Where TDS is applicable and how to avoid it

Salary income: Employer deducts TDS on total income, including income other than salary after taking into account all deductions and exemptions. This saves the individual the hassle of paying tax himself.

TDS rate: As applicable to individual based on his income and deductions.

Interest income: TDS is deducted by banks on FDs and RDs if the interest exceeds Rs 10,000 a year. TDS does not end tax liability. Someone in a higher tax slab will need to pay additional tax. Those in lower income bracket can seek a tax refund.

TDS rate: If PAN has been provided, TDS is 10% of income. Otherwise it is 20% of income.

EPF withdrawals: Withdrawals from Employee Provident Fund are subject to TDS if you withdraw before five years of service. However, no TDS is deducted on withdrawals of less than Rs 30,000.

TDS rate: If PAN has been provided, TDS is 10% of the withdrawal. Otherwise it is 20% of the amount.

Property sale: TDS is applicable if the value of the property exceeds Rs 50 lakh. If instalments are being paid TDS is deducted on each instalment. The buyer must obtain a Tax Deduction Account Number to deduct TDS. TDS has to be de -posited along with Form 26QB within a week from the end of the month in which TDS was deducted. Buyer must give TDS certificate to the seller.

TDS rate: If PAN has been provided, TDS is 1% of sale value. Otherwise it is 20% of the sale value.

On NRIs: NRIs are not permitted to submit Form 15G/H for NRO deposits and TDS is mandatory on all incomes. In case of resident Indians, TDS kicks in only if interest exceeds Rs 10,000 a year. But there are no such threshold for NRO deposits. Easwar committee has recommended easing of TDS rules for NRIs.

TDS rate: 30% on interest income from bank deposits, 20% from corporate deposits, 15% on short-term capital gains if securities transaction tax (STT) has been paid and 10% on longterm capital gains. If no STT is paid on short-term gains, TDS is 30%. Flat rate of 20% on sale of property.

How to avoid it
TDS can be avoided by submitting Form 15G or 15H. Form 15H is for senior citizens. It can be submitted if there is no tax on total income. Form 15G is for everybody else, except NRIs. It can be filed if tax on total income is nil and total interest income is less than the basic exemption limit.

Source:  The Economics Times

When and How to claim TDS Refund

In case of excess deduction of tax at source, claim of refund of such excess TDS can be made by the deductor. The excess amount is refundable as per procedure laid down for refund of TDS.

The difference between the actual payment made by the deductor and the tax deducted at source or deductible, whichever is more will be treated as the excess payment made. This amount is to be first adjusted against any existing tax liability under any of the Direct Tax Acts. After meeting such liability, the balance amount is to be refunded.

When TDS refund can be claimed:

  1. When the amount you are supposed to pay as tax in a year is lower than the amount already deducted as TDS, you are eligible to claim a TDS refund.
  2. When you fall below the minimum taxable limit and yet TDS has been deducted.

How TDS refund can be claimed:

There is no specific refund process or form to claim TDS refunds. You must file your income tax returns in the normal manner. The excess of TDS over what you are supposed to pay as tax in the year will be the refund amount due, and this needs to be shown in the returns filed. The TDS refund is processed by the Income Tax department within a few months of filing returns. Usually, it takes about 6 months time.

The Income Tax department processes the refund amount along with an interest of 6% per annum in some cases. The refund is usually given in the form of a cheque. However, with effect from AY 2015-16, all refunds will be made in electronic form, directly to the bank account of the assessee, which is required to be mentioned while filing the returns.

FAQ on TDS/TCS Credit

What is view TDS / TCS credit?

This is a facility which can be availed by deductor in order to verify whether the PANs for which user is deducting TDS are getting the credit for the same or not. This feature is available for only those PANs for which TDS / TCS statement has been previously filed by the deductor.

For which period can I view the TDS / TCS credit?

In order to view TDS / TCS credit, deductor has to specify the Financial Year, Quarter and Form Type for the PAN. The period is restricted to the relevant quarter for which statement has been filed. This facility is available for statements filed since FY 2007-08.

What is the process of viewing TDS / TCS Credit?

Deductor must enter PAN, FY, Quarter and Form Type to see information for a particular PAN. ‘Statement Details’ table will be populated irrespective of whether PAN is present in the statement or not. This table provides information related to the statement pertaining to the input criteria selected by user. ‘Deductee Details’ table will be populated only if the PAN entered by user is present in the latest accepted statement for the input criteria selected. This table shows the status of booking for a PAN.

How to unmask data in ‘Deduction Details’ table?

Deductor can view masked data by clicking on ‘View Details’ and providing ‘TDS Certificate Number’ for that PAN. Token Number will not be unmasked.

Due Dates for the month of February 2016

7 February 2016 – ​Due date for deposit of Tax deducted/collected for the month of January, 2016.  ​However, all sum deducted/collected by an office of the government shall be paid to the credit of the Central Government on the same day where tax is paid without production of an Income-tax Challan

7 February 2016 – ​​​Due date for furnishing of challan-cum-statement in respect of tax deducted under Section 194-IA in the month of January, 2016

15 February 2016 – ​Quarterly TDS certificate (in respect of tax deducted for payments other than salary) by a person being an office of the Government for the quarter ending December 31, 2015

22 February 2016 – ​​​​Due date for issue of TDS Certificate for tax deducted under  section 194-IA​ in the month of January, 2016

CPC Defaults in Quarterly TDS Statements exceeding Rs. 1 Crore from FY 2007-08 to Q2, FY 2015-16

CPC (TDS) has released a follow up communication to all deductors regarding CPC Defaults in Quarterly TDS Statements exceeding Rs. 1 Crore from FY 2007-08 to Q2, FY 2015-16.

The released communication has been given below:

Date of communication: 23/01/2016

Dear Deductor (TAN XXXXXXXXX)

Centralized Processing Centre (TDS) has observed from its records that as on 21st January, 2016, there are outstanding Defaults in quarterly TDS Statements submitted by you during Financial Year 2007-08 to Q2, FY 2015-16.

The details of outstanding Defaults for the respective Financial Years are as follows:

Outstanding-Defaults.jpg

Action to be taken:

  • Please download the latest Justification Reports from our web portal TRACES to view details of outstanding demand
  • If required, please use Challan ITNS 281 to pay the demand with your relevant Banker.
  • Please submit a Correction statement without any further loss of time for closure of the outstanding demand.
  • Online Corrections facility on TRACES can be used to submit corrections to payoff/ close the demand. To avail the facility, please Login to TRACES and navigate to Defaults tab to locate Request for Correction from the drop-down list. You can refer to our e-tutorials for necessary help.
  • In case of Short Payment Defaults due to Unmatched Challans, please use Tag Unmatched Challan facility using Online Corrections.
  • In case of Short Payment Defaults due to Insufficient Challans, please use Move Deductee facility using Online Corrections. With use of this feature, a portion of the Deductee Rows can now be moved to any other Unconsumed OLTAS challan with adequate balance.

For any assistance, you can raise a ticket for resolution Online at TRACES or call on 1800 103 0344. CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM