Entries Tagged 'direct tax' ↓

Revised Procedure for non-dedcution of TDS against Form 15G / Form 15H

This is most relevant for entities which have borrowed monies from individuals who are not chargeable to tax. An example would be a loan to a private company by the individuals non-working parents or spouse.

Payee can now submit their self-declaration (Form 15G / Form 15H) either in paper form or electronically to the Payer / Deductor.

The Payer / Deductor will, based on this submission, not deduct tax at source (withholding tax) and is now required to allot a Unique Identification Number (UIN) to each self-declaration (Form 15G / Form 15H) received in a given financial year.The Payor / Dedector has to allot the UIN based on 3 fields –

  • 1st Field – Sequence Number: A 10 character alphanumeric (1 letter and 9 digits) sequence starting with “G” for Form 15G and “H” for Form 15H. The sequence number should restart at 1 for each financial year.
  1. Sequence number for 1st Form 15G should be – G000000001
  2. Sequence number for 1st Form 15H should be – H000000001
  • 2nd Field – Financial Year: This represents the financial year for which the Form 15G / Form 15H is submitted as follows 201516 (for financial year 2015-16) or 201617 (for FY 2016-17)
  • 3rd Field – The TAN of the Payer/ Deductor: i.e. the PAN person / entity responsible for deducting TDS (or not deducting TDS in this case).

Combining these three fields gives the UIN for the Form 15G / Form 15H declaration.

  1. UIN for 1st Form 15G of FY 2016-17 should be G000000001201617ABCD12345Z
  2. UIN for 1st Form 15H of FY 2016-17 should be H000000001201617ABCD12345Z

Points to Note:

  1. The payer/ deductor is required to upload all the declarations (paper and electronic) to the Income Tax Department website on a quarterly basis
  2. The payer / deductor is required to furnish the Form 15G / Form 15H declaration in their Quarterly TDS Return, even if no tax has been deducted for the quarter
  3. The PAN of the payee has to be mandatorily quoted
  4. If the payer has not reported the UIN in their Quarterly TDS Return or not uploaded the UIN to the Income Tax website, they have to file an exceptional report
  5. The payer / deductor is required to retain Form No.15G / Form 15H for seven years.

The last date for uploading the Form 15G / Form 15H for 2015-16 is 31st May 2016.

For Quarter 1 of 2016-17 (April to June 2016) the last date for uploading the Form 15G / Form 15H is 31 July 2016.

Full text of the notification is available here.

Unlisted shares held for 24 months or less to be now treated as short-term capital gains / losses

Gains / Losses from sale of unlisted shares would be treated as short-term capital only if the shares are held for 24 months or less, as against the earlier period of 36 months.

Thus, gains / losses from unlisted shares held for more than 24 months would classify as long-term.

This distinction is crucial, especially to investors in start-ups as the short-term meant income tax at the slab applicable, while long-term means a flat 10% income tax without the benefit of indexation on purchase cost or 20% income tax with the benefit of indexed cost of purchase.

Tax to be Collected by Seller of Goods / Provider of Services in certain cases

A seller of goods or provider of services is from 1st June 2016 required to collected tax at 1% from the buyer of goods / receiver of services, if whole or part of the payment is made is cash.

Luckily this is not a blanket provision and applies only to transactions / invoices of over Rs2 lakhs for goods (including bullion) and services and Rs5 lakhs for purchase / sale of jewellery.

The 1% tax is to be collected when the cash portion is received and the tax should be collected on the full value of invoice (and not only on the cash portion)

Do note that this Rule is applicable irrespective whether the buyer or goods / receiver of services is a manufacturer, trader or the purchase is for personal use.

Exception: The seller of goods / provider of services is not obliged to collect the tax, if the buyer has deducted the tax at source from the payment being made. IN other words, the seller of goods / provider of service is not required to collect tax if the buyer of goods / recipient of service has deducted tax at source.
For example: If M/s A rendered the services to Mr Z for Rs2 lakhs and Mr Z deducts TDS on this Rs2 lakhs before making the payment to M/s A, then M/s A is required to collect TCS from Mr B.

Change in Due Dates for TDS Return

From the first quarter of financial year 2016-17, i.e. April to June 2016 quarter, the due date for filing TDS returns has been revised. The new dates have increased from the earlier period by 15 days. The full annual schedule is below:

Revised TDS Return Due Dates

Quarter Ending Due Date to File Return
30th June 31st July
30th September 31st October
31st December 31st January
31st March (tax year end) 31st May

Form 12BB to be submitted by Employees to the Employer

A recent change in the Income Tax Act has now standardised the format in which all employees have to submit their tax, savings and investment declaration.

As an employer, you have to deduct TDS based on these declarations by the employee.

Briefly the employer needs to collect Form 12 BB along with the evidence as below:

Nature of Claims Evidence or Particulars
House Rent Allowance (HRA) Name, address and Permanent Account Number (PAN) of the landlord, where the aggregate rent paid during the previous year exceeds INR 1 lakh
Leave Travel Concession or Assistance (LTA) Evidence of expenditure
Deduction of interest under the head “Income from House Property” Name, address and PAN of the lender
Deduction under Chapter VI-A Evidence of investment or expenditure

The declaration is in Form 12BB and is available here in excel format (13kb) and here in pdf format (38kb).

Full Text of the Notification is available here.

No TDS on Service Tax Component

Clarification in the Latest Circular from CBDT

The latest circular from CBDT (Central Board of Direct Taxes) clarifies, based on a High Court decision, that service need not be deducted on the Service Tax component.

Thus, your cllients should now pay you higher to that extent. Correspondlngly, you need to deduct lower TDS to a similar extent.

An example:

  Earlier NOW
Head % Rs Rs
Amount Billed 10,000 10,000
Service Tax 12.36% 1,236 1,236
Gross Amount 11,236 11,236
T.D.S. 10.00% 1,124 1,000
Net Amount Receivable / Pauable 10,112 10,236

Ensure you follow this and also make sure your clients pay you accordingly. The link to the circular is here.

Note that, for now, this is applicable only if Service Tax is charged seprately for professional / techincal services.

Deadline postponed for PAN No for Demat Acccount

The SEBI has vide a circular issued late on 26th September, 2006 postponed the date for mandatory requirement of PAN No. for operating demat accounts (dematerialised shares in the depository system) to 31st December, 2006.

I shall be posting a more detailed version of this circular tomorrow (28th Sept. 2006)

Full Text is available on SEBI’s website.

Due Date for Filing Return (Corporates) Extended

The due date for filing of returns for all other than salaried individuals & HUF is extended to 31st October, 2006; from 31st July, 2006.

In addition, returns can now be designated post offices. The full list of post offices that have started accepting returns from 26 July, 2006 is here. Use this link to search for post offices near you.

More updates on the Credit Policy Review to follow.

Use of ECS for Refunds – Database Updation

SEBI has vide circular no SEBI/CFD/DIL/DIP/18/2006/1 amended the SEBI (DIP) Guidelines, 2000 for ensuring ECS refunds in 15 centres. Details are available in my earlier post / newsletter on this subject.

DP’s are now required to update the MICR code and other bank details of the applicants in their databases to ensure proper refunds through ECS mode. In view of this, the two depositories (NSDL and CDSL) are required to instruct DP’s to comply with this requirement.

At the same time the DP’s are required to suitably amend their bye-laws, rules and regulations for smooth implementation. DP’s are also required to communicate to SEBI the implementation status in the Monthly Development Report.

Full Text of this circular is available here.

NSE & BSE recognised Stock Exchanges for Sec 43(5)(d) of IT Act

The CBDT has notified the BSE and NSE as recognised stock exchanges for the purposes of the proviso to section 43(5)(d) of the Income Tax Act. Thus, any derivative trading transaction of these stock exchanges will not be deemed to be speculative transactions .