The Indian Income-Tax law contained in the Income-Tax Act, 1961 has the twin objectives of increased revenue generation and correct application of tax laws. Section 2(15) of the Income-Tax Act,1961 defines charitable purpose as ” relief of the poor, education, medical relief and advancement of object of general public utility” which includes trade, commerce or business. A Person is defined under Section 2(31) of the Income Tax Act so as to include Individual, Hindu Undivided Family, company, firm, Association of Persons/Body of Individuals and local authority. Section 2(7) of the Income Tax Act defines Assessee so as to include a deemed assessee and an assessee in default.Section 2(24) of the Income Tax Act,1961 defines Income so as to include Income from Business or Profession, Dividend, voluntary contributions, perquisites, income from the business of insurance, banking and lottery and capital gains.
As per Section 17(1) of the Income-Tax Act,1961 , salary includes wages, pension/annuity, gratuity, perquisites, salary advance, Leave Encashment and Contribution to Provident Fund. It is to be noted that that bonus is taxable on receipt basis. The limits regarding House Rent Allowance are laid out under Section 10(13A) of the Income-Tax Act, 1961. As per Rule 2AA of the Income Tax Rules, 1962 HRA is exempt to the least of the following :
A) Actual HRA received
B) rent paid in excess of 10% of salary
C) 50% of salary in case of metropolitan cities (40% of salary in case of other cities).
Fully taxable allowances include Dearness Allowance, City Compensatory Allowance, medical allowance, lunch allowance, Overtime Allowance, Servant Allowance and family allowance. Perquisites taxable in the hands of all employees include Rent-free Accommodation and Provident Fund. Perquisites taxable in the hands of only specified employees include the provision of the services of sweeper, gardener, watchman, facilities such as gas, electricity and water and the provision of motor car. As per Section 17(2)(ii) of the Income-Tax Act , 1961, a specified employee includes a director, a person who has more than 20% of voting power, and a person whose salary is more than Rs 50,000. As per Rule 3(1) of the Income-Tax Rules, 1962, in case of government accommodation, the value of perquisite is licence fee. In case of furnished accommodation, the value of perquisite is 10% of furniture cost or actual hire charges, whichever is higher. In case of accommodation provided by any other employer, where the population exceeds 25 lakhs, the value of perquisite is 15% of salary. Where the population exceeds 10 lakhs and below 25 lakhs, the value of perquisite is 10% of salary. Where the population is less than 10 lakhs, the value of perquisite will be 7.5% of salary. In case of hotel accommodation, the value of perquisite will be 24% of salary for such days, if the stay in the hotel exceeds 15 days. Salary for the purpose of Rent-Free Accommodation includes Bonus, Commission, Dearness Allowance and employer’s contribution to provident fund and Leave Encashment. As per Section 17(3) of the Income-Tax Act, 1961, profits in lieu of salary includes Unrecognised Provident Fund, Unrecognised Superannuation fund and keyman insurance policy payouts. In case of gratuity, it is exempt to the least of the following amounts :
a) If covered under the Payment of Gratuity Act, Actual gratuity received
b) Average salary for a period of 15 days in a total period of 26 days
c) Rs 20 Lakhs; If the Assessee is not covered under the Payment of Gratuity Act,
A) Half-month’s average salary for the period of last 10 months
B) Rs 20 Lakhs.Uncommuted Pension is entirely taxable. As per Section 17(1)(ii) of the Income-Tax Act, 1961, in case of commuted pension, half is exempt. If gratuity is also received by the assessee , one-third of commuted pension is exempt. In case of leave encashment, it is exempt to the least of the following amounts :
a) Actual Leave Encashment received
b) 10 month’s average salary
c) Cash equivalent to the credit of the employee on the basis of 30 days for every completed year of service D) Rs 25 Lakhs.
Income from House Property is computed by taking the Gross Annual Value and deducting taxes therefrom. From the Net Asset Value, one has to deduct statutory deduction amounting to 30% of Net Annual Value under Section 24 of the Income-Tax Act, 1961. Further, interest on borrowed capital also has to be deducted. The conditions to be fulfilled by an assesee under these provisions are that he should be the owner of the property and the property should not be used for the purpose of business and profession. Under Section 27 of the Income-Tax Act, 1961 deemed ownership includes transfer to spouse, transfer to child, holder of an impartible estate and member of a co-operative society. The rules for unrealised rent stipulate that it should be a bonafide tenancy, there should be vacation of property and the defaulting tenant is not in occupation of any other property of the assessee. Under Section 25B of the Income-Tax Act, 1961 in case of arrears of rent received, the deduction stipulated is 25% of the rent received.
Income from Business and Profession is computed by taking up Net Profit as per the Profit and Loss Account and adding speculation profits and brought-forward loss. As per Section 28 of the Income-Tax Act, 1961 business income includes income of a trade association, export incentives such as import licence, cash assistance and duty drawback , interest, salary, bonus and commission of the firm’s partner. As per Section 145 of the Income-Tax Act, 1961 the method of accounting to be followed could be either mercantile or cash system. As per Section 30 of the Income-Tax Act, 1961 deduction is given for rent,rates and taxes and repairs and insurance for premises. As per Section 32 of the Income-Tax Act, 1961 depreciation is allowed for both tangible and intangible assets. As per Section 43(3), “plant” includes ships, vehicles, books, scientific apparatus and surgical equipments either on actual cost or block of assets on the basis of Written Down Value. Additional depreciation is allowed after 31.03.05 but not allowed for ships and aircraft, guest house and office appliances. Additional depreciation is allowed at 20% of the actual cost of the asset. As per Section 33AB, relating to tea, coffee and rubber development account, deduction is allowed at 40% of the income from that particular business or the deposit in the aforesaid scheme, whichever is less. The deposit into that account should be made within 6 months of closure of that financial year. As per Section 33ABA relating to site restoration fund deduction is limited to the lower of scheme deposit or 20% of the income from the aforeasaid business. Section 35 relates to the deduction towards expenditure on scientific research. Under this provision, revenue expenditure incurred 3 years before commencement of business related to salary and purchase of raw materials is allowed as a deduction. Similarly, Capital expenditure incurred 3 years before commencement of business is allowed. Similar is the case with social science or satistical research. As per Rule 2AA of the Income-Tax Rules, 1962 150% weighted deduction is allowed on contribution to national laboratory or university or Indian Institute of Technology. For this deduction, a report under Form 3CI coupled with a report to the Director-General of Income-Tax Exemptions in Form 3CJ within 3 months of approval. There is a 150% weighted deduction for investment in Research and Development in the fields of bio-technology, drugs, pharmaceuticals, electronic equipments, computers, telecom equipments, chemicals etc. There is a deduction for investment in Land and Buildings on scientific Research and Development. . Under Section 35CCA, deduction is given for expenditure towards rural development, contribution towards national fund for rural development and national urban poverty eradication fund provided approval accorded by the prescribed authority before 1st March, 1983. As per Section 35D, deduction on account of preliminary expenditure is allowed only for resident assessees. The deduction is allowed towards preparation of feasibility and project report, market survey and engineering services. The deduction on account of legal charges should not exceed 5% of the cost of the project. In case of a company, the deduction to be allowed is limited to 5% of the cost of the project or capital employed, whichever is beneficial to the company. The deduction is allowed in 5 equal annual instalments. As per Section 35DD relating to amalgamation and demerger, where an indian company incurs expenditure after 1st April,1999 one-fifth of the expenditure is deductible for 5 successive previous years beginning with the year of amalgamation or demerger. As per Section 35DDA, in case of expenditure towards voluntary retirement scheme, one-fifth of the expenditure is deductible in the first year and the balance in 4 immediately succeeding previous years. As per Section 35E, minerals specified in the 7th Schedule and expenditure incurred after 31st March, 1970 qualifies for a deduction of one-tenth of the expenditure. As per Section 40A(3), cash payments in excess of Rs 10,000 are permitted only in the case of payments made to banks and LIC,payments made to government, payment through the medium of letter of credit, telegraphic transfer,bill of exchange,electronic clearing service, purchase of agricultural produce, payment to cottage industry, payments where there are no banking facilities, retirement benefits more than Rs 50,000, temporary posting for more than 15 days, banks being closed due to holiday/strike, payment to agents, and foreign exchange dealings. As per Section 43B, deduction is allowed on the basis of actual payment relating to tax, provident fund, bonus, interest on loan and leave encashment. As per Section 44AD, in case of the business of civil construction, 8% of the total gross receipts deemed income from business and profession.The income is taxed at 6% if the amount is received through electronic means and this amount is received before the due date of filing return of income under Section 139(1) of the Income-Tax Act, 1961. This is not applicable if the gross receipts are more than Rs 3 Crores. Depreciation and other deductions are deemed allowed. As per Section 44AE, in case of the business of goods carriages, in case of heavy goods vehicle, Rs 1000 per month is deemed income from business. In case of light motor vehicle, Rs 7500 per month is deemed income from business. This provision is applicable for a maximum of 10 goods carriages. As per Section 44AF, 5% of the total turnover is deemed income from business and profession. This is not applicable if the turnover is more than Rs 40 Lakhs.
Income from Capital gains is computed by deducting expenses on acquisition and Cost of acquisition and Cost of improvement from the Net Consideration alongwith exemptions under Section 54 of the Income-Tax Act, 1961. Under Section 45(1), the basis of charge towards capital gains is that the asset should be a capital asset, there should be transfer involved, there should be income from business and profession and it should not be exempt under Section 54. Under Section 2(14), a capital asset includes stock,stores and raw materials, personal effects( including jewellery, furniture, archeological collections, drawings, paintings, work of art and bonds. As per Section 2(42A), a Short-term capital asset has a 2 years time-limit for transfer whereas it is 12 months in case of shares, units and bonds. Transfer is defined under Section 2(47) so as to include sale and compulsory acquisition under law. As per Section 46 & 47, the following transactions are not regarded as transfer : 1) Assets distributed to shareholders on liquidation of company 2) partition of Hindu Undivided Family 3) transfer under gift or will 4) subsidiary company transfer 4) transfer under scheme of amalgamation 5) transfer under scheme of demerger 6) co-operative bank transfer 7) Gross depository receipt 8) Transfer of urban agricultural land in india before 31st march, 1970 9) transfer of debentures and deposit certificates 10) transfer of sick industrial company 11) transfer of intangible asset ( there is a 5-year time limit for successor company) 12) transfer through a recognised stock exchange 13) sole propreitorship succeeded by a company. . Under Section 55(2)(aa) relating to rights shares , in case of remission of rights, then cost of acquisition will be deemed nil. In case of conversion of preference share capital to equity share capital,consideration is deemed fair market value on the date of allotment. Section 54 deals with profit on transfer of house property used for residence This is deemed long-term capital gain and the property transferred by individual or HUF 1 year before or 2 years after the date of transfer for purchase of residential house. Under Section 54B, the agricultural land should be transferred by an individual and used for agricultural purpose 2 years before the date of transfer. Section 54D relates to capital gains on compulsory acquisition of Land and buildings. The only condition laid down here is that the land and building should have been used for the purpose of business 3 years before the date of transfer. Under Section 54EC, where an asset is transferred after 1st April, 2000 the consideration should be invested within 6 months of the date of transfer in long-term specified assets. Under Section 54F, asset should be transferred by individual or Hindu Undivided Family, it should be a long-term capital asset, the capital asset concerned should be other than a residential house and the assessee should not own more than one residential house and the assessee should make the investment 1 year before or 2 years after transfer. Section 54G relates to shifting of industrial undertaking from urban areas. The investment should be made 1 year before and 3 years after transfer of the asset.
As per Section 56(2) of the Income-Tax Act, 1961 Income from other sources includes dividends, winnings from lottery, crossword and horse race , employee contribution to provident fund, interest on securities, income from Plant and Machinery or furniture let on hire, and payouts from keyman insurance policy. As per Section 57(iia), family pension received by legal heirs of a deceased employee is entitled for a standard deduction of 33% of the pension received or Rs 15,000 , whichever is less. An amount of 50% on Enhanced Compensation is allowed as a deduction on income. As per Section 58, amounts not deductible under Income from other sources include personal expenses, interest where no tax deducted at source, salary where no tax deducted at source, cash payments exceeding Rs 10,000, payment of income-tax and wealth-tax, and winnings of lottery and crossword puzzles.
As per Section 61 of the Income-Tax Act, 1961 in case of revocable transfer of assets, the income is included in the total income of the transferor. As per Section 62, transfer is irrevocable during life time of the transferee. In case of transfer before 1st April, 1961 the transfer is irrevocable after a period of 6 years. As per Section 64(1)(ii), there will be no clubbing of income if the remuneration received is due to technical or professional qualification and where husband and wife have substantial interest(20%) and both are getting remuneration. Section 64(1)(iv) is attracted where transfer is not for adequate consideration, there is an agreement to live apart and the relationship of husband and wife does not exist at that point of time. As per Section 64(1)(vi) where there is a transfer by an individual to his son’s wife after 1st june, 1973 otherwise than for adequate consideration the income thereon is included in the income of the transferor. As per Section 64(1A) the income received by a minor child or Rs 1500 , whichever is less is exempt from tax. The minor child’s income is taxable if there is disability under Section 80U, there is manual work involved and there is application of skills. As per Section 64(2), where an individual,transfers after 31st december, 1969 into HUF property, the income is taxable in the hands of the individual.
Under Section 73 of the Income-Tax Act, 1961 speculation loss can only be set-off against income of speculation business. As per Section 43(5), speculation transaction is a transaction not settled by actual delivery or transfer. Under Section 74A, losses from the activity of maintaining race horse can only be set-off against income from the activity of maintaining race horses. Losses on lottery winnings cannot be set-off against winnings from lotteries. Exempt loss cannot be set-off against taxable income. Long-term capital loss can be set-off against long-term capital gain. Losses on account of capital gains are only allowed to be carried-forward , not set-off. Income from business and profession is not eligible to be set-off against salary income, but allowed under any other head. As per Section 80, Income from house property is allowed to be carried-forward even if the return is not filed within the due date. As per Section 71B, loss from house property is allowed to be carried-forward for 8 assesment years. As per Section 72, business loss is allowed to be set-off against business income, even if the business is not continued. As per Section 78(2), loss can only be set-off by the assessee who has actually incurred the loss. The exceptions to this are inheritance, amalgamation, succession of firm by company, and demerger. The order of set-off is unabsorbed depreciation, capital expenditure and expenditure on family planning. As per Section 73, carry-forward and set-off of speculation business is allowed only for 8 assessment years. As per Section 74A, In the case of owning and maintaining race horses, carry-forward and set-off is allowed for 4 assessment years. As per Section 79, in case of change in voting power, 51% criteria is applicable. This is not applicable in the case of death of a shareholder, gift, amalgamation and demerger.
The basic rules of deduction stipulate that it cannot exceed Gross Total Income, not allowed to members if allowed to Association of Persons/ Body of Individuals, and evidence is necessary for getting the deduction. Under Section 80C of the Income-Tax Act, 1961, the deduction is allowed to an individual and a Hindu Undivided Family and is available to the assessee and his immediate family and insurance policy includes endowment assurance policy and children deferred endowment assurance policy. The insurance premium should not exceed 20% of the capital sum assured. The following deposits/investments are allowed under Section 80C : 1) Contribution to provident fund 2) Contribution to National Savings Scheme, 1992 3) Contribution to National Savings Certificate 8 issue 4) Contribution to Unit Linked Insurance Plan of UTI 5) Subscription to mutual fund 6) Subscription to pension fund 7) Subscription to notified deposit scheme of public sector unit 8) Amount paid by individual as tuition fees subject to a maximum of 2 children 9) payment for purchase of residential house property 10) Payment of instalment to co-operative society 11) Subscription to equity shares/debentures of a listed company 12) subscription to term deposit for a period of 5 years 13) Subscription to NABARD Bonds . As per Section 80CCC, subscription to the annuity plan of LIC is deductible to the least of the deposit or Rs 1 lakh. As per Section 80 CCD, the deduction allowed should not exceed 14% of the salary. The maximum amount allowed under this section is Rs 1.5 lakhs per year. As per Section 80D, medical insurance premium paid to GIC including independent dependants is allowed towards the least of the actual payment or Rs 50,000 , whichever is less. In case of CGHS, the deduction allowed is Rs 25000.This deduction is over and above the deduction available under Section 80C. It is to be noted that cash payments are not allowed. In case of senior citizens, the deduction allowed is Rs 20,000. Under Section 80DD, the medical treatment of dependant with disability under a scheme of LIC/UTI, the deduction allowed is Rs 75,000. In case of severe disability, the deduction allowed is Rs 1,25,000. If the dependent predeceases the assessee, the income is taxable in the assessee’s hands. Under Section 80DDB, with respect to medical treatment of dependants , a certificate in Form 10I from a doctor working in a government hospital is compulsory to claim deduction. The deduction allowed is limited to the least of Actuals or Rs 40,000 , whichever is less. In case of a senior citizen, the deduction allowed is Rs 1,00,000. Under Section 80E, interest on loan taken for higher education is deductible for 8 assessment years. The loan should have been taken from a financial institution/ approved charitable institution. Under Section 80G, the donations available for 100% deduction include National Defence Fund, PM Armenia earthquake relief fund, National foundation for communal harmony, donation to university, Maharashtra CM Earthquake relief fund, Gujarat earthquake relief fund, Zilla Saksharata samithi, National blood transfusion council, AP CM Cyclone relief Fund, Chief Minister’s relief fund, National Sports Fund and National cultural fund. The donations eligible for 50% deduction are Jawaharlal nehru memorial fund, PM drought relief fund, National children’s fund, Indira gandhi memorial trust and Rajiv gandhi foundation. As per Section 80GG, in case of rent paid, the condition is that the assessee should not be entitled to House rent allowance or Rent-free Accommodation and a certificate in Form 120BA is compulsory to avail the deduction. The deduction should be the least of rent paid in excess of 10% of adjusted total income, 25% of adjusted total income or Rs 5,000 per month. As per Section 80GGA, the donation for scientific research or rural development and contribution to a programme of social science or statistical research or programme for rural development is eligible for deduction. Cash payments above Rs 2000 are ineligible for deduction. As per Section 80JJA, in case of bio-degradable waste related to power, bio-fertilizers and bio-gas , the deduction is allowed for 5 assessment years. As per Section 80JJAA, the deduction with respect to new workmen, a CA Certificate in Form 10DA is compulsory to avail the deduction.The deduction allowed is upto 30% of the additional wages. This does not include casual and contract labour and employment less than 240 days.( new workmen includes more than 100 workmen and the deduction is allowed in 3 assessment years.The salary earned by the additional workmen should not exceed Rs 25000 per month. As per Section 80P, the deduction is allowed for banking, cottage industry, marketing of agricultural produce and fishing. Profits of consumer co-operative society is allowed upto Rs 1 lakh and other co-operative societies upto Rs 50,000. Interest on securities is allowed upto Rs 20,000. As per Section 80QQB, royalty income of authors is deductible to the least of 100% of the income or Rs 3 Lakhs and Form 10CCD and Form 10CCH is compulsory to claim deduction. As per Section 80RRB, royalty on patents registered after 1st April,2003 is deductible to the least of 100% of the income or Rs 3 Lakhs, whichever is less. Form 10CCD and Form 10CCH is compulsory to avail this deduction.
As per Section 2(1A) of the Income-Tax Act, 1961 agricultural income includes rent or revenue and income from farm house. As per Rule 7A, 35% of the income from growing and manufacturing rubber is subject to tax. An allowance is given for cost, but not for subsidy. As per Rule 7B, the income from growing and manufacturing coffee is subject to tax at 25%, whereas the income from grounding, curing and roasting coffee is subject to tax at 40%. As per Rule 8, 60% is taken as net agricultural income while 40% of this is treated as business income.
Profit share from a partnership firm is exempt from tax in hands of the individual. Salary is taxable as business income in the hands of a partner. Same is the case with interest on capital/loan. In case of assessment of a firm, it is treated as a seperate tax entity and deductions under Sections 30- 37 and 40(b) allowed. Partnership deed acts as a basic evidence to the existence of a partnership. In case of computation of firm’s total income, payment of salary, remuneration and interest not exceeding 12% per annum is allowed. In case of computation of book profits, income-tax, provisions, dividends and depreciation have to be added while withdrawal from reserves, depreciation and unabsorbed depreciation and deferred tax is to be deducted. Brought-forward loss or unabsorbed depreciation is to be deducted from book profits. Chartered Accountant’s certificate is compulsory in Form 29B.
As per Section 139(1) of the Income-Tax Act, 1961 a company, firm, local authority and any other person should file IT returns. As per Section 139(3), loss return should be filed in case of Income from business and profession and Income from capital gains. As per Section 139(4), belated return should be filed before one year of the due date or completion of assessment, whichever is earlier. As per Section 139(4A), tax return of charitable trusts and institutions should be filed in Form 3A, failing which a penalty of rs 100 for everyday of default would be levied. As per Section 139(9) , defective return can be rectified within 15 days of intimation. A return is considered to be defective if the computation of tax is improper, improper audit report is furnished and books of account is improper. As per Section 140A, in case of self-assessment, tax to be paid is the actual tax plus surcharge plus secondary and higher education cess minus tax credit and tax deducted at source plus interest under Section 234. As per Section 142, there should be service of notice in case of requisition of books of accounts of more than three years. The permission of joint commissioner of Income-tax is required for seperate statement of assets and liabilities. As per Rule 2A to 2D, audit requirement is necessary only with prior approval of Commissioner of Income-tax/ Chief commissioner of Income-tax. Audit report should be presented in Form 6B. The total period of audit should not exceed 180 days. As per Section 154, rectification of mistake should be done within 4 years of filing the original return.
As per Section 139A read with Rule 114, an application has to be made in Form 49A for allotment of a permanent account number for certain categories of assessees. As per Section 139A(1A), the central government is empowered to notify classes of persons obligated to apply for Permanent Account Number such as people in the Export-import business and service-tax assessees. As per Section 139A(5)(c) read with rule 114B, the following transactions necessitate quoting of Permanent account number :
A) purchase of immovable property above Rs 10 lakhs
B) Motor vehicle transaction
C) Term deposit above Rs 50,000 with a bank
D) Post-office savings bank deposit more than Rs 50,000
E) Securities contracr more than Rs 1 Lakh
F) Opening of bank account
G) Hotel bill exceeding Rs 50,000
H) Purchase of demand draft exceeding Rs 50,000
I) Cash deposit more than Rs 50,000
J) Foreign travel exceeding Rs 50,000
J) Purchase of mutual fund units exceeding Rs 50,000
As per Section 191 of the Income-tax Act, 1961, if no tax is deducted or remains unpaid, the assessee is deemed to be in default. As per Section 192, in case of salaries, liability against TDS arises at the time of payment. Particulars of TDS have to be filed in Form 12B and Form 12BA. Salary includes wages, bonus, commission, allowances, perquisites, salary arrears and advance salary, profits in lieu of salary or addition to salary, pension, annuity, gratuity, leave encashment and interest in excess of 9.5% credited to Recognised Provident Fund. The net tax payable is reduced or increased by the amount of surcharge. As per Section 193 dealing with interest on securities, TDS is deducted at the time of payment or credit of interest to the payee, whichever is earlier. No TDS is deducted on debenture interest and interest on government security. No TDS is deducted towards interest to insurance companies. As per Section 194A, interest exceeding Rs 40,000 per annum attracts TDS Provisions except interest paid to bank, financial corporation, LIC, UTI, Co-operative society, partner of a firm, Interest on NRE Deposit. In respect of senior citizens, the threshold limit for TDS to be deducted is Rs 50,000. Declaration in Form 15G is compulsory to avoid tax only if the assessee falls below the tax bracket. As per Section 194B, in case of lottery winnings, exceeding Rs 10,000 TDS is deducted at the rate of 30%. As per Section 194BB, in case of winnings from race horse, if the amount exceeds Rs 10,000 per annum, TDS is attracted at the rate of 30 %. As per Section 194C, no TDS is attracted for personal purposes. The rate of TDS for advertisement is 1% and in other cases 2%. In case of payment for a single contract, if the amount paid does not exceed Rs. 30,000, no TDS is required to be deducted. Further, if the amount paid or credited during a single Financial Year does not exceed Rs. 1,00,000 no TDS is required to be deducted. As per Section 194D, in case of insurance commission, e a resident person other than company is liable to deduct TDS at the rate of 5% and 10% in case of a domestic company for amounts exceeding Rs15,000 per annum. As per Section 194E, payment to NRI sportsmen attracts TDS at the rate of 20% for participation in a game, advertisement or contribution to articles. As per Section 194EE, Interest under National savings scheme deposit exceeding Rs 2,500 per annum attracts TDS at the rate of 10%. As per Section 194G, commission on sale of lottery tickets exceeding Rs 15,000 per annum attracts TDS at the rate of 2% per annum. As per Section 194H, payment of commission and brokerage after 1st june,2001 exceeding Rs 15,000 per annum attracts TDS at the rate of 5% for individual, HUF and 10% for other payees . As per Section 194I, Where payee is an individual or HUF, TDS is deducted at the rate of 15.45%. In other cases, TDS is deducted at the rate of 20.6%. In case of Pant and Machinery, TDS is deducted at 2%. Rent on Land and Building, Plant and Machinery and Furniture and fixtures are included under the relevant TDS Provisions. In case of Land and Buildings, TDS is deducted at the rate of 10% , provided the threshold limit under both the cases crosses Rs 2,40,000. No TDS is deductible on payments made to government. As per Section 194J, TDS is attracted in case of payee other than individual and HUF with relation to fees for professional and technical services at the rate of 2%. In case of payment of Royalty, the rate of TDS Deduction is 10%. The threshold limit for tax to be deducted under Section 194J is Rs. 30,000. As per Section 194LA, in case of payments after 1st October,2004, TDS is deducted at the rate of 10% for monetary limits exceeding Rs 2,50,000 per annum. Under Section 199, credit for TDS is given on the receipt of a certificate ubder Section 203. As per Section 203A and Rule 114A, application has to be made for allotment of TAN or CAN within one month of deduction of TDS. As per Rule 31A(2) an assessee has to quote TAN and PAN in quarterly TDS statements. Quarterly statement with respect to TDS in case of NRI’s has to be filed in Form 27Q within 14 days from the end of the quarter. As per Section 206C(1) and Rule 37C & D, TCS is attracted at the rate of 1% in case of liqour, 5% for tendu ;leaves, 2.5% for timber, and 1% for scrap. If Form 27C is furnished, no need of TCS deduction. Ordinarily, TCS is deducted within 7 days of the end of the month. As per Section 206C(1C), parking lot, toll plaza and mining attracts TCS at the rate of 2%. In case of motor vehicles, if the sale consideration exceeds Rs 10 Lakhs, TCS is deducted at the rate of 1%. In case of foreign remittances exceeding a value of Rs 7 lakhs, TCS is deducted at the rate of 20%. In case of gross sale consideration exceeds Rs 10 crores, TCS is deducted at the rate of 0.1% of the sale consideration or gross receipts. A quarterly statement has to be filed in Form 27EQ within 15th July, 15th October, 15th January and 30th April for the last quarter of the financial year. The e-filing of quarterly statement of TCS will be filed in Form 27B. Credit for TCS can be availed on production of Form 26AS. Issuance of TCS Certificate in Form 27D within one month of payment or debit whichever is earlier Section 207 entails liability for payment of advance tax. As per Section 208, advance tax has to be paid when tax payable for that year exceeds Rs 10,000. The computation of tax payable is made by taking up the tax payable minus credit & rebate plus surcharge plus secondary and higher education cess minus relief under Section 89 The advance tax order should be issued before the last day of February. As per Section 211, in case of non-corporate assessees, instalments of advance tax has to be paid in the following manner :
1) 15th June 15%
2) 15th September 45%
3) 15th December 75%
4) 15th march 100%. In case of corporate assessees, the schedule is as follows :
i) 15th September 30%
ii) 15th December 60%
iii) 15th march 100%.
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