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Budget 2014/2015 – Personal Tax Rates & TDS

The Finance Minister (FM) presented the Interim Budget and introduced Finance Bill 2014 on 17th February 2014.

He has not proposed any changes in the existing Personal Tax (PT) or Tax Deducted at Source (TDS) rates

The PT rates for Financial Year 2014-2015 are going to be as below:

1. Tax Slab for an Individual (resident & below 60 years) or HUF/AOP/BOI/AJP

Income Slabs

Tax Rates

Total income up to Rs. 2 Lac 0% Tax
Total income above Rs. 2 Lac and below Rs.5 Lac 10% on amount exceeding Rs. 2 Lac
Total income above Rs. 5 Lac and below Rs.10 Lac 20% on Income exceeding Rs. 5 Lac + Rs. 30,000
Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1,30,000

* u/s 87A the Individual having taxable income up to Rs. 5 Lac , can claim rebate, on the Actual Tax amount subject to a maximum of Rs.2,000

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 10% of Income tax is applicable

2. Tax Slab for an Individual (resident & above 60 years but below 80 years)

Income Slabs

Tax Rates

Total income up to Rs. 2.50 Lac 0% Tax
Total income above Rs. 2.50 Lac and below Rs.5 Lac 10% on amount exceeding Rs. 2.50 Lac
Total income above Rs. 5 Lac and below Rs.10 Lac 20% on Income exceeding Rs. 5 Lac + Rs. 25,000
Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1,25,000

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 10% of Income tax is applicable

3. Tax Slab for an Individual (resident & above 80 years)

Income Slabs

Tax Rates

Total income up to Rs. 5 Lac 0% Tax
Total income above Rs. 5 Lac and below Rs.10 Lac 20% on Income exceeding Rs. 5 Lac
Total income more than Rs. 10 Lac 30% on Income exceeding Rs. 10 Lac + Rs. 1 Lac

Where the Taxable Income exceeds Rs. 1 crore, Surcharge @ 10% of Income tax is applicable

File Validation Utility (FVU) 4.1 and 2.137 – Applicable from 04th January 2014

NSDL came out with a new FVU late evening yesterday 02nd January 2014

FVU Applicability

Date Applicable from FVU Version
From 04th Jan 2014 4.1 & 2.137
Till  03rd Jan 2014 4.1 & 2.137 and 4.0 & 2.136

Points introduced in the new version are:

Deletion of Deductee Record

Applicable Forms – 24Q, 26Q, 27Q, 27EQ

  • Deletion of Deductee’s records (in Correction Return) is no longer permitted.
  • Till the prior FVU versions Deductee records could be deleted, while filing the Correction Return.
  • Henceforth a Deductor would be required to modify the particular Deductee  details in the Correction return and enter zero against the following fields:
    • Amount of payment
    • Amount of Deduction
    • Amount of Deposit
    • Rate of Deduction
    • Date of Deduction should be blank

Form 27A

  • Form 27A is used for providing summarized information with the Statement of Tax deduction/Tax Collection at source.
  • Now on, the Form 27A would be auto generated on creation of the .fvu file
  • The new Form27A also contains a barcode (refer file attached)

27A

Date of Tax Deduction and/or Tax Collection

Applicable Forms – 24Q, 26Q, 27Q, 27EQ

  • Going ahead transactions, on which tax is deducted prior to the filing period, cannot be included in the TDS return.
  • Ex – In the Dec 2013 quarter, a Deductor cannot include a TDS deduction entry prior to 01st October 2013
  • Earlier there were no restrictions and one could declare transaction related to previous quarter in the subsequent filing quarters
  • Now on, a Deductor is required to file a Correction return, if they have any (such) transaction relating to previous filing periods.

Challan/Transfer Voucher validation

Applicable Forms – 24Q, 26Q, 27Q, 27EQ

  • Challan amount should be more than or equal to total of Tax deducted, interest payments, late filing fees and other amounts.
  • i.e – No challan can be submitted with a short payment
  • Ex -  Assume a scenario as below:
TDS Amount 10,000
Interest  5,000
Other Amount  4,000
Fees  1,000
TOTAL 20,000
  •  In this case, the Challan amount has to be more than/equal to Rs. 20,000

* Points expressed here are the Author’s interpretation. This cannot substitute Expert advice

File Validation Utility (FVU) 4.0 and 2.136 – Applicable from 01st October 2013

NSDL came out with FVU version 4.0 and 2.136  on 25th September 2013.

FVU Applicability

Date Applicable from FVU Version
From 01st Oct 2013 4.0 & 2.136
Till 30th Sept 2013 4.0 & 2.136 and3.9 & 2.135

 

 

Points added/introduced in the new version are:

Nil Challan/ transfer vouchers

Applicable Forms – 24Q, 26Q,27Q, 27EQ

  • In case of Nil Challan/ transfer vouchers, it’s now mandatory to update reasons for such non deduction
  • Along with entering all the other transaction details one now needs to, also, update either of the following flags “A/B/S/T/Y/Z” in the ‘Reason for Non deduction/Lower deduction’ field
  • It needs to be seen how one treats a situation where there are no transactions in a quarter.

Section 194LD

Applicable Forms –27Q

  • As per Section 194LD, introduced in the Finance Bill 2013, TDS @ 5% needs to be deducted on interest payments for Rupee denominated bonds issued by the Government of India or any other Indian company.
  • TDS would be applicable on all such interest payments made from 01st June 2013 till 31st May 2015
  • These payments are made to Qualified Foreign Investors (QFI) and/or Foreign Institutional Investors (FII)

Section 194LC

Applicable Forms –27Q

  • Section 194LC covers following payments made to non residents
    • Interest (other than interest on securities) and
    • Other payments except for salary
  • Now onwards only an Indian Company or it’s Branch, may deduct TDS under this section
  • Earlier this Section was open to use by all Deductors. Ex – Company, AOP, BOI etc
  • It’s still not clear on how Deductors (apart from Company or Branch) deal with payments under this Section

Section 194LC (Correction Statement)

Applicable Forms –27Q

  • Pursuant to the change in this FVU, Correction Statement may be filed, only, if there are any changes in the existing Challan or Deductee or in case a new challan has been paid.
  • Under the ‘Correction Type’ field, Deductor may only use
    • C2 – Correction in Deductor and/or Challan details
    • C3 – Change in Deductor, challan, and/or Deductee details
    • C9 – Additional Challan payments
  • This change is applicable from 2012-2013 onwards

Provisional Receipt Number (PRN)

Applicable Forms –24Q,26Q,27Q,27EQ

  • It is now mandatory to mention the PRN for all Regular statements
  • PRN from the last filed Regular Statement (for the same Form) needs to be quoted
  • Ex – In case a Deductor is filing Form 24Q for quarter ending June 2013, he has to mention the PRN from previous period, would henceforth be required to mention their PRN

Date of Challan Deposit

Applicable Forms –24Q, 26Q, 27Q, 27EQ

  • Surplus challan payments, from the immediate previous financial year (FY), may now be adjusted against current year dues. Eg – While filing returns for FY 2013-2014, one can use the surplus from the previous FY 2012-2013
  • Surplus arising from any year prior to the previous FY cannot be entered
  • A Deductor would now be allowed to enter details of surplus payments made in the previous FY
  • Excess payments from previous FY occurring on account of Book entry adjustments, would not be allowed

FVU 3.8 : Key changes effective July 2013

NSDL has released FVU version 3.8 effective July 1,2013. There are some important changes in the data structure of eTDS statement. Several new fields have been added,  few fields removed effective FY 2013-14 .

Major changes and data structure amendments are explained in this blog.

Challan Amount Allocation

  • Till now Section code was mentioned in the Challan sheet and deductee sheet only had reference of the challan. Hence all dedcutee records pertaining to a particular challan number were considered belonging to section code of the challan.
  • This posed problem for deductors who had combined two or more sections while depositing challans. While a workaround to take care of this situation was available, it was difficult for deductors to comprehend and put into practice.
  • Now there is no need to mention Section Code in the challan sheet and the same has been shifted to deductee sheet.
  • This means that a challan amount deposited can be allocated to deductees belonging to different section codes. The only restriction being those sections must be valid for that particular form. Hence a section code pertaining to Form 27Q cannot be mentioned in Form 26Q

Income and Tax deducted by Previous Employers in Salary Details

One of the main deficiency in data structure so far no place to mention tax deducted by previous employer. This was a cause of confusion for employers as they were supposed to consider tax deducted by previous employer while computing tax deductible , but no place to mention the same in eTDS Statement. This has been addressed now by incorporating the following fields in Q4 Form 24Q

  • Reported Taxable Amount on which tax is deducted by previous employer(S)
  • Reported amount of Tax deducted at source by previous employer(s)/deductor(s)

Discontinuation of “Y” type correction.

  • So far a regular statement filed can be cancelled by filing a Y type of correction statement.
  • This is being discontinued now. Hence a regular statement once filed cannot be cancelled

Discontinuation of quarterly TDS/TCS statements (regular and correction) pertaining to FY 2005-06 and 2006-07.

  • Currently there was no time limit for filing regular or correction statements.
  • Now no regular statement  or correction statement for FY 2005-06 and 2006-07 can be filed.
  • This means a deductor can still file regular and correction statements for past 6 years i.e  2008-09 to 2012-13

Other Changes : Common across all forms

 Deductors Details

Additional details to be provided

  • TAN Registration Number
  • Alternate Phone number and email ID of deductor
  • Alternate Phone number and email ID of Responsible Person
  • Accounts Office Identification Number in case of Governement Deductors

Challan Details

  • The following fields are not to be mentioned starting Financial Year 2013-14
    • Section Code
    • Cheque / DD Number
  • Total amount deposited as per challan has to be in rupee, no paise allowed
  • A new field for entering  fee paid in terms of Section 234E is introduced. Applicable for FY 2012-13 onwards
  • A new field for entering Minor head of challan . Valid for FY 2013-14 onwards and mandatory

Deductee Details

  • A new field to enter “Deductee Reference Number “ where PAN is not available
  • Book Entry / Cash indicator is to be given only upto FY 2012-13
  • Section Code is to be mentioned for each deductee starting FY 2013-14
  • Certificate Number issued by the AO under section 197 for non-deduction / lower deduction is to be mentioned

Other Changes : Form Specific

Form 24Q : Salary Details

New fields added

  • Taxable Amount on which tax is deducted by the current employer
  • Reported Taxable Amount on which tax is deducted by previous employer(S)
  • Total Amount of tax deducted at source by the current employer for the whole year [aggregate of the amount in column 323 of Annexure I for all the four quarters in respect of each employee]
  • Reported amount of Tax deducted at source by previous employer(s)/deductor(s) (income in respect of which included in computing total taxable income in column 344)
  • Whether tax deducted at Higher rate due to non furnishing of PAN by deductee

Section code changes

Nature of Payment Section Section code to be used in the return
Payments made to Govt. employees other than Union Govt. employees 192 92A
Payments made to employees other than Govt. employees 192 92B
Payments made to Union Govt. employees.Applicable from for statement pertaining to FY 2013-14 onwards. 192 92C

Form 26Q

Bifurcation to be given in respect of deduction under section 194I

Nature of Payment Section Section code to be used in the return
Payments in respect of use of any machinery or plant or equipment; 194I ( a) 41A
Payments in respect of use of any land or building 194I ( b) 41B
  • Reason for lower/Nil Deduction : In case of no deduction on account of payment under section 197A (1F), applicable from FY 2013-14 onwards, ‘Z’ is to be mentioned.

Form 27Q : Deductee Details

New fields introduced

  • if TDS Rate is as per income-tax Act or DTAA :  Enter A : If TDS rate is as per Income Tax Act   or B : If TDS rate is as per DTAA
  •  Nature of remittance as per given 66 codes
  •  Country to which remittance made as per given 286 codes
  •  Unique Acknowledgement Number of Form 15CA , if available

Form 27EQ : Deductee Details

If there is non collection in terms  section 206c(1A) , update  flag ‘B’ in the field “Reason for lower/non-deduction”

Section 194-IA : TDS on sale of immovable property : Compliance procedure

The Finance Bill 2013 has introduced a new section 194-IA providing for TDS @ 1% to be deducted by purchaser. In case valid PAN of seller is not available , tax deduction will be at higher rate of 20%.

This is applicable w.e.f  June 01, 2013  for sale of immovable property ( other than agricultural land ) where consideration is Rs. 50 Lacs and above. The purchaser is exempt from the obligation to obtain TAN, which is otherwise mandatory for all deductors.

CBDT has issued Notification No. 39/2013 on 31st May 2013 amending rules to simplify procedure for complying with provisions of this new section.

TDS-194-IA

Deposit of tax

Any tax deducted under section 194-IA will be

  • Deposited within 7 days from the end of month in which tax was deducted
  • Deposited by way of Challan-cums-statement in Form 26QB
  • Deposited electronically into RBI/SBI or any authorized bank. Director General of income-tax (Systems) will specify formats , standards and procedure for such electronic remittance

TDS Certificate

  • TDS Certificate in respect deduction under section 194-IA will be issued by deductor in Form No 16B
  • Form 16B has to be issued within 15 days from the due date of depositing tax
  • Form 16B will have to be downloaded from income tax web portal

Mandatory Electronic Payment

  • NSDL site has already provided a new link “TDS on sale of Property” under ePayment of Taxes to electronically deposit such TDS
  • It is mandatory to provide PAN of both transferor and transferee
  • Complete address of transferor and transferee is to be given
  • About property , complete address,  value consideration ,date of agreement  and whether payment made in lump sum or installment is also to be provided in the online form

Electronic Payment by deductors not having net-banking facility

  • Since Section 194-IA transactions will be one off and deductor may not have net-banking facility, an alternate has been provided.
  • The deductor has to fill the information online and then opt for e-tax payment on subsequent date option.
  • On completing the form, an acknowledgement will be generated.
  • The deductor can then visit a bank branch for payment, provide the acknowledgment number.
  • Bank will use TIN web site to retrieve payment information based on the acknowledgement number and then proceed to make electronic payment

What if there is an error in providing PAN details

  • Deductor must be very careful in filling up PAN details.
  • In case wrong PAN is entered, there is no facility of correcting the same online. The only option available is to approach the Assessing Officer or TDS-CPC

FVU 3.71 : Key Changes Effective May 2013

File validation utility 3.71 has been released on May 7,2013

Effective Date

  • FVU 3.71 will be mandatory w.e.f  May 26,2013
  • This means on or before May 25, 2013, statements can be filed with either FVU version 3.6 or FVU version 3.71
  • Effective May 26,2013 version 3.71 can only  be used for all statements pertaining to FY 2010-11 onward.

 Changes:

 Form 24Q : TDS on salaries

  • 80CCG : Investment in Rajiv Gandhi Equity Savings Scheme. This has been incorporated in Form 24Q , Q4 statement. This is effective FY 2012-13 onward.
  • 80CCF : Investment in approved infrastructure bonds. Quoting deduction under section 80CCF has been restricted to FY 2010-11 and 2011-12, as deduction under this section is not available from FY 2012-13 onward.

Form 27EQ : Tax Collection at Source

  • 206CK : Collection at source on cash case of Bullion and Jewellery
  • Such transactions are to be shown in Form 27EQ
  • PAN compliance validation of 85% pertaining to deductees of section code 206CK has been relaxed.

Finance Bill 2013 Amendments : TDS Provisions

Finance Bill 2013 was passed by Lok Sabha on 30-04-2013. The following amendments ( in respect of TDS/TCS Provisions ) were carried out to the original Finance Bill presented on Feb 28,2013

TDS @ 1% on transfer of immovable property- Sec. 194-IA

  • The Finance Bill has introduced a new section 194-IA providing for TDS @ 1% to be deducted by transferee. This is applicable for sale of immovable property ( other than agricultural land ) where consideration is Rs. 50 Lacs and above.
  • The amendment now exempts transferee from the obligation to obtain TAN, which is otherwise mandatory for all deductors
  • With this change, we should also now expect procedural changes related to
    • Payment of TDS without TAN
    • Issuance of TDS certificate and filing of eTDS statement in the absence of TAN

 TDS @ 5% on interest on rupee denominated bonds – Section 194LD

  • The amendment has introduced a new section : 194LD
  • This new section is applicable on interest payable on rupee denominated bonds issued by Govt. or an  Indian company
  • Such interest is payable between 01-06-2013 to 31-05-2015
  • Such interest is payable to FII or Qualified Foreign Investor
  • The rate of TDS will be 5%
  • For such transactions, provisions of Section 195/196D will not be applicable

No penal rate of TDS for transactions covered under section 194LC

  • Section 194LC covers the following payments made to a non resident person or a foreign provided such payment are taxable in India for the payee.
    • Interest except Interest on securities.
    • Other sum except salaries.
  • The amendment in Section 206AA provides that even if deductee does not have a PAN, tax under section 194LC will be deducted at prescribed rate of 5% and penal rate of 20% will not be applicable

Gold coins covered under Tax Collection at Source

  • Effective July 2012 TCS is applicable , if sale consideration of bullion exceeds Rs. 2 lac and part or full consideration is paid in cash. However sale of gold coins weighing 1o grams or less were not considered for the purpose this limit of 2 Lacs
  • The amendment now makes  even sale of gold coins or other articles weighing 10 grams or less will be subject of provisions of tax collection at source, effective June 1, 2013
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