Income Tax Audit Report

Income Tax audit report has to be filed in:

Form 3CA– Where the books of accounts of the business or profession of the person have been audited under any other law, Form 3CA is required to be filed.

Form No 3CA

Form 3CB– Where the books of accounts of the business or profession of the person have not been audited under any other law, in such a case Form 3CB is required to be filed.

Form 3CD – Form 3CD is the form that has to be filed in both of the above cases. Form 3CD is the Statement of particulars to be furnished under section 44AB.

How and when tax audit report shall be furnished?

Tax auditor shall furnish tax audit report online at https://www.incometaxindiaefiling.gov.in
by using his login details in the capacity of ‘chartered accountant’. Taxpayer shall also add CA details in their login portal. After uploading audit report by tax auditor, it should either be accepted/rejected by taxpayer. Where it is rejected for any reason, all the procedures need to be followed again until the taxpayer accpects the the audit report.

NOTE: Tax audit report shall be filed on or before the due date of filing the return of income under section 139(1) i.e., 30th November of the subsequent year where a taxpayer has entered into an international transaction and 30th September of the subsequent year in case of other taxpayers.

Penalty
If a taxpayer is required to conduct audit u/s 44AB but fails to get his accounts audited, then he will be liable for penalty under section 271B. Penalty will be levied for failure to get the accounts audited or failure to furnish a report of audit as required u/s 44AB. Penalty shall be levied 1.5% of total sales or Rs. 1,50,000, whichever is less.

Know Everything on MSME Form 1 ROC Filing

MSME Form-1 (MCA) is to be filed by those specified companies whose outstanding payment to MSMEs suppliers is exceeding 45 days.

Date of Notification: In context to Order dated January 22, 2019, issued under Section 405 of the Companies Act, 2013.

Click here to read the full notification.

What is MSME Form 1 (MCA)?

The MSME Form-1 is to be filed for the payment of half yearly return with the Registrar of Companies (ROC) in respect of the outstanding payments to Micro or Small Enterprises.

The Ministry of Corporate Affairs have made major changes for protecting the interest of groups of small companies or business. He laid emphasis on following compliance by all Specified Companies Whether Public or a Private Company, Micro or Small.

The Companies who receive supply of goods or services from Micro or small enterprises and the amount of payment due with having the reasons of such delay, exceeds 45 days from the date of acceptance or date of deemed acceptance of the goods or services are required to file a half-yearly return.

The return shall be filed in prescribed MCA e-form “MSME FORM 1”

The Return should be state following points in it:

  • amount of payment due; and
  • reasons for the delayed payment

In the exercise of power under the provision of section 405 of the Companies Act, 2013, (18 of 2013) the Central Government made it necessary for all the “Specified Companies” to furnish the above-notified information about payment to micro and small enterprise suppliers.

Meaning of Some Important Terms

Specified Companies: Specified companies as per the provisions of section 9 of the MSME Development Act, 2006 are those companies who receive the supply of goods or services from MSMEs and the payment against these supplies to the suppliers of these MSMEs exceed 45 days from the date of acceptance or date of deemed acceptance of the goods or services
Micro and Small Enterprise: Any class or classes of enterprises (including proprietorship, Hindu undivided family (HUF), partnership firm, company, undertaking, co-operative society or an association of persons), in which are defined as MSME(s) under the Micro, Small and Medium Enterprise Development (MSME) Act, 2006.

Note: The Criteria specified above are specified bases Micro, Small and Medium Enterprises Development Act, 2006 and the bill to change the criteria of classification and to withdraw the MSMED (Amendment), 2015 is pending in the Lok Sabha.

Applicability on Companies

As per a notification issued by the MCA it has been mandated to file disclosures through e-Form MSME-I for every type of the Company – Public or Private Company, Micro or Small Companies; the Company that satisfies the following two conditions:

  • Condition 1: Company must have received Goods and/or Services from Micro or Small Enterprise
  • Condition 2: Payment must have been due/not paid, to such Micro and Small Enterprise for 46 days from the date of acceptance

Note: Date of deemed delivery refers to the acceptance of goods and services by the buyer in written with no objection with the product or services received within the 15 days time period.

Manner for Filing MSME Form 1 (MCA)

The Initial one-time Return: The companies should file, the MSME Form I detailing all the outstanding/ dues against the Micro or small enterprises suppliers that are existing on the date of notification of the related order within 30 days from the date of deployment of E-form MSME-1 on the MCA Portal.

Last date for filing Initial Return (First time return) in form MSME 1: Within 30 days from the date when E-form MSME-1 shall be deployed on the MCA Portal. Note: (as per the extended notification of MCA dated 21.02.2019).

Due Date for Filing MSME Form 1 (MCA)

Initially, every company is required to file MSME-1 before February 21, 2018 mentioning details of all outstanding payments to Micro or Small enterprises (MSMEs) suppliers existing on the date of notification of this order within thirty days

Thereafter, every company shall require to file MSME -1 as a half yearly return, in respect of outstanding payments to MSMEs.

Filing Period Due date of Filing
From April to September 31st October
From October to March 30th April

Exemption to this rule-Who should not file the form?

  • This Rule is not applicable for all the Companies but only for those Specified Companies whose dues to MSMEs suppliers exceed 45 days from the date of acceptance or deemed acceptance of the goods or services under the provisions under section 9 of the MSME Development Act, 2006.
  • If the payment against supplier exceeds 45 days but the supplier/Creditors gives a declaration that they do not fell under the category of Micro or small Enterprises.

Section 44AB of Income Tax Act – Applicability & Audit Reports

Income Tax Audit – Various kinds of audit being conducted under the different laws such as company audit conducted under company law, cost audit, stock audit etc. Similarly, Income tax law also mandates an audit known as ‘Tax Audit’. Tax audit is an examination of books of accounts of the business/profession from income tax perspective.

* Where-

  1. Section 44BB (non resident engaged in the business of exploration of mineral oils)
  2. 44BBB (any foreign company engaged in the business of civil construction etc. in certain turnkey power projects)
  3. 44AD (any business other than business referred to in 44AE)
  4. 44ADA (eligible professionals)
  5. 44AE (business of plying, hiring or leasing of goods carriages)
  • Above are presumptive taxation schemes. Where certain fixed percentage of income or amount is assumed to be the profit for the purpose of taxation.
    Under Income Tax Audit Turnover means the gross receipts of the business or profession, but does not include:
    1. Income received from renting of the house or any other rental income.
    2. Any money received by selling of an asset, held as Investment.
    3. The Income by selling of a Fixed Asset.
    4. Interest Income.

Form 3CA -Where the books of accounts of the business or profession of the person have been audited under any other law, Form 3CA is required to be filed.
Form 3CB– Where the books of accounts of the business or profession of the person have not been audited under any other law, in such a case Form 3CB is required to be filed.
Form 3CD – Form 3CD is the form that has to be filed in both of the above cases. Form 3CD is the Statement of particulars to be furnished under section 44AB
* The audit report under Income Tax shall be shall be filed before 30th September of the relevant Assessment Year.

ACTIVE INC 22A

The government has recently released the address validation form i.e. e-form ACTIVE (INC-22A) included in the Companies (incorporation) Rules, 2014.

The Ministry of Corporate and Affairs (MCA) had earlier introduced the new MSME Form-1, which is required to be filed by Specified Companies whose outstanding payment to supplier exceed 45 days.

What is MCA E-Form ACTIVE (INC-22A)?

The Ministry of Corporate and Affairs (MCA) under the company law requires the companies to fill out the e-form ACTIVE or INC-22A for the address validation. This form is named as Active Company Tagging Identities and Verification (ACTIVE).

It is applicable for all the registered companies under the Companies Act 2013.

Applicability of e-form ACTIVE (INC-22A)

This form is applicable on the companies incorporated on or before the 31 December 2017 and has to file the details of the company and its relevant registered office within the e-Form ACTIVE or INC-22A (Active Company Tagging Identities and Verification) on or before 25.04.2019

Companies that are not required to file e-form ACTIVE (INC-22A)

E-Form Active shall not be filled by the following companies, which are:

  • Struck off;
  • Under the process of strike off;
  • Under liquidation;
  • Amalgamated;
  • Dissolved

Due Date of filing e-form ACTIVE (INC-22A)

The government has mandated the filing of e-form ACTIVE or INC-22A and it has to be filed on or before 25th April 2019. If it is filed after 25th April 2019, penalty of Rs.10,000 shall be imposed or the company may be removed from the Registrar of companies.

Where Company is marked as “Active non-compliant”

If a company does not file e-form ACTIVE or INC-22A on or before 25.04.2019, then the company would be marked as ACTIVE non-compliant. And once a company is marked as ACTIVE non-compliant, it would not be able to file or effect any of the following changes:

  • (Form SH-07) Changes in authorized capital
  • (Form PAS-03) Changes in paid-up capital
  • (Form DIR-12) Changes in Director except for cessation
  • (Form INC-22) Changes in Registered Office
  • (INC-28) Amalgamation or Merger

If a company files e-form ACTIVE or INC-22A after 25.04.2019,a penalty of Rs.10,000 would be levied. After making payment of the penalty and filing of all overdue returns, the company would be again marked as ACTIVE compliant.

Consequences of not filing e-form ACTIVE (INC-22A)

Non-filling of e-form ACTIVE (INC-22A) allows Registrar of Companies to conduct a physical inspection of the Registered office of the Company and also to strike off the name of your Company from its Register.

The Company will also be debarred for the filing of various major e-forms like Form SH-7,PAS-03 and other as discussed previously.

Documents to be attached for filing e-form ACTIVE (INC-22A)

Photograph of the registered office showing the inside office and external building, showing at least one director or KMP and the same director will affix its Digital signature (DSC) on the form.

Other Details:

  • CIN of the company
  • Name and Address of the company
  • Latitude and longitude of the registered office
  • Email Id for OTP verification
  • Number of directors with their Director Identification Number (DIN)
  • Statutory Auditor Details
  • Cost Auditor Details
  • Details of MD, CEO, Manager or WTD
  • Details of Company Secretary (CS)
  • Details of CFO
  • SRN of AOC-4 and MGT-7 filed for FY 2017-18

e-form ACTIVE (INC-22A) is required to be digitally signed by one director or one KMP or two directors in case other than OPC.

Alternative Minimum Tax (AMT)

Applicability of AMT

MAT is applicable to companies only, whereas AMT is applicable to non-corporate taxpayers. Thus, it can be said that MAT applies to companies and AMT applies to a person other than a company. The provisions relating to AMT are given in sections 115JC to 115JF of Income Tax Act.

Alternate Minimum Tax (AMT) is applicable on all assessees except companies, if the tax payable under the normal provisions of Income Tax is less than 18.5% of the Adjusted Total Income (plus surcharge and cess as applicable).
However, in the case of individuals, HUF (Hindu Undivided Family), Association of Persons (AOPs) and Artificial Judicial person, AMT shall not be payable if adjusted total income of the assessee does not exceed Rs. 20 Lakhs,

In essence, AMT will only apply to an assessee who has claimed any deduction under-

a) sections 80-IA to sections 80RRB (other than section 80P); or
b) section 10AA (Deduction in respect of SEZ units); or
c) section 35AD

Rate of AMT

AMT is levied at 18.5% of adjusted total income in case of non-corporate taxpayer. Surcharge and cess will also be levied as applicable.

However, AMT is levied at the rate of 9% in case of a non-corporate assessee’s unit situated in an International Financial Services Centre and generates its income exclusively in convertible foreign exchange. Surcharge and cess will also be levied as applicable. (Applicable from Assessment Year 2019-20)

Calculation of Adjusted Total Income

Adjusted total income and AMT is computed in the following manner:

Particulars Amount
Total net income as computed under the normal provisions of Income Tax Act XXX
ADD: Deduction under Chapter VI-A from 80H to 80RRB except deduction under 80P XXX
ADD: Deduction under Section 10AA (Deduction in respect of SEZ units) XXX
ADD: Deduction claimed under Section 35AD reduced by regular depreciation allowed XXX
Adjusted total income XXX

How to calculate AMT?

As per AMT, the tax liability will be higher of the following:

  • Tax liability computed as per the normal provisions of the Income-tax Law (applying applicable tax rate).
  • 18.5% on adjusted total income (plus surcharge and cess as applicable). The tax computed at the rate of 18.5% on adjusted total income (plus surcharge and cess as applicable) is called AMT.

Note: AMT is levied at the rate of 9% in case of a non-corporate assessee’s unit is situated in an International Financial Services Centre and generates its income exclusively in convertible foreign exchange. Surcharge and cess will also be levied as applicable. (Applicable from Assessment Year 2019-20)

Let us understand calculation of AMT with an Illustration:
Illustration
The taxable income of Mr. Ranjan a resident individual aged 42 years for the year 2018-19 calculated as per the provisions of Income-tax Act is Rs. 26,40,000. The taxable income has been computed after deduction of Rs. 2,00,000 under section 80RRB in respect of royalty on patent. Will he be liable to pay AMT? What will be his tax liability for that financial year?

Ø As mentioned earlier, AMT calculation and usage only applies in cases where the tax payer has used deductions under section 80H to 80RRB (excepting section 80P), under section 35AD and under section 10AA. Further, the provisions of AMT shall also apply to an individual or a HUFs or a body of individuals(BOI) or an artificial juridical person(AJP) or an association of persons only if the adjusted total income exceeds Rs. 20,00,000. Hence, Mr. Ranjan has claimed a deduction under section 80RRB in respect of royalty on patent and his adjusted total income is exceeding Rs. 20,00,000 and thus the provisions of AMT will apply to him.

As per the provisions of AMT, the tax liability of Mr. Ranjan will be higher of the below:

  • Tax calculated as per the normal provisions of the Income-tax Law (applying applicable tax rate).
  • 18.5% on adjusted total income (plus surcharge and cess as applicable). The tax computed at the rate of 18.5% on adjusted total income (plus surcharge and cess as applicable) is called AMT.

Therefore, Tax on Rs. 26,40,000 as per applicable tax rates of an individual below 60 years of age for the AY 2019-20 works out to Rs. 6,04,500. Tax liability after health & education cess of 4% would work out to Rs. 6,28,680.
Adjusted total income will come to Rs. 28,40,000 (Rs. 26,40,000 + Rs. 2,00,000, i.e., deduction under section 80RRB). AMT at 18.5% on Rs. 28,40,000 will come to Rs. 5,25,400. AMT liability after health & education cess of 4% will come to Rs. 5,46,416.
In the given case, the liability as per the normal provisions of the Income-tax Act is more than the liability as per AMT and, hence, the tax liability of Mr. Ranjan will be Rs. 6,28,680.

Audit Report from Chartered Accountant
Assessee will be required to obtain a report from a chartered accountant certifying the computation of the adjusted total income and AMT in the Form No. 29C.
Such report will be furnished on or before the due date of filing of income tax return.

Tax Credit for Alternate Minimum Tax (AMT)

a. Alternate minimium tax (AMT) paid in excess of the regular income tax under the normal provisions of income tax act, will be available as credit against the subsequent tax liability.
b. The credit of AMT will be allowed to be carried forward and set off upto 10 succeeding financial years in which such credit becomes available.
c. AMT credit is allowed in the year in which regular tax > AMT.
d. The credit will be restricted to the difference between the regular income tax computed under normal provisions of income tax act and the AMT.

Let us understand AMT credit with an Illustration:

Illustration
The tax liability of a partnership firm XYZ Enterprises for the financial year 2018-19 under the normal provisions of the Income-tax Act is Rs. 19,40,000 and the liability as per the provisions of AMT is Rs. 19,00,000. It has brought forward AMT credit of Rs. 2,00,000. Can the firm adjust the AMT credit? Calculate the tax liability after adjusting AMT credit.

Ø AMT credit is allowed in the year in which regular tax is more than AMT. In this case, the liability as per the normal provisions of the Income-tax Act is Rs. 19,40,000 and the liability as per the provisions of AMT is Rs. 19,00,000. As the tax liability as per the normal provisions of income tax act is more than liability as per AMT, thus the firm can adjust the AMT credit.
Ø Brought forwardof AMT credit shall be allowed in the following years to the limit of the difference between the tax on total income as per the normal provisions and the liability as per the AMT provisions. Thus, after adjusting AMT credit, the liability of the firm cannot be less than liability as per the provisions of AMT. In this case, the tax charge as per AMT is Rs. 19,00,000, and, hence, after claiming AMT credit, the firm cannot pay less than Rs. 19,00,000. Hence, out of the credit of Rs. 2,00,000 the firm can claim credit of Rs. 40,000 only and the balance credit of Rs. 1,60,000 can be carried forward to the subsequent years.

Form 16C

Form 16C is the TDS certificate which is issued by the Tenant of property to the Landowner of property in respect of TDS deducted on rent under Section 194-IB of the Income-tax Act, 1961.

Form 16C can be download from the website of Centralized Processing Cell of TDS (CPC-TDS), www.tdscpc.gov.in

Form 16C is a new TDS certificate introduced by the government of India. Form 16C reflects the amount of TDS deducted on rent at 5 % by the individual/HUF (u/s 194IB). The person deducting TDS on rent is required to deposit the TDS along with Form 26QC within 30 days of deducting TDS on rent. In addition, the Form 16C should then be provided to the deductee within 15 days of depositing the TDS and Form 26QC.

For Example:

Shivam is a salaried employee and paying a rent of Rs 70,000 per month. He deducted the TDS at the rate of 5% as per section 194IB for the whole year in the month of March. The amount of TDS comes out to be Rs 42,000 (8,40,000 x 5%). Now this TDS has to be deposited along with Form 26QC before 30th April, i.e. within thirty days from the end of the month in which TDS has been deducted. Also, Shivam is required to furnish the Form 16C to his landlord within 15 days from the due date of furnishing a challan cum statement i.e. in Form 26QC. That means you need to furnish the Form 16C to your landlord by 15th of May.

You can download Form 16C or Form 26QC online from TRACES website.

Understanding Form 15G and Form 15H

What is Form 15G and Form 15H?

Form 15G and Form 15H are forms that we need to submit every financial year, as per eligibility to the banks, requesting the bank not to deduct Tax Deducted at Source (TDS) on the Interest Income. The depositor should have a PAN card to submit these forms.

Form 15G is for individuals less than 60 years of age and Form 15H is for senior citizens aged 60 years or more.

Purpose of submitting Form 15G and 15H

Form 15G and 15H are submitted to banks every financial year to make sure that no deduction at source is done for the income in the form of interest from banks. TDS will be levied in case the interest paid or payable on your fixed deposit, recurring deposit etc. is more than Rs. 10,000 in a financial year. Therefore, in case the income of investor including interest from bank is less than the taxable income, he can file form 15G/15H to ensure bank will not deduct TDS. The interest is calculated every year on 31st March and tax is deducted if the interest is more than Rs 10,000.

Both Forms 15G and 15H are valid for one financial year. Therefore it is mandatory to submit these forms every year if you are eligible to file these forms. The taxpayer has to submit these Forms as soon as the financial year starts to ensure that the bank will not deduct TDS on his/her interest income.

Eligibility of Submitting Form 15G

  • An individual or HUF (Hindu Undivided Family)
  • Person Resident of India
  • Age of person should be less than 60 years
  • Tax Liability should be NIL
  • Interest income received from bank must be less than the exemption limit of that year.

Eligibility to Submit Form 15H

  • You must be a resident individual
  • Your Age should be 60 years or more
  • Tax Liability should be NIL
Type Form No. Age Tax Exemption Upto to Annual income of Rs.
Individual 15G Below 60 years 2,50,000
Senior Citizen (Individual) 15H 60-80 years 3,00,000
Super Senior Citizen (Individual) 15H 80 years above 5,00,000
Other than Individual (Trust, Association, HUF etc.) 15G Not Applicable 2,50,000

Important points during Submission

  • Submit a copy of PAN card to the bank in the beginning of the Financial Year and get the Acknowledgement for the same from Bank.
  • You should submit the details of Forms 15G/H submitted to other banks as the total interest from all the bank accounts can be verified by the Banker.
  • Do not declare any wrong information to banks
  • Submit the forms as per eligibility by furnishing correct details to avail the benefit. You can also file it online also as some banks provide online facility.
  • Always take one copy of the relevant form as received if you are submitting the application manually to bank which is considered as a proof of submission.

Procedure to Fill Form

  • Name of Assessee – Name as per Income Tax records
  • PAN of the assessee –As per your PAN card
  • Status –an individual or HUF
  • Previous Year –current financial year
  • Residential Status –For Residents only
  • Flat/Door/Block No – details of your address
  • Name of Premises – Your complete address
  • Road/Street/Lane
  • Area/Locality
  • Town/City/District
  • State
  • PIN
  • Email ID
  • Contact Number
  • Assessed to tax as per the Income tax act, 1961?
  • If ‘yes’ to the previous question then provide details of latest assessment year for which you have been assessed.
  • Estimated Income
  • Estimated total income of the previous year
  • Details of Form 15G other than this form
  • Signatures

What you can do if TDS is deducted by Bank?

You can claim the refund for the TDS deducted by the bank on the interest amount while filing your Income Tax Return.

Penalty for wrong information

Penalty will be imposed, if you furnish any of the above forms to the bank even if you are not required or eligible to submit them. If any false declaration in Form 15G or Form 15H by the taxpayer occurs and the tax evaded exceeds Rs 25 lakh, then he could be subject to rigorous imprisonment of 6 months and maximum upto 7 years accompanied by a fine. In any other case, a taxpayer would need to undergo imprisonment between 3 months to 2 years with a fine u/s 277 of the Income-tax Act.

Amendment: From April 1, 2018, a new Section 80TTB has been inserted in the Income-tax Act, 1961, that allows a deduction up to Rs 50,000 in respect of interest income from deposits held by senior citizens. However, usage of Section 80TTB cannot be clubbed with Section 80TTA as Section 80TTA also provides a deduction of Rs 10,000 on interest income from savings account in bank deposits and post office. In summary, TDS on account of interest income for senior citizens, only gets deducted when interest income exceeds Rs 50,000 in a relevant financial year.

Tax Deducted at Source (TDS)

What is TDS?

TDS is an indirect collection scheme, where a person who is responsible for making payment of income is also required to deduct tax at source and deposit the same to the Government’s treasury within the stipulated time period.

Who is eligible to deduct TDS and When?

Tax Deduction & Collection Account Number is an alphanumeric number that is required to be obtained by all the persons who are required to Deduct Tax at Source (TDS) or collecting tax. TDS or Tax Deducted at source is treated as pre-paid taxes as it is paid in advance to the government. This will be the duty of the person who paid to someone for his services, goods etc. These payments are known as specified payments.

An individual making specified payments such as Salary, Rent, Professional fees, interest, brokerage, commission, contractual payment etc. is required to deduct TDS.

Persons making such specified payments are required to deduct TDS at the time of making such specified payment. Thus, TDS shall not be deducted in case the person making the payment is an individual or HUF and whose books are not required to be audited.

The person who deducts TDS is called deductor and whose tax is deducted is called deductee.

Therefore, An Individuals or an H.U.F. will not deduct TDS on such payment except where such individual or H.U.F. is carrying business or profession and accounts are required to be audited under section 44AB, in the immediately preceding financial year (FY).

A person is required to get its accounts audited u/s 44AB if during the relevant financial year its gross sales or gross receipts exceeds Rs. 1 Crore or Rs. 50 Lakhs in case of a profession.

Persons liable to deduct TDS must apply for ‘TAX DEDUCTION AND COLLECTION ACCOUNT NUMBER’ (TAN) in the form No. 49B within one month from the month end in which TDS was deducted. TAN number should be mentioned on all transaction related to TDS like TDS certificate, E-TDS Returns and other related documents. There is penalty of Rs. 10,000 on failure to apply TAN.

“Apply for TAN”

Rental payments made by individuals and HUF of more than Rs 50,000 per month, are required to deduct TDS at the rate of 5% even if the individual or HUF is not liable for a tax audit. For such Individuals and HUF liable to deduct TDS @ 5% are not required to apply for TAN.

Due date for depositing the TDS to the government?

The TDS deducted by the payer has to be deposited to the government by 7th of the subsequent month. Likewise, TDS deducted in the month of January must be paid to the government by 7th February. The TDS deducted in the March month can be deposited till 30th April.

TDS can be deposited by Challan/ITNS 281 on TIN-NSDL Website.

TDS deducted on the rent and purchase of property can be deposited within 30 days from the month end in which TDS is deducted.

In case of Payment of TDS on Rent of Property – The deducter is required to file Form26QC Challan.

In case of purchase of property- The Deducter or the purchaser of the property has to file Form 26QB Challan. Manual submission of the form is not allowed.

Form 26QB & 26QC has to be filed online on TIN-NSDL Website.

Process to Deposit TDS?

TDS has to be deposited using Challan 281 on TIN-NSDL Website.

Step-1 Select Challan /ITNS 281 for making payment of TDS.

Step-2 After that enter your details in E-Payment window:

1. Select (0020) in case Tax Deducted at source is from Company Deductees and Select (0021) in case Tax Deducted at source is from Non-Companies Deductees.

2. Enter your TAN No. and select assessment year for which your depositing your TDS.

3. After entering the correct TAN no., Full name will be displayed on confirmation screen (as per Income Tax Database).

4. Enter your address details in Challan 281 with Email ID and Mobile No.

5. Now, select the Type of Payment:

  • 200) for TDS/TCS Payable by Taxpayer
  • (400) for TDS/TCS Regular Assessment

6. Select the Nature of Payment from the dropdown list on E-Payment Challan.

For Example:

*193 for Interest on Securities
*194I for Rent
*194J for Fees for professional & technical fees

7. After selecting the nature of payment, Select the mode of payment for depositing TDS.

8. On Successful TDS Payment, A Challan Counterfoil would be displayed containing the Challan Identification No.(CIN), payment details, bank name. You can also verify the challan details in the “Challan Status Enquiry” on the NSDL-TIN Website after a week of making payment.

Rates of TDS deducted

TDS Rates Applicable for Persons Resident in India

TDS u/s Section Particulars TDS Rate (%) Limits
192 Salary As per Income Tax Slab Normal Tax Rate plus surcharge and education cess Surcharge: 10% (if total income exceeds Rs. 50 lakh but doesn’t exceed Rs. 1 crore), 15% (if total income exceeds Rs. 1 crore) EC: 2% and SHEC: 1%
192A Payment of accumulated balance of PF (Provident Fund) taxable in the hands of an employee 10%
-
193 Interest on securities:
a) Interest on securities
b) Interest on Debentures
10%
10%
Nil
Nil
194 Payment of Dividend (Other than companies) 10% Nil
194A* Interest Income other than interest on the securities 10% Rs.5000
194B Winnings from lotteries/ puzzles/card games 30% Rs.10000
194BB Income from Winnings from horse races 30% Rs.5000
194C Payment to contractor/sub- contractor
a) HUF/Individuals
b) Others
1%
2%
Rs.30000
194D Insurance commission 5% Rs.20000
194DA Payment of life insurance policy 1%
-
194EE Payment of NSS Deposits 10% Rs.2500
194F Payment for repurchase of unit by Mutual Fund or Unit Trust of India 20% Nil
194G Commission on sale of lottery tickets 5% Rs.1000
194H Commission or Brokerage 5% Rs.5000
194I* Rent
a) Plant & Machinery
b) Land & Building or Furniture & fittings
2%
10%
Rs.1.8 Lakhs
194-IB Payment of rent by individual or HUF not liable to tax audit 5% Rs.50
194-IC Payment of monetary consideration under Joint Development Agreements 10%
-
194J Payment of monetary consideration under Joint Development Agreements Any sum paid by way of
  • Professional services Fees
  • Technical services Fees
  • Royalty
  • Remuneration or commission or Fee to the director or
  • For not carrying out any activity in relation to any business.
  • For not sharing any patent
  • copyright etc
Rs.30000
194LA Payment in respect of compensation on acquisition of certain immovable property 10% Rs.1 Lakh
194LBA Income distribution by a Business Trust u/s 115UA 10%
-
194LBB Income distribution by an Investment Fund u/s 115UB 10%
-
194LBC Income distribution by a Securitisation Trust u/s 115TCA 25% - Individual or HUF 30% - Other Individuals
-
  ANY OTHER INCOME 10%
-

Filing of TDS Returns

Form No. Particulars
Form 24Q TDS Statement for Salaries
Form 26 Q TDS Statement for other than Salaries
Form 27 Q TDS Statement to Non-Resident of India
Form 27 EQ TCS Statement

Due Date for filing TDS Return

Quarter Period TDS Return Due Date
1st Quarter 1st April – 30th June 31st July 2018
2nd Quarter 1st July – 30th September 31st October 2018
3rd Quarter 1st October – 31st December 31st January 2019
4th Quarter 1st January – 31st March 31st May 2019

Interest on Late Payment of TDS

Under Section 201A, In case of Non-deduction of tax at source, either wholly or partially – Interest will be levied at 1% per month from the date on which tax deductible to the date on which it has to be deducted.

In case of after deduction of tax, non payment of tax either in whole or in part – Interest will be levied at 1.5% per month from the date of deduction to the date of payment.

Note: The interest on late payment should be paid before filing of TDS return.

For example, your TDS payable amount is Rs 7000 and the date of deduction is 09th January and you pay the TDS amount on 22th May. Then the interest shall be levied of Rs 7000 x 1.5% p.m. x 5 months = Rs 525.

Penalty for late filing of TDS return:

  • Penalty under Section 234E: Deductor will be liable to pay a fee of Rs.200 per day till the failure to pay TDS continues. However penalty should not exceed the TDS amount for which statement was required to be filed.
  • Penalty under Section 271H: Assessing officer (AO) may direct a person who fails to file the TDS statement within due date to pay penalty minimum of Rs.10,000 which may extend to Rs.1,00,000.
  • This Penalty under this section is in addition to the penalty u/s 234E.
  • This section will also cover the cases of incorrect filing of TDS return.

Non-Applicability of TDS

You can avoid TDS by submitting Form 15G or 15H. Where, Form 15H is for senior citizens and they can submit if there is no tax liability on total income. Form 15G is for everyone, if the tax on total income is nil and total interest income is below than the basic exemption limit exception for NRIs.

TDS Certificates

Form Certificate of Frequency Due date
Form 16 TDS on salary payment Yearly 31st May
Form 16 A TDS on non-salary payments Quarterly 15 days from due date of filing return
Form 16 B TDS on sale of property On Every transaction 15 days from due date of filing return
Form 16 C TDS on rent On Every transaction 15 days from due date of filing return

TDS on Rent of Property

A new section 194-IB has been introduced under The Finance Act, 2017 provides that any Tenant of a property making monthly rental payment exceeding Rs. 50, 000 is liable to deduct TDS at the rate of 5% from the rent payable to a resident landlord.

Eligibility to deduct the TDS on Rent of Property under section 194-IB?

The tenant of the property as an individual or a HUF (not liable for a tax audit u/s 44AB) would have to deduct the TDS and deposit the same to Government.

Individuals and HUFs who are not entitled to get their accounts audited and are paying rent of more than Rs 50,000 per month will have to deduct TDS at 5% of the rent paid in a financial year.

When to deduct TDS

TDS is to be deducted in March, the last month of the financial year. In case the property is being vacated before the end of the financial year, then tax is to be deducted in the last month of the tenancy. The last date for March compliance without interest or penalty is 30 April.

The Tenant of the Property must remember the following points:

1. All individuals or HUFs (except those liable to audit u/s 44AB) paying monthly rent to a resident in excess of Rs. 50,000 are liable to deduct TDS under section 194-IB
2. Deduct tax at the rate of 5 % from the rent payment made to the Landlord.
3. Furnish the Permanent Account Number (PAN) of the Landlord.
4. PAN of the Landlord and Tenant should be mandatorily furnished while filling online Form for furnishing rental information.
5. Do not perform any error in quoting the PAN or other details in the online Form.
6. Download and furnish TDS certificate in Form 16C from TRACES and issue the same to the Landlord or Lessor or Payee within 15 days from the due date of furnishing of the challan-cum-statement in Form 26QC.
7. If the Landlord / Lessor/ Payee is a non-resident, liability to deduct TDS arises under section 195 of the Income-tax Act, 1961.

Points to be remembered by the LandLord/ Lessor of the Property:

1. Provide your PAN to the Tenant for furnishing information regarding TDS to the Income Tax Department.
2. Verify taxes deducted by the Tenant in your Form 26AS.
3. Ask Form 16C from the tenant which has been downloaded from TRACES website only.

In Short:

Section 194-IB:

ü Person Eligible
Any Individual or HUF not liable for tax audit under section 44AB.

ü Limit
Rent of Rs. 50,000 for one month or part of the month.

ü Rate of TDS – 5%

ü No need to obtain TAN
Under this section, Tax payer need not obtain TAN.

ü Deduction, once in a year
As per this section, Taxpayer is required to deduct tax at source only once in a financial year.

ü Time of deduction
The tax should be deducted at the time of credit or payment (whichever is earlier) of rent for the last month of the tax year or last month of tenancy if the property is vacated during the year, as applicable

Form 26QC

Form 26QC is the challan-cum-statement in respect of TDS on rent under section 194-IB of the Income-tax Act, 1961. It can be downloaded from TIN- NSDLwebsite.

What is Form 26QC?

You need to deduct TDS on rent paid to the landlord when the monthly rent exceeds Rs.50,000. It is now your responsibility to deposit the same with the tax authorities. This can be done by filling a form, namely Form 26QC.

When do I need to fill Form 26QC?

You need to submit Form 26QC within 30 days of deducting TDS from the rent you have paid to your landlord. Do note, if your rental agreement states quarterly payments to your landlord then you need to fill and submit Form 26QC within 30 days of deducting the TDS once every quarter. The rule is related to when you pay the rent and deduct the TDS and not a calendar. Form 26QC is the step between deducting the TDS and finally providing the TDS certificate (Form 16C) to your landlord.

Procedure to fill Form 26QC

Firstly fill Form 26QC, which is available at www.tin-nsdl.com. You are required to furnish details of your as well as of the landlord’s PAN, email ID and phone number; address of the property, the amount of tax deducted, etc. There are options for filling multiple PAN in case the property is owned by several people or is leased by multiple tenants. Multiple Form 26QC will be filed in case of various landlords.

After furnishing the details in Form 26QC, You can deposit the TDS through the option available i.e. ‘E-tax payment immediately’ via Net banking, debit or credit cards. You can also make the payments at a later date by opting for the ‘e-payment on subsequent date’ option. You can also visit any authorised bank’s branch to deposit the TDS once you have filled the Form 26QC.

TDS certificate in Form 16C is required to be furnished to the landlord within 15 days of the last permissible date of filing Form 26QC.

What if I don’t comply?

1. You are liable to pay 1% interest for every month of delay in deducting the tax. The penalty is higher at 1.5% per month if the tax has been deducted but not deposited.
2. Late filing of Form 26QC attracts a late fee of Rs 200 per day. For delay in issuing Form 16C, the penalty is Rs 100 per day.
3. If Form 26QC is not filed within one year after the due date, a penalty ranging from Rs 10,000 to Rs 1,00,000 could be levied on the tenant.