Applicability

Every person carrying on-

> Business whose Gross Turnover, Receipts Or Total Sales exceed Rs. 2 Crore

OR

Profession whose Gross Receipts exceed Rs. 50 Lakhs.

> Where profits & gains of person from business are taxable on estimated basis u/ss. 44AD, 44AE, 44BB or 44BBB & such person claims his income to be lower than profits & gains so estimated.

> 44AD: option to be assessed on presumptive basis, so long as the sales, turnover or gross receipts from an eligible business do not exceed Rs. 2 Crores.

> 44AE: Business of plying, hiring or leasing goods carriages.

> 44BB: Business of exploration etc. of mineral oil.

> 44BBB: Business of civil construction etc. in certain turnkey projects.)

TDS COMPLIANCE IN TAX AUDIT REPORT

Particulars in Form No. 3CD

Clause 21

(b) Amounts inadmissible under section 40(a):-

(i) as payment to non-resident referred to in sub-clause (i)

(A) Details of payment on which tax is not deducted:

Particulars in Form No. 3CD

(I) date of payment

(II) amount of payment

(III) nature of payment

(IV) name and address of the payee

Clause 21

(B) Details of payment on which tax has been deducted but has not been paid during the previous year or in the subsequent year before the expiry of time prescribed under section 200(1)

Particulars in Form No. 3CD

(I) date of payment

(II) amount of payment

(III) nature of payment

(IV) name and address of the payee

(V) amount of tax deducted

Clause 21

(ii) as payment referred to in sub-clause (ia) of section 40(a)

(A) Details of payment on which tax is not deducted:

(I) date of payment

Particulars in Form No. 3CD

(II) amount of payment

(III) nature of payment

(IV) name and address of the payee

Explanation Clause 21:

Section 40(a) in The Income- Tax Act, 1961

(a) in the case of any assessee-

(i)  Any interest (not being interest on a loan issued for public subscription before the 1st day of April, 1938 ), royalty, fees for technical services or other sum chargeable under this Act, which is payable outside India, on which tax has not been paid or deducted under Chapter XVII- B: Provided that where in respect of any such sum, tax has been paid or deducted under Chapter XVII- B in any subsequent year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid or deducted.

Section 40(a)(ia) in The Income- Tax Act, 1961

If it is noticed at the time of tax audit that the assessee has failed to deduct tax at source on payments on which tax is deductible, then Section 40(a)(ia) comes into the picture and such payments/expenses are not deductible at 30% from the income of the assessee.

However, the payer/assessee can claim the said expenses under second proviso to Section 40(a)(ia) by complying first Proviso to Section 201(1) & Section 201(1A).

In section 201 of the Income-tax Act,—

(A)  with effect from the 1st day of July, 2012,—

(i)  in sub-section (1),—

(a)  before the proviso, the following proviso shall be inserted, namely:—

“Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident—

(i) has furnished his return of income under section 139;

(ii) has taken into account such sum for computing income in such return of income; and

(iii) has paid the tax due on the income declared by him in such return of income, and the person furnishes a certificate to this effect from an accountant in such form as may be prescribed:”;

Particulars of Form 3CD

Clause 34

(a) Whether the assessee is required to deduct or collect tax as per the provisions of Chapter XVII-B or Chapter XVII-BB, if yes please furnish:

Tax deduction and collection Account Number (TAN)
Section
Nature of payment
Total amount of payment or receipt of the nature specified in column (3)
Total amount on which tax was required to be deducted or collected out of (4)
Total amount on which tax was deducted or collected at specified rate out of (5)
Amount of tax deducted or  collected out of (6)
Total amount on which tax was deducted or collected at less than specified rate out of (7)
Amount of tax deduced or collected on (8)
Amount of tax deducted or collected not deposited to the credit of the Central Government out of (6) and (8)
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(9)
(10)

Clause 34

(b) whether the assessee has furnished the statement of tax deducted or tax collected within the prescribed time. If not, please furnish the details:

Tax deduction and collection Account Number (TAN) Type of Form Due date for furnishing Date of furnishing, if furnished Whether the statement of tax deducted or collected contains information about all transactions which are required to be reported

Clause 34

(c) whether the assessee is liable to pay interest under section 201(1A) or section 206C(7). If yes, please furnish:

Tax deduction and collection Account Number (TAN) Amount of interest under section 201(1A)/206C(7) is payable Amount paid out of column (2) along with date of payment.

Interest Proviso to subsection (1A) of Section 201

According to Proviso to section 201(1A) any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of chapter XVII-B, .on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso of section 201(1), as the conditions mentioned therein have been satisfied & the deductor has furnished form no. 26A certified by a chartered accountant, then the interest @ 1% for every month or part of the month shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident.

Particulars Individual / HUF Domestic Company / Firm Criteria for Deduction
Nature of Payments Section Code Rate % Rate % Payment in excess of
1. Salary 192 As per the prescribed rates applicable to Individual / Women & Senior Citizens
2. Premature withdrawal from EPF 192A 10 NA Rs. 50,000/- p.a.
3. Interest on Securities 193 10 10 Rs. 10,000/- p.a.
4. Dividends 194 10 10 Rs. 25,00/- p.a.
5. Interest other than Interest on Securities 194A 10 10 Banking Rs. 10,000/- p.a. Others Rs. 5,000/- p.a.
6. Winning from Lotteries & Puzzles 194B 30 30 Rs. 10,000/- p.a.
6.1 Winnings from horse race 194BB 30 30 Rs. 10,000/- p.a.
7. Payment to Contractors 194C 1 2  

Rs. 30,000/- per contract or Rs. 1,00,000/- p.a.

7.1 Payment to Advertising / Sub Contractors 194C 1 2
8. Insurance Commission 194D 5 5 Rs. 15,000/- p.a.
9. Life insurance Policy 194DA 1 1 Rs. 1,00,000/- p.a.
10. Non-Resident Sportsmen or Sports Association 194E 20 20
11. NSS 194EE 10 10 Rs. 25,00/- p.a.
12. Repurchase Units by MFs 194F 20 20
13. Commission – Lottery 194G 5 5 Rs. 15,000/- p.a.
14. Commission & Brokerage 194H 5 5 Rs. 15,000/- p.a.
15. Rent – Land & Building 194I 10 10 Rs. 1,80,000/- p.a.
15.1 Rent – Plant & Machinery 194IA 2 2
16. Professional Fees & Technical Services 194J 10 10 Rs. 30,000/- p.a.
17. Immovable Property other than Agricultural Land 194IA 1 1 Rs. 50,00,000/-
18. Compensation on transfer of certain immovable property other than agricultural land 194LA 10 10 Rs.2, 50,000/-

19.

19. Income by way of interest from infrastructure debt fund (non- resident) 194LB 5 5
20. Interest on certain bonds and Govt. Securities 194LD 5 5

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Tags : Tax Audit Report (200) TDS (1134)

3 responses to “TDS Compliance In Tax Audit Report”

  1. Sandeep says:

    Tax audit limit is 1cr for business but as per your article does disclosure under clause 34 has to be given only if turnover exceeds 2 cr

  2. P V VISWANATHAN says:

    dear sir,
    I need the Old and NEW FORM 3CD in Excel

  3. L M says:

    Isn’t there a redundancy between these clauses? Why should they require such details in Clause 21 when it is covered by Clause 34?

    I do see that 34 is wider and requires to report on TDS compliance even of amounts not charged to Revenue, such as TDS on construction of capital asset.

    But it also covers TDS on payments which are debited to P&L – shouldn’t this negate the requirement of reporting on such items in clause 21?

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