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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

Budget 2013 and TDS Provisions

Tax Rate and Slabs

There is no change in tax rate or slabs. However surcharge has been proposed as follows

Description

Existing Surcharge

Proposed Surcharge

Domestic Company having income exceeding 1 crore but not exceeding 10 crore

5%

5%

Domestic Company having income  exceeding 10 crore

5%

10%

Non-Domestic Company having income exceeding 1 crore but not exceeding 10 crore

2%

2%

Non-Domestic Company having income  exceeding 10 crore

2%

5%

Others having income exceeding Rs. 1 Crore

NIL

10%

TDS Rates

There is no change in rates of TDS

Surcharge and cess is to be considered while deducting tax at source in respect of

  • payment to non-residents and non-domestic companies
  • payment of salaries

Raising of limit of eligible premium on insurance policies- Sec, 80C

Currently deduction under section 80C in respect of premium paid on life insurance policy is allowable only if such premium does not exceed 10% of sum assured.This limit of 10% is increased to 15% in respect of life insurance policy of a person

  • with disability as referred in section 80U or
  • with disease as specified in section 80DDB
  • Such policy is issued on or after 01-04-2013

Contribution to health schemes – Sec. 80D

Central Government can specify health schemes , contribution to which will be eligible for deduction under section 80D

Rebate of Rs. 2000 on individuals having total income upto Rs. 5 Lac- Sec 87A

An individual having taxable income of upto Rs. 5 Lac , can claim rebate under section 87A of actual amount tax subject to maximum of Rs. 2000

Additional deduction for interest on new home loan- Sec 80EE

A new deduction under section 80EE is proposed as follows:

  •  An individual buying residential house for the first time and taking loan from any financial institution can claim this deduction
  • Conditions to be fulfilled :
  1. The loan must be sanctioned between 1st April 2013 and 31st March 2014.
  2. The loan amount should not exceed Rs. 25 Lacs
  3. The value of residential house does not exceed 40 Lacs
  4. Individual does not own any residential house on the date of sanction of loan
  • Amount of deduction is limited to Rs. 1 Lac and is to be allowed only during Assessment year 2014-15. However, if the interest amount is less than 1 lac during AY 2014-15, the balance amount can be claimed during Assessment Year 2015-16
  • This deduction is in addition to deduction of Rs. 1.50 Lacs available in respect of interest payment on home loans.

Expansion in scope for Rajeev Gandhi Equity Saving  Scheme- Sec. 80CCG

The scope of scheme is proposed to be expanded from Assessment Year 2014-15  to

  •  include investment in equity oriented mutual funds
  •  extend deduction to three consecutive assessment years as against one assessment year at present
  •  raise threshold from 10 Lac to 12 Lac as gross total income to be eligible to claim this deduction

Donation to National Children’s Fund- Sec 80G

Donations made to National Children’s Fund will be eligible for 100% deduction. This is being increased from 50% applicable as present

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

  • A new section 194-IA is proposed to provide that
    •  every transferee,
    •  at the time of making payment or crediting of any sum as consideration which is Rs. 50 Lacs and above
    •  for transfer of immovable property (other than agricultural land)
    •  to a resident transferor,
    •  shall deduct tax @ 1% of such sum
  • This provision is effective 1st June 2013
  • This is applicable even to Individuals/ HUFs not covered under tax audit u/s 44AB
  • The purchaser will have to apply for TAN, deposit tax and file TDS statements

TRACES : new TDS web interface from Income-tax Dept.

TRACES stands for TDS Reconciliation Analysis and Correction Enabling System and has been set up by TDS Centralised Processing Cell of the income-tax department.

TRACES will integrate the following components

  • Tax information Network
  • Automated TDS Challan Matching
  • TDS Defaults Processing
  • IVR/ Call Centre
  • Web Portal

New Web Portal :  https://www.tdscpc.gov.in

The new portal has been created using latest technology to enhance swift interaction between the deductor, deductee, income-tax department and CPC. The following features are/ will be  available to deductors and deductees

  • Dashboard giving summary of Deductors account
  • Online registration of TAN
  • Online filing of TDS Statements
  • Online corrections of TDS  statements
  • Default Resolution
  • View Form 26AS
  • Download Form 16/16A/Consolidated TDS File
  • Grievance registration and resolution

Not all of the above features have been activated so far

NSDL web site V/s TRACES web Site : Current Status

Currently several online services are provided to deductors and deductees on TIN  site by NSDL.  The following table presents various services at both the sites

1

Registration at TRACES

  • Users who have already registered at NSDL TIN site, need not register again on TRACES. Their registration details are migrated and they can login at TRACES with their NSDL-TIN login details
  • Fresh registrations on NSDL site have been stopped
  • New registrations can be done at TRACES site and online help is available under the FAQ link

It appears; gradually TRACES will become the only site for deductors and deductees. As more features appear and existing features understood, we will keep sharing the information with you

Budget 2012 and TDS Provisions

        Summary of provisions related to TDS/TCS

  • No tax deduction on interest on securities upto Rs. 5000
  • Payment to independent directors covered under section 194J and tax to be deducted @ 10%
  • Threshold limit increased from Rs. 1 Lac to 2 Lac for compensation towards compulsory acquisition of immovable property
  • New provision for deducting tax at source @ 1% on sale of immovable property
  • Senior citizens of age 60 or above can now file Form 15H and claim non deduction of tax at source
  • For non deduction, no default if deductee provides proof of taxes paid
  • Intimation issued after processing of TDS return will be deemed to be Notice of Demand
  • Penalty for non filing or incorrect filing of TDS  statements
  • Time limit for passing order for failure to deduct tax increased from 4 years to 6 years
  • Tax collection at source on sale of jewellery in cash in excess of Rs. 2 Lac

       Section wise details

Section 193 : Interest on securities : Effective  July 1 , 2012

  • Existing provisions provide for threshold limit of Rs. 2500 in respect of interest payable to resident individuals on listed debentures of a listed company and for unlisted debentures there is no threshold
  • Amended provision now prescribes a limit of Rs. 5000 in respect of interest payable to resident individuals or HUF for listed or unlisted debentures issued by a public company. For this purpose the payment of interest must be made by an account payee cheque

Section 194J : TDS on fees for professional or technical services : Effective  July 1 , 2012

  • The amendment has included payments made to independent directors ( whether by way of fees or professional services or whatever name ) @ 10% of gross payments.
  • If the remuneration to director is already subject to TDS under section 192 ( salaries ), then the above provision will not apply

Section 194LA : TDS on compensation on acquisition of immovable property : Effective  July 1 , 2012

  • Existing provision prescribe a threshold limit of 1 Lac
  • The amendment seeks to increase threshold limit to 2 Lac

194LAA : TDs on payment on transfer of immovable property : Effective Oct 1, 2012

  • This new proposed section covers consideration for transfer of immovable property , other than agricultural land
  • The deduction has to be made at the time of credit or payment , whichever is earlier
  • TDS is required @ 1% of consideration
  • Threshold limit for deduction is 50 Lacs for property situated in specified urban areas and 20 lacs in other areas
  • Consideration will be actual amount OR value assessed by stamp authorities
  • The property document will not be registered unless proof of TDS deposit is attached
  • This TDS deduction will not be subject to other provisions like quoting TAN,  submitting eTDS statement , issuing Form 16A. A separate one page form will be prescribed which needs to be submitted to registration authorities

Section 197A :  Non Deduction in certain cases

  • Form 15H for claiming of certain amount without deduction of tax at source can be now submitted by a person 60 or above years of age.

Sec. 201 – Consequences of Failure to Deduct or Pay

Increase in time limit  :Effective April 1, 2010

  • If a person required to deduct tax at source, does not deduct or after deducting does not deposit the amount, is deemed to be an assessee in default.
  • For this purpose an order is to be passed by the Assessing Officer under section 201
  • This time limit currently is 4 years from the end of financial year in which payment is made or credit given. The amendment now seeks to increase this period to 6 years and is effective April 1, 2010

Not assessee in default : Effective July 1, 2012

  • A person will not be deemed to be assesse in default for failing to deduct tax at source if deductee
    • has furnished income tax return
    • has considered such sum ( on which tax was not deducted at source ) in computing total income
    • has paid tax due on income shown in the return
    • furnishes a certificate to this effect from an accountant
  • The deductor however will be liable to pay interest from the date such amount was deductible to the date of furnishing of return by deductee

206C Collection of tax at source : Effective July 1, 2012

  • A new sub section (1D) is proposed. A seller who receives any amount in cash as consideration of sale of jewellery  or bullion , will be required to collect tax at source @ 1 % of sale consideration. The threshold for this provision is Rs. 2 Lac
  • Sale of minerals like coal, lignite or iron ore will also be subject to tax collection at source @ 1%

Sec  271H – Penalty for Default in Furnishing Statements

  • A new section 271H provides for penalty from Rs. 10,000 to Rs. 1 Lac where
    • Deductor fails to file eTDS statements in time
    • Furnishes incorrect information in eTDS statements

Sec 234 – Fee for Default in Furnishing Statements

 Failure to file eTDS statements in time will now entail a penalty of Rs. 200 per day ( instead of Rs. 100 per day )

  • No penalty will be levied for delay if TDS statements are filed within 1 year of prescribed due date after payment of tax and interest on delayed deposit

Intimation after processing of TDS Statements  :Effective July 1, 2012

  • ·         Intimation generated after processing of TDS statement will be treated a  Notice of Demand u/s 156 ,Rectifiable order u/s 154 and  Appealable order u/s 24A

 

Provisions pertaining to Non Resident Indians

Section 194E : TDS on payment to non-resident sportsmen or Sports Association : Effective  July 1 , 2012

  • Existing provisions provide for TDS @ 10% of gross receipts of non-resident sportsmen or sports association
  • Amended provisions not provide for TDS @ 20% of gross receipt of non-resident sportsmen , sports association OR entertainer

Sec. 194-LC – TDS on Interest from Specified Indian Companies : Effective July 1, 2012

  • This new section prescribes TDS @ 5% in respect of interest paid by specified companies to non-residents in respect of foreign currency loans
  • The borrowing must be made between July 1, 2012 to July 1, 2015 and approved by Central Govt
  • The specified companies are those which are engaged in:   Construction of dam ,Operation of aircraft ,  Manufacture or production of fertilizers ,Construction of Port including inland port ,Construction of road, tall road or bridges.Generation, distribution or transmission of power ,Construction of ships in shipyard ,Developing and building affordable housing projects referred to in Section 35AD (8)(c)(vii).

Sec. 195 – TDS on Payments to Non-Residents

  • The tds on interest payment covered under this section will not include interest covered under section 194LB and 194LC
  • The obligation to deduct tax under this section will apply to residents or non-residents. Even if a non-resident does not have a place of business or any other presence in India. This explanation is retrospective with effect fron 1st April 1962
  • The  Board can issue Notification to specify a class of persons or cases where person responsible for making payment to a non-resident can make application to Assessing Office to determine sum chargeable to tax. This amendment will be effective July 1, 2012