FINANCE ACT, 2020soganiprofessionals.com/upload/27d48c62-1a61-4b93-b03d-b25bd6f3496c.pdfHowever, new...

A.Y. 2020-21 Budget 2020 - An Overview

FINANCE ACT, 2020

Like every year, Tax proposals were put forward by Hon’ble Finance Minister on

1st February, 2020.

The proposals which were given in the longest ever budget speech were

approved by our Hon’ble President on 27th March, 2020 amid the COVID-19 (a

global pandemic) battle.

Therefore, the proposals has been culminated into provisions which we shall be

required to follow.

Attached are the key highlights of the changes introduced by the Finance Act,

2020, to the Income Tax Law. All amendments are applicable w.e.f. 1st April,

2020 i.e. A.Y. 2021-22 unless otherwise specified.


MAJOR CHANGES IN INCOME TAX ACT, 1961

1. New Scheme for Individual and HUF (Section 115BAC)

There is no change in the existing Income Tax Rates or Slabs which are

applicable on Individuals, HUFs, AOPs and BOIs. (Old Regime)

However, new range of Slabs and Income Tax Rates have been provided

for Individuals and HUFs which are lower than the existing rates. The rates

can be exercised subject to non-eligibility of certain

deductions/exemptions. The rates are as under: (New Regime)

INCOME SLABS A.Y. 2021-22

0 – 2,50,000 Nil

2,50,001 – 5,00,000 5%

5,00,001 – 7,50,000 10%

7,50,001-10,00,000 15%

10,00,001-12,50,000 20%

12,50,001-15,00,000 25%

Above Rs.15,00,000 30%

All the Individuals and HUFs have been given an option to pay the taxes

either as per Old Regime or as per New Regime. This option is available

with effect from A.Y. 2021-22 (F.Y. 2020-21) and is not available for A.Y.

2020-21 (F.Y. 2019-20).

It is to be noted that in case of the tax payers who are having income from

Business or Profession, this new option once exercised can be withdrawn

only once. Meaning thereby a wise decision has to be taken. In case of

other tax payers (having income other than income from Business or

Profession), different option can be exercised for different assessment

years. Meaning thereby they have to take decision every year.


If the taxpayer opts for New Regime then he shall not be eligible for

following major deductions / exemptions:

Section Deduction for

10(5) Leave travel concession

10(13A) House rent allowance

10(32) Allowance for income of minor

10(14) Conveyance Allowance

10AA Exemption for SEZ unit

16 Standard Deduction

24 Interest in respect of Self-Occupied Property

32(1)(iia) Additional Deprecation

57(iia) Family Pension

80C Life Insurance Premium

80CCD Contribution to Pension Scheme

80D Health Insurance Premium

80G Donation

It is to be noted that in the New Regime the benefit of section 80JJAA,

relating to deduction in respect of employment of new employees, and

section 80CCD(2), related to Employer contribution in NPS, can be

availed.

Every employer is required to obtain a declaration from their employees

with regard to the option which they tend to choose in F.Y. 2020-21 so

that they can deduct appropriate TDS while making payment of salary.

2. New Scheme for Domestic Companies (Section 115BAA)

An option w.e.f. A.Y. 2020-21 have been provided to Domestic Company

(existing or new) wherein they can chose to pay tax @ 22% plus

surcharge @10%.


The benefit is subject to fulfillment of following main conditions:

a) No deductions/exemptions under following major sections:


10AA Exemption for SEZ Unit

32(iia) Additional Depreciation

80-IBA Profit and gains from housing projects

.

However, the benefit of 80JJAA, relating to deduction in respect of

employment of new employees, and 80M, relating to deduction of

certain inter-corporate dividends, can be availed.

b) Depreciation to be claimed in prescribed manner. (Not yet prescribed)

c) Provision relating to MAT shall not be applicable. Also MAT credit will

not be available.

d) Option once exercised cannot be subsequently withdrawn.

3. New Scheme for Domestic Manufacturing Companies (Section

115BAB)

An option w.e.f. A.Y. 2020-21 have been provided to Domestic

Manufacturing Company, incorporated on or after 1st October, 2019, not

formed by splitting up or by reconstruction of a business already in

existence, to pay tax @ 15% plus surcharge @10%.

The benefit is subject to fulfillment of following major conditions:

a) Manufacturing to be commenced on or before 31st March, 2023.

b) No deductions/exemptions under following sections:


10AA Exemption for SEZ Unit

32(iia) Additional Depreciation

80-IBA Profit and gains from housing projects


.

However, the benefit of 80JJAA, relating to deduction in respect of

employment of new employees, and 80M, relating to deduction of

certain inter-corporate dividends, can be availed.

c) Depreciation to be claimed in prescribed manner. (Not yet prescribed)

d) Provision relating to MAT shall not be applicable. Also MAT credit will

not be available.

e) Option once exercised cannot be subsequently withdrawn.

f) Income not related to manufacturing shall be taxed at the rate 22%

without availing any deductions.

4. TDS Liability on Individual and HUF

At present, only those Individuals and HUFs who are covered by the provision

of Tax Audit, are required to deduct tax at source under various provisions of

Income Tax Act.

It is now provided that Individuals and HUFs whose turnover from business

exceeds Rs.1 crore or whose receipts from profession exceed Rs. 50 lakhs,

irrespective whether they are covered by the provisions of Tax Audit or

not, will be required to deduct tax at source under various provisions of

Income Tax Act.

5. Dividend Distribution Tax (DDT)- Removed.

At present, all the companies who declare dividend are required to pay

Dividend Distribution Tax (DDT) @ 20.56% (effective rate). As a result such

dividend, upto Rs. 10 lacs, is exempt in the hands of shareholders.

It is now provided that the companies shall not be required to pay any DDT

and, therefore, dividend shall be taxable in the hands of shareholders. The

rate of tax will be the rate as applicable to the shareholder after adding

dividend income to his total income. It is further provided that the deduction


for expense in hands of shareholder, against dividend income, shall not

exceed 20% of the dividend income.

It has been further provided that the dividend which has been received on or

after 1st April, 2020, however, tax on the same has been paid under the old

provisions shall be exempt from tax.

In order to remove the cascading effect of taxes on inter-corporate dividend,

dividend income in hands of a domestic company from any other domestic

company or foreign company shall be allowed as deduction u/s 80M. The

amount deduction shall be equal to dividend income received till 30th

September.

Company has to deduct tax @ 10% u/s 194 while paying the dividend of an

amount exceeding Rs. 5,000.

6. New Penalty for Fake Invoices/ False Entries

To deal with the issue of fake and fraudulent invoices and fake entries, a new

penalty u/s 271AAD has been provided. The penalty shall be equal to the

aggregate amount of false entries.

Some of the situations, where such penalty can be impose are as under:

a) Invoice without actual supply / receipt of goods

b) Bogus Commission

c) Bogus Unsecured Loan

d) Bogus Capital Gain

e) Bogus Salary

f) Bogus Expenditure

7. Real Estate Sector- Relaxations

a) Tolerance Limit Increased

At present, while computing income, under the head ‘Capital Gains’

[Section 50C], ‘Business Profits’ [Section 43CA], ‘Other Sources’ [Section

56(2)(x)], arising out of transactions of transfer of immovable property, the

Sale Consideration or Stamp Duty Value, whichever is higher has to be

taken into consideration for calculation of taxable income.

However, if difference between the Sale Consideration and Stamp Duty

Value is less than 5% of the Sale Consideration, Sale Consideration will be


taken into account for calculation of taxable income (Stamp Duty Value will

ignored).

It is now provided that if difference between the Sale Consideration and

Stamp Duty Value is less than 10% of the Sale Consideration, Sale

Consideration will be taken into account for calculation of taxable income

and Stamp Duty Value shall be ignored.

b) Conditions applicable on Affordable House Developers relaxed

(Section 80-IAB)

At present, a person engaged in the developing affordable housing

projects is allowed a deduction @ 100% of the profits derived from such

business subject to fulfillment of certain conditions.

One of the condition prescribed is that the project should be approved by

the competent authority between 1st June, 2016 and 31st March, 2020.

This period of approval of the project from the competent authority is

extended to 31st March, 2021.

8. Tax Incentives for Start-Up

Eligible startups (incorporated on or after 01.04.2016 but before 01.04.2021)

are allowed a deduction of 100% of the profits from the eligible business for

any three consecutive years on fulfillment of the certain conditions.

Some of the existing conditions are relaxed. Details of which are as under:

Conditions Old New

Total Turnover should

not exceed Rs. 25 cr. 100 cr.

Total number of years

within which 3 years

are to be selected

7 Years beginning from

the year of

incorporation.

10 Years beginning

from the year of

incorporation


9. Widening the scope of TDS on E-Commerce transactions.

A new TDS provision has been inserted wherein every E-Commerce Operator

is required to deduct tax @1% on the gross amount of sales or service of its

E-Commerce participants which has been facilitated through its digital or

electronic facility.

Tax is required to be deducted only if the amount paid or credited to the

account of its E-Commerce participant, being Individuals or HUFs, during

the previous year exceeds Rs. 5,00,000. No ceiling limit has been specified

for E-Commerce participants other than Individuals and HUFs.

Any payment made by a purchaser of goods or recipient of services directly

E-Commerce participant shall be deemed to be credited or paid by the E-

Commerce Operator.

10. Widening the scope of Tax Collected at Source u/s 206C - w.e.f. 1st Oct,

2020

a) Overseas Remittance by Authorized Dealer

New provision has been inserted wherein every authorized dealer, who

receives an amount in a financial year for making overseas remittance

under Liberalized Remittance Scheme of the RBI, has to collect TCS at the

rate of 5%

However, if remittance is made for a purpose other than of purchasing

overseas tour package and the same is less than Rs. 7 lakhs no TCS shall

be collected.

Further, if the amount being remitted out is a loan obtained for the purpose

of pursuing any education and the same is in excess of Rs. 7 lakhs the

TCS @ 0.5% has to be collected.

b) Overseas Tour Packages

New provision has been inserted wherein a seller of overseas tour

package, has to collect TCS @ 5%, on the total amount receivable by the

purchase


c) Sale of Goods

New provision has been inserted wherein every seller, whose total

turnover from the business in the preceding financial year exceeds Rs. 10

crore, has to collect TCS @ 0.1% on the transactions of sale, other than

export sale, where the sale consideration exceeds Rs. 50 Lakhs.

It is provided that the Central Government, subject to fulfilment of some

conditions, may notify person who shall not be liable to collect such TCS.

11. Reducing the rate of TDS on Fees for Technical Services (other than

Professional Services).

At present, section 194J requires deduction of tax @ 10% on the payments

being fees for professional services, fees for technical services, payment of

royalty, etc.

Similarly, section 194C requires deduction of tax @ 1% or 2% (as the case

may be) on the payments which are made for carrying out any work in

pursuance of a contract.

In most of the cases, deductors are confused whether to deduct tax u/s 194J

or 194C. As a result there are a number of litigations involving issue of short

deduction of tax where the deductor deducts tax at lower rate i.e. u/s 194C.

In order to reduce litigation, the rate of deduction of tax u/s 194J only in case

of fees for technical services (other services not covered) is reduced from

10% to 2%. The rate in other cases would remain same i.e. 10%.

12. TDS on income from Mutual Funds

A new section 194K has been introduced which provides that the person who

is paying to a resident any income in respect of units of a Mutual Fund

specified under clause (23D) of section 10 shall, at the time of credit or

payment whichever is earlier, deduct income-tax thereon at the rate of 10%.

It has been also provided that no TDS shall be deducted if:

a) Aggregate of such income credited or paid during the financial year by the

does not exceed five thousand rupees.

b) If the income is in nature of capital gains


13. Scope of TDS on cash withdrawals enlarged

Every bank, from 1st September, 2019, was required to deduct TDS @ 2%

on cash withdrawal by account holder (i.e. on withdrawals for recipient)

exceeding Rs. 1 crore from all the accounts in aggregate maintained with it in

a previous year. Deduction was to be made only if the sum exceeded Rs.1

crore.

It is now provided that where the recipient has not filed his return of income

for 3 preceding years and for which time limit of filing of income has expired,

every bank is required to deduct tax as follows on cash withdrawal by

account holder:

a) 2% where amount exceeding Rs. 20 lakh but less than Rs. 1 crore is

withdrawn from all the accounts in aggregate maintained with it in a previous

year.

b) 5% where amount exceeding Rs. 1 crore is withdrawn from all the

accounts in aggregate a maintained with it in a previous year.

14. Income chargeable to Equalization Levy: Exempt

It has been provided that income from any e-commerce supply or services

derived in F.Y. 2020-21 and chargeable to equalization levy shall be exempt

from tax.

15. Provisions Related to Trusts

a) Clarification with regard to corpus donations for institutions

registered u/s 10(23C)

It has been clarified that voluntary donations given with a specific direction

that it shall form part of corpus of other trust shall not be considered as

application of income.

Further, it has been clarified that voluntary donations received with a

specific direction that it shall form part of corpus of the trust cannot be set

apart.

b) Clarification with regard to corpus donations for institutions

registered u/s 12AA

If a Trust registered u/s 12AA gives corpus donation to other trust

registered u/s 12AA the same is not treated as application of income.


It is now provided that if a Trust registered u/s 12AA gives corpus donation

to other trust which is registered u/s 10(23C) the same will also be not

treated as application of income.

c) Requirement to obtain Fresh Registration – Trust who is already

having approval or registration

All the Trusts which are having approval or registration u/s 10(23C), 12A or

80G have to apply for fresh registration within 3 months starting from 1st

June, 2020 and ending on 31st August, 2020. The application has to be

filed electronically.

The registration shall be renewed without any enquiry.

In case the application is not made within the prescribed time limit i.e. upto

31st August, 2020, then the registration shall stand cancelled.

d) Requirement to obtain Fresh Registration – Trust who is not having

any approval or registration

Trust making fresh application for approval u/s 10(23C), u/s 12AA or u/s

80G after 1st June, 2020 shall be provisionally registered for three years

on the basis of application. No enquiry shall be conducted and provisional

registration shall be granted to those Trusts also who are yet to begin their

activities.

However, after obtaining provisional registration, every Trust will have to

again move an application for registration. Such application has to be

moved at least six months prior from the date of expiry of provisional

registration or within six months from the date on which activities of the

Trust have been start whichever is earlier. If registration is granted the

same shall be valid from the date on which the Trust obtained provisional

registration.

e) Statement of donation by Donee

At present, there is no obligation on the Trust receiving donations to report

such donations.


It is now provided that all the Trusts, receiving donations, are required to

furnish a statement in respect of donations and also to issue a certificate to

the donor so that he can claim deduction.

Donor will be allowed deduction only after one-to-one matching of what is

received by the Trust and what is claimed as deduction by the Donor. This

is similar to the provisions relating to the tax collection/ deduction at

source.

16. Combined Upper Cap for Contributions by Employers to Certain Funds

At present, employer’s contribution to following funds is exempt from tax

subject to the following limits:

Employer’s Contributions towards Limits

Recognized Provident Fund Upto 12% of salary

Approved Superannuation fund Upto Rs. 1,50,000

National Pension Scheme 14% / 10% of salary

However, there is no combined upper limit in quantitative terms for

Contributions by Employers to above funds.

It is now provided that maximum contribution (aggregate of all 3) which shall

be exempt from tax will be Rs. 7,50,000. Any amount contributed above Rs.

7,50,000 shall be taxable. Further, interest, dividend, etc. thereon shall also

be taxable.

17. Preventing Tax Abuse by Becoming Non-Resident

a) Period for becoming Non Resident Curtailed

At present, an individual is treated as tax resident of India if:

i) He stays in India for a period of 182 days or more in that year.

ii)He stayed in India for a period of 365 days or more in four immediately

preceding years and stays for 60 days or more in that year.

The Act provides relaxation to citizens of India who leaves India as a

member of crew of an Indian Ship or for the purpose of employment

outside India and treat them resident if he stayed in India for a period of

365 days or more in four immediately preceding years and stayed for less

than 180 days in that year.


In some cases, individuals, who are actually carrying out substantial

economic activities from India, manage their period of stay in such a way

that they remain in India for less than 182 days or 60 days, so as to

become a Non-Resident in India. By becoming Non-Resident, they are not

required to declare their global income in India.

It is now provided that an Indian citizen or a person of Indian origin having

total income in India (other than foreign sources) exceeds Rs. 15,00,000

who stays in India for a period of 120 days or more shall be treated as

Resident in India for that year. Thus, the number of days have been

reduced from 182 days to 120 days.

b) Indian Citizen who is not Resident in any Country

At present, if an individual arranges his affairs in such a fashion that he is

not resident in any country, then he is not liable to tax in any country.

Therefore, it is now provided that an Indian citizen, having total income in

India (other than foreign sources) exceeds Rs. 15,00,000, who is not liable

to tax in any other country or territory, will be deemed to be resident in

India and his global income shall be taxable in India.

c) Provisions for becoming Not Ordinary Resident (NOR) enlarged

At present an individual or HUF, who is non-resident in nine out of 10

preceding years or during seven previous years has been in India for 729

days or less, is treated as Not Ordinary Resident. NOR is not required to

offer his income from overseas business for tax in India.

It is now provided that an Indian citizen or a person of Indian origin having

total income in India (other than foreign sources) exceeds Rs. 15,00,000

who stays in India for a period of more than 120 days but less than 182

days shall be deemed to be NOR.

Further, the Indian citizen, who is deemed to be resident in India because

he of having total income in India (other than foreign sources) more than

Rs. 15,00,000 and not liable to tax in any other country or territory, shall

also be treated as NOR.


18. Procedural Provisions

a) Form 26AS to Contain Multiple Information

At present, Form 26AS contains the information about tax collected or

deducted at source.

It is now provided that Form 26AS will contain multiple information in

respect of a person such as sale/purchase of immovable property, share

transactions, cash deposit in bank, etc.

b) Due date of filing ITR extended

Assessee Due Date

(Old)

Due Date

(New)

Company 30th September 31st October

Person (other than Company) who

is required to get its audit done

under Income Tax or any other law

30th September 31st October

Working Partner 30th September 31st October

Non-Working Partner 31st July 31st October

c) To enable pre-filling of returns - Due date for filing of Audit Report not

extended

To enable pre-filling of returns in case of persons having income from

business or profession, it is now provided that the Tax Audit Report, etc.

shall be furnished by the assessees at least one month prior to the due

date of filing of return of income. Since, due date of filing of return, where

audit is required, is extended to 31st October, the assessee is required to

furnish the tax audit report, etc. by 30th September.

d) Monetary Limit for Tax Audit Increased

At present, every person, carrying on business, is required to get his

accounts audited, if his total sales, turnover or gross receipts exceeds Rs.

1 crore in any previous year.

This threshold limit for a person carrying on business is now increased

from Rs. 1 crore to Rs. 5 crore subject to the following conditions:


i. aggregate of all receipts in cash during the previous year does not

exceed five per cent of total receipt; and

ii. aggregate of all payments in cash during the previous year does

not exceed five per cent of total payment.

e) Stay before ITAT

At present, there is no requirement of making any payment of disputed

demand in order to obtain stay from ITAT.

It is now provided that stay can only be obtained from ITAT only if not less

than 20% of the disputed demand is paid or security of equal amount is

furnished.

This could majorly have an impact on high pitched assessment cases,

wherein 20% would also be a huge sum. However, assessee would still

have the option of filing writ petition.

This is prepared for Client’s service and is for internal use only. We

recommend that before taking action on any specific issue, professional

advice should be sought.

For R Sogani & Associates

Chartered Accountants

Place: Jaipur (Rakesh Kedia)

Date: 1st April, 2020 Partner

R Sogani & Associates


A.Y. 2021-22 Income Tax Rates Page 1

Annexure I

INCOME TAX RATES

A. Y. 2020-21 & A.Y. 2021-22

1) INDIVIDUALS/HUF-

(A) Existing Slab Rates

a. Individuals (other than Resident Senior & Super Senior Citizens) & HUF

INCOME SLABS SLAB RATES

0 – 2,50,000 Nil

2,50,001 – 5,00,000 5%

5,00,001 – 10,00,000 20%

10,00,001 & above 30%

b. Resident Individuals – Senior Citizens (Age of 60 years or

more but less than 80 years)


0 – 3,00,000 Nil

3,00,001 – 5,00,000 5%

5,00,001 – 10,00,000 20%

10,00,001 & above 30%

c. Resident Individuals – Super Senior Citizens (Age 80 years & above)


0 – 5,00,000 Nil

5,00,001-10,00,000 20%

10,00,001 & above 30%




d. Rebate u/s 87A in case of Resident Individuals

PARTICULAR REBATE ALLOWED

Total income upto Rs.5,00,000

100% of tax paid or Rs.12,500 whichever is lower

e. Surcharge Rates for Individuals/HUF

INCOME SLABS RATES

Upto 50 lakh Nil

More than 50 lakh upto 1 crore 10%

More than 1 crore upto 2 crore 15%

More than 2 crore upto 5 crore 25%

More than 5 crore 37%

(B) New Scheme Slab Rates (without deductions) - Refer Para 1

INCOME SLABS A.Y. 2020-21 A.Y. 2021-22

0 – 2,50,000

No option for A.Y. 2020-21

Nil

2,50,001 – 5,00,000 5%

5,00,001 – 7,50,000 10%

7,50,001-10,00,000 15%

10,00,001-12,50,000 20%

12,50,001-15,00,000 25%

Above Rs.15,00,000 30%




2) PARTNERSHIPS AND LLPS


Whole of the Total Income 30%

Plus Surcharge for income above 1 crore

12%

Note: Alternative Minimum Tax (AMT) for non corporate assessee (including LLP) @ 18.5%.

3) COMPANY (DOMESTIC)

(A) Existing Rates

Particulars

If Turnover or Gross Receipts is less than 400

crores in F.Y. 2017-18 Others

Tax Rates 25% 30%

Plus Surcharge 7% for income above 1 crore and 12% for

income above 10 crore

Note: Minimum Alternate Tax (MAT) for corporate assessee @ 15%.

(B) New Scheme (without deductions) - Refer Para 2 and 3

Particulars

New Manufacturing Companies(incorporated on or after 01.10.2019) u/s

115BAB

Others Companies to 115BAA

Tax Rates 15% 22%

Plus Surcharge 10%




4) HEALTH & EDUCATION CESS

Health and Education Cess is applicable to all assessee, on Tax Payable +

Surcharge, if any, as under:

PARTICULARS Cess Rate

Health & Education Cess 4%



A.Y. 2021-22 TDS Law-An Overview Page 1

Annexure II

TDS LAW - AN OVERVIEW

A.Y. 2021-22

w .e .f. 1st April , 2020

APPLICABLE TO ALL PERSONS

Nature of

Payment

Rate of TDS

from

01.04.2020 to

13.05.2020

Rate of TDS

from

14.05.2020-

31.03.2021

Monetary Limits Requiring

TDS/Remarks

Salary u/s

192

• No specific

rate.

• Tax payable

on Total

Salary is

to be

deducted in

12 equal

monthly

installments

.

No Change • Estimated Gross Salary exceeds

Rs.5 lakh.

• Employer is required to obtain

Form 12BB from the employee

for investment and other

incomes.

• At the commencement of the

Financial Year, the employer

should ask the employee which

scheme (pertaining to slab rate),

he would opt for while filing his

return of income.

Transfer of

Immovable

Property

other than

Rural

Agricultural

Land u/s

194- IA

1% of

Consideration

for Immovable

Property

0.75% of

Consideration

for Immovable

Property

• If purchase consideration is

equal to or exceeds Rs.50 lakhs.

• Consideration for Immovable

Property includes charges that

are incidental to transfer of the

immovable property, like car

parking fees, maintenance fees

etc.

• TAN is not required for

deduction of tax under this

section.




APPLICABLE TO INDIVIDUALS/HUFS [OTHER THAN SPECIFIED

INDIVIDUALS/HUFS]

Payment

made to

contractors

and

professionals

u/s 194M

5% 3.75%

• Payment or credit for contract

work, commission, brokerage or

professional services to a

resident in a financial year

exceeding Rs. 50 lakh in

aggregate.

• Applicable even if the expense is

personal in nature.

• TAN is not required, for deduction

of tax under this section.

• Not applicable if such transaction

is already covered u/s 194J or

194C.

Rent u/s 194-

IB

5% 3.75%

• Amount credited or paid exceeds

Rs. 50,000 per month.

• TAN is not required for deduction

of tax under this section.

• Individual/HUF other than

covered u/s 194I shall be liable to

deduct TDS under this section




APPLICABLE TO SPECIFIED INDIVIDUALS/HUFS AND ALL

OTHER PERSONS

Interest

u/s 194A 10% 7.5%

• Amount credited or paid

exceeds Rs. 5,000.

• In case, payer is a Banking

Co. /Co-operative Bank/Post

Office, the limit is Rs.

40,000.

• The threshold for senior

citizens is Rs. 50,000.

Payments Made

to Contractors

u/s 194C

• If recipient is

an Individual

or HUF- 1%.

• 2% in other

cases.

• If recipient is

an Individual or

HUF- 0.75%.

• 1.5% in other

cases.


exceeds Rs. 30,000 to a

contractor in a single

payment or Rs. 1 lakh in the

aggregate during the

financial year.

• No liability of deducting

tax on Individual/HUF under

this section if amount is

paid/credited to contractor

exclusively for personal

purposes.

Rent u/s 194-I

Plant or

Machinery or

Equipment -

2%

Plant or

Machinery or

Equipment –

1.5%


exceeds Rs. 2.40 lakh in

aggregate in a financial year

to a single person.

Land or

building or

furniture or

fittings - 10%.

Land or

building or

furniture or

fittings – 7.5%.




Fees for

Professional

and Technical

Services u/s

194J

10%

7.5%

• Amount credited or paid for

professional services

exceeds Rs. 30,000 during

the financial year.

2% 1.5%

• Amount credited or paid for

technical services exceeds

Rs.30,000 during the

financial year.


exceeds Rs.30,000 in case

of payment to the person

engaged only in the business

of operation of call center.

Commission or

Brokerage u/s

194H

5% 3.75%


exceeds Rs. 15,000 in a

financial year.

E-Commerce

Transaction of

sale of goods or

services u/s

194O

- 0.75% (w.e.f

01.10.2020)

• Amount credited or paid in

case of Individual or HUF,

exceed Rs. 5,00,000 in a

financial year.

• No ceiling limit specified

other than for individual and

HUF.

Dividend u/s 194 10% 7.5% • Amount paid exceeds

Rs.5000 in a financial year.

Income from

Mutual Funds

u/s 194K

10% 7.5%

• Amount paid exceeds

Rs.5,000 in a financial year.




` TAX COLLECTED AT SOURCE

Sale of Scrap

and Timber

u/s 206C

Scrap - 1% Scrap – 0.75%

• Applicable when scrap is

purchased by buyer for trading.

• “Scrap" means waste and scrap

from the manufacture or

mechanical working of materials

which is definitely not usable as

such because of breakage,

cutting up, wear and other

reasons.

• Not required when scrap is

purchased by the buyer for

further manufacturing or

processing, provided that the

declaration for the same is

submitted in Form No. 27C.

Timber –

2.5%

Timber –

1.875%

Overseas

Remittance

u/s 206C

5% 5%

• Receiving an amount of Rs.

7,00,000 or more in financial year

for remittance under Liberalized

Remittance Scheme of RBI.

Overseas

Tour Package

u/s 206C

5% 5%

• No threshold Limit




Sale of goods

by seller

whose

turnover from

business

during the

preceding

financial year

exceeds

Rs.10 crore

u/s 206C

- 0.075% (w.e.f

01.10.2020)

• Consideration received from

buyer in excess of Rs.50,00,000

in a financial year.

EQUALISATION LEVY

Payment to a

Non-resident

for online

advertising

and digital

advertising

u/s 165

6% 6%

➢ Applicable

• When payment made to a non-

resident exceeds Rs. 1 lakh for

services of online advertising,

digital advertising and any other

specified services.

➢ Not Applicable

• When the non-resident has a

permanent establishment (PE) in

India and the specified service is

connected with such permanent

establishment.

• When aggregate amount of

consideration payable does not

exceed Rs. 1 lakh in a financial

year.

• When payment is not for the

purposes of carrying out business

and profession.




Notes:

S. No. Particulars

1.

Time limit for deposition of tax deducted

i. For the month of March, on or before 30th April where income is

credited or paid in the month of March.

ii. In any other case on or before 7 days from the end of the month in

which the deduction is made.

iii. In case of deduction of tax u/s 194-IA/194IB /194M on or before

30 days from the end of the month in which tax is deducted

payment should be accompanied by Form No. 26QB or 26QC or

Form No.26QD respectively.

iv. In case of Equalisation levy, the amount deducted shall be paid

within a period of 7 days from the end of the month, in which such

levy was so deducted.

2.

Interest for late deduction/deposition of tax

i. If no tax is deducted, simple interest @ 1% for every month or

part of a month on the amount of such tax from the date on

which such tax was deductible to the date on which such tax is

deducted.

ii. If tax is deducted but not deposited in time then simple interest

@ 1.5% per month or for part of the month on the amount of

such tax from the date on which such tax was deducted to the

date on which such tax is actually paid.

3.

Penalty for late deduction/deposition of tax

If no tax is deducted or deducted but not deposited, then penalty to the

extent of such tax amount can be imposed.

4.

Prosecution for late deduction/deposition of tax

If the tax deducted or collected at source is not deposited within the

due date, the assessee shall be punishable with rigorous imprisonment

for a minimum period of 3 months, which can extend to 7 years. This is

in addition to interest & penalty.




5.

Time limit for filing of return of TDS Quarterly Statements

i. In case of IV Quarter (Jan-Mar), on or before 31st May of the

financial year immediately following the financial year in which

deduction is made.

ii. For remaining quarters, within 1 month from the end of the

relevant quarter.

iii. No other statement needs to be filed separately for tax deducted

u/s 194-IA /194-IB /194M.

iv. Furnishing of statement of Equalisation Levy- A

v. Annually in Form No. 1 on or before the 30th June immediately

following that financial year.

6.

Late fee for delay in filing of return

If TDS/TCS return is not filed in time, then, a late fee of Rs.200 per day

till the failure to file return continues, shall be levied. However, the

penalty should not exceed the amount of TDS for which statement was

required to be filed. Additionally, a penalty ranging from Rs. 10,000 to

Rs. 1,00,000 shall also be levied for not furnishing TDS/TCS return

within one year from prescribed time or for furnishing incorrect

statements in TDS/TCS return.

7. No TDS is required to be deducted on GST amount.

8.

Specified Individuals/HUFs are those Individuals/HUFs whose turnover

from business exceeds Rs.1 crore or whose receipts from profession

exceed Rs. 50 lakhs.

9. Surcharge and Health & Education Cess are not applicable in case of

payment other than salary to a resident.

10.

i. Details of various Form i.e. 15G, 15H, are to be furnished

electronically with the returns of tax deducted at source. Delay will

attract penalty @ Rs. 100 per day of delay.

ii. Form 27C received, is to be deposited with Commissioner of

Income Tax on or before the seventh day of the month next

following the month in which the declaration is furnished to him.

Delay will attract penalty @ Rs. 100 per day of delay.

iii. 15G/ 15H Form can be issued for interest income and rental

income.




11.

Tax is not required to be deducted u/s 194C in case of payment made

to transporters in the following case:

i. A declaration of owing less than or equal to 10 goods carriage at

any time during the year and

ii. Furnishing of Permanent Account Number.

12.

Payments to transporters without deducting tax (as they have quoted

PAN) are to be reported by deductor with PAN details in the TDS

Quarterly Statements.

13.

Every deductee including transporter is required to furnish his

Permanent Accountant Number to the deductor. Otherwise tax will be

deducted at the following prescribed rates:

Section TDS Rate

E-Commerce Transactions u/s194O 5%

Overseas Remittance and Overseas Package u/s 206C 10%

Other Cases 20%

14.

Time Limit for issue of certificate

Nature of

Payment

Form

No. Periodicity Due date of Issue

Salary 16 Annually

On or before June 15 of the

financial year immediately

following the financial year in

which tax is deducted.

Other than

Salary 16A Quarterly

Within 15 days from the due

date for filing the TDS return.

206C 27D Quarterly

Within 15 days from the due

date for furnishing the statement

of TCS.

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