agreement with his landlord for a total of 11 months. This period of 11 months is from 1st October 2017 to 31st August 2018. The rent that Mr. Y is supposed to pay is Rs. 60,000. In such a case, Mr. Y will file Form 26QC two times. He will first file it when the FY 2017-18 ends, i.e., 31st March 2018. He will file the second Form when his tenancy period ends, i.e., on 31st August 2018. The details are:

Particulars	First Return	Second Return
Financial Year	2017-18	2018-19
Tenancy Period	Months = 6	Months = 5
Total-Rent	3,60,000	Less than 3,00,000
Rent of Last Month	60,000	60,000
Amount Payable	3,60,000	3,00,000
Date of payment	31st March, 2018	31st August, 2018
TDS	18,000	15,000
TDS Deduction Date	31st March, 2018	31st August, 2018
Form 26QC Filing Date	On or before April 30, 2018	On or before September 30, 3018
Date to provide 16C to Landlord	On or before May 15, 2018	On or before October 15, 2018

Example 3:

If the agreement of rent between tenant and landlord is in the same financial year (FY):

The tenant Mr. A has a tenancy agreement with his landlord for six months. This period of 6 months is from 1st June 2017 to 30th November 2017. The rent that Mr. A is supposed to pay is Rs. 80,000. In this case, Mr. A will file his 26QC Form once. He will file it when his tenancy period ends, i.e., on 30th November 2017. The details are:

Particulars	By The End Of The Tenancy Period
Financial Year	2017-18
Tenancy Period	Months = 6
Total-Rent	4,80,000
Rent of Last Month	80,000
Amount Payable	4,80,000
Date of payment	30th November, 2017
TDS	24,000
TDS Deduction Date	30th November, 2017
Form 26QC Filing Date	On or before 30th December 2017
Date to provide 16C to Landlord	On or before 15th January 2018

Note:

If the landlord misses providing his PAN details, then the TDS on rent will be subjected to a rate of 20%.

Types of Penalties

There are various types of penalties that are charged. These are:

• Any delay in the filing of the 26QC Form is subjected to a late fine. This late fine amounts to 200 rupees a day. It would be best if you kept in mind that the number of late filing fees should not cross the total amount of TDS.
• Any delay in the filing of the 16C Form is also subjected to a late fine. This fine amounts to 100 rupees a day. In this case, too, the total amount of late fees should not exceed the total amount of TDS.
• In some instances, the amount of penalty charged can go up to 1,00,000 rupees. In case of late filing of the TDS statement (especially if it goes later than a year from the due date), then the late fine can be charged at 10,000 rupees, which can go up to 1,00,000 rupees. If the case is of filing incorrect details (giving false information like PAN or amount of TDS), the penalty can also be the same.

Interests for Late Payment of TDS

For any short payment or late payment of TDS, interests are charged.

• Interest would be charged at 1% every month in case TDS has not been deducted. This period will continue from when the TDS is deductible to the actual date when it is deducted.
• The banks would charge the interest rate at 1.5% per month if the TDS has been deducted, but the payment is made late. In this case, too, the period of interest will continue when the TDS is deductible to the actual date when it is deducted.

Section 194I vs Section 194IB

Basis of difference	Section 194I	Section 194IB
Eligibility for deduction of TDS	In the case of business, if the total turnover crosses Rs. 1 Crore. In the case of professionals, if the turnover crosses 50 Lakhs.	There is no limit as such.
Rent Limit for deducting TDS	Rs 2.4 lakhs per year	Rs. 50,000 every month
Asset on which it is applicable	Buildings, Land, Machinery or Plants	Buildings, Land
The rate at which TDS is deducted	On plant and machinery, the rate is 2% On land, furniture, building, etc. the rate is 10%	5% is charged if the landowner provides PAN details. 20% is charged if the landowner fails to provide PAN details
Requirement of TAN	Yes	No
The form that is required to be submitted	26Q	26QC
Payment	Monthly	Once every year
Return	Quarterly	Once every year

 

File Request for Refund of Excess TDS Deposited by Deductor: If an excess of tax, more than the actual amount, is deposited, a Deductor can make a request for a refund of the excess TDS that he has deposited through TRACES. (From 2007 to 2008). In addition, an online utility is accessible for various Form types of 24Q, 26Q, 27EQ, 26QB, 27Q and 27Q.

• The List for Filing a Raising Refund Request through TRCES for Form Type 26B.
• A Stepwise Guide to File a Request for Refund.

The List for Filing a Raising Refund Request through TRACES for Form Type 26B

1. A Digital Signature on TRACES should be registered for an authorised person.

1. Against the TAN or PAN of the Deductor, there should be no remaining outstanding balance.
2. As per TAN Master, the PAN of the Deductor and their TRACES profile should be the same.
3. Refunds can only be requested for the OLTAS challans where the amount unclaimed is larger than Rs.100.00 for each challan.
4. The maximum refund amount allowed will be considered the minimum challan amount in the challan receipt’s history.
5. You will not be able to claim the credit of any challan that is used in the refund requests of any statement except the available residual balance.
6. Before the appeal process for a refund of the challan, all statements in which it has been claimed are processed.
7. Against TAN and any TAN(s) associated with the PAN of the Deductor, no outstanding balance should remain.

A Stepwise Guide to File a Request for Refund

Step 1: Logging into Traces.

Step 2: Selecting the option “Request for Refund” under the Statements or Payments category.

Step 3: Clicking the “Proceed” button on the refund checklist.

Step 4: Selecting the type of challan that is meant for a refund.

1. The refund request for challan or challan(s) u/s of section 195
2. The refund request for challan or challan (s) u/s other than section195.
3. A separate request is needed for the challan u/s 195

Step 5: Selecting at least a single reason from the five given options in the section below to raise a refund request.

Step 6: Clicking on the option “View Challan Details” after entering the details of the challan against which the refund is requested.

Step 7: After reviewing all details of the challan and its consumption details (if any). Confirm all checkboxes and click “I Agree” to proceed with your request.

Step 8: The Challan will be added to the request list, and the Deductor can add a maximum of 5 challans per request. After that, click on “Proceed”, and all of the challans are added.

Step 9: Reviewing the name and the communication address of the Deductor (which should be the same as the TRACES profile). The Deductor should provide the following bank details:

1. The Bank Name
2. Number of the Bank Account
3. The IFSC Code
4. Account type

Note: – If the refund amount is more than 50,000, it will be transferred to the bank account mentioned by the Deductor at the time of submission of the refund request.

Step 10: The verification details will be displayed. Then, click on the “Proceed” button for final submission or on the “Back” button to cancel or make any changes.

Step 11: After reviewing the summary displayed on the screen, click on the “Submit Request Refund” option. Then, in case of any edits, click on “Edit” for the specified segment.

Step 12: Signing the application via digital signature is the next important step.

Step 13: Printing the acknowledgement that is generated for Form 26B.

Step 14: Delivering printed acknowledgement to your Jurisdictional Assessing Officer within 14 days, starting from the date of transmission of the data electronically, is the last step and failing this step will lead to the rejection of your refund request.

TDS on Purchase of Property from Non-Resident: Section 195 of the IT Act of 1961 is associated primarily with Tax Deducted at Source (TDS) for non-resident Indians.

Per Section 195 of the Act, an Indian tax citizen who acquires assets from a non-resident must deduct the amount of TDS and deposit the money with the Government Of India.

Whatever amount of fee is charged, the remittance documentation is legally mandatory.  Any sum owed to Tax is the expenditure incurred that has the element of income and gross amount, the entirety of which may or may not accurately reflect revenue or profits.

Table of Contents

• Who is liable for deducting Tax under Section 195?
• What is the TDS percentage that applies to this section?
• What Is the Payment Structure?
• Computation of the Sum From Which TDS Should Be Withheld
• When should TDS be collected under Section 195?
• Precautions and adherence while buying assets from an NRI
• What is the maximum bound?

Who is Liable for Deducting Tax under Section 195?

Any individual responsible for the payment of a non-resident who is neither a business nor a foreign business must essentially deduct income tax at the prevailing rates.

What is the TDS Percentage that Applies to this Section?

TDS rates fundamentally alter based on whether the asset is a long-term asset or a short-term asset.

• If the asset is possessed by the owner for longer than two years, the profit on selling counts as “Long term Capital Gains,” and TDS is levied at 20% along with the additional surcharges and cess.
• However, suppose the asset is possessed by the owner for a shorter than a period of two years. In that case, the profit on selling automatically falls under “short term capital gains”, and TDS is charged as per the Income Tax Rates bracket contingent on the total income of the seller. Generally, TDS is deducted at 30% plus appropriate surcharge and cess.

What Is the Payment Structure?

• Any interest incurred (not being the Interest indicated in section 194LB, 194LC, and 194LD).
• Some other amount taxable under this Act’s stipulations (but not revenue taxable under the section “Salaries”).

Computation of the Sum From Which TDS Should Be Withheld

Section 195  stipulates that TDS be levied exclusively on revenue earned by a non-resident. In simple terms, the buyer can only deduct TDS on just the quantity of capital gain realized by the non-resident, not on the gross proceeds from the sale.

According to Section 195(2), when the entire sum payable to the non-resident is not subject to taxation for non-residents, he may petition his Assessing Officer to evaluate the acceptable fraction of the total amount taxable. The Income Tax Officer must assess the taxable profit and issue certified documentation indicating the exact amount of the capital gain.

The seller cannot conduct the determination of taxable income and, therefore, must be necessarily undertaken by the Income Tax Officer.

If the documentation is not readily accessible, it is recommended to deduct TDS on the total amount of the sales profits applying the highest tax rate bracket (not neglecting the surcharge and cess).

When Should TDS be Collected under Section 195?

When such total revenue is transferred to the payee’s account or when the transaction is carried out, whichever happens before.

Credit to Interest, payable account, Suspense account, or any other term will be widely deemed to be a credit of such earnings to the payee’s account for this specific purpose.

Payment for this specific function can be made in cash, via cheque or drafts, or any other viable method.

If the Government, a public sector bank, or a public financial institution needs to pay Interest, the tax deduction is allowed only when the payments are made in cash, by cheque, drafts, or any other form.

Precautions and Adherence while Buying Assets from an NRI

• TDS is simply liable for the acquisition of assets from an NRI independent of the transaction size. TDS is applicable even when the asset is priced well below Rs. 50 lakhs.
• To deduct the cost TDS, a purchaser must essentially acquire a TAN (Tax Deduction Account Number). If the asset is bought from a Resident Indian, no TAN is obligatory. Alternatively, TAN is legally necessary if the property is obtained from a Non-Resident Indian.
• TDS must be necessarily deposited within seven days of completing the month for which it was computed. For illustration, if TDS is withdrawn on July 28th, the payment is payable on August 7th.
• The TDS deducted must be submitted initially using Challan No./ITNS 281.
• TDS returns must be filed within 31 days following the end of the quarters from which TDS was levied using TDS Form 27Q.
• TDS authorization documentation must be issued within 15 days of the TDS return’s due date.

What is the Maximum Bound?

Zero, which denotes that there is no maximum restriction.

However, the Tax must be subtracted from the total amount payable to taxation. Consequently, if no amount of money is liable to taxation in India, no tax must be deducted.

There is no TDS under Section 195 on amounts of income taxed under the header ‘Salaries’ or payments fully included under Sections 194LB, 194LC, or 194LD. TDS will be collected at the exact point of payment or credit, whichever happens, earliest.

Declaration Deposit Lower TDS: TRACES implying the TDS Reconciliation Analysis and Correction Enabling System. It is the online portal for the implementation and administration of the TDS (Tax Deducted at Source) and the TCS (Tax Collected at Source).

A Deductor deducts the TDS after making the payment to a Deductee. He/she deposits their TDS return with the Income Tax Department and files for the TDS Return.

However, sometimes there can be a reduction in TDS deducted in the current period compared to the TDS removed in the previous period.

In that case, the deductor can submit a declaration for lower deduction and lower TDS payment along with relevant reasons. He/she can then choose to file a TDS Return on deduction of TDS at a lower rate.

If, as a deductor, one has reasonable reasons for lowering deduction/payment of the TDS in the current period in comparison to the previous period, then the deductor could file a declaration to the deposit lower TDS through TRACES.

It is an advisory issued by the Centralised Processing Cell (TDS) for filing this declaration if there is a strong reduction (no specific guideline for this, in our view if the deduction is more than 35%-40%) in the amount of tax deposited in comparison with the previous period.

Steps for submitting Declaration on the TRACES website for depositing lower TDS

Steps for Submitting Declaration on the TRACES Website for Depositing Lower TDS

Step 1: Log in to TRACES

Log in to the TRACES website– Enter the User Id, Password, TAN or PAN and the captcha

Step 2: Navigate to Declaration to deposit lower TDS

Go to the Statements / Payments then go to Declaration to the Deposit Lower TDS

Step 3: Select financial year, quarter and form type

Select the Financial Year, Quarter as well as the Form Type, i.e. 24Q, 26Q, 27Q, 27EQ, for which you are willing to submit the declaration for deposition of lower TDS. Click on ‘Add Statement Details’

Step 4: Add nature of payment

Under the section of ‘Lower Deposit Statement Details’, select ‘Add Nature of Payment ‘. Select the section from the drop-down list.

Step 5: Add TDS lower by percent.

Click on ‘Add TDS Lower By % ‘. Enter the number by which you are willing to reduce the TDS Rate.

Step 6: Reason for lower TDS deposited.

Select the proper reason behind the lower TDS deposited for the previous year from the options given in the drop-down list.

Step 7: Select the checkbox

Select all the checkboxes and click on the ‘I Agree’ for submitting the declaration. If you click on ‘I Disagree ‘, you will be tracked back to the previous page.

Step 8: Authorised person

Details on the Authorised Person is going to appear on the screen. Verify the details and click on ‘Proceed’.

Step 9: Success message

A success message will showcase on the screen. You are going to receive the details of the statement for which you will have to make the declaration in your email.

Avoid Notice from Department for Non-filing of TDS Return: As per Income Tax Act under section 200(3), 1961, every individual shall file a quarterly TDS return if the person is responsible for deduction of tax. However, no TDS return is ordered to be filed if TDS is not obligated to be deducted during that quarter of the financial year.

Due to this reason, the Income Tax Department has been noticing it challenging to distinguish between below types of deductors: –

• Deductors who are obligated to file TDS return and have not filed.
• Deductors who are not obligated to file TDS return due to NIL TDS.

So, for filing a declaration of non-filing of TDS statement, Department has introduced new functionality in the TRACES, which began from Financial Year 2013-14 onward. This functionality has been originated way back in 2013. However, many assessees are still not informed of this and skip TDS return without filing any declaration, which leads them to show-cause or intimation notice from the Department for non-filing of TDS return.

• Step By Step Model to File Declaration of Non-Filing of TDS Statement
• One can select any one of the Following Reason
• Step By Step Model to Revert Declaration of Non-Filing of TDS Statement

Step By Step Model to File Declaration of Non-Filing of TDS Statement

• First, login into Traces
• Select the ‘Declaration for Non-filing of Statement’ option under the ‘Statements/Payments’ section.
• Click on ‘Add Statements’

The page will also show all the declaration that was before filed for Non-filing of statement.

Add all the necessary details for the ‘Non-filing of Statement’.

Select the financial year, form, quarter and appropriate reason for the declaration.

One can select any one of the Following Reason

• Not liable to deduct for the chosen statement period – When one is not obligated to deduct any TDS under India’s Income Tax Act 1961.
• Credited to Deductee/No payment made – When credited to the deductee or no payment has been made
• Temporarily closed business– When the business is momentarily sealed
• Permanently closed business – When the business is permanently sealed
• Payment beneath the threshold to Deductee – When the payment credited or made is beneath the threshold limit
• Branch shifted – If the branch is shifted
• Any other reason – One is needed to register the reason (apart from the reason which is not available above) if one preferred this option.

One can also register multiple declarations at the same time by clicking on the option of ‘Add Statement Details’.

5. Click on ‘Proceed’
6. Click on ‘I Agree’
7. Click on ‘Proceed’

A Message of Confirmation is Displayed for Non-filing of the Statement

Traces also implement functionality to revert the declaration of Non-filing of statements. This is needed if the user desires to file a TDS statement for which a declaration of Non-filing has already been made. Also, once the user reverts the status of declaration for that period statement, they cannot re-file declaration for Non-filing of Statement.

Step By Step Model to Revert Declaration of Non-Filing of TDS Statement

• Step 1 – Select the specific statement that you wish to change the Non-filing status.
• Step 2 – Click on the option ‘Change Filing Status’ and select ‘Proceed’.
• Step 3 – The subsequent screens show the change in status from Non-Filing to Filing.

Note: – One cannot revert the status of declaration if the person opts ‘Branch shifted’ or ‘Permanently business closed’ as the reason for Non-filing of statement.