7 Recent Significant changes in TDS/TCS

Tax Deducted at Source (TDS) is the tax deducted by the payer before paying the amount to the payee levied on incomes, dividends, asset sales, rents, interest payments by the bank etc… The statement of TDS so deducted is reflected in Form 26AS.

1. Changes in TDS provisions by Finance Act 2020 are made in respect of sections 194, 194C, 194J, 194 K w.e.f. 1^st April, 2020: Important amendments are in respect to dividend i: section 194 to include dividend for a tax deduction as the Dividend Distribution Tax (or DDT) payable by a domestic company on the dividend declared by it under section 115-O stands abolished. Similar is the change on any income payable by a mutual fund in respect of units to its unit holders, a new section 194K is introduced. Section 80M: Deduction in respect of certain inter-corporate dividends is also provided of an amount equal to so much of income by way of dividends received from such other domestic company

2. Changes in TCS now brought in / provided for: scope enlarged

1. On remittance under Liberalised Remittance Scheme (LRS) of Reserve Bank of India exceeding Rs. 7 Lakh in a year and the rate of TCS is 5 per cent i.e. no TCS shall be required on Rs. 7 Lakh;

2.  On remittance in a case loan obtained from any financial institution as defined in section 80E, rate shall be 0.5 per cent;

3. On sale of the overseas tour package without any threshold limit and the rate is 5 per cent;

4. On Sale of Goods under section 206C(1H) rate shall be @ 0.1 per cent (0.075% up to 31.03.2021) in certain conditions.

3. e-portal notified/ launched for filing complaints regarding tax evasion/benami Properties/Foreign Undisclosed Assets to receive and process complaints of tax evasion, foreign undisclosed assets as well as benami properties at e-filing website of the Department https://www.incometaxindiaefiling.gov.in/ under the head “File complaint of tax evasion/ undisclosed foreign asset/ benami property”.

The public can file complaints in respect of violations of the Income-tax Act, 1961, Black Money (Undisclosed Foreign Assets and Income) Imposition of Tax Act, 1961 and Prevention of Benami Transactions Act. The complainant would be able to view the status of the complaint on this website.

4. National Faceless Centres established/ are being established for assessments, appeals and penalty: 

• Faceless Penalty Scheme 2021 vide Notification No. 03/2021-Income Tax Dated 12th January, 2021
• Faceless Assessment Scheme, 2020 vide Notification No. 60/2020-Income Tax on 13.08.2020, and
• Faceless Appeal Scheme, 2020 videNotification No. 76/2020-Income Tax dated 25.09.2020.

The above 3 schemes have been notified and authorities are placed/ being placed as it may deem necessary comprising of:

1. National Faceless Centre to facilitate the conduct of e- proceedings in a centralised manner;

2. Regional Faceless Centres to facilitate the conduct of e- proceedings;

Units, to perform the functions of disposing cases of assessments, appeals and penalty.

Notifications referred above contain the detailed procedures to be followed by the authorities and the assessees. Also “Exclusive email ID launched – “feedback.notice.neac@incometax.gov.in” to register grievance regarding S. 142(1) notices (including roving questionnaires) issued under the Faceless Assessment Scheme 2019. The grievances received in the said email shall be closely monitored by a team of officials at National e-Assessment Centre”. Form 35 is re-enabled to file an appeal in accordance with the Faceless Appeal Scheme. The Prime Minister stated that the Faceless Service and Taxpayer Charter Service are aimed at eliminating human interaction between taxpayer and department; also boost the confidence of the taxpayer and making them fearless.

 5. Scope of form 26AS enlarged: It now contain not only details of taxes deducted and/or paid but also information in respect to:

– Details of proceedings in form of Inclusion of both pending and completed proceedings,

– Details of Income Tax Demand & Refund,

– Summary of Specified Financial Transactions-

(a) Cash deposits aggregating to Rs. 10 lakh or more in one or more saving bank account(s) and Cash deposits or cash withdrawals (including through bearer’s cheque) aggregating to Rs. 50 lakh or more in one or more current account(s) of a person,

(b) Inclusion of Financial Transactions is in form of Cash/Credit Card payments made to credit card issuing institution of Rs. 1 Lakh or more in cash or Rs. 10 Lakh or more by any other mode,

(c) Investment Transactions of Rs. 10 Lakh and more (term deposits, acquisition of shares, bonds or debentures, buy back of shares, Mutual Funds),

(d) Purchase or sale by any person of immovable property for an amount of Rs. 30 Lakh or more

(e) cash payment exceeding Rs. 2 lakh for goods or services of any nature and

(f) Sale of foreign currency an amount aggregating to Rs. 10 lakh or more during financial year.

–   Any adverse action initiated or taken or found or order passed under any other law such as Custom, GST, Benami Properties Law etc. also information about Turnover reported under GST returns, import, export etc.

Form 26AS will be updated regularly every 3 months basis and should be reviewed to determine  its  correctness and/ or taking timely steps to get it rectified.

6. Statutory compliances dates extended: In view of the continued challenges faced by taxpayers in meeting statutory compliances due to outbreak of COVID-19, the Govt. further extends the dates for various compliances. Press release on the extension of time limits from time to time, last issued dated 30/12/2020.

7. CBDT to validate Unique Document Identification Number (UDIN) generated from ICAI portal at the time of upload of Tax Audit Reports ICAI website www.icai.org made mandatory for every kind of certificate/tax audit reports and other attests introduced to curb fake certifications by non-CAs misrepresenting themselves as Chartered Accountants….. In consonance with this requirement, Income-tax e-filing portal had already factored mandatory quoting of UDIN with effect from 27th April, 2020 by a Chartered Accountant…. UDIN taken from ICAI made mandatory to be given while filing online tax audit report by tax auditor with his digital signatures.