Income Tax

1. Advance Tax, TDS and
TCS- an overview
Presentation by
Asoke kumAr Dey
Joint Commissioner of inCome
tAx(retD)
kolkAtA

2. Different stages of collection
A. Pre-paid taxes (Advance tax, TDS and
self assessment tax)
B. Recovery by the AO
C. Recovery by the TRO

3. Advance tax
 It is paid in advance during the FY
 It is paid by the assessee on his own
accord
Advance is on the concept “Pay as
you earn”

4. Liability
Advance tax liability arises when the tax
payable is Rs 10,000/- or more
There will be no advance tax liability to a resident in India who-
a)Does not have any income chargeable under the head “ profits
and gains from business or profession” and
b)Is of the age of sixty years or more at any time during the year

5. How to compute
Estimate the amount of current income
Estimate the tax payable at the rate in
force
 Reduce the amount by the amount of
tax deductible/collectible at source
If TDS/TCS is not made by the deductor/collector within
the FY, the assessee is liable to pay advance tax on the
amount.
Vide the proviso to section 209 wef 01.04.2012

6. Table I
Sl No Instalment Due date Amount
1 1st
15th
June Not less than 15% of the
advance tax
2 2nd
15th
September Not less than 45% of advance
tax as reduced by earlier
instalment paid
3 3rd
15th
December Not less than 75% of advance
tax as reduced by earlier
instalments paid
4 4th
15th
March Not less than 100% of advance
tax as reduced by earlier
instalments paid

7. Table II
Sl
No
Instalment Due date Amount
1 1st
15th
September Not less than 30% of advance
tax
2 2nd
15th
December Not less than 60% of advance
tax as reduced by earlier
instalment paid
3 3rd
15th
March Not less than 100% of advance
tax as reduced by earlier
instalments paid

8. Duties of the AO
o Prepare list of 100 top advance tax
payers under your jurisdiction
o Issue suitable letters to the top tax
payers
oTake necessary action, if required

9. Failure to pay advance tax-
sec 234B
 Interest is to be paid @ 1% on the
amount by which the advance tax paid falls
short of the assessed tax-
from the 1st
day of April of the relevant AY
to the date of determination of income tax
payable u/s 143(1)/143(3)/ 147

10. A case study
In the case of Rambabu, the tax payable for the
AY 2010-11 was determined at Rs 2.5 lakh
31.12.2012 u/s 143(3) . The case was
reassessed u/s 147 and the tax payable was
determined on 31.03.2014 at Rs 4.5 lakh. How
much interest u/s 234B is payable in the
reassessent?

11. A question
In one case after giving appeal effect
the Interest payable u/s 234B is reduced
by Rs 10,000/-. Is it required to issue
fresh notice u/s 156?

12. 234C
When there is a short fall in payment of
advance in a particular quarter by a
company/ non company interest is payable
@ 1% on the amount of short fall of the tax
due on returned income for three months

13. Paid by 31st
March
Mr Yadav paid the advance tax payable in
the last installment on 31st
march . What
will be the effect ?

14. Capital Gain
Madhu babu earned a Capital Gain of Rs
5 lakh on 15th
Dec. 2014 but paid the
advance tax on 30th March 2014. How
much interest is payable by him ?

15. Penalty
Is there any penalty or
prosecution for non payment of
advance tax ?

16. Major Contributors

17. Who is to deduct tax ?
 The person responsible for payment is to
make deduction of tax
 He may be the principle Officer of a
company
He may be a DDO in the case of a
Government deductor

18. Sl No nature of payment Threshold limit Rate
1 Interest ( u/s 194A) 10000/5000 10%
2 Lottery ( u/s 194B ) 10000 30%
3 Contractors payments
( u/s 194C )
300000/
750000
1% or 2%
4 Insurance Commission
( u/s 194D)
20000 10%
5 Commission &
brokerage (u/s 194H )
5000 10%
6 Rent (u/s 194I) 180000 10% or 2%
7 Professional & Technical
payment (u/s 194J)
30000 10%

19. Other cases
194BB Winning from Horse
Race
Rs 5000/- 30%
194E Payment to non-
resident sportsman
- 20%
194EE Deposits under
NSS
Rs 2500/- 20%
194G Commission on
Lottery Ticket
Rs 1000/- 10%
194LA Compensation on
Compulsory
acquisition of
immovable property
Rs 2,00,000/- 10%

20. Deduction without PAN
w.e.f 01.04.2010
In case of non-furnishing of PAN by
deductees, tax shall be deducted at the
higher of following viz.
i) at the rate specified in the relevant
provision of Act
ii) at the rate or rates in force
iii) at the rate of 20%
Vide section 206AA

21. Section 192- TDS on salary
Who will deduct ? Any person responsible for
payment of salary
When will be
deducted
At the time of payment of
the salary
What will be the
rate ?
Rate in force in that
particular year
On which amount On the estimated salary of
the year

22. Average rate
Average rate =
Income Tax payable on the estimated income
12

23. Items allowable from salary
Deduction for investments u/s 80C
Other deductions u/s 80D, 80DD, 80DDB,
80E, 80G, 80GG, 80U
Loss from self occupied house property
Relief u/s 89 for arrear or advance
payment of salary

24. Exempted casesU/S 194A
Payments to-
a) A banking Company
b) A financial Corporation
c) LIC
d) UTI
e) Any Company or co-operative society
carrying on insurance business
f) Any other institution notified by govt.

25. An example
 Park Street branch of Central bank has
paid interest of
1)Rs 1 lakh to M/S XY Ltd,
2) Rs 5.5 lakh to Kolkata Municipal Corporation
and
3)Rs 8000/- to Mrs Reena Roy in the month of
January 2012.
How much TDS should the bank make in
that month ?

26. Section 194C-TDS on payments to
contractors
 For carrying out any work ( including
supply of labour for carrying out any work)
 At the time of credit of sum to the account
of the contractor or at the time of payment
in cash, cheque or draft which ever earlier

27. Work include
• Advertising
• Broadcasting and telecasting
• Carriage of goods or passengers by any
mode of transport other than railway
• Catering
• Manufacturing or supplying a product
according to the requirement and
specification of a customer by using
material purchased from such customer

28. An example
 Mr X a contractor has paid as given below:-
I) Rs 5 lakh for purchase of brick from a
contractor
ii) paid Rs 3.5 lakh to M/s AB Ltd, a labour
contractor
iii) paid Rs 4 lakh to Mr parekh, a labour
contractor
iv) Paid Rs 25,000/- to Mr Nayar another
contractor
Compute the total amount of tax to be
deducted u/s194C

29. u/s 194H -A question
 M/S Vodafone sold mobile sims to the
retail sellers and allowed discount on the
MRP.
Whether the m/s Vodafone should
deduct tax against discoount allowed?

30. Rent-An example
 A bank has made the following payments
of rent-
a) Rs 15 lakh for house A
b) Rs 1.2 lakh for house B
c) Rs 5 lakh for some machineries taken on
rent
compute the tax deductible on rent paid

31. 194E- payment to non-resident
sportsman or entertainer
 When the income is payable to a non-
resident sportsman or entertainer who
is not a citizen of India or a non resident
sports Association
 The rate of deduction will be 20%

32. 194IA wef 01.06.2013
 Any person ( being a transferee) responsible for
paying (other than the person referred in section
194LA) to a resident transferor any sum by way of
consideration for transfer of any immovable property
( other than agricultural land in rural area) is liable to
deduct tax
 No deduction when the consideration is less than Rs
50 lakh
 The rate of deduction is 1% of the consideration
 The payee will deposit the TDS in a challan cum
statement in Form No 26QB and issue TDS
certificate in Form No 16B

34. SALIENT FEATURES OF TCS CONTINUES….
RATE FOR COLLECTION OF TAX AT SOURCE ( AS ON 01/07//2010 )
In case of sales u/s 206C(1)
Sl. No. Section Nature of Goods % Rate of TCS
1 206C(1) Alcoholic liquor for human consumption 1
2 206C(1) Tendu leaves 5
3 206C(1) Timber obtained under a forest lease 2.5
4 206C(1)
Timber obtained by any mode other than a
forest lease 2.5
5 206C(1)
Any other forest produce not being timber
or tendu leaves 2.5
6 206C(1) Scrap 1

35. TCS on lease, license etc
u/s 206C(1C) wef 01.10.2004
Sl No Nature of
license
Rate of
Tax
Code
1 Parking Lot 2% 6CF
2 Toll Plaza 2% 6CG
3 Mining
quarrying
2% 6CH

36. TCS on sale of minerals
 Any sale of minerals being coal or
lignite or Iron Ores
The rate of collection is 1%
When the purchase is being made for utilisation in
power generation no TCS is required
Vide sec 206C(1D) wef 01.07.2012

37. TCS on sale of Jewellery
wef 01.07.2012
 A seller who receives any amount in cash
as sale consideration of bullion or
jewellery shall at the time of receipt of
such amount in cash, collect from the
buyer , a sum equal to 1% of sale
consideration as income tax if such
consideration exceeds-
a) Rs 2 lakh for bullion
b) Rs 5 lakh for jewellery

38. SALIENT FEATURES OF TCS CONTINUES….
No TCS, if a resident buyer furnishes to the
collector, a declaration in Form No. 27C, verifying
that the specified goods are to be utilized for the
purpose of
 manufacturing,
 processing
 producing articles or things
 and not for the trading purposes.

39. TRACES
 It means TDS Reconciliation Analysis
Correction Enabling System
It can be entered through
www.tdscpc.gov.in

40. CPC(TDS) PROCESSING
E-TDS DATA
NO/Lower deduction
certificate
OLTAS Data
I
T
D
CPC-TDS
Verification
Maching of
challan
Processing
Defaults (Short deduction,
short payment and late payment
interest)
PAN errors
Deductors
and other
stakeholders
 Mapping of PAN
with TAN
Creation of PAN
ledger and TDS
Certificates
INPUT
Intimation/
letter
clarification
synchronise

41. FACILITIES FOR DEDUCTOR
 Default summary
Online correction
Online PAN verification
Verification of 197 certificates
Statement and challan status
Download TDS certificates, consolidated
statement file, justification report on defaults

42. Facilities to the AO(TDS)
 TDS/TCS statement processing status
 TAN/AIN details
Consolidated statement files
 Intimation u/s 200A/154
Challan details
 Justification report

43. Challan correction by AO
-Change of one TAN to another TAN
- Change of assessment year
- Change of section code

44. Facilities to a Taxpayer
View and download 26AS
 View and download Form 16B
 A compressive view of TDS defaults
relating to all PANs associated with a PAN

45. Quarterly statement Forms
Sl No Form No Applicable to
1 24Q Payments of salary to
Residents
2 26Q Payments other than
salary to residents
3 27Q Payments to non
residents
4 27EQ TCS made u/s 206C

46. Due dates of filing
Quarter Govt
deductor
Non Govt
deductor
1st
Quarter 31st
July 15th
July
2nd
Quarter 31st
October 15th
October
3rd
Quarter 31st
January 15th
January
4th
Quarter 15th
May 15th
May

47.  AO will find out the list of non-filers from the
TRACES
He will issue letters to the non-filers after one
month of the due date
He will also take follow up actions

48. Processing the statements-Sec
200A
The Processing of statements is done by
tdscpc at Gaziabad through TRACES
 After processing an intimation is issued
showing the amount of demand
The intimation is to be sent within one year
from the end of the year in which the
statement is filed
Consequential rectification, required if any
also done by the CPC

49. Duty of the AO
 The duty of the AO is find out list of
demands raised by the CPC
 Issue letters/ notices to the deductors
to collect the demand
Guide the deductor to file correction
statement , if required

50. Assessee in default u/s 201
When the deductor -
a ) does not deduct
b) After deduction fails to deposit
the whole or part of the tax
The deductor will be treated as an
assesee in default

51. Consequences
 Will be treated as an assesse in default
Interest u/s 201(1A) is charged @ 1% for
short deduction and 1.5@ for short
payment
Penalty u/s 221 is initiated
May create a charge on the asset of the
deductor

52. Other consequences
Disallowance of the expenditure u/s 40(a)
(ia) on which no TDS has been made or
TDS has been made but has not been
deposited
Penalty U/s 271C for non deduction of
TDS @ 100% of the TDS amount

53. Limitation of order u/s 201 wef
01.04.2010
When failed to deduct whole or part of the
tax-
a)Two years from the end of FY in which the
statement is filed
b)Six years from the end of the FY in which
the payment is made or credited

54. Limitation wef 01.10.2014
No order u/s 201(1) in respect of default to deduct
the whole or the part of the tax shall be made at
any time after seven years from the end of the
year in which the payment is made or credit is
given

55. Duty of the AO
 Issue a show cause notice in suitable
cases
Allow necessary opportunity to explain
the case
 Pass a speaking order determining
the amount including interest u/s
201(1A) payable

56.  Information received from the AOs concerned
Information received from other sources
 As a consequences of survey/verification
conducted

57. Certificate U/S 197
Assessing Officer is satisfied that the
total Income of the recipient justifies
the deduction of income tax at any
lower rates or no deduction
of income tax

58. Application is to be filed by
the deductee
Application in Form No-13

59. Rule 28AA- consideration
a) Tax payable on estimated income of the
previous year relevant to the AY
b) Tax payable on the assessed/returned
income of the last three previous years
c) Existing liability under income tax Act /
wealth tax Act
d) Advance tax payment till the date of
application
e) TDS till the date of payment

60. Prosecution u/s 276B
 AO will identify the case from the TRACES
 He will identify the principal officer u/s 2(35) and
send a proposal to the CIT through JCIT
 CIT will issue a show cause letters to the
responsible person/principal officers
 CIT will issue a sanction for launching
prosecution u/s 279(1)
 AO will send the proposal to ADIT (prosecution)
in the prescribed format

61. TDS Survey u/s 133A
wef 01.10.2014
Any office or any other place where business or profession
is carried on.
Place of survey
(i) To afford such facility to inspect the books of accounts
or other documents as may be required and available
at that place
(ii) To furnish such information as may be required
relating to the matter
powers

62. TDS survey/verification
Whether TDS has been made against
the expenditures which requires
deduction
Whether deduction has been made at
proper rate
Whether the tax deducted has been
deposited to Govt. account in due time
Whether the statements have been filed

63. Selection of case
• Deposit of TDS is lower than earlier years
• TDS statements are not being filed though
it has its activity
• A special nature of payment where TDS
is not made by similar deductors
• Any petition from deductee/outsider giving
information of non payment of TDS
• Deductors not following the guidelines
from CBDT

64. Other duties of AO
 Make regular contacts with top
deductors of his jurisdiction and guide
them
 Conduct workshops/seminars with
different classes of deductors

65. Thank You