Amendments to TDS and TCS Provisions
This information discusses recent amendments to TDS and TCS provisions in the Finance Acts of 2022, 2021, and 2020. It covers changes in TDS related to benefits, perquisites, virtual assets, immovable property, and more, along with amendments to TCS provisions concerning ecommerce transactions, sale of goods, foreign remittance, and more.
Download Presentation
Please find below an Image/Link to download the presentation.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.If you encounter any issues during the download, it is possible that the publisher has removed the file from their server.
You are allowed to download the files provided on this website for personal or commercial use, subject to the condition that they are used lawfully. All files are the property of their respective owners.
The content on the website is provided AS IS for your information and personal use only. It may not be sold, licensed, or shared on other websites without obtaining consent from the author.
E N D
Presentation Transcript
AMENDMENTS TO TDS AND TCS AMENDMENTS TO TDS AND TCS PROVISIONS PROVISIONS - - CA Hetal Vinit CA Hetal Vinit Gada 09 November, 2022 09 November, 2022 Gada 09 November, 2022 (C) CGCA & Associates LLP 1
TDS AND TCS AMENDED PROVISIONS IN FA 2022 TDS AND TCS AMENDED PROVISIONS IN FA 2022 Amendments in Finance Act 2022 Amendments in Finance Act 2022 (Applicable from 1st st July, 2022) Sec 194R TDS on benefit or perquisite in respect of business or profession (Applicable from 1 July, 2022) (Applicable from 1st st July, Sec 194S TDS on transfer of virtual digital asset (Applicable from 1 July, 2022) 2022) (Applicable from 1st st April, Sec 194-IA TDS on transfer of certain immovable property (Applicable from 1 April, 2022) 2022) 09 November, 2022 (C) CGCA & Associates LLP 2
TDS AND TCS AMENDED PROVISIONS IN FA 2021 and FA 2020 TDS AND TCS AMENDED PROVISIONS IN FA 2021 and FA 2020 Amendments in Finance Act 2021 Amendments in Finance Act 2021 (Applicable from 1st st April, 2021) Sec 194P TDS in case of Specified Senior Citizens (Applicable from 1 April, 2021) Sec 194Q TDS on Purchase of Goods (Applicable from 1st July, 2021) (Applicable from 1st st July, 2021) Sec 206AB TDS on Non Filers of Income Tax Return (Applicable from 1 July, 2021) (Applicable from 1st st July, 2021) Sec 206CCA TCS on Non Filers of Income Tax Return (Applicable from 1 July, 2021) Amendments in Finance Act 2020 Amendments in Finance Act 2020 (Applicable from 1st st October, 2020) Sec 194O TDS on Ecommerce Transactions (Applicable from 1 October, 2020) (Applicable from 1st st October, 2020) Sec 206C(1H) TCS on Sale of Goods (Applicable from 1 October, 2020) (Applicable from 1st st October, 2020) Sec 206C(1G) TCS on Foreign Remittance Through LRS and Overseas Tour Package (Applicable from 1 October, 2020) (Applicable from 1st st April, 2020) Sec 192 - - Deferment of TDS on ESOP of startups (Applicable from 1 April, 2020) (Applicable from 1st st April, 2020) Sec 194J Amendment to TDS on fees for Technical Services (Applicable from 1 April, 2020) 09 November, 2022 (C) CGCA & Associates LLP 3
TDS / TCS AMENDMENTS IN FINANCE TDS / TCS AMENDMENTS IN FINANCE ACT 2022 ACT 2022 09 November, 2022 (C) CGCA & Associates LLP 4
Sec 194R Sec 194R TDS on benefit or perquisite in respect of business or profession TDS on benefit or perquisite in respect of business or profession Extracts from the Memorandum Extracts from the Memorandum As per clause clause (iv) (iv) of of section arising from business or exercise of profession is is to to be benefit or perquisite. However, However, in in many income, income, leading leading to to furnishing furnishing of of incorrect section 28 28 of of the Act, the value of any benefit or perquisite, whether convertible into money or not, be charged charged as as business business income income in in the many cases, cases, such such recipient recipient does does not not report report the incorrect particulars particulars of of income income. . the Act the hands hands of of the the receipt receipt of of benefits the recipient recipient of such benefits in in their their return return of of Accordingly (consequently), in order to widen and deepen the tax base, it is proposed to insert a new section 194R to the Act Extract Extract of of Finance Rationalizing TDS Provisions Rationalizing TDS Provisions Finance Minister s Minister s Speech Speech It has been noticed that as a business promotion strategy, there is a tendency on businesses to pass on benefits to their agents agents. Such benefits are taxable in the hands of the agents Such benefits are taxable in the hands of the agents. In order to track such transactions deduction by the person giving benefits deduction by the person giving benefits, if the aggregate value of such benefits exceeds Rs. 20,000 during the financial year tendency on businesses to pass on benefits to their track such transactions, I propose to provide for tax tax Meaning of the term Benefit / Perquisite not defined under the Act. 09 November, 2022 (C) CGCA & Associates LLP 5
Sec 194R Sec 194R TDS on TDS on benefit or perquisite in respect of business or profession benefit or perquisite in respect of business or profession Nature of transaction Nature of transaction Any Any benefit benefit or or perquisite, the the exercise exercise of of profession perquisite, whether profession whether convertible convertible into into money money or or not not arising arising from from business business or or Liability on Liability on Person providing benefit or perquisite (Resident In case of Company, company itself including Principal officer (Resident as as well well as as Non Non Resident) Resident) TDS to be deducted in case of TDS to be deducted in case of A person Resident in India Resident in India TDS not to be deducted in case of TDS not to be deducted in case of Recipient being Individual exceed exceed Rs Rs. . 1 1 crore crore in in case during the FY. Value or aggregate of value of benefit or perquisite exceeding Rs. 20,000/- during a financial year Individual or or HUF case of of business HUF whose total sales, turnover or gross receipts does business and does does not not exceed exceed Rs does not profession not Rs. . 50 50 lakhs lakhs in in case case of of profession Threshold Limit Threshold Limit Rate of TDS Rate of TDS Time of deductibility Time of deductibility 10% on value of benefit or perquisite Before providing Benefit or Perquisite. Applicable from Applicable from 1st July, 2022 (Threshold limit to be determined for FY 2022-23, though liability to deduct TDS only on benefit / perquisites on after 1 No reference of Sec 194R in Sec 197 which means no application can be made for Lower or NIL TDS and TDS deduction to be undertaken mandatorily Benefit / Perquisite in kind or partly in cash and partly in kind and cash is insufficient to deduct TDS, then service provider to ensure tax has been paid before providing the benefit / perquisite. st July, 2022) Lower Lower TDS Application TDS Application Tax Tax deduction in certain circumstance deduction in certain circumstance 09 November, 2022 (C) CGCA & Associates LLP 6
Sec 194R Sec 194R FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties 16th th June, June, 2022 13th th September, September, Guidelines issued in the form of Circular 2022 2022 for removing difficulties Circular no no. . 12 12/ /2022 2022 dated dated 16 2022 and Circular Circular no no. . 18 18/ /2022 2022 dated dated 13 Power Power of of a a Circular Circular Binding Binding on on Revenue Revenue authorities authorities but but not not on on the the tax tax payer payer Circulars are issued to to give give more more clarity clarity of of the the statutory statutory provisions provisions but but cannot cannot go go beyond beyond them them Circulars cannot cannot expand expand the scope of the statutory provisions Circulars cannot cannot go go beyond beyond the law interpreted by High Court and Supreme Court Guidelines issued under Sec 194R can be binding binding only only to to the the extent extent they they are are removing removing difficulties difficulties 09 November, 2022 (C) CGCA & Associates LLP 7
Sec 194R Sec 194R FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties FAQ FAQ 1 1 Whether Whether necessary necessary to to check check that that the the amount amount of of benefit benefit or or perquisite perquisite is is taxable taxable under under Sec Sec 28 28(iv) (iv) As As per per FAQ to provisions of Sec 195 where the words used are any sum chargeable to tax . No such words used in Sec 194R FAQ No requirement to check taxability under Sec 28(iv), could be taxable under any other Section. Comparison Sec 4(2) of the Act provides that in in respect deducted at source or paid in advance, where it is so deductible or payable under any provision of the Act. respect of of income income chargeable chargeable under under sub sub- -section section ( (1 1) ) of of section section 4 4, the income tax shall be Section 190(1) of the Act provides for deduction of tax at source in respect of the income. TDS alternative to tax collection should be deducted only if income element present in the transaction FAQ 1 contrary to law where TDS to be deducted only on income element FAQ 1 completely contrary to intent as reflected in Memorandum and Finance Ministers Speech 09 November, 2022 (C) CGCA & Associates LLP 8
Sec 194R Sec 194R FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties FAQ FAQ 2 2 Whether Whether benefit benefit or or Perquisite Perquisite must must be be in in kind kind As As per per FAQ partly in cash or in kind FAQ Covers all the 3 scenarios Benefit or Perquisite in cash, Benefit or Perquisite in kind, Benefit or Perquisite The words used in Sec 194R benefit or perquisite whether convertible in money or not implies benefit in kind (as interpreted by SC in Mahinda & Mahindra 404 ITR 1 The Circular cannot expand the scope of the Section beyond the law interpreted by the SC. FAQ FAQ 3 3 Whether Whether benefit benefit or or Perquisite Perquisite can can be be in in the the form form of of Capital Capital Asset Asset As As per per FAQ FAQ Covers benefit or perquisite in form of Capital Asset. As per various judicial pronouncements, benefit or perquisite in form of Capital Asset is taxable under Sec 28(iv). Depreciation on capital Asset Yes provided the benefit / perquisite is offered as income by the recipient under the head Business clarified clarified under under FAQ FAQ 5 5 of of Circular Circular no no 18 18/ /2022 2022 dated dated 13 13th th September, September, 2022 2022 09 November, 2022 (C) CGCA & Associates LLP 9
Sec 194R Sec 194R FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties FAQ FAQ 4 4 Whether Whether sales sales discount, discount, cash cash discount discount and and rebates rebates are are benefit benefit or or perquisite? perquisite? As per FAQ No tax required to be deducted in case of sales discount, cash discount and rebates as they tantamount to reduction in purchase price of the recipient. Amount saved is not the same as amount of income received in the pocket. Benefit / Perquisite used by owner / director / relative even though not carrying business or profession, the TSD to be deducted in the hands of the recipient entity of such owner / director / relative No relaxation for Free samples given taxable as benefit or perquisite Free samples from manufacturer to Dealer TDS to be deducted, from Dealer to Customer TDS to be deducted. Free samples to doctors as employees of the Hospital TDS to be deducted in the hands of the hospital. Hospital to in turn deduct TDS of doctors u/s. 192 and claim expenses. If doctors are consultant same mechanism to be followed. Alternatively TDS can directly be deducted in the name of the doctors as consultant Every scenarios to be seen on a case to case basis to determine TDS deductibility Other taxable illustrations given incentives in the form of cash or kind, sponsor trip of recipient or relative, fre ticket ti event 09 November, 2022 (C) CGCA & Associates LLP 10
Sec 194R Sec 194R FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties FAQ FAQ 5 5 Valuation Valuation of of benefit benefit or or perquisite? perquisite? As As per per FAQ FAQ In case of benefit / perquisite purchased by the service provider Purchase cost In case of benefit / perquisite manufactured Price charged to customer GST not to be included in the value of benefit / perquisite FAQ FAQ 6 6 Benefit Benefit or or perquisite perquisite for for products products given given to to social social media media influencer influencer ? ? As per FAQ If product is to be returned by the social media influence, then no TDS liability. If product is retained then in the nature of benefit or perquisite Issues Purchase of product by social media influencer at nominal price whether benefit / perquisite Product given in lieu of his services whether benefit / perquisite 09 November, 2022 (C) CGCA & Associates LLP 11
Sec 194R Sec 194R FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties FAQ FAQ 7 7 Reimbursement Reimbursement of of out out- -of of- -pocket pocket expenses expenses - - whether whether benefit benefit or or perquisite? perquisite? As per FAQ liability of the person carrying on business is met by or reimbursed by some other person, the same would be regarded as benefit or perquisite for the person who had the primary liability of incurrence Expenses reimbursed by the client of the consultant would be regarded as benefit/perquisite liable for TDS, however no TDS if bill is in the name of the client, paid by consultant and reimbursed by the client to the consultant Further clarification by Circular No. 18/2022 Out of pocket expenses if part of the bill for services covered u/s. 194C and Sec 194J, TDS to be deducted in the respective section and not to be deducted u/s. 194R. FAQ FAQ 8 8 Dealer Dealer conferences conferences whether whether benefit benefit or or perquisite? perquisite? As per FAQ If conferences are held with the primary object to educate dealers/customers product for launch of new product, sales technique, addressing queries etc. than such conference not in nature of benefit / perquisite Expenses attributable to leisure trip, leisure component, for sponsoring family members or for prior stay or overstay liable for TDS further clarification by circular no 18/2022 that day immediately prior to actual start date of conference and a day immediately following the actual end date of conference would not be considered as over stay Further clarification by circular no 18/2022 - Expenses in the nature of benefit / perquisite not attributable to individual dealer as conference for a group of individuals, then option with the tax payer to not claim expenses. If opted no TDS to be deducted u/s. 194R and accordingly not considered shall not be considered as Assessee in default. 09 November, 2022 (C) CGCA & Associates LLP 12
Sec 194R Sec 194R FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties (Circular (Circular no no. . 18 18/ /2022 2022) ) FAQ FAQ 1 1 Relaxation Relaxation to to certain certain bank bank on on loan loan settlement settlement / / loan loan waiver waiver Extra burden of deducting TDS in addition to bearing the haircut granted on loan settlement / loan waiver. Accordingly relaxation granted Relaxation only for TDS deduction. However taxability in the hands of the recipient shall not be impacted. Issue - Why restricted to select category of banks / financial institutions. Relaxation to be extended to entities where there is genuine hardship for realization of loans (Circular (Circular no benefit benefit or or perquisite? perquisite? no. . 18 18/ /2022 2022) ) FAQ FAQ 7 7 Issue Issue of of bonus bonus shares shares / / rights rights shares shares in in which which public public are are substantially substantially interested interested - - whether whether Bonus shares issued to all the shareholders. No change in the ownership. No benefit to shareholders on account of issue of Bonus shares therefore no benefit / perquisite Right shares offered to all shareholders and hence no benefit / perquisite to any specific shareholder accordingly no TDS u/s. 194R. 09 November, 2022 (C) CGCA & Associates LLP 13
Sec Sec 194S 194S TDS TDS on transfer of Virtual Digital Asset on transfer of Virtual Digital Asset Nature of transaction Nature of transaction Liability on Liability on Transfer Transfer of of Virtual Person paying consideration for transfer of Virtual Digital Asset ( (Resident Resident Resident) ) Virtual Digital Digital Asset Asset Resident as as well well as as Non Non TDS to be deducted in case of TDS to be deducted in case of A person Resident in India Resident in India Threshold Limit Threshold Limit a. a. Exceeding Exceeding Rs profession income OR Individual or HUF turnover, gross receipts or sale in business not exceeding Rs. 1 crore or in profession not exceeding Rs. 50 lakhs Rs. . 50 50, ,000 000/ /- - - - Specified Specified person person Individual or HUF with no business or b. b. 1% of consideration At the time of credit or payment whichever is earlier Transfer in kind or partly in cash and partly in kind and cash is insufficient to deduct TDS, then buyer to ensure tax has been paid before the transfer. 1st July, 2022 (Threshold limit to be determined for FY 2022-23, though liability to deduct TDS only on transfer on after 1 No reference of Sec 194S in Sec 197 which means no application can be made for Lower or NIL TDS and TDS deduction to be undertaken mandatorily a. Specified person not required to obtain TAN number b. Higher rate not applicable in case specified person has not filed returns of income in 2 of the immediately preceding previous year Exceeding Exceeding Rs Rs. . 10 10, ,000 000/ /- - for persons other than specified person Rate of TDS Rate of TDS Time of deductibility Time of deductibility Tax deduction Tax deduction in certain circumstances in certain circumstances Applicable from Applicable from st July, 2022) Lower Lower TDS Application TDS Application Relaxation to specified Relaxation to specified persons persons 09 November, 2022 (C) CGCA & Associates LLP 14
Sec Sec 194S 194S FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties 22nd nd June, June, 2022 Guidelines issued in the form of Circular Circular no no. . 13 13/ /2022 2022 dated dated 22 2022 for removing difficulties FAQ FAQ 1 1 - - TDS TDS deduction deduction in in case case transfer transfer of of VDA VDA through through exchange exchange Seller Buyer Broker Involve d Transac tion in cash or in kind? In cash Who deduct tax? will Remarks Any Person Broker Any Person Any Person Any Person No Exchange - - In cash Exchange - Any Person Yes In cash Exchange and Broker Only Broker will deduct if there is an agreement between the Broker and Exchange that the Broker will deduct the tax. No tax will be deducted if the Exchange enters into an agreement with the buyer or broker that the Exchange would pay the tax on or before the due date for that quarter. Exchange Any Person No In cash Exchange and Buyer 09 November, 2022 (C) CGCA & Associates LLP 15
Sec Sec 194S 194S FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties Seller Buyer Broker Involv ed No Transaction in cash or in kind? In kind Who deduct tax? will Remarks Any Person Any Person (a) Buyer and Seller; or Buyer and seller will pay their respective taxes and share the evidence of payment with the other party. As an alternative, the Exchange can deduct from both the parties if there is a written agreement with both the parties. Broker and seller will pay their respective taxes and share the evidence of payment with the other party. As an alternative, the Exchange can deduct from both the parties if there is a written agreement with both the parties. (b) Exchange Broker Any Person - In kind (a) Broker and Seller; or (b) Exchange 09 November, 2022 (C) CGCA & Associates LLP 16
Sec Sec 194S 194S FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties Seller Buyer Broker Involved Transacti on cash or in kind? In kind Who will deduct tax? Remarks in Any Person Any Person Yes (a) Buyer and Seller; or Buyer and seller will pay their respective taxes and share the evidence of payment with the other party. As an alternative, the Exchange and Broker can deduct from both the parties if there is a written agreement with both the parties. However, only Broker will deduct if there is an agreement between the Broker and Exchange that the Broker will deduct the tax. No tax will be deducted by the buyer if the Exchange enters into an agreement with the buyer that the Exchange would pay the tax on or before the due date for that quarter. (b) and Broker Exchange Exchange Any Person No In kind Exchange Buyer and 09 November, 2022 (C) CGCA & Associates LLP 17
Sec Sec 194S 194S FAQs FAQs issued in Circular for removing difficulties issued in Circular for removing difficulties Sec 194Q (TDS on purchase of goods) shall not not apply apply if TDS is deducted under Sec 194S. GST GST not to be included in the consideration amount while deducting TDS on transfer of VDAs Relaxation Relaxation to to payment payment gateways gateways on on payment payment of of consideration consideration for for transfer transfer of of VDA VDA Double deduction of TDS, once by the buyer under Sec 194S on the consideration amount and once by the payment gateway on the same consideration amount under Sec 194-O as transaction being undertaken on digital platform. Relaxation granted to payment gateways to not deduct TDS to avoid double deduction where buyer has deducted TDS, declaration to be procured by the payment gateway from the buyer that TDS has been deducted by him. 09 November, 2022 (C) CGCA & Associates LLP 18
Sec Sec 194 194- -IA IA TDS on transfer of certain immovable property TDS on transfer of certain immovable property Provisions of Sec 194IA for TDS on transfer of immovable property are on statue since 1st June, 2013. The amendment is effective from 1st April, 2022 Existing Provisions Existing Provisions Amended Provisions Amended Provisions Buyer Buyer Resident or Non Resident Resident or Non Resident Seller Seller Resident Resident Threshold Threshold Limit Limit Consideration on transfer exceeding Rs. 50 lakhs Consideration on transfer or Stamp duty value exceeding Rs. 50 lakhs If Both don t exceed Rs. 50 lakhs, no liability to deduct tax Rate of TDS Rate of TDS 1% of consideration 1% of consideration or Stamp Duty value whichever is higher Issue Issue - - Stamp duty value to be considered on which date. Date Date of of allotment, allotment, date date of of agreement agreement or or date date of of registration registration ? ? 09 November, 2022 (C) CGCA & Associates LLP 19
TDS / TCS AMENDMENTS IN FINANCE ACT 2021 TDS / TCS AMENDMENTS IN FINANCE ACT 2021 09 November, 2022 (C) CGCA & Associates LLP 20
Sec 194P Sec 194P TDS in case of Specified Senior Citizens TDS in case of Specified Senior Citizens Applicable to Applicable to Specified Specified Senior a. Age of 75 years or more b. Pension Income and Interest income from same specified bank in which pension is received c. Declaration to the specified bank in the prescribed format Notified Banking Company Senior Citizen Citizen being Resident Resident Individual Individual Specified Bank Specified Bank Rate of TDS Rate of TDS Rates in force applicable after granting deduction under Chapter VIA and rebate u/s. 87A. Specified Senior Citizen shall be exempted from filing Income tax return for the year in which tax is deducted under the said section 1 Exemption Exemption st April, 2021 Applicable from Applicable from Interest from Savings Bank Account and interest on Fixed deposits should be eligible Exempt income. Literal reading vs Liberal view Banks to test new regime of tax vs old regime of tax and should apply the most beneficial regime Account with more than 2 banks, shall not be eligible from exemption to file income tax return. Declaration to contain such clause 09 November, 2022 (C) CGCA & Associates LLP 21
Sec 194Q Sec 194Q TDS on Purchase of Goods TDS on Purchase of Goods Nature of Expenses Nature of Expenses Purchase of Goods Applicable to Applicable to Buyer purchasing goods from Seller (Resident) Buyer means a person whose sales, turnover or gross receipts exceeds Rs. 10 crores in immediately preceding financial year Threshold Limit Threshold Limit Rate of TDS Rate of TDS Rs. 50 Lakhs (value or aggregate of value) 0.1% on purchases exceeding Rs. 50 lakhs Time of deductibility Time of deductibility At the time of credit or payment whichever is earlier Applicable from Applicable from 1st July, 2021 Provisions not applicable when Provisions not applicable when a. Tax is deductible under any other provisions b. TCS is collectible u/s. 206C (other than 206C(1H)) 09 November, 2022 (C) CGCA & Associates LLP 22
Sec 194Q Sec 194Q TDS on Purchase of Goods TDS on Purchase of Goods Not applicable on import of goods ( Seller is a non resident) Export of goods Not Applicable to Non resident if there is no PE or fixed place of business in India (Circular no. 13 of 2021) 2021) (Circular no. 13 of No PAN cases Higher of rate as per Section i.e. 0.1% or 5 % (Sec 206AA) (Sec 206AA) Non Income tax filers Higher of 2X rate as per the relevant Section or 5% (Sec 206AB) (Sec 206AB) If both No PAN as well as no Income tax return filed, then the higher of 2 shall apply i.e. 5% No application can be made by the seller for certificate for lower TDS for TDS u/s. 194Q no corresponding amendment in Sec 197. Similarly buyer cannot apply for lower TCS certificate for TCS u/s. 206C(1H). If Purchaser fails to deduct TDS u/s. 194Q, then he shall not be considered as Assessee in default on fulfilment of following shall not be considered as Assessee in default on fulfilment of following conditions conditions, but interest for non deduction shall be levied u/s. 201(1A) a. Seller has filed return u/s. 139 b. Seller has taken into account such income in his return of income c. Seller has paid tax on such income d. Certificate from a Chartered Accountant has been submitted 09 November, 2022 (C) CGCA & Associates LLP 23
INTERPLAY BETWEEN SEC 194Q and Sec 206C(1H) INTERPLAY BETWEEN SEC 194Q and Sec 206C(1H) Particulars Particulars Sec 194Q Sec 194Q - - TDS on Purchase of Goods TDS on Purchase of Goods Sec 206C(1H) Sec 206C(1H) TCS on Sale of Goods TCS on Sale of Goods Liability Liability on on Buyer whose sales, turnover or gross receipts exceeds Rs. 10 crores in immediately preceeding financial year Seller whose sales, turnover or gross receipts exceeds Rs. immediately preceeding financial year 10 crores in Threshold Threshold Transaction Transaction Limit Limit of of Purchases of goods exceed Rs. 50 lakhs Sales of goods exceed Rs. 50 lakhs Rate Rate of of Tax Tax 0.1% on purchases exceeding Rs. 50 lakhs 0.1% on sales exceeding Rs. 50 lakhs Non Non PAN PAN case case Higher of rate prescribed i.e. 0.1 % or 5% Higher of rate prescribed i.e. 0.1 % or 5% Non Non filer filer case case Higher of rate prescribed i.e. 0.1 % or 5% Higher of rate prescribed i.e. 0.1 % or 5% Time Time of of Deductibility Deductibility / / Collectibilty Collectibilty When When both both sections applicable, applicable, which which section shall shall apply apply At the time of credit or payment whichever is earlier At the time of receipt sections are section are Tax to be mandatorily deducted by the Purchaser, if threshold limits satisfied Tax to be collected if the Purchaser is not liable to or if liable has not deducted the same Applicable from Applicable from 1st July, 2021 1st October, 2020 09 November, 2022 (C) CGCA & Associates LLP 24
INTERPLAY BETWEEN SEC 194Q and Sec 206C(1H) INTERPLAY BETWEEN SEC 194Q and Sec 206C(1H) Particulars Particulars Sec 194Q Sec 194Q Sec 206C(1H) Sec 206C(1H) a Person Importing Goods in India (Seller is a Non resident) Not applicable by virtue of provisions a Person Importing Goods in India - specific exclusion Purchase from entities specified in Sec 196 The Central Government, a State Government, an embassy, a High Commission, legation, commission, consulate representation of a foreign State - the Government and the trade - the RBI - Corporation established under Central Act exempt from Local authority as defined in the Explanation to clause (20) of section 10 Exemption Income tax Purchase by the above agency not covered under exemption Export of goods a. Tax Deductible under the other provisions of Chapter XVII B b. TCS collected (other than 206C(1H) a. TCS collected u/s. 206C(1), (1F), (1G) b. TDS deducted under any other section on purchase of goods by the buyer 09 November, 2022 (C) CGCA & Associates LLP 25
INTERPLAY BETWEEN SEC 194Q and Sec 206C(1H) INTERPLAY BETWEEN SEC 194Q and Sec 206C(1H) Scenario where only Sec 194Q shall apply Scenario where only Sec 194Q shall apply Buyer s Turnover > Rs. 10 crore in the immediate preceding Financial Year but Seller s turnover < Rs. 10 crore (Threshold limit for purchase / sale exceeding Rs. 50 lakhs fulfilled) a. Seller s Turnover > Rs. 10 crore in the immediate preceding Financial Year but Buyer s turnover < Rs. 10 crore (Threshold limit for purchase / sale exceeding Rs. 50 lakhs fulfilled) Scenario where only Sec 206C(1H) shall apply Scenario where only Sec 206C(1H) shall apply b. Purchases before 1st July, 2021. Receipt by seller after 1st July, 2021. Liability on seller to collect TCS Scenario where both Sec 194Q and Sec 206C(1H) shall apply Scenario where both Sec 194Q and Sec 206C(1H) shall apply Buyer s Turnover > Rs. 10 crore in the preceding Financial Year and Seller s turnover > Rs. 10 crore (Threshold limit for purchase / sale of Rs. 50 lakhs fulfilled) TCS collected by Sellers at the time of raising sale invoice raised on a safe side, correspondingly TDS will deducted by the buyer at the time of purchase invoice raised. Unawareness of other persons liability by both buyer and seller, double taxation, Cashflow issues, ledger reconciliations, compliance burden on staff of both the entities, changes in accounting software, additional compliance to check non PAN and non filers cases. 09 November, 2022 (C) CGCA & Associates LLP 26
INTERPLAY BETWEEN SEC 194Q and Sec 206C(1H) INTERPLAY BETWEEN SEC 194Q and Sec 206C(1H) SN SN Turnover of Buyer Turnover of Buyer in Immediate in Immediate Preceding FY (in Preceding FY (in crores) crores) Turnover of Turnover of Seller in Seller in Immediate Immediate Preceding FY Preceding FY (in crores) (in crores) Purchase / Purchase / Sale of Sale of Goods (in Goods (in lakhs) lakhs) Liability Liability 1 2 12 7 5 15 60 58 Buyer - 194Q Seller - 206C(1H) 3 4 5* 6 8 75 40 70 Not Applicable Not Applicable Buyer - 194Q 13 18 14 19 * In Scenario 5 if the buyer does not fulfill his liability to deduct TDS u/s. 194Q, then the Seller shall be bound to collect TCS u/s. 206C(1H) 09 November, 2022 (C) CGCA & Associates LLP 27
SEC 194Q SEC 194Q Meaning of Goods Meaning of Goods Goods not defined neither u/s. 194 nor u/s. 206C(1H), neither under Sec 2 of the Income Tax Act, 1961 'Goods' means every kind of movable growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale" Sale Sale of of Goods Goods Act, Act, 1930 1930 movable property property other than actionable claims and money; and includes stock and shares, 'Goods' means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply Central Central Goods Goods and and Services Services Tax Tax Act, Act, 2017 2017 The Sale of Goods Act, 1930 is a specific statute which deals with the 'sale with tax on 'supply of goods'. Thus, the definition of term 'goods' can be referred to from the Sale of Goods Act, 1930 for the purpose of Section 194Q. sale of of goods goods' whereas the CGST Act, 2017 deals Therefore, the tax is to be deducted under this provision from the purchase value of Movable property, Any commodity, Shares or Securities, Electricity, Agriculture produce, Fuel, Motor vehicle, Liquor, Jewelery or bullion, Art or Drawings, Sculptures, Scraps, Forest produce, etc. 09 November, 2022 (C) CGCA & Associates LLP 28
SEC 194Q SEC 194Q Goods Goods Whether following can be considered within the purview of goods for Sec 194Q and Sec 206C(1H) a. a. Services Services Act has specifically stated goods and services separately in various sections, hence services not to be included in goods. b. b. Shares Shares and 206C(1H) under CBDT Circular no. 17/2020 on shares transactions on recognized stock exchanges as trade executed on exchange platform and no contract between buyer and seller. Similar 13/2021. However both section shall be applicable on transfer of unlisted shares. and securities securities - is a good as per definition of Sale of Goods Act, 1930, however exemption of applicability of Sec Similar exemption exemption granted granted u/s u/s. . 194 194Q Q vide Circular no. c. c. Immovable Immovable Property Property Goods are movable property, hence not applicable. Further covered under specific section 194IA d. d. Electricity Electricity Held as good by Apex court decision in case of National Thermal Power Corporation (5 SCC 203), however CBDT vide CBDT Circular no. 17/2020 exempted transaction in electricity, renewable energy certificates and energy-saving certificates traded through power exchanges from applicability Section 206C(1H). Similar vide Circular no. 13/2021. Similar exemption exemption granted granted u/s u/s. . 194 194Q Q 09 November, 2022 (C) CGCA & Associates LLP 29
SEC 194Q SEC 194Q Goods Goods e. e. Capital Capital Goods Goods No specific exclusion so covered for applicability of both Sec 194Q and Sec 206C(1H) f. f. Jewelry Jewelry movable property and hence included for applicability of both Sec 194Q and Sec 206C(1H) g. g. Motor Motor car not applicable as specifically provided in the section. Implications of Sec 194Q and Sec 206C(1F) on Manufacturer, Distributor, Retailer. car CBDT Circular 22/2016 TCS u/s. 206C(1F) applicable only to sale of Motor car at retail level. Sec 206C(1H) h. h. Software Software Purchase of software whether purchase of goods or purchase of service . If purchase of service then Sec 194Q not applicable since sec 194J or Sec 195 shall apply. If Purchase of goods then Sec 194Q to apply. SC judgement in case of TCS 141 Taxmann 132 Canned software (off the shelf computer software) are 'goods . 09 November, 2022 (C) CGCA & Associates LLP 30
SEC 194Q SEC 194Q Sale of Sale of Mortor Mortor Car Car 206C(1F) 206C(1F) Manufacturer Distributor Retailer Consumer Seller Buyer Seller Buyer Seller 206C(1H) 194Q 206C(1H) 194Q Car sale >10L Car sale <10L Sale > 50L Sale > 50L 206C(1F) 206C(1H) 09 November, 2022 (C) CGCA & Associates LLP 31
SEC 194Q SEC 194Q Other issues / Considerations Other issues / Considerations Claim Claim of of TDS TDS credit credit Sec 194Q TDS to be claimed in the year in which Income is offered (Rule (Rule 37 37BA) BA). Claim Claim of of TCS requirement of matching expense and corresponding TCS. TCS credit credit Sec 206C(1H) TCS can be claimed in the year in which the same is collected (Rule (Rule 37 37- -I) I) no prior to to 1 1st st July, Purchase Purchase prior CBDT vide circular no 17 / 2020 has clarified that for applicability of TCS to sale transaction after 1st October, 2020, sales prior the 1st October, 2020 shall be considered for determining Threshold limit of Rs. 50 lakhs. Same analogy can be applied for Sec 194Q till further clarification. July, 2021 2021 whether whether to to be be considered considered for for Threshold Threshold limit limit of of Rs Rs. . 50 50 lakhs lakhs prior to to 1 1st st July, after 1 1st st July, Purchases Purchases exceeding Sec 194Q states credit or payment, whichever is earlier. Since credit to party by Purchaser before 1st July, 2021, then Sec 194Q not applicable but receipt by Seller after 1st July, 2021 , the TCS u/s. 206C(1H) shall apply. exceeding Rs Rs. . 50 50 lakhs lakhs prior July, 2021 2021, , but but receipt receipt by by Seller Seller after July, 2021 2021, , whether whether TDS TDS or or TCS TCS Whether Whether Sec CBDT circular no. 17/2020 states that no adjustment to GST for applying TCS Sec 206C(1H). In contradiction to circular CBDT vide Circular No. 23/2017, dated 19-7-2017 which states that no indicated separately. Sec 194 194Q Q and and Sec Sec 206 206( (1 1H) H) applicable applicable on on GST GST on on purchases purchases and and sales sales respectively respectively no TDS TDS on on GST GST on on services services under Chapter XVII B if GST 09 November, 2022 (C) CGCA & Associates LLP 32
Sec 206AB Sec 206AB TDS for Non filers of Income Tax Return TDS for Non filers of Income Tax Return Nature of Transaction Nature of Transaction Tax to be deducted in the respective sections under Chapter XVIIB Except Except Sec 192 TDS on Salary Sec 192A - TDS on accumulated balance in PF of an employee Sec 194B - Winnings from Lottery or crossword puzzle Sec 194BB Winnings from Horse race Sec 194LBC Income from Investment in Securitization Trust Sec 194N Payments of certain amounts in cash Specified Specified person person means a person a. who has not filed Income Tax for immediately 2 previous year from the year in which tax is deducted b. the due date for original return has expired on the date of deduction c. Aggregate of TDS and TCS > 50,000 in each of the 2 previous years Does Does not not Include Include NR NR who who does does not not have have PE PE in in India India TDS to be deducted in case of TDS to be deducted in case of Rate of TDS Rate of TDS Higher of a. 2X the rate in relevant Section b. 2X the rate or rates in force c. 5% Higher of the rates provided in both the Section Rate in case both Sec 206AA and Sec 206AB Rate in case both Sec 206AA and Sec 206AB applicable applicable Applicable from Applicable from 1st July, 2021 Consequential amendment to Sec 194 Consequential amendment to Sec 194- -IB IB TDS shall not exceed the last month of rent payable 09 November, 2022 (C) CGCA & Associates LLP 33
Sec 206CCA Sec 206CCA TCS for Non filers of Income Tax Return TCS for Non filers of Income Tax Return Nature of Transaction Nature of Transaction Tax to be collected in the respective section under Chapter XVIIBB TCS to be collected in case of TCS to be collected in case of Specified Specified person a. who has not filed Income Tax for immediately 2 previous year from the year in which tax is deducted b. the due date for original return has expired on the date of deduction c. Aggregate of TDS and TCS > 50,000 in each of the 2 previous years person means a person Does Does not not Include Include NR NR who who does does not not have have PE PE in in India India Rate of TCS Rate of TCS Higher of a. 2X the rate in relevant Section b. 5% Rate in case both Sec 206CC and Sec Rate in case both Sec 206CC and Sec 206CCA applicable 206CCA applicable Applicable from Applicable from Higher of the rates provided in both the Section 1st July, 2021 09 November, 2022 (C) CGCA & Associates LLP 34
Sec 206AB and Sec 206CCA Sec 206AB and Sec 206CCA Other issues / Considerations Other issues / Considerations Consequences to be faced in the respective sections, even if Belated returns filed Belated returns filed. Return if filed even in 1 of the 2 immediate preceding previous years Return if filed even in 1 of the 2 immediate preceding previous years, then the provisions are not applicable. Provisions do not consider situation where persons not liable to file return of income not liable to file return of income Example Example : a. Specified Super senior citizen not required to file return if TDS deducted u/s. 194P b. Non residents or Foreign companies not required to file return of Income in India by virtue of exemption granted u/s. 115A(5) c. Ecommerce operator deducting TDS of Farmers (Ecommerce participant) selling agriculture produce who is not required to file income tax return (agriculture income being only source of income) d. Senior Citizen having only interest income not exceeding maximum chargeable limit who forgets to submit Form 15G to the bank. Bank shall deduct TDS at higher rates for non filing of return of previous year. 09 November, 2022 (C) CGCA & Associates LLP 35
Sec 206AB and Sec 206CCA Sec 206AB and Sec 206CCA Other issues / Considerations Other issues / Considerations Aggregate of TDS and TCS in his case threshold limit to be checked for transaction with the deductor or with others also. in his case exceed Rs. 50,000/- words used in his case in his case not giving clarity as to Data of aggregate TDS and TCS deducted / collected by other parties not available or not in control with the Deductor or the Collector and hence better view should be limits to be checked by the deductor Resistance of other party to share ITR copy with the Deductor or the Collector ITR Filing Compliance Check ITR Filing Compliance Check Reporting Portal for Scheduled Commercial banks for TDS u/s. 194N. Similar mechanism to be brought in by the government Due date for filing original return has not yet expired. In such a case what should the deductor do. Call for a declaration from the payee / collectee that return shall be filed. 09 November, 2022 (C) CGCA & Associates LLP 36
SEC 194Q SEC 194Q Other issues / Considerations Other issues / Considerations Advance payment to Seller before and after 1 Advance payment to Seller before and after 1st st July, 2021, for purchases of goods July, 2021, for purchases of goods Before 1 Before 1st st July, 2021 However seller shall be liable to collect TCS u/s. 206C(1H). July, 2021- Credit or payment whichever is earlier if falls before 1st July, 2021 then Sec194Q shall not be applicable. After 1 After 1st st July, 2021 July, 2021 - - 2 views possible Applicable shall be deductible on income chargeable to tax, since advance in not income of the seller, than no liability to deduct TDS. Applicable - - credit or payment whichever is earlier. Not applicable Not applicable Sec 4 states TDS TDS applicable on branch Transfers TDS applicable on branch Transfers Pre requisite of a buyer and a seller and hence TDS not applicable on branch transfers Seller having multiple units, then purchases to be aggregated for TDS applicability Seller having multiple units, then purchases to be aggregated for TDS applicability Purchases shall be aggregated to compute threshold limit, if the multiple units fall under the same PAN of the seller. Whether barter transactions covered under the scope of TDS u/s. 194Q and TCS u/s. 206C(1H) Whether barter transactions covered under the scope of TDS u/s. 194Q and TCS u/s. 206C(1H) Sales, Turnover, or gross receipts Sales, Turnover, or gross receipts whether GST shall be considered while determining the threshold limit whether GST shall be considered while determining the threshold limit Purchase of Goods / Sale of Goods Purchase of Goods / Sale of Goods - - whether GST shall be considered while determining the threshold limit whether GST shall be considered while determining the threshold limit Adhoc Adhoc on account payments received by the Seller on account payments received by the Seller TCS u/s. 206C(1H) TCS u/s. 206C(1H) Grossing up to be done for GST & TDS both 09 November, 2022 (C) CGCA & Associates LLP 37
TDS / TCS AMENDMENTS IN FINANCE ACT 2020 TDS / TCS AMENDMENTS IN FINANCE ACT 2020 09 November, 2022 (C) CGCA & Associates LLP 38
Sec 194 Sec 194- -O O TDS on Ecommerce Transactions TDS on Ecommerce Transactions Nature of Expenses Nature of Expenses Liability on Liability on Sale of Goods or services on ecommerce platform E-commerce operator (Resident (Resident as as well A person who owns, operated or manages digital or electronic facility or platform for ecommerce transactions well as as Non Non Resident) Resident) TDS to be deducted in case of TDS to be deducted in case of E-commerce participant A person Resident in India Resident in India selling goods or providing services or both on ecommerce platform TDS not to be deducted in case of TDS not to be deducted in case of Ecommerce participant being Individual service or both does does not Aadhar Aadhar number number Individual or or HUF exceed Rs Rs. . 5 5 lakhs HUF whose gross amount of sales or lakhs during the FY and he he has not exceed has furnished furnished PAN PAN or or Threshold Limit Threshold Limit Rate of TDS Rate of TDS Time of deductibility Time of deductibility No limit 1% on sale or service or both At the time of credit or payment whichever is earlier Applicable from Applicable from Amount deemed to be credited or paid Amount deemed to be credited or paid by Ecommerce operator by Ecommerce operator 1st October, 2020 Purchaser of goods or recipient directly making payment to the Ecommerce participant 09 November, 2022 (C) CGCA & Associates LLP 39
Sec 194 Sec 194- -O O TDS on Ecommerce Transactions TDS on Ecommerce Transactions Example Example 1 1 : : Purchases of goods by Mr. ABC (customer) on the platform of Amazon (Ecommerce operator), goods provided for sale by the vendor Mr. XYZ (Ecommerce participant) Example Example 2 2 : : Purchases of goods by Mr. ABC (customer) on the platform of Amazon (Ecommerce operator), goods provided for sale by the vendor Mr. XYZ (Ecommerce participant). Payment made direclty by the customer to XYZ Particulars Particulars Amount Amount (Rs.) (Rs.) Particulars Particulars Amt (Rs.) Amt (Rs.) Purchase of goods by Mr. ABC Purchase of goods by Mr. ABC 1,00,000 1,00,000 Amount remitted by Mr. ABC to Mr. XYZ Amount of TDS to be deducted by Amazon u/s. 194-O 1,00,000 1,000 Commission charged by Amazon to Mr. XYZ 100 Commission charged by Amazon to Mr. XYZ Amount of TDS to be deducted by Amazon u/s. 194-O Debit note to be raised by Amazon on Mr. XYZ 100 1,000 Amount to be remitted by Amazon to Mr. XYZ 98,900 1,100 09 November, 2022 (C) CGCA & Associates LLP 40
Sec 194 Sec 194- -O O Other issues / Considerations Other issues / Considerations Payment Payment Gateways Undertaking to be taken by payment gateway from the ecommerce operator (Circular Gateways not to deduct TDS u/s. 194-O if ecommerce operator have deducted TDS on the same transaction. (Circular No No. . 17 17 / / 2020 2020) ) Insurance agent or Insurance aggregator exempted from deducting TDS u/s. 194-O (Circular (Circular No No. . 17 17 / / 2020 2020) ) Transaction Transaction prior prior to to 1 1st st October, October, 2020 2020 whether whether to to be be considered considered for for Threshold Threshold limit limit of of Rs Rs. . 5 5 lakhs lakhs in in case case of of Individual Individual / / HUF HUF CBDT vide circular no 17 / 2020 has clarified that the transactions by Individual / HUF before 1st October, 2020, shall be considered for determining Threshold limit of Rs. 5 lakhs and accordingly amount credited or paid after 1st October, 2020 shall be liable to TDS u/s. 194-O Gross Gross amount amount whether whether TDS TDS to to be be deducted deducted on on GST GST on on sale sale of of Goods Goods and and GST GST on on sale sale of of services services Circular No. 23/2017, dated 19-7-2017 which states that no TDS on GST on services under Chapter XVII B if GST indicated separately. However no clarification on GST on sale of goods. Further CBDT in Sec 206C(1H) has clarified that no adjustment on GST on sale of Goods for TCS. 09 November, 2022 (C) CGCA & Associates LLP 41
Sec 194 Sec 194- -O O Other issues / Considerations Other issues / Considerations Explanation Explanation to to Sec payment payment by Sec 194 ecommerce operator 194- -O( O(1 1) ) payment payment directly operator directly by by consumer consumer to to ecommerce ecommerce participant participant - - Deemed Deemed credit credit or or by ecommerce Practical Difficulty - Debit note, Cash flows, cost to be borne by Ecommerce operators if ecommerce participant doesn t reimburse. Reconciliations - additional compliance burden Explanation Explanation to to Sec Sec 194 194- -O( O(1 1) ) inconsistent inconsistent with with provisions provisions of of Sec Sec 198 198 TDS deemed to be income of the ecommerce participant. Full payment received by the ecommerce participant from the consumer. TDS to be deducted in case of Farmers (Ecommerce participants) selling agriculture produce exempt income not required to file income tax returns (agriculture income being only source of income) 09 November, 2022 (C) CGCA & Associates LLP 42
Sec 194 Sec 194- -O O Other issues / Considerations Other issues / Considerations No No TDS TDS under under any any other other section section once once sec sec 194 194- -O O becomes becomes applicable applicable (Sec (Sec 194 194- -0 0( (3 3)) )) Person availing services for professional services availed from an ecommerce participants through ecommerce platform as ecommerce operator liable to deduct TDS u/s. 194-O. Applicable even if services of individual / HUF does not exceed Rs. 5 lakhs Threshold. Example Example : : Audit Amazon Amazon (Ecommerce (Ecommerce operator) Audit services services availed operator). . availed from from a a CA CA (Mr (Mr. . XYZ) XYZ) (Ecommerce (Ecommerce participant) participant) by by Mr Mr. . ABC ABC (customer) (customer) on on the the platform platform of of Particulars Particulars Gross Gross amount of amount of services services exceed Rs. 5 exceed Rs. 5 Lakhs Lakhs Gross Gross amount of amount of services services does not does not exceed Rs. 5 exceed Rs. 5 Lakhs Lakhs Servcies of CA availed by Mr. ABC on Amazons Platform 1,00,000 1,00,000 Amount of TDS to be deducted by Amazon u/s. 194-O - 1,000 Amount to be deducted by the customer while making payment for audit services availed u/s. 194J - - 09 November, 2022 (C) CGCA & Associates LLP 43
Sec 194 Sec 194- -O O Other issues / Considerations Other issues / Considerations Direct payment made by consumer to ecommerce participant for some additional work either in cash or bank Practical difficulty to track and deduct TDS by the Ecommerce operator. Non compliance by the Ecommerce operator. Example Example : : Availing services of a Technician (Mr. XYZ) (Ecommerce participant) by Mr. ABC (customer) on the platform of Amazon (Ecommerce operator). Additonal payment made by the customer to the Technician for providing spare parts at the time of giving servcies not known to Amazon Particulars Particulars Amount (Rs.) Amount (Rs.) Servcies of Technician availed by Mr. ABC on Amazons Platform 1,00,000 Amount paid by Customer to Technician direclty 20,000 Amount of TDS to be deducted by Amazon u/s. 194-O 1,200 TDS actually deducted by Amazon 1,000 Short deduction by Amazon due to unawareness of the spare parts provided by the Technician 200 09 November, 2022 (C) CGCA & Associates LLP 44
Sec 206C(1G) Sec 206C(1G) TCS on Foreign remittance under LRS & Overseas Tour package TCS on Foreign remittance under LRS & Overseas Tour package Nature of Transaction Nature of Transaction Foreign Remittance under Liberalised Remittance Scheme (LRS) Payment for Overseas Tour program package (expenses for travel, stay, etc for a visit to a country outside India) Seller of an Overseas Tour program package (No (No TCS TCS by by AD AD if if seller seller has has collected Liability on Liability on Authorised Authorised Dealer A person authorized by RBI to deal in Foreign exchange or Foreign security Amount in excess of Rs. 7 lakhs in a FY 5% on the amount of remittance 0.5% on the remittance of loan from Financial Institution for pursing education At the time of debit or payment whichever is earlier 1st October, 2020 a. Liable to TDS and TDS has been deducted b. Remittance by CG, SG, embassy, High Commission, legation, commission, consulate, Trade representative of a foreign state, local authority Dealer (AD) (AD) collected TCS) TCS) Threshold Limit Threshold Limit Rate of TCS Rate of TCS No limit 5 % on the amount of remittance Time of collection Time of collection At the time of debit or payment whichever is earlier 1st October, 2020 Applicable from Applicable from Exemption Exemption 09 November, 2022 (C) CGCA & Associates LLP 45
Sec 206C(1G) Sec 206C(1G) TDS on Foreign remittance under LRS & Overseas Tour package TDS on Foreign remittance under LRS & Overseas Tour package Transactions Transactions covered covered under under LRS LRS a. Travel to country outside India b. Gift or Donation c. Studies outside India d. Business Trips e. Employment outside India f. Expenses for Medical Treatment outside India g. Making Investments outside India h. Purchase of Property outside India Extra amounts to be shelled out by parents or students for making payment for education. Hardships faced in case of in adequate funds for studies abroad. Threshold limit per AD. No tracking possible if buyer transacts through multiple AD. Transaction prior to 1st October, 2020 to be considered to determine Threshold limit of Rs. 7 lakhs ( no Board circular) 09 November, 2022 (C) CGCA & Associates LLP 46
Sec 192 Sec 192 Deferment of TDS on ESOPs for Start up Deferment of TDS on ESOPs for Start up Nature of Transaction Nature of Transaction Perquisites in the hands of the employee in the form of Employee Stock Options Plan (ESOP) Employer being an eligible Start up u/s. 80IAC a. Company or LLP engaged in eligible business after 1 2022 b. Turnover < 25 crores in the year of claim of deduction c. Holds certificate of eligible business from Inter Ministerial Board of Certifcation Liability on Liability on st April, 2016 but before 1 st April, Rate of TDS Rate of TDS Rates in force for the FY in which ESOP is exercised (chargeable in the year of exercise but payment of TDS deferred) Within 14 days from the earliest of the following a. 48 months from the end of the relevant AY in which ESOPS are exercised b. from the sale of specified security or shares by the employee c. from the date the individual ceases to be an employee of the Start up 1st April, 2021 If the employer fails to deduct TDS or deducts but fails to pay, then the employee shall be required to pay tax directly. If the employee fails to pay such tax then he shall be considered as Assessee in default. Time of deduction Time of deduction Applicable from Applicable from Direct payment by Employee u/s. Direct payment by Employee u/s. 191 191 09 November, 2022 (C) CGCA & Associates LLP 47
Sec 194J Sec 194J Reduction in the rate of Fees for Technical Fees Reduction in the rate of Fees for Technical Fees Nature of Transaction Nature of Transaction Fees for technical services (not being professional services) Liability on Liability on Person responsible for making payment to the person providing Technical services Applicable to Individual & HUF only if the their turnover exceeds prescribed limits in the immediate preceding financial year Rate of TDS Rate of TDS 2% on fees for Technical services Time of deduction Time of deduction At the time of credit or payment whichever is earlier Applicable from Applicable from Definition of Technical Services Definition of Technical Services 1st April, 2020 As per explanation to 9(1)(viii) "fees for technical services" means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head "Salaries" Services of an Engineer for testing and Certification Services of an Engineer for AMC Services 09 November, 2022 (C) CGCA & Associates LLP 48
TDS and TCS TDS and TCS way forward way forward Management Management / / Accounts Accounts Team Team a. Software updation Automation b. Knowledge upgradation of the Accounts Team handling TDS c. Communication with the accounts team of the Buyer / Seller d. Ledger Reconciliations at regular intervals e. Reconciliation of TDS / TCS credit to be claimed in a FY f. Declarations from Buyer to be procured by the Seller for TCS collection u/s. 206C(1H) CA s CA s office office a. Thorough Knowledge of the provisions of TDS and TCS before going on Audit b. Internal Session for knowledge upgradation c. Audit workings Reconciliations reporting under Clause 34 of Tax Audit Report d. Judgements / case of opinions / Circulars to be documented 09 November, 2022 (C) CGCA & Associates LLP 49
Consequences of Non deduction & Non payment Consequences of Non deduction & Non payment Sec 40(a)(ia) - Disallowance of 30% of the expenditure for non deduction or non payment Sec 201 TDS, 206C - TCS a. Assessee in default b. Recovery of Tax c. Interest u/s. 201 for TDS and Interest u/s. 206C(7) Penalty a. Sec 271C - Penalty for failure to deduct TDS b. Sec 271CA Penalty for failure to collect TCS Prosecution Sec 276B / 276BB Prosecution for failure to pay the tax collected from vendors / customers 09 November, 2022 (C) CGCA & Associates LLP 50
