TDS Compliance In Tax Audit Report

This article is covering TDS compliance in Tax Audit Report i.e. 3D Report. Applicability of Tax Audit, TDS clauses under Form 3CD and its in depth analysis alongwith rate chart of TDS are covered in this article.

Applicability of Tax Audit

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) of Form 3CD – Amount Inadmissible under section 40(a)

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

(ii) As payment referred to in sub clause (ia)

(iii) As payment referred to in sub clause (ib)

A in depth details are as under:

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

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

Date of Payment	Amount of Payment	Nature of Payment	Name of the Payee	PAN of the Payee, if Available	Address Line 1	Address Line 2	City or Town or District	Pincode

(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

Date of Payment	Amount of Payment	Nature of Payment	Name of the Payee	PAN of the Payee, if Available	Address Line 1	Address Line 2	City or Townor District	Pincode	Amount of Tax Deducted

(ii) As payment referred to in sub clause (ia)

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

Date of Payment	Amount of Payment	Nature of Payment	Name of the Payee	PAN of the Payee, if Available	Address Line 1	Address Line 2	City or Townor District	Pincode

(B) Details of payment on which tax has been deducted but has not been paid on or before the due date specified in sub-section (1) of Section 139

Date of Payment	Amount of Payment	Nature of Payment	Name of the Payee	PAN of the Payee, if Available	Address Line 1	Address Line 2	City or Town or District	Pincode	Amount of Tax Deducted	Amount out of (VI) deposited, if any

 (iii) As payment referred to in sub clause (ib)

(A) Details of payment on which levy is not deducted

Date of Payment	Amount of Payme-nt	Nature of Payme-nt	Name of the Payee	PAN of the Payee, if Availab-le	Address Line 1	Address Line 2	City or Town or Distri-ct	Pin code

(B) Details of payment on which levy has been deducted but has not been paid on or before the due date specified in sub-section (1) of Section 139

Date of Payment	Amount of Payment	Nature of Payment	Name of the Payee	PAN of the Payee, if Available	Address Line 1	Address Line 2	City or Town or District	Pincode	Amount of levy Deducted	Amount out of (VI) deposited, if any

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).

Section 201 of the Income-tax Act,1961

(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 Payee or on the sum credited to the account of a payee 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 of Form 3CD

(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)

(b) Whether the assessee is required to furnish the statement of tax deducted or tax collected. If yes, 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

If not, please furnish list of details/ transactions which are not reported

(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. 2,500/- p.a.
5. Interest other than Interest on Securities	194A	10	10	Banking/ Co-operative society/ post office –  Rs. 40,000/- 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. 2,500/- 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. 2,40,000/- 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. 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		–

(Republished with Amendments)