bcc_br_104_242

CORPORATE ACCOUNTS &TAXATION DEPARTMENT, BARODA CORPORATE CENTRE, Bandra Kurla Complex, Bandra (East), MUMBAI 400 051

Phone: (022) 6698 5288 Fax: (022) 2652 6891. Email: [email protected] Page 1 of 13

BCC:BR:104/242 5th July, 2012 MASTER CIRCULAR TO ALL BRANCHES / OFFICES IN INDIA

ISSUED BY CORPORATE ACCOUNTS & TAXATION DEPARTMENT, B.C.C., MUMBAI

Dear Sir / Madam,

Re: Taxation Matters-TDS other than Salary We refer to our circular BCC:BR:104/30 dated 24-01-2012, wherein we had advised the various guidelines applicable for deduction of tax at source and emphasized timely and correct filing of quarterly TDS return through electronic media to the IT Department.

The Finance Bill, 2012 has been passed on 28.05.2012 and there have been several amendments in the Finance Act, 2012. In order to inform to our

branches the important changes made in the said Finance Act, 2012 and all the updated guidelines/existing instructions in respect of the TDS guidelines other than salary at one place, we have consolidated the same here, which will serve as a Master Circular. We trust that deduction/filing of return of TDS by the branches shall be as per latest/updated guidelines of Income Tax Act, 1961. Important changes as per Finance Act, 2012:

1. TDS on remuneration to a director (w.e.f 1st July 2012)

TDS is required to be deducted on the remuneration paid to a director, which is not in the nature of salary, at the rate of 10% of such remuneration under Sec 194J. (Not applicable to the Branches)

2. Form No. 15 G

The income ceiling for submission of Form 15G declaration is raised to Rs.

2,00,000 w.e.f. 1st April 2012. There is no separate income ceiling for women

assesse and this limit is applicable in both the cases.

3. Form No.15 H

The age for availing the benefits by a senior citizen has been reduced from 65 yrs to 60 yrs w.e.f from 1st July 2012. Declaration of Form No. 15H can now be submitted by a resident individual who is of the age of 60 years or more (w.e.f 1st July 2012) claiming interest income without deduction of tax.



4. Fee and Penalty for delay in furnishing TDS statement and incorrect

information in TDS statement for FY 2012-13.

Nature of Penalty Amount of Penalty

Fee for late furnishing of TDS statement

Increased from Rs. 100 per day to Rs. 200 per day.

Penalty for not furnishing TDS statement within the prescribed

time.

Ranging from Rs. 10,000 to

Rs.1,00,000

Penalty for furnishing incorrect statement

Ranging from Rs.10,000 to Rs.1,00,000

Updated guidelines for TDS other than salary:-

A. TDS on Interest other than Interest on securities- Section 194A

I- GENERAL:

Bank responsible for paying interest on term deposit to a resident is required to deduct tax at source. The expression term deposit has been

defined to mean deposits, excluding recurring deposits, repayable on the expiry of the fixed periods.

TDS rate is 10%. If the deductee does not furnish his PAN to the Bank, tax will be deducted (with effect from 01.04.2010) at the rate of 20%.

TDS is required to be deducted either at the time of credit of such income to the payees account or at the time of payment, whichever is earlier. TDS is required to be deducted even if credited to Interest Payable/Suspense A/c.

In case of term deposits with banks, no tax is required to be deducted up to an aggregate interest of Rs.10,000/- in a financial year.

No tax is required to be deducted in case of interest paid/credited to any banking company, co-operative bank, public financial institutions, LIC, UTI, an insurance company or a co-operative society carrying on the business of insurance or notified institutions.

II- Form 15 G/15 H: According to Sec 197A of Income Tax Act, 1961, the Bank is not required to

deduct tax on interest paid to individuals or a person (not being a company

or a firm) if such customer furnishes to the Bank a declaration in prescribed Form No. 15G /15H as applicable.

Declaration of Form 15G can be submitted by a individual or a person (not being a company or a firm) who is of less than 60 years (w.e.f 1st July

2012) of age and his/her total income should not exceed Rs.2,00,000 for FY 2012-13. In case the interest paid by the Bank to such customer during a financial year exceeds Rs.2,00,000 then TDS has to be deducted by the Bank on the entire amount of interest paid.

Declaration in Form No. 15H can be submitted by a resident individual who is of the age of 60 years or more (w.e.f 1st July 2012) claiming interest income without deduction of tax.



Form 15G/15H can be accepted from account holders who are having deposits in our Bank and earn interest income. It cannot be accepted for any other income such as salary and / or pension.

Form 15G/15H is to be obtained at the beginning of each financial year (1st April) for existing accounts. Form 15G/15H has to be obtained for all new accounts wherever applicable as and when account is opened.

No exemption is given against Form 15G / 15H to non-resident customers.

Form 15H can be accepted from the senior citizens whose tax liability is nil even though their estimated total income exceeds the exempted limit of

Rs.2,50,000. Therefore Form 15H can be obtained even if the Interest payment crosses Rs.2,50,000/-.

The declaration in Form 15G/ 15H is required to be obtained in duplicate from the customer (payee).

One copy of the declaration is required to be submitted to the Commissioner of Income Tax of the concerned area on or before 7th day of the next following month in which declaration is made.

Immediately on receipt of Form 15G / 15H, enter the status in the accounts

of the customer in CBS system stating the fact that Form 15G/15H is received in this account. This will ensure non-deduction of tax at source.

Branch should ensure that in Form 15G/15H status of residency Resident/Non Resident is clearly mentioned, all columns are filled in properly, non-relevant portion is striked off.

The Branch should ensure that the customer has mentioned his/her PAN in the Form 15G/15H.

III-Non- deduction OR Lower deduction of TDS

The Bank may not deduct TDS or deduct TDS at a lower rate if a customer

submits a certificate issued by the Assessing Officer of its jurisdiction under Sec 197 (1) for nil deduction or lower deduction. Branch should ensure the

authenticity & validity of the certificate furnished by the customer and necessary changes in the CBS system may be made for the period mentioned in the certificate.

IV-TDS on NRE Deposits: Interest earned on Non Resident External (NRE) accounts and Foreign Currency Non Resident (FCNR) accounts are tax free in India. Hence, there would be no TDS. Provided that such individual is a person resident outside India as defined in clause (q) of section 2 of the said Act or is a person who has been permitted by the Reserve Bank of India to maintain the aforesaid

Account.

V-TDS on NRO Deposits under Sec 195 Income Tax rates will be as per Double Taxation Avoidance Agreement

(DTAA) agreed between India and various countries. The updated list of

DTAA countries and prevalent concessional tax rates is given as per Annexure - 1

In order to extend the benefit of concessional rate of withholding tax on NRO

deposits, following documents are required to be obtained from the NRI customer



a. Tax Residency Certificate from the Income Tax Authorities of the country of the customer as per specimen enclosed in Annexure -2

b. A Declaration from NRI concerned as per specimen enclosed in

Annexure -3. The declaration is required to be stamped in India as per State Laws within 90days.

If the above documents are not submitted by the depositor, then Income Tax at a rate of 30.90% will be deducted at source on interest earned in

the NRO accounts irrespective of the amount of interest. Branches should note the following:

Branches are required to mark/update in the Finacle, the concessional tax

rate and Tax Residency Certificate and Declaration at the beginning of every financial year. The same shall be valid upto the validity of Tax Residency Certificate or 31st March or maturity of the deposit whichever is earlier.

B. TDS on Contractors & Sub-Contractors Section 194C

Nature Rate of TDS Exemption

Payment to Resident Contractor and Sub-contractor (in respect of any work including supply of labour for carrying out any work)

In case of Individuals/HUF:1%

In case of domestic company or firm:2%

Contract payment not exceeding Rs 30,000 per single contract or aggregate Rs 75,000 in a year.

In case of work contract being manufacturing or supplying product, TDS

shall be deducted on the invoice value excluding the value of material, if

such value is mentioned separately in the invoice. Where the material component has not been separately mentioned in the invoice, TDS shall be

deducted on the whole of the invoice value.

Tax is deductible on the entire consideration including Service Tax, if any. With effect from 01/10/2009, limit of cash payment to Transport Operators

u/s 40 A (3) is enhanced from Rs. 20000/ to Rs. 35000/ in the case of payment made for plying, hiring or leasing goods carriages. For other payments, the limit of Rs. 20,000/- will continue.

If the deductee is a Transport Contractor and he furnishes valid PAN

to the Bank, NO TDS is applicable. For this purpose, the transport operator is a person who is in the business of plying, hiring or leasing goods carriages. Please note that deductors who make payment to transporters without deducting TDS (as they have quoted PAN) will be required to intimate these PAN details to the Income tax Department through Return No.26Q. Further, while filing return no. 26Q, the Branch should mention Nil rate in all entries related to such transporters by inserting a Tag T in the remarks.



C. TDS on Commission & Brokerage Section 194-H

Nature Rate of TDS Exemptions

Payment to Resident by

way of commission or brokerage

10%

Aggregate payment during the

Financial Year does not exceed Rs 5,000/-

Tax is deductible on the entire consideration including Service Tax, if any If the recipient of income does not furnish his PAN to the Bank, Tax will be deducted at the rate of 20%.

D. TDS on Rent Section 194-I

Nature Rate of TDS Exemptions

Payment to Resident by way of rent on land/ building/machinery/ Equipment and Furniture

Rent on Plant and Machinery:2%

Rent on Land and Building or Furniture or fittings 10%

When aggregate payments to the payee during a financial year does not exceed Rs 1,80,000/-.

Please take note of the following with regard to Sec-194-I:

If there are a number of payees, each having definite and ascertainable share in the property, the limit of Rs.180000/- will apply to each of the payee/co-owner separately.

Ownership is immaterial. TDS is to be deducted whether payment is made under any lease, sub lease or any other agreement/ arrangement.

If a building is let out along with Furniture/Fittings but rent is payable

under two separate agreements (one for building and another for

furniture/fittings) the composite rent is subject to tax under Sec-194I.

If advance rent is paid on or after 31st May, 1994, it is subject to tax deduction at the time of payment.

In case the tenant makes a non-refundable deposit, tax would have to be

deducted at source as such deposit represents the consideration for the use of land and building, etc.

Tax is not deductible on service tax components of the rent.

Where apart from rent, the municipal tax, ground rent etc. are to be borne by the tenant i.e. Bank, no tax will be deducted on such municipal tax, ground rent etc. paid/reimbursed to the landlord.

If the recipient of income does not furnish his PAN to the Bank, Tax will be deducted at the rate of 20%.

TDS is not applicable, if payee is GOI or local authorities.



E. Section 194-J: Deduction of tax at source on fees for professional or

technical services: Professional Services means services rendered by a person in the course

of carrying on Legal, Medical, Engineering, Architectural Profession, Profession of Accountancy, Technical Consultancy, Interior decoration,

authorized representative, film artist, company Secretary and information technology.

Explanation:

Authorised Representative means a person who represents any other person, on payment of any fee or remuneration before any Tribunal or authority constituted or appointed by or under any law for the time being in force, but does not include an employee of the person so represented or a person carrying on legal profession or a person carrying on the profession of accountancy;

Film Artist means any person engaged in his professional capacity in the

production of a cinematograph film whether produced by him or by any other person, as

(i) an actor

(ii) a cameraman;

(iii) a director, including an assistant director;

(iv) a music director, including an assistant music director;

(v) an art director, including an assistant art director;

(vi) a dance director, including an assistant dance director;

(vii) an editor;

(viii) a singer;

(ix) a lyricist;

(x) a story writer;

(xi) a screen-play writer;

(xii) a dialogue writer; and

(xiii) a dress designer

With effect from 1st July 2010, the exemption limit for deduction of TDS is Rs.30000/-. The rate of tax to be deducted is 10%.

If a consolidated bill is given by a professional /consultant for his fees as

well as out of pocket expenditure, then the entire amount of bill including service tax is subject to TDS. If a separate bill is given for reimbursement of out of pocket expenditure, then reimbursement of expenditure is not subject to tax deduction.

F. Tax deduction at source on the deposits in banks in the name of the

Registrar/ Prothonotary and Senior Master attached to the Supreme Court/ High Court etc during the pendency of litigation of

claim/compensation-reg.



1. Deduction of Tax under section 194A of Income Tax Act, 1961 has to be made on the deposit kept in the name of abovementioned persons.

2. There may be situation where in the course of the proceedings before

Supreme Court/ High Court/ any other court or tribunal (hereinafter the court), one or more than one litigant (hereinafter the depositor) is directed by the court that a specified amount (hereinafter deposit) be

deposited in the bank either directly or through the court in order to protect the interest of litigants. Such deposits (usually time deposits) are kept in

the bank in the names of Registrar/Prothonotary and Senior Master or any other name as per the order of the court. Tax is to be deducted on the interest periodically accruing on such deposits/ time deposits and TDS certificate is to be issued in Form 16A.

3. It has been clarified by the IT Department that:

i. where one or more than one litigant is directed by the court that a

specified amount be deposited in the bank directly or through the court, the bank shall in accordance with the provisions of the IT Act,

deduct tax at source on the interest accruing on the above mentioned deposit(s) as per existing procedure and at the rates in force. The certificate of deduction of tax shall be issued by the bank in the name of the depositor. If more than one person has been directed to deposit any specified amount, the amount of TDS shall be corresponding to each such depositor for the portion of interest accrued in its respective share in the total amount deposited and TDS certificates shall be accordingly issued by the bank.

ii. At the time of making deposit of the amount ordered by the court,

the depositor(s) shall submit a prescribed declaration with the court for record purpose and to facilitate the administration of TDS. The Registrar/Prothonotary and Senior Master or any person authorized by the court will pass the information furnished therein to the bank concerned for TDS properly in the name of the depositor(s) in accordance with the provisions of the Act.

iii. Some of the instances covered by this circular are: a. In the course of appellate proceedings, the court directs an

insurance company (the depositor) to deposit a part of

compensation awarded by Motor Accident Claims Tribunal. This amount is deposited as Time Deposit in a bank in such name as per

the directions of the court, the credit of TDS on interest accruing on such deposit will be allowed to the Insurance Company which has made the said deposit.

b. The Court while deciding the cases of land compensation directs the authority concerned (liable for making payment of compensation) to deposit any sum in time deposit in any bank, the TDS on time deposit shall be in the name of the authority making deposit, if such authority is an entity liable for charge to Income Tax on its income.

In case the deposit in the bank is by Central or State Government no tax will be deducted.



c. The court adjudicating upon financial dispute during pendency of proceedings direct any party (ies) to deposit any amount as security in time deposit, the TDS on interest accruing on such deposit will be in name of the depositor irrespective of the fact that at the directions of the court such time deposit has been drawn in the name of the officer of the court or joint name or any other name.

4. The above procedure shall not apply to: a. any deposit in the bank held or dealt by the court or any other

person appointed by the court in the capacity of being an administrator or receiver or any authority of similar nature; or

b. any deposit which has not been made by any specific depositor but has arisen due to attachment made by the Court; or

c. the cases of representative assessee within the meaning of section 160 of the Act.

Therefore in view of point no.4 above, TDS in respect of income, which

the Court of Wards, the Administrator- General, the Official Trustee or any receiver or manager (including any person, whatever his

designation, who in fact manages property on behalf of another) appointed by or under any order of a court, receives or is entitled to receive, on behalf or for the benefit of any person, such Court of Wards, Administrator-General, Official Trustee, receiver or manager; shall be deducted as per extant guidelines and TDS certificate shall be issued in the name of depositor only.

G. As per latest guidelines relating to TDS payment date, mode of

payment of TDS, TDS Certificates and filing of statement of TDS (TDS Return), the following rules will apply:

i. Time of Payment - All sums deducted as TDS shall be paid to the credit

of Central Government: a) On or before 30th day of April where the income or amount is

credited or paid in the month of March and b) In any other case before seven days from the end of the month in

which the deduction of tax is made. ii. Mode of Payment:

The payment of TDS is to be made to Government account only

through e-payment i.e. through Net Banking only as it is mandatory as per law.

iii. Form of TDS Certificate to be issued / received:

A. The certificate of deduction of tax at source by the employer on behalf of the employee under sub section (1A) of section 192 shall be in,

a. Form 16 and 16AA (where the salary of an employee before

allowing deductions does not exceed ` 1,50,000/-), if the deduction

or payment of tax is relating to salary. b. Form 16A, if the deduction is other than salary. It is now

mandatory for all deductors including Banks to issue TDS



certificate in Form No.16A generated through TIN central system which is to be downloaded from the TIN Website with a unique TDS certificate number in respect of all sums deducted on or after the 1st day of April, 2011 other than section 192. (For detailed guidelines please refer our circular no.BCC/BR/103/168 June 8, 2011).

c. It is further clarified that TDS certificate issued in Form

No.16A by the deductor and downloaded from the TIN Central System shall only be treated as a valid TDS

certificate. d. As a deductee branch should obtain TDS certificate downloaded from TIN central system only.

B. The TDS certificate shall specify:

a. The valid Permanent Account Number (PAN) of the deductee. b. Valid Tax Deduction and Collection Account Number (TAN) of the

deductor.

c. Challan Identification Number or Numbers. d. (i) Receipt number of the relevant quarterly statement i.e. 26Q of

tax deducted at source which is submitted to NSDL in respect of TDS other than salary. (ii) Status of the booking should be matched. (iii)The deductor should authenticate the correctness of the contents

before issue of the said certificate by either using digital signature or manual signature.

(iv)The TDS certificate issued in Form No.16A by the deductor and downloaded from the TIN Central system shall only be treated as

a valid TDS Certificate. (v)The receipt number of all the 24Q quarterly statements in case

the statement is for tax deducted at source from income chargeable under the head Salaries.

iv. Periodicity & Time Limit for TDS Certificate to be issued:

The certificates in Forms specified in column 1 of the table below shall be furnished to the employee or the payee as the case may be, as per the periodicity specified in the column 2 and by the time specified in column 3 of the following table.

FORM No. (1)

PERIODICITY (2)

DUE DATE (3)

16/16AA Annual By 31st May of the Financial Year immediately following the financial year in which the income was paid and the tax deducted.

16A Quarterly Within 15 days from the due date for furnishing the statement of tax deducted at

source under Rule 31 A



v. Filing of TDS Return: a. The provisions are as under:

Details of Income

Periodicity Form No. Time Limit

Salary Quarterly 24Q 27A

15 days after the expiry of each quarter 45 days in case of March Quarter

Other than salary

Quarterly 26Q 27A

15 days after the expiry of each quarter

45 days in case of March Quarter

Payment to

Non-resident

Quarterly 27Q

27A

15 days after the expiry of each

quarter 45 days in case of March Quarter

The branches at the time of filing the statement of tax deducted with NSDL should ensure to mention properly:

i. Tax Deduction Account Number (TAN) in the statement. ii. Permanent Account Number (PAN) in the statement. iii. PAN of all deductees. Where PAN of the deductee is not available

Branch/Office should not mention the PAN of the Bank in any case and report the same as PAN not available.

iv. Where 15G/15H is submitted and no tax is deducted, such transactions to be reported in quarterly statement of Tax i.e. Form No. 26Q (Return) with appropriate flag (flag B) as provided in the return.

v. Particulars of tax paid to the Central Government including Book Identification Number or Challan Identification Number as the case may be.

vi. Branch/Office to ensure the timely and correct filing of quarterly return. Fee and penalty has been introduced w.e.f 01st July 2012 for not furnishing TDS statement within prescribed time and for furnishing incorrect information in the TDS statement.

Nature of Penalty Amount of Penalty

Fee for late furnishing of TDS

statement

Increased from Rs. 100 per day to Rs.

200 per day.

Penalty for not furnishing TDS statement within the prescribed

time.

Ranging from Rs. 10,000 to

Rs.1,00,000

Penalty for furnishing incorrect

statement

Ranging from Rs.10,000 to

Rs.1,00,000

b. Reporting of 15G/15H transactions in quarterly TDS statements: As per Income Tax Rules 31A (4)(v), (deductor) the Bank at the time of

preparing the return/statements of Tax Deducted at Source shall furnish particulars of amount paid or credited on which tax was not deducted in view of the compliance of provisions of section 197 by the payee, such transactions are required to be reflected in TDS statements/returns by flagging such

transactions with the appropriate flag (flag B) as provided in form 26Q.



In view of above branches are advised that, in TDS statement submitted by

the branches to Income Tax Authority, transactions which are exempted from tax due to submission of Form 15G/15H, should be marked with appropriate flag (flag B).

H. Penalty for failure to deposit tax

If a person fails to deduct tax at source or after deduction fails to deposit

TDS, he is liable to pay:

Rate of Interest (per month or part)

Period for which interest is payable

1 per cent From the date on which tax was deductible to the date on which tax is actually deducted.

1.5 per cent From the date on which tax was actually deducted to the date on which tax is actually paid.

I. Permanent Account Number (PAN) - Sec 139A and Form 60/61 Every person shall quote his permanent account number in all documents pertaining to the transaction specified below: 1. A time deposit exceeding Rs.50,000, with a banking company to

which the Banking Regulation Act, 1949 applies 2. Opening an account with a banking company to which the Banking

Regulation Act, 1949 applies (but other than time deposit account)

3. Payment in cash for purchase of bank drafts or pay orders or bankers cheques from a bank for an amount aggregating Rs. 50,000

or more during any one day. 4. Deposit in cash aggregating Rs. 50,000 or more during any one day

with a bank. 5. Making an application to any banking company or to any other

company or institution for issue of a credit card or debit card 6. Payment in cash in connection with travel to any foreign country of an

amount exceeding Rs. 25,000 at any time. 7. Payment to a dealer

a. Of an amount of Rs.5 lakh or more at any one time, or b. Against a bill for an amount of Rs. 5 lakh or more,

For purchase of bullion or jewellery. 8. A contract value exceeding Rs. 1 lakh for sale or purchase of securities

as defined in Sec 2 (h) of the Securities Contracts (Regulation) Act, 1956.

For further details please refer to Rule 114B of the Income Tax Rules. The following points should be noted:

Payment of Cash includes payment for purchase of foreign currency.

Travel to foreign country does not include travel to Bangladesh, Bhutan, Maldives, Nepal, Pakistan or Sri Lank or travel to Saudi Arabia

for Haj or travel to China on pilgrimage to Kailash Mansarovar.



Where a person making an application for opening a bank account, is a minor and who does not have any income chargeable to income tax, he shall quote the PAN of his father or mother or guardian, as the case may be.

Any person who has not been allotted a PAN shall make a declaration in Form No. 60 giving therein the particulars of above mentioned transactions.

The provisions of Section 139A (relating to furnishing of PAN) shall not apply

to the following class or classes of persons, namely: 1. A person who has agricultural income and is not in receipt of any other

income chargeable to income tax [such person shall make a declaration in Form No.61 in respect of transactions referred above].

2. Non- Residents 3. The Central Government, State Government and Consular Officers in

transactions where they are payers. The declaration in this form must be made on each occasion on which any of

the specified transactions are entered into, and handed over to the branch. Branch should ensure that proof of address is given through one of the

specified documents mentioned in the form. The form should be received in duplicate and a copy of the same should be

forwarded to the Commissioner of Income Tax (Central Information Branch) having territorial jurisdiction over the area in which the transaction is entered, in two instalments as mentioned below:

Particulars Due Date

Forms received from April 1 to September 30

By October 31

Forms received from October 1 to March 31

By April 30

J. Others: Please note the following:

PAN is compulsory for deduction of tax at normal rates. If the recipient does not furnish PAN to the Bank, tax should be deducted at the rate of 20% or normal rate whichever is higher.

If valid PAN is not furnished then TDS rate is 20% (or normal tax rate whichever is more) to all (including non residents). For e.g. if withholding

tax for non resident is 30.90% and the non resident has not submitted his PAN, then the Withholding tax should be deducted at 30.90% as it is more than 20%. However, if the country in which he is a resident has a Double Tax Avoidance Agreement, the tax rate could be even 10% or 15%. In such case as the non resident has not submitted valid PAN, then the withholding tax should be deducted at 20% and not at lower rate (i.e. 10% or 15%).

Please quote PAN in all correspondences between the bank and the recipient.

Surcharge @ 2% on TDS is applicable only when the recipient is a foreign company and the total payment (before TDS deduction) to such foreign

company exceeds Rs. 1 crore. Education Cess (@2%) and secondary and higher education cess (@1%) is

applicable on any payment made to a non-resident or a foreign company.



In case of payment to a person who is resident of India surcharge, education cess and higher education cess is not applicable while deducting TDS.

K. Timely filing of TDS Return & prompt filing of correction statement

Time & again we receive letters from Income Tax Department/Ministry of

Finance expressing their seriousness for correct and timely filing of TDS statements and prompt filing of correction statements, if required, so as to

avoid punitive action by the tax authorities and inconvenience to deductees/tax payers on account of missing or inaccurate tax credit of their TDS. Branches are therefore advised to ensure that quarterly TDS returns and also correction statements as and when any mistakes are pointed out by deductee/tax department are filed within prescribed time limit. As non-compliance of tax provisions as mentioned above not only attracts

penalty/penal proceedings but this also leads to complaints by the customers.

L. Summary Branches / offices are advised to go through important aspects as mentioned above. All the Regional offices are requested to guide the branches, if any required, on the above guidelines. Rates of TDS have been summarised in Annexure 4 for ready reference of Branches / Offices.

Based on repetitive queries received from various branches/offices we have compiled Frequently Asked Questions (FAQ) and Answers as mentioned

in Annexure -5 to enable the branches / offices to address the customers common queries. We trust that the FAQ will be beneficial to the branches/offices. For any other queries, the Regional offices, may forward the branchs query to Corporate Taxation Department at [email protected] or call us at (022) 66985288 for further guidance. Yours faithfully,

(V. K. Gupta) GENERAL MANAGER (CORPORATE A/Cs & TAXATION AND CFO)

Annexure 1.

Withholding Tax Rates

[Tax rates applicable in India under ADT Agreement]

Country Dividend [not being covered by section 115-O] Interest Royalty Fees for technical

service

Right of

State to

tax

Tax rate Right of

State to

tax

Tax rate Right of

State to

tax

Tax rate Right of

State to

tax

Tax

rate

Armenia Both 10% Both 10% Both 10% Both 10%

Australia Both 15% Both 15% Both [Note 3] Both [Note

3]

Austria Both 10% Both 10% Both 10% Both 10%

Bangladesh Both 10% (if at least 10% of the capital of the

company paying the dividend is held by the

recipient)

Both 10% [Note 2] Both 10% No separate

provision

Belarus Both 10% if paid to a company holding 25% shares;

otherwise 15%

Both 10% [Note 2] Both 15% Both 15%

Belgium

Both 15% Both 15% (10% if

granted by a

bank)

Both 10% Both 10%

Botswana Both 7.5% (if shareholder is a company and holds at

least 25% shares in the investee-company);

otherwise 10%

Both 10% Both 10% Both 10%

Brazil Both 15% Both 15% [Note 2] Both 25% for use of

trademark; 15% for

others

No separate

provision

Dividend [not being covered by section 115-O] Interest Royalty Fees for technical

service

Right of

State to

tax

Tax rate Right of

State to

tax

Tax

rate

Right of

State to

tax

Tax rate Right of

State to

tax

Tax

rate

Bulgaria Both 15% Both 15%

[Note

2]

Both 15% of royalty relating to literary, artistic,

scientific works other than films or tapes used

for radio or television broadcasting; 20% in

other cases

Both 20%

Canada Both 15% if at least 10% of the shares of the

company paying the dividends is held by

the recipient of dividend; 25% in other

cases

Both 15%

[Note

2]

Both 10%-20% Both 10%-

20%

China Both 10% Both 10%

[Note

2]

Both 10% Both 10%

Cyprus Both 10% if at least 10% of the capital of the

company paying dividend is held by the

recipient, 15% in all other cases

Both 10%

[Note

2]

Both 15% Both 10%

Czeck

Republic

Both 10% Both 10%

[Note

2]

Both 10% Both 10%

Country Dividend [not being covered by section 115-O} Interest

Royalty Fees for technical service

Right of

State to

tax

Tax rate Right of

State to

tax

Tax rate Right of

State to tax

Tax rate Right of State

to tax

Tax rate

Denmark Both 15% if at least 25% of the shares of the


recipient; 20% in other cases

Both 10% if loan is

granted by bank;

15% for others

[Note 2]

Both 20% Both 20%

Germany Both 10% Both 10% [Note 2] Both 10% Both 10%

Georgia Both 10% Both 10% Both 10% Both 10%

Finland Both 10% Both 10% [Note 2] Both 10% Both 10%

France Both 10% Both 10% Both 10% Both 10%

Greece Source 20% Source 20% Source 30% No separate provision

Hungary Both 10% Both 10% Both 10% Both 10%

Indonesia Both 10% if at least 25% of the shares of the



Both 10% [Note 2] Both 15% No separate provision

Iceland Both 10% Both 10% Both 10% Both 10%

Ireland Both 10%-15% Both 10% [Note 2] Both 10% Both 10%

Israel Both 10% Both 10% [Note 2] Both 10% Both 10%

Italy Both 15% if at least 10% of the shares of the

company paying dividend is beneficially

owned by the recipient company; 20% in

other cases




Right of

State to

tax

Tax rate Right of

State to

tax

Tax rate Right of

State to tax


to tax

Tax rate

Japan Both 10% Both 10% Both 10% Both 10%

Jordan Both 10% Both 10% [Note 2] Both 20% Both 20%

Kazakstan Both 10% Both 10% [Note 2] Both 10% Both 10%

Kenya Both 15% Both 15% [Note 2] Both 20% Both 17.5%

Korea Both 15% if at least 20% of the capital of the



Both 10% if interest is

paid to a bank;

15% for others

[Note 2]

Both 15% Both 15%

Kuwait Both 10% Both 10% Both 10% Both 10%

Kyrgyz

Republic

Both 10% Both 10% Both 15% Both 15%

Libyan Arab

Jamahiriya

Source 20% Source 20% Source 30% No separate provision

Luxembourg Both 10% Both 10% Both 10% Both 10%

Malaysia Both 10% Both 10% Both 10% Both 10%

Malta Both 10% if at least 25% of the shares of the


recipient company; 15% in other cases




Right of

State to

tax

Tax rate Right of

State to

tax

Tax rate Right of

State to tax


to tax

Tax rate

Mangolia Both 15% Both 15% [Note 2] Both 15% Both 25%

Mauritius Both 5% if at least 10% of the capital of the



Both 20% [Note 2]; Nil

in some cases

Both 15% No separate provision

Montenegro Both 5% (In some cases 15%) Both 10% Both 10% Both 10%

Myanmar Both 5% Both 10% Both 10% No separate provision

Morocco Both 10% Both 10% [Note 2] Both 10% Both 10%

Mozambique Both 7.5% Both 10% Both 10% No separate provision

Namibia Both 10% Both 10% [Note 2] Both 10% Both 10%

Nepal Both 10% if at least 10% of the shares of the



Both 10% if paid to

bank,; for other

15% {Note 2}


Netherlands Both 10% Both 10% [Note 2] Both 10% Both 10%


Royalty Fees for technical

service

Right of

State to

tax

Tax rate Right of

State to

tax

Tax rate Right of

State to

tax

Tax rate Right of

State to tax

Tax rate

New Zealand Both 15% Both 10% [Note 2] Both 10% Both 10%

Norway Both 15% if at least 25% of the capital of the




Oman Both 10% if at least 10% of shares are held by the

recipient; 12.5% in other cases


Philippines Both 15% if at least 10% of the shares of the



Both 10% if interest is

received by a

financial institution

or insurance

company; 15% in

other cases

Both 15% if it is payable

in pursuance of any

collaboration

agreement

approved by the

Government of

India

Poland Both 15% Both 15% [Note 2] Both 22.5% Both 22.5%

Portuguese

Republic


Quatar Both 5%-10% Both 10% [Note 2] Both 10% Both 10%

Romania Both 15% if at least 25% of the shares of the co.

paying the dividend is held by the recipient;

20% in other cases

Both 15% [Note 2] Both 22.5% Both 22.5%

C ountry Dividend [not being covered by section 115-O} Interest


Right of

State to tax

Tax rate Right of

State to

tax

Tax rate Right of

State to

tax

Tax rate Right of

State to tax

Tax rate

Russian

Federation

Both 10% Both 10% [Note 2] Both 10% Both 10%

Saudi Arabia Both 5% Both 10% Both 10% No separate provision

Serbia Both 5% (if recipient is company and holds 25%

shares) otherwise 15%

Both 10% Both 10% Both 10%

Singapore Both 10% if at least 25% of the shares of the



Both 10% if loan is granted

by a bank/similar

institute including an

insurance company;

15% for others

Both 10% Both 10%

Slovenia Both 5-15% Both 10% Both 10% Both 10%

South Africa Both 10% Both 10% [Note 2] Both 10% Both 10%

Spain Both 15% Both 15% [Note 2] Both [Note 4] Both [Note 4]

Sri Lanka Both 15% Both 10% [Note 2] Both 10% Both 10%

Sudan Both 10% Both 10% Both 10% No separate provision

Sweden Both 10% Both 10% [Note 2] Both 10% Both 10%

Swiss Both 10% Both 10% [Note 5] Both 10% Both 10%

C ountry Dividend [not being covered by section 115-O} Interest


Right of

State to tax

Tax rate Right

of

State

to tax

Tax rate Right of

State to

tax


to tax

Tax rate

Syrian Arab

Public

Both 10% (5% if shareholders is a company holding

at least 10% shares)

Both 10% Both 10% No separate provision

Taipei

Both

12.5%

Both

10%

Both

10%

Both 10%

Tajikistan Both 10% (5% if shareholder is a company and holds

25% of shares)

Both 10% Both 10% No separate provision

Tanzania Both 10% if at least 10% of the shares of the

company paying the dividend is held for a

period of at least 6 months prior to the date of

payment of the dividend; 15% in other cases

Both 12.5% Both 20% No separate provision

Thailand Both 15% if dividend is paid by an industrial

company and at least 10% of capital of such

company is held by the reci-pient; 20% in other

cases

Both 10% for financial

institutions and insurance

company; 20% for others

[Note 2]


Trinidad and

Tobago

Both 10% Both 10% [Note 2] Both 10% Both 10%

Turkey Both 15% Both 10% if recipient is bank,

etc.; 15% in other cases

[Note 2]

Both 15% Both 15%

Country Dividend [not being covered by section 115-O} Interest Royalty Fees for technical

service

Right of

State to

tax

Tax rate Right of

State to tax

Tax rate Right of

State to

tax

Tax rate Right of

State to

tax

Tax rate

Turkmenistan Both 10% Both 10% [Note 2] Both 10% Both 10%

Uganda Both 10% Both 10% Both 10% Both 10%

Ukraine Both 10%-15% Both 10% [Note 2] Both 10% Both 10%

United Arab

Emirates

Both 5% if at least 10% of the capital of the



Both 5% if loan is granted by a

bank/similar financial

institute; 12.5% for others


United Arab

Republic

Source 10% Source 20% Source 30% No separate provision

United

Kingdom

Both 15% Both 10% if interest is paid to a

bank; 15% for others [Note

2]

Both [Note 3] Both [Note 3]

United States

Mexican


United States Both 15% if at least 10% of the voting stock of the



Both 10% if loan is granted by a

bank/similar institute

including insurance

company; 15% for others

Source [Note 3] Source [Note 3]

Uzbekistan Both 15% Both 15% [Note 2] Both 15% Both 15%

Vietnam Both 10% Both 10% [Note 2] Both 10% Both 10%

1. 10 per cent of the gross amount of the interest on loans made or guaranteed by a bank or other financial institution carrying on bona fide banking or financing

business or by an enterprise which holds directly or indirectly at least 10 per cent of the capital of the company paying the interest.

2. Dividend/interest earned by the Government and certain institutions like the Reserve Bank of India is exempt from taxation in the country of source.

3. Royalties and fees for technical services would be taxable in the country of source at the following rates :

a. 10 per cent in case of rental of equipment and services provided along with know-how and technical services ;

b. any other case

i. during first five years of the agreement

- 15 per cent if the payer is Government or specified organisation;

- 20 per cent in other cases;

ii. subsequent years, 15% in all cases.

Income of Government and certain institutions will be exempt from taxation in the country of source.

4. Royalties and fees for technical services would be taxable in the country of source at the following rates :

a. 10 per cent in case of royalties relating to the payments for the use of, or the right to use, industrial, commercial or scientific equipment;

b. 20 per cent in case of fees for technical services and other royalties.

5. 10 per cent of the gross amount of the interest on loans made or guaranteed by a bank or other financial institution carrying on bona fide banking or financing

business or by an enterprise which holds directly or indirectly at least 20 per cent of the capital of the company paying the interest.

Country

Dividend [not being covered by section 115-O} Interest


Right of

State to tax

Tax rate Right of

State to tax

Tax rate Right of

State to tax

Tax rate Right of

State to tax

Tax rate

Zambia Both 5% if at least 25% of the shares of the company

paying the dividend is held for a period of at

least 6 months prior to the date of payment of

the dividend; 15% in other cases

Both 10% [Note 2] Both 10% No separate provision

Annexure 2

TAX RESIDENCY CERTIFICATE

This is to certify that Mr / Mrs / Miss __________________________ residing at __________________________________________________________________

__________________________________________________________________ __________________________________________________________________

is resident of ___________________ (name of the country) within the meaning of Avoidance of DoubleTaxation Agreement with India and ___________________ (name of the country) and various conventions and that his / her worldwide income

is subject to tax in the _________________ (name of the country)

This certificate is issued at the request of the assessee and is valid for the Financial Year ____/___/______to ____/____/________.

INCOME TAX

ASSESSING OFFICER WITH SEAL

Annexure - 3

FORMAT FOR DECLARATION FOR WITHHOLDING TAX ON N.R.O. DEPOSITS

The Branch Head,

Bank of Baroda,

___ ___ __ _____ ____ Branch,

___ ___ __ _____ ____.

DECLAR ATION

1. I am a non - resident within the meaning of the Indian Income Ta x Act, 1961 for the

Financial Year__________ i. e.period from 01 April _____ to 31 March _____.

2. I am a Tax Resident of (name of the country) within the meaning of the Agreement for

Avoidance of Double Taxation between India and (name of the country) i. e. the Tax

Treaty.

3. I am the beneficial owner of the interest paid by your Bank for the period ___________

to___________ and that I do not carry on any business in India or perform any

independent personal services in India through a permanent establishment or fixed base

situated in India.

4. I undertake to include the said interest income in my tax liability in the country of my

Tax Residency i. e. (name of the country)

5. I am entitled to the benefits of the said Tax Treaty in respect of interest earned by me

from your Bank on NRO Deposits for the period ____ ___ __ __ to _______ ____ and

that the said income is subject to the withholding tax @ _ __ __% plus cess if any.

6. I undertake to provide a fresh declaration promptly in case of any change in the facts

given above. I also undertake to provide fresh declaration for each financial year by 15th

April of the year.

7. I undertake to indemnify your Bank any tax loss including interest and penalty which

may result on account of providing me tax benefits as per my declaration. The obligation

to indemnify shall survive indefinitely.

8. I under take to provide my Tax Residency Certificate from the Tax Authorities of my

country of residence.

9. I confirm that any delay or failure to provide any information as desired by your Bank,

will allow the Bank to apply the income tax rate provided in Indian Income Tax Act,

1961 ignoring the lower rate in the Tax Treaty.

10. I confirm that your Bank will not be liable to refund any withholding tax deducted from

the said interest income.

(SIGNATURE )

Date: _______ NAME: ____________________________ Place: _______ ACCOUNT DETAILS: __________________

Annexure-4

RATES OF TDS FOR FY 12-13

Sr.

No

Sec Nature of Payment TDS

Rate**

When TDS is

applicable

1. 194A Interest paid on Deposits to a customer

residing in India

10% If total interest paid

during a financial year

exceeds Rs.10,000.

2. 194C Payment to a contractor / sub-contractor

residing in India

- Payment to a contractor or sub-contractor who

is an individual / HUF

- Payment to a contractor or sub-contractor who

is not an individual / HUF

1%

2%

If contract payment

exceeds

-Rs30,000 per single

contract payment or

-Rs75,000 in aggregate

during a financial year.

3. 194H Commission or Brokerage to a person residing

in India

10% If aggregate payment

to the payee during a

financial year exceeds

Rs.5,000.

4. 194 I Rent to a person residing in India

- Rent of plant and machinery

- Rent of land or building or furniture or fitting

2%

10%

If aggregate payment



Rs. 1,80,000.

5. 194J Professional fees, technical fees, royalty

paid or payable to a person residing in India.

Note: Remuneration (other than salary) paid to

Director w.e.f 01.07.2012 (not applicable to

branches)

10% If aggregate payment



Rs.30,000.

6. 195 Interest on NRO deposits

- If the customer is a resident of a country with

whom India has entered into Double Tax

Avoidance Agreement (DTAA) Refer

Annexure -1

- If the customer is a resident of a country with

whom no DTAA has been entered by India.

Rate as

per DTAA

30.90%

TDS is applicable on

any sum paid as

interest on NRO

deposits to a NRI

customer.

** If the recipient of income does not furnish PAN to the Bank, TDS should be deducted at

the rate of 20% or normal rate whichever is higher.

Note:

1. If the recipient is a person residing in India, then surcharge, education cess, higher

education cess is not applicable.

2. If the recipient is a foreign company and the total payment (before TDS deduction) to

such foreign company exceeds Rs.1 crore, then surcharge @ 2% is applicable.

3. Education cess and Higher Education cess is applicable on payment to a NRI person or

foreign company.



Annexure -5

FREQUENTLY ASKED QUESTIONS AND ANSWERS

Sr.

No

Frequently asked questions Answers

1. Mr. X wishes to receive interest without deduction of TDS and approaches the Branch. Can Mr. X avail exemption from TDS?

Yes. Mr. X can submit either - Form 15 G/H (Refer Point A II

on Page 2 of this Circular ) OR - Certificate under Sec 197(1) (Refer

Point A- III on Page 3 of this Circular)

2. Can a NRI customer submit Form

15G/15H and avail TDS exemption?

No.

Form 15G/15H certificate is applicable only to a customer who is resident in

India.

3. Mr. A is a NRI customer residing in UK. He wants to avail the benefit of Double Tax Avoidance Agreement (DTAA). What documents should the Branch obtain from Mr. A?

Mr. A will have to submit the following: -Tax Residency Certificate - Declaration to the Branch. (Refer Point AV on Page 3 of this Circular)

4. Mr. B has a Fixed Deposit with the

Bank. Mr. B receives monthly interest on his FD. He had submitted Form 15G to avail TDS exemption during FY-11-12. Does he have to submit Form 15G for every year?

Yes.

Mr. B should submit Form 15G at the beginning of every financial year.

5. In the above case, when should Mr. B submit Form 15G declaration for availing TDS exemption for FY 12-

13?

Mr. B should submit Form 15 G in April 2012 before interest is paid /credited to his account.

6. Whether TDS is required to be deducted on interest payment on deposits made by any Co-operative Bank?

No. Refer Point A-I on Page 2 of this Circular)

7. Can the branch refund the TDS deducted on interest paid to Mr. B

prior to submission of Form 15G on 15.05.2012?

No. The Bank cannot refund TDS which was

deducted prior to submission of form 15G.



Sr. No


8. Mr. X had submitted Form 15G in April 2012. Interest paid to Mr. X during FY 12-13 is Rs.2,05,000. Is tax deductible u/s 194A

Exemption from TDS can be availed by submitting Form 15G only if total income of Mr. X for FY 12-13 (including interest earned from Bank) is less than the basic exemption limit i.e Rs. 2,00,000.

Since, his interest income exceeds Rs. 2,00,000 Bank is liable to deduct TDS

from the total interest paid to him.

9. Should the Branch take into

consideration other deduction available to the customer while verifying Form 15G from the customer? (For eg: int on housing loan, eligible investments for deduction u/s 80C)

No.

The branch is not required to consider other deductions available to the customer while verifying Form 15G from the customer.

10. A customer Mr. C does not have a

PAN. Can the Branch accept a declaration in Form 15 G submitted by Mr. C ?

No.

The customer has to mention his PAN in the declaration Form 15G.

11. If a bill has fees/ charges plus service tax, should TDS be deducted on the total bill amount OR only on fees/charges?

TDS should be deducted on the total Bill amount i.e. inclusive of service tax except in case of rent paid to a lessor.

12. The Branch is paying lease rent of Rs. 10,000 pm to 3 people who are

jointly the landlords of the property. Is the branch liable to deduct tax?

No. The branch is not liable to deduct tax

since payment to each person does not exceed Rs. 1,80,000 per annum.

13. As per lease agreement the Branch is liable pay interest free deposit which will be refunded after the expiry of lease agreement. Should the branch deduct TDS on such payment?

No. The branch is not required to deduct TDS since it is a refundable deposit.

14 As per lease agreement the Branch is liable to pay 3 month advance rent

in the form of interest free deposit which will be adjusted against the last three months rent payable by the Branch. Should the branch deduct TDS in the above case?

Yes.

The branch should deduct TDS, if total rent (including the 3 month advance rent) paid to the landlord exceeds Rs. 1,80,000 per annum.



Sr. No


15. Is the Branch liable to deduct tax u/s 194 J on advance fees paid to an advocate?

If the total payment (including the advance fees) to the advocate during a financial year exceeds Rs. 30,000 then the branch is liable to deduct TDS.

16. What will be the consequence if the Branch fails to deduct tax on any payment?

The branch is liable to pay penal interest @1% from the date on which tax was deductible to the date on which tax is actually deducted.

17. What will be the consequence, if the branch has deducted tax on time but forgot to remit to the governments account by the due date?

The Branch is liable to pay penal interest @ 1.5% from the date on which tax was actually deducted to the date on which tax is actually paid.

18. If the customer does not have PAN, at what rate will tax be deducted

from interest payable to him?

If the customer does not mention his PAN TDS will be deducted @ 20%.

Note: TDS applicable only if interest paid exceeds Rs. 10,000

19. Mr. P deposits cash of Rs. 55,000 in Mr. Qs account. Whose PAN no. should be quoted in the deposit receipt Mr. P or Mr.Q?

Mr. Qs PAN should be quoted on the deposit receipt since Mr. Q is the customer of the Bank.

20. In the above example, if Mr. P has signed the deposit receipt and quoted Mr. Qs PAN ?

Can the branch accept such deposit

receipt?

Yes. The branch can accept the deposit

since Mr. Qs PAN is quoted in the deposit receipt irrespective of who has

signed it.

21. Mr. A has submitted a copy of his PAN card while opening the account with the Bank. Should he submit a copy of PAN card every time he

deposits cash above Rs. 50,000?

No. Mr. A is not required to submit a copy of his PAN card every time he

deposits cash above Rs. 50,000. However, Mr. A has to mandatorily

quote his PAN in the deposit receipt.

22. Mr. B deposits cash in installments

i.e Rs. 10,000, Rs. 15,000 and Rs. 27,000 during one day. Should Mr. B quote his PAN in the deposit receipt?

Yes.

If cash deposited in aggregate exceed Rs. 50,000 during any one day, the customer has to mandatorily quote his PAN in the deposit receipt.

bcc_br_104_242

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