In the recent Past TDS Wing of Income tax department has conducted many surveys and inspections. TDS wing has conducted TDS surveys and TDS inspections to verify various issues including the following, as applicable to the concerned assessee to check avoidance of TDS/ TCS liability in respect of the following payment,/ transactions :-
1. Payment for purchase of land under sale deed by project implementing authorities towards compulsory land acquisition for SEZs/public utilities implemented under Fast Track procedure where the implementation is not done directly by state government.
2. Payment of commission by cooperative banks to agents/daily deposit collectors
3. Annual Maintenance Charges paid by the big Corporate/Banks Govt. Offices etc to the service providers for maintenance of computer systems which include hardware as well as software maintenance. TDS is to be generally made on such payments
4. Payments made by companies operating Star Hotels to the owners of buildings in which such hotels are run
5. Payments made for hiring of vehicles, hiring of aircrafts, helicopters on time charter basis on which tax is generally deducted U/s. 194C as against 194I claiming it as contract for carriage of passengers.
6. Payments made for hiring of tugs/launches by the port operation for guiding ships for anchorage on which tax is generally deducted u/s 194C as against 194I.
7. Demurrage paid on goods to be loaded on the ship or unloaded there from which is not penalty but is in the nature of payment for warehousing charges and, hence, tax is to be deducted on the same u/s 194I.
8. TCS on sale of timber in High Sea,
9. Salary payments to doctors u/s 192 camouflaged as payment for professional services u/s 194J in corporate hospitals.
10. Payment of lease rentals in respect of transmission towers used by cellular phone operators.
11. TCS on sale of timber by traders where the purpose is further trade and not end use.
12. Payment of interest in respect of loans funds taken from NBFCs and sister concern/companies by firms and companies.
13. Payment of hire charges in transport/travel agency business.
14. Payments made on acquiring satellite rights/TV rights on films Under Section 194J.
15. Payment made towards hiring a plan/machinery/equipment Under Section 194I.
16. Payments towards hiring of windows of showroom for displaying their products U/s. 194I.
17. Payments of interest earned by builders on advance amount taken by them from the buyers of flat. which subsequently is adjusted against the sale consideration. (uis 194 A).
18. Payments of commission by the trading merchants to the credit card companies (such as MASTER/ VISA).
19. Payment by shopkeeper to mall owners camouflaged as profit sharing between them to avoid TDS u/s 194I.
20. Payment of rent by big business houses/airlines on the booking of hotel room for long duration.
21. Payment made to authors, printing press, artists, models etc by book/ magazines publishers.
22. Payments such as hiring of earth moving machinery like cranes, storing machines. dumpers, tracks etc.
23. Payments made for hiring out of Cine equipment (sound, light etc) studios and allied services by film producers / tele serial makers.
24. Payments made for hiring out of towing vehicles on wrong parking by traffic police.
25. Payments made in huge amounts by municipal corporations for carrying out various contract work by them.
26. Payments made by big sari houses/garment house/jewelers to models who display their products at fabulous considerations as also to professional photographers dress designers, artists etc,
27. Payments made by public libraries/universities, colleges, museums , Art Galleries and such institutions to pest control companies for such treatment.
28. Payments made by big business houses /Mall owners to security service agency.
29. Payments made by big builders to township planners, hand scrapers, architects and technical consultants etc.
30. Payments made to players, coaches, managers, fitness experts etc. by sport bodies,
31. Payments made on hiring out of vehicle platform for mounting big hoardings, cutouts, hire scenes for advertising of the products services by big companies, such vehicles are parked at some conspicuous place at roadside.
32. Payments made by large business house to land scrapers, gardening contractors on development and maintenance of green sites / road dividers for putting up their company’s advertisement material.
33. Payments made to studio owners for shooting purposes including use of floors/locations, equipment, settings etc,
34. Payments made to Jr. Artists Association for providing junior artists.
35. Payments made towards film processing, graphic designs, special effects etc.,
36. Distribution rights taken by top artists in lieu of remuneration, which amounts to ‘royalty’ (exploitation of exhibition rights).
37. Commission payments retained by the distributor’s as a part of the producer-distributor agreement in the nature of constructive payments).
38. Payments made to referral doctors for referring their patients to the corporate hospitals (commission under Section 194H).
39. Payments made to outside labs for specialized diagnostic services such as D.N.A. printing, immunological assay,
40. Constructive payments/ Reimbursement of expenses.
41. Franchisee Payments & Non – compete fee & fees for exclusivity rights:
42. Payment on landing and parking charges rent for space used for cargo handling, work of cargo handling, navigation charges and other similar charges to the airport authorities by the airlines.
43. Payment of Royalty to Author, Artists, Musicians etc.
44. Payment of hire charges for machinery and equipments, especially in the construction sector.
45. Payments in the nature of lucky dip, festival bonanza where the prizes are distributed by way of lottery among the eligible customers.
46. Transfer of funds between group companies / firms is taking place and these payments fall within the purview of section 2 (22)(e) (deemed dividend). Tax needs to be deducted at source u/s 194, as this dividend is not covered under the provisions of dividend distribution tax .
47. Payments made by clubs for construction of buildings / swimming pools and maintenance of the same,
48. Payments of lease rentals / hire charges for machinery / equipments, especially between sister concerns of group companies,
49. Payment by Multi – National companies and National companies on the lease rentals paid for their retail outlets (194 I).
50. Payments made by State Government Departments for computer training and pre-examination training conducted by them for its personnel and for the public.
51. Payment of compensation and additional compensation on acquisition of land, but tax not deducted U/s. 194LA.
52. Payment of interest by Electricity companies on the deposits made by subscribers.
53. It is noticed in the case of some public sector banks that while the TDS is deducted from interest on fixed deposits annually, the interest is being calculated Monthly / Quarterly. and transferred to interest payable. It should be seen that the TD S is accounted on the basis of interest calculation.
54. Payments of rent by splitting the lease agreement into two or more agreements for lease of the building, lease of the furniture and fixture, agreement for maintenance, etc.
55. Payment of port/ inter-connectivity charges by mobile-telephone service providers to other telephone companies.
56. Payment of interest on belated payment of compensation under Motor Vehicles Act,
57. Accrued interest on term deposits/ cumulative deposits not maturing during the year.
58. Commission paid by cellular companies to sellers of starter packs and recharge coupons for cell phones.
59. Commission paid by airline companies to travel agents.
60. Payment of salaries camouflaged as payments under professional contracts.
61. Payment by banks for taking professional services for recovery of bad debts, loan-processing, credit- verification, etc.
62. Contracts given by Municipal Bodies for installation of streetlights, etc.
63. Payment of Airing Charges to TV channels for broadcast of programmes,
64. Perquisites on account of concessional loans given by companies, especially PSUs, to their employees.
65. TCS under section 206C on sale of liquor to excise contractors TCS on the sale of liquor by wholesalers to the retailers.
66. Payment of Usance Interest in the ship-breaking business.
67. Payment of interest on term deposits maintained by banks as margin money/ collateral for issue of bank guarantees, NOCs, etc.
68. Payment of charges for Internet Services, VAT Charges, Bandwidth Charges, etc.
69. Payment of fees by hospitals and medical institutes to consultant doctors.
70. Payment of Upfront Commission to banks/ financial institutions for availing financial assistance.
71. Distribution of service charges collected by hotels from the customers amongst the employees.
72. TDS compliance by multi-national companies in respect of salary and allowances paid to expatiate employees,
73. TDS compliance by entities whose income is exempt from tax.
74. TDS compliance by Municipal Corporations and State Public Works Departments (P.W.D.?),
75. TDS compliance by large Government Departments like Indian Armed Forces, Indian Railways, Department of Posts, etc in respect of TDS on payment for various contracts for works and for professional or technical services given out by them.
76. TDS on contracts lease or license for parking lot and toll plaza and to sale of scrap. Large sellers of scrap like railways, steel plants, iron foundries, ship-breaking units, etc to be identified and the compliance of TCS on sale of scrap need to be verified.
77. Common issues relating to companies having branches in various parts of the country to be taken up at the head office level so that directions are issued by the head office to all the branches for proper TDS compliance. Some illustrative common issues in respect of certain large companies are?
78. TDS on value of perquisite on account of rent-free accommodation by SBI group of banks, BSNL and LIC as determined under rule 3(1) and not as per “‘Standard Rent’.
79. TDS matters relating to companies outsourcing large part of their operations.
80. Payment of post-sale incentives by companies to dealers/ distributors.
81. Payment of interest by Chit Fund companies to their members/ subscribers.
82. Contracts between cinema theaters or multiplexes and the film distributors for supply of prints of movies on collections-sharing basis.
Please Note – The views expressed herein are personal view of the author and do not reflect the official views of the Government and are not in the nature of any kind of clarification. For doubts, please rely on the provision of the Income Tax Act and Rules.
(Republished With Amendments)