j.b.nagar cpe study circle of wirc 4 th july 2012

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J.B.NAGAR CPE STUDY CIRCLE OF WIRC

4TH JULY 2012

TDS RECENT AMENDMENTS & ISSUES

NINA P. KAPASI CHARTERED ACCOUNTANT

Intensive Course on Income Tax

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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


TDS on Interest on Securities- s.193

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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


TDS on Directors Remuneration- s.194J


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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%

TDS on Acquisition- s.194LA

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W.r.e.f. 01.04.1962 Obligation -always apply and deemed to have

applied;To resident or non-residentIrrespective of residence or place of business or business

connectionIrrespective of presence in India

W.e.f. 01.07.2012 Board empowered to notify for mandatory

application to A.O. Class of persons or cases Payer to apply for determination of amount of deduction


TDS on payment to NR- s.195(1)&(7)

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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 softwarelicense & medium irrelevantconsi. for right, property or info. whether or not

in possession or control with the payerused directly by the payerlocated in India

“Process” to includetransmission by satellite, cable, optic fibre, etc.

up linking, amplification, conversion- any seg. secret or not

Conflict put to rest NINA P. KAPASI CHARTERED ACCOUNTANT

Software Income and Royalty-s.9(1)(vi)

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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.


Notification no221/2012 dt.13.06.2012

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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

Extension of time for passing order u/s. 201(3) w.r.e.f. 01.04.2010 6 years from 4 years


Failure to Deduct or pay– s.201

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Delay in filing TDS/TCS ReturnsPenalty of Rs. 100 per day u/s. 272A upto 30.06.2012Penalty of Rs. 10,000 -1,00,000 u/s. 271H from 01.07.2012

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


Levy of Fee & Penalty for TCS/TDS defaults - s.234E,271H, 272A & 273B

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W.e.f. 01.07.2012 Where payer is Government

Drawing or Disbursing OfficerAny other person


Person Responsible- s.204

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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

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 Not to be deemed to be an assessee in default but interest payable

subject to compliance


Tax Collection at Source- s.206C

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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


Intimation of TDS/TCS u/s 200A(1)- s.156,154 & 246A

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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


Cir No.1/2012 dt. 9.4.2012

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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.


S. 200A Processing of statements of tax deducted at source.

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‘Rent’ inclusive definition u/s194I CIT vs. Reebook India Co 291 ITR 455 Del 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


CURRENT ISSUESS.194- I Rent Deposit

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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)


S. 194 J Fees for professional or technical services.

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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 ?


S.194 H Commission or Brokerage

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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


S. 194 H Commission or Brokerage Credit Card payments

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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.)


S. 194 H Commission or Brokerage

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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)


S.194 H Commission or Brokerage

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S.194C- Contract for Work 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

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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 partyCIT 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


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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


24NINA P. KAPASI

CHARTERED ACCOUNTANT

S.194J- Professional fees

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)

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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


j.b.nagar cpe study circle of wirc 4 th july 2012

Documents

kapasi chartered accountanttds

income tax

rest nina

resident directorremuneration

appliedto resident

j onpaymentfor

threshold exemption

payee resident hadfurnished