Showing posts with label TDS. Show all posts
Showing posts with label TDS. Show all posts

Monday 3 April 2017

Disallowance for non-deduction of tax from payment to resident in respect of Income from Other sources


Budget 2017, insert a new section 58(1A)(ia), it provides that the provision of section 40(a)(ia) will apply in computing income chargeable under the head “ income from other sources” as they apply in computing income chargeable under the head of “ profit and gains of business & profession”.

Under the current provision of section 58 disallowance incudes disallowances such as disallowance of cash expenditure, disallowance for non-deduction of tax from payment to non-resident, etc, now it applies to resident also in section 58.

The amendment is applicable from the Previous year 2017-18 and will accordingly apply in relation to assessment year 2018-19 and subsequent years.

Concessional Tax rate under section 194 LD –Extension of eligible period thereof (Budget 2017)

Extension of eligible period of concessional tax rate under section 194LD
Budget 2017, amend the provision of section 194LD to provides that
lower TDS at the Rate of five percent will now be available
on interest payable before 1st July 2020 to FII and QFIs on their investments in Government securities and rupee denomination corporate bonds
provided that the rate of interest does not exceed the rate notified by the Central Government in this behalf.

Existing provision of section 194LD provides lower TDS at the rate of five percent on interest payable at any time on or after 1st June, 2013 but before the 1st July, 2017.
The amendment will be applicable from the previous year 2017-2018.

Concessional rate of tax on interest in case of overseas borrowings –extension period thereof.

Extension of eligible period of concessional tax rate on interest in case of External Commercial Borrowing and Extension of benefit to Rupee Denominated Bonds

Budget 2017, amend the section 194LC to provide that the
concessional rate of five per cent. TDS on interest
payable to a non-resident
by a specified company on borrowings made by it in foreign currency
from sources outside India under a loan agreement or by way of issue of any long-term bond including long-term infrastructure bond
will now be available in respect of borrowings made before the 1st July, 2020.
This amendment will be applicable from the previous year 2017-18 and will accordingly apply in relation to assessment year 2018-19 and subsequent years.


Budget 2017 also proposed to extend the benefit of section 194LC to rupee denominated bonds issued outside India before the 1st july 2020.

This amendment will take retrospectively from 1st April 2016.

Existing provision of section 194LC provides that the concessional rate of tax available on borrowing made under loan agreement at any time on or after the 1st July, 2012, but before the 1st July, 2017; or by way of any long-term bond including long-term infrastructure bond on or after the 1st October, 2014 but before the 1st July, 2017, respectively.
Budget 2017 extends the concessional rate of TDS to boost the economy by way of introduction of foreign capital.

Thursday 16 February 2017

TDS rate reduced from 10% to 2% on Call Centre Business Income –Budget 2017.


Budget 2017, proposed to amend section 194J to reduce the rate of deduction of tax at source to 2% to from 10%, in case of payments received or credited to a payee, being a person engaged only in the business of operation of call centre.

Section 194J provides that a specified person is required to deduct an amount equal to ten per cent. of any sum payable or paid ( whichever is earlier) to a resident by way of fees for professional services or fees for technical services provided such sum paid/payable or aggregate of sum paid/payable exceeds thirty thousand rupees to a person in a financial year.

This will be effective from 1st June 2017.


No TDS deducted on compensation received that are exempt under RFCTLAAR Act, 2013 (Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013) –Budget 2017.


Budget 2017, proposed to amend the section 194LA to provide that no deduction shall be made under this section where such payment is made in respect of any award or agreement which has been exempted from levy of income-tax under section 96 (except those made under section 46) of RFCTLARR Act.



Section 194LA, provides that any person paying compensation shall deduct tax at source at the rate of ten per cent. on the compensation or enhanced compensation or consideration on account of compulsory acquisition of any immovable property (other than agricultural land) under any law for the time being in force subject to certain conditions specified therein.



Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013, ('RFCTLARR Act') came into force on 1st January, 2014.

Section 96 of the RFCTLARR Act, provides that income-tax shall not be levied on award or agreement made subject to limitations mentioned in section 46 of the said Act. Therefore, compensation received for compulsory acquisition of land under the RFCTLARR Act (except those made under section 46 of RFTCLARR Act), is exempted from the levy of income-tax.



The CBDT has issued Circular number 36/2016 dated 25th October, 2016 clarifying that compensation received in respect of any award or agreement which has been exempted from the levy of income-tax vide section 96 of the RFCTLARR Act shall not be taxable under the provisions of the Act, even if there is no specific provision of exemption for such compensation under the Act.



However, the circular addressed only the matter pertaining to taxability of compensation received on compulsory acquisition of and not tax deduction at source under section 194LA of the Act.



This amendment will applicable from 1st April 2017.




Now the Form 15G/15H for non-deduction of TDS can be filled for insurance commission – Budget 2017.


Budget 2017, proposed to amend section 197A so as to make them eligible for filing self-declaration in Form.No.15G/15H for non-deduction of tax at source in respect insurance commission referred to in section 194D

Section 194 D of the act provides for tax deduction at source (TDS) at the rate of 5% for payments in the nature of insurance commission beyond threshold limit of Rs.50,000 per financial year.

Section 197A of the Act provides that tax shall not be deducted, if the recipient of certain payments on which tax is deductible furnishes to the payer a self- declaration in prescribed Form.No.15G/15H declaring that the tax on his estimated total income of the relevant previous year would be nil.

Presently, the payment in the nature of income referred to in section 194D is not covered by provisions of section 197A.

This will be applicable from 1st June 2017.




Monday 6 February 2017

TDS on rent payment exceeding Rs.50,000 - Budget 2017



Budget 2017 proposed to imposed TDS deduction liability on individual or a HUF (other than those liable for tax audit) for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of month during the previous year , shall deduct an amount equal to five per cent. of such income as income-tax thereon.

Budget 2017 proposed to imposed TDS deduction liability on individual or a HUF (other than those liable for tax audit) for paying to a resident any income by way of rent exceeding fifty thousand rupees for a month or part of month during the previous year , shall deduct an amount equal to five per cent. of such income as income-tax thereon.

New Section 194-IB inserted

Ø  Applicable: - Individual or an HUF for rent payment exceeding Rs. 50,000 for a month or a part of month during the previous year.

Ø  Rate of TDS :- 5%

Ø  Deduction of tax :- at the time of credit of rent, for the last month of the previous year or the last month of tenancy if the property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier.

Ø  It is further proposed that the deductor shall not be required to obtain tax deduction account number (TAN) as per section 203A of the Act.

Ø  It is also proposed that the deductor shall be liable to deduct tax only once in a previous year.

Ø  It is also proposed to provide that where the tax is required to be deducted as per the provisions of section 206AA(where PAN number of the deductee not furnished i.e at a rate of 20%), such deduction shall not exceed the amount of rent payable for the last month of the previous year or the last month of the tenancy, as the case may be.


     Salaried employee who are claiming HRA and showing payment of rent of more than Rs. 50,000/-  per month have to compulsory deduct TDS of 5%.
The amendment will be effective from 1st June 2017.