Intensive Course on Income Tax
TDS
RECENT AMENDMENTS & ISSUES
NINA P. KAPASI
CHARTERED ACCOUNTANT
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W.e.f. 01.07.2012
On listed Debentures of a Public Ltd. Company
Increase in threshold to Rs. 5,000 from Rs. 2500
HUF made eligible if resident
Need not be listed
Separate exemption for interest on listed securities
held in demat form continues
NINA P. KAPASI
CHARTERED ACCOUNTANT
2
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W.e.f. 01.07.2012
Payment to a Resident Director
Remuneration, fees and commission
Not covered by s.192-Salary
10% of Remuneration, etc.
Not eligible for threshold exemption-Any amount
NINA P. KAPASI
CHARTERED ACCOUNTANT
3
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W.e.f. 01.07.2012
Increase in threshold from Rs. 1,00,000 to Rs. 2,00,000
TDS on Non resident non-citizen sportsment etc.,
entertainers – s.115BBA & s.194E
 Entertainers
covered
 Rate increased to 20%
NINA P. KAPASI
CHARTERED ACCOUNTANT
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W.r.e.f. 01.04.1962
Obligation -always apply and deemed to have
applied;
To resident or non-resident
Irrespective of residence or place of business or business connection
Irrespective of presence in India
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W.e.f. 01.07.2012
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Board empowered to notify for mandatory
application to A.O.
 Class of persons or cases
 Payer to apply for determination of amount of deduction
NINA P. KAPASI
CHARTERED ACCOUNTANT
5
Software Income and Royalty-s.9(1)(vi)
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Explanation 4 to 6 clarification w.r.e.f. 01.04.1976
Trf. of rights in any right, property or info. including;
trf . of right for use or to use a computer software
license & medium irrelevant
consi. for right, property or info. whether or not
in possession or control with the payer
used directly by the payer
located in India
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“Process” to include
transmission by satellite, cable, optic fibre, etc.
up linking, amplification, conversion- any seg.
 secret or not
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Conflict put to rest
NINA P. KAPASI
CHARTERED ACCOUNTANT
6
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Non deduction of tax shall be made on the following
specified payment under section 194J of the Act, namely:Payment by a person (hereafter referred to as the transferee) for
acquisition of software from another person, being a resident, (hereafter
referred to as the transferor), where(i) the software is acquired in a subsequent transfer and the transferor
has transferred the software without any modification,
(ii) tax has been deducted(a) under section 194J on payment for any previous transfer of
such software; or
(b) under section 195 on payment for any previous transfer of
such software from a non-resident, and
(iii) the transferee obtains a declaration from the transferor that the tax
has been deducted either under sub-clause (a) or (b) of clause (ii) along
with the Permanent Account Number of the transferor.
2. This notification shall come in to force from the 1st day of July, 2012.
NINA P. KAPASI
CHARTERED ACCOUNTANT
7
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Not to be deemed to be an assessee in default where payee resident had;
 Furnished return u/s. 139
 Taken into account the concerned sum in computing income
 Paid the tax on returned income
 Furnished certificate of ‘accountant’ in prescribed form
 Payment of interest for period from date when deductible upto date of filing ROI
 Consequences of non compliance
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Extension of time for passing order u/s. 201(3)
 w.r.e.f. 01.04.2010
 6 years from 4 years
NINA P. KAPASI
CHARTERED ACCOUNTANT
8
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Delay in filing TDS/TCS Returns
 Penalty of Rs. 100 per day u/s. 272A upto 30.06.2012
 Penalty of Rs. 10,000 -1,00,000 u/s. 271H from 01.07.2012
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For delay after 1 year of due date
No penalty if return filed with fee & interest within 1 year
Reasonable cause u/s. 273B
Penalty in addition to fee
Penalty for incorrect info. in TDS/TCS return u/s. 271H w.e.f. 01.07.2012
One time penalty or separate penalties
New provision for levy of Fee -s. 234E w.e.f . 01.07.2012
 Delay in filing TDS/TCS Returns- from due date
 Rs. 200 per day of default
 Termed as a ‘fee’
 Fee not to exceed the amount of TDS/TCS
 Fee to be paid before filing return
 Combined fee or separate fees
NINA P. KAPASI
CHARTERED ACCOUNTANT
9
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W.e.f. 01.07.2012
Where payer is Government
Drawing or Disbursing Officer
Any other person
NINA P. KAPASI
CHARTERED ACCOUNTANT
10
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W.e.f. 01.07.2012
TCS @ 1% on minerals being coal or lignite or iron ore
TCS on sale of bullion or jewelry w.e.f. 01.07.2012
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Seller to collect TCS @ 1%
Only where receipt is in cash and exceeds Rs. 2 Lakhs
Applies to non-business purchases also,
Not applicable to sales by an AOP, BOI & a Juridical Person
Not applicable where sellers turnover etc. is Rs. 1 crore or less
Not applicable to non-business sellers
Bullion not defined
Consequences where no separate collection
 Grossing up and exemption for purchaser
 Includible in turnover or not
 Deductible or not
 Income of purchaser or not
 Credit for purchaser or not
 No exemption from TAN
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Not to be deemed to be an assessee in default but interest payable subject to
compliance
NINA P. KAPASI
CHARTERED ACCOUNTANT
11
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W.e.f. 01.07.2012
Is Notice of Demand u/s. 156
Is rectifiable u/s. 154
Is appeallable u/s. 246A
NINA P. KAPASI
CHARTERED ACCOUNTANT
12
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All deductors shall issue TDS certificates in
Form 16A to be downloaded from TIN
website in respect of all sums deducted on or
after 1.4.2012
NINA P. KAPASI
CHARTERED ACCOUNTANT
13
Following adjustments can be made during the
processing of statements:
i. any arithmetical error in the statement or,
ii. any incorrect claim, apparent from any
information in the statement.
Incorrect claim defined as:
i.
An item, which is inconsistent with another
entry.
ii.
In respect of rate of deduction of tax at source.
Time limit:
No intimation shall be sent after the expiry of one
year from the end of the financial year in which
statement is filed.
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NINA P. KAPASI
CHARTERED ACCOUNTANT
14
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‘Rent’ inclusive definition u/s194I
CIT vs. Reebook India Co 291 ITR 455 Del
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Not refundable and hence advance rent. TDS
applicable upfront
Refundable deposit not to be considered as
advance rent and hence no TDS u/s.194I
Enterprises International Ltd. Vs. ITO 77 ITD
189 Cal
NINA P. KAPASI
CHARTERED ACCOUNTANT
15
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Payment of transaction charges ,VSAT
charges, etc. paid by stock broker to Bombay
Stock Exchange and National Stock Exchange.
Kotak Securities Ltd. 62 DTR 339(Bom)
Bharti Cellular Ltd. 44 DTR 190(SC)
Skycell Communication Ltd. 251 ITR 53(Mad)
Glaxo Smithline 12 SOT 221 (Del)
NINA P. KAPASI
CHARTERED ACCOUNTANT
16
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Definition is Inclusive
Commission or brokerage in common
parlance
Commission and brokerage in commercial
law
Whether principal agent relationship is
mandatory ?
Is nomenclature important ?
NINA P. KAPASI
CHARTERED ACCOUNTANT
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Mechanism of payment.
 To approve the merchant establishment(ME)
for processing the credit card payment.
 Acquiring Bank (AB) pays ME the amount
after deduction.
 No indemnity to AB in case of default .
 No payment made or amount credited by ME
Ref: Vah Magna Retail (P) Ltd.
ITA No.905/Hyd/2011 Dt.10/04/2012
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NINA P. KAPASI
CHARTERED ACCOUNTANT
18
Bank Guarantee Commission
Kotak Securities Limited
ITA No.6657/Mum/11
dt.03/02/12
 Distrubution/Sale of SIM card and recharge coupons (prepaid).
Principal to principal or principal agent .
Vodafone Essar Cellular Ltd.
35 DTR 393 (Cochin)
Idea Cellular Ltd.
29 DTR 237 (2009) (Hyd)
Idea Cellular Ltd.
230 CTR 43 (2010) (Del)
Bharti Cellular Ltd.
294 ITR 283 (2007) (Kol)
 Explanation is not wide enough to cover any payment received in
course of buying and selling of goods.
 Ahmadabad Stamp Vendor
257 ITR 202 (Guj.)
 Kerala Stamp Vendor
150 Taxmann 30 (Ker.)
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NINA P. KAPASI
CHARTERED ACCOUNTANT
19
Sale of goods at fixed margins and the
activity is under the direct supervision and
control of the manufacturer.
Hindustan Coca Cola Pvt Ltd. 98 TTJ I (Jp)
 Control of sales Vs.Contract agency.
Title and property passes on to the
buyer/distributor on the delivery o goods.
Fosters India Pvt. Ltd. 94 TTJ 899 (2005)
(del)
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NINA P. KAPASI
CHARTERED ACCOUNTANT
20
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Contract for sale vs. Works contract
Relationship- Principal to Principal
Passing of property in the goods only on
delivery
Payment of sales tax and excise
Open Market for goods
No contribution of expenses from Buyer
NINA P. KAPASI
CHARTERED ACCOUNTANT
21
BDA Ltd. vs. ITO (TDS)
CIT vs. Glenmark Pharmseuticals 324 ITR 194(Bom) -exclusive
contract no bar for sale
Twin conditions- Property in goods passed on delivery Material
from the third party
CIT Vs. Seagram Manufacturing (P.Ltd.)
Hindustan Shipyard Ltd. vs. State of AP 6 SCC 579 –even though
material was obtained from the buyer, the relevance of such
material into final product
Circular No. 681 dated 08.03.1994 wherein vide para 7(b) no tax
is required to be deducted even in cases of a works contract
where the property in goods has passed on delivery
NINA P. KAPASI
CHARTERED ACCOUNTANT
22
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Hindustan Shipyard Ltd. vs. State of AP 6 SCC
579 –even though material was obtained from
the buyer, the relevance of such material into
final product
Circular No. 681 dated 08.03.1994 wherein
vide para 7(b) no tax is required to be
deducted even in cases of a works contract
where the property in goods has passed on
delivery
NINA P. KAPASI
CHARTERED ACCOUNTANT
23
If no element of profit and separate debit note- nothing on
reimbursement of expenses.
Separate debit note
Dr. Wilmar Schwabe P.Mltd. 3 SOT 71 (Del)
Q.30 of s.715 – referring to TDS on gross amt applicable only
when composite bill was raised.
Credit – TDS u/s.199 – when income was offered for taxation
as per the method of income employed by the assessee
Smt. Varsha Salunkhe 98 ITD 147 (Mum)
NINA P. KAPASI
CHARTERED ACCOUNTANT
24
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If part income is offered –prorata TDS,
balance when offered
Pradeep Kumar Dhir vs.ACIT 107 ITD 118
Chd
TDS on service tax- Cir 4 /008 dt. 21.4.2008
– No TDS on service tax on rent
Letter FNo. 275/73/2007- IT (B)
d6.30.6.2008. Since s.194J covers ‘any sum
paid’, the Board has decided not to extend
the scope of the above circular
Binding nature of circular
NINA P. KAPASI
CHARTERED ACCOUNTANT
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