Jun 152015
 

Computation of TDS in case employee is working under two employer in same year

Cases where an employee can work under two employer in a single financial year

Normally an employee is employed under employer during whole financial year and thus no problem arises in deduction of TDS from salary. In this case all information relating to income of employee is readily available with employer and computation task is easy to handle. However, complexity arise where employee work under two employer. This problem may arise in the following situations:

  1. Where employee changes his job in the middle of year
  2. Where employee is engaged in part time jobs or week end assignment
  3. Where employee work under two employee simultaneously

Here, an attempt is made to explain the duties and responsibilities of employee and employer. Further this blog will explain you how to handle this situation.

More Than One Employer

Where an employee has more than one employer,he is required to furnish in Form No. 12B to one of the employers (as selected by the employee having regards to the circumstances of the case)the detail of salary due/received by him from one other employers.

Only after submission of information in Form No.12B, it becomes the obligation of the employer (to whom Form No.12B is submitted) to deduct tax at source after considering the information submitted by the employee.

For instance, if information is submitted in the month of October,only from October onwards, tax shall be deducted at the average rate determined after considering the details submitted in the Form No. 12B.

Case 1:

During the previous year 2015-16, Mr X is employed simultaneously by A Ltd.(salary: Rs.30,000)and B Ltd. (salary:Rs.42,000) on part-time basis. Mr X may select any of the two companies for deducting tax at source on aggregate salary.

Suppose, Mr X selects B. Ltd.,then tax will be deducted as follows:

Tax deduction by A Ltd on salary paid by it.
Rs.
Tax salary by A Ltd. (Rs.30,000*12) 3,60,000
Tax on taxable salary to be deducted at source by A Ltd. 9,270

The above information pertaining to A Ltd will be submitted by Mr X to B Ltd in Form No.12B Ltd will deduct tax on the aggregate salary as follows:

Tax deduction by
B Ltd.
Rs.
Taxable salary (Rs.30,000*12+Rs.42,000*12) 8,64,000
Tax on taxable salary 1,00,734
Less: Tax deducted by A Ltd. 9,200
Tax to be deducted by B Ltd. 91,464

Case 2:

Mr Y is employed by C Ltd. Up to June 30,2015(salary being Rs.80,000 per month). On July 1,2015,he joins D Ltd. (salary being Rs. 95,000 per month). Tax will be deducted as source as follows:

Taxation deduction by
C Ltd on salary paid by it Rs.
Taxable salary by C Ltd. (80,000*3) 2,40,000
Tax on salary deduction of source by C Ltd.(Tax will be calculated on monthly basis at annual average tax rate which is calculated as below:

Salary per month Rs. 80,000
Annual salary Rs. 960,000
Tax on annaul salary Rs. 120,510
Annual tax rate 13%
Salary received till June 2015 Rs. 240,000
Tax on above salary Rs. 30,130
30,130

The above information pertaining to C Ltd will be submitted by Mr Y to D Ltd. in Form No.12B. D Ltd. will deduct tax on the aggregate salary as follows(Mr Y should not select the old employer for deducting tax in respect of aggregate salary).

Tax deduction by B Ltd .
Rs.
Taxable salary (Rs. 80,000*3+ Rs.95,000*9) 10,95,000
Tax on taxable salary 1,58,105
Less:Tax deducted by C Ltd. 30,130
Tax to be deducted by B Ltd. 1,27,980
May 272015
 

TDS deductible on payment to transporter owing more than 10 carriages

You may be aware that hitherto (upto 31.05.2015) no TDS was require to be done from Transport charges paid/ payable if the transporter  furnishes the copy of PAN.

However, as per the amendment effective from 01.06.2015, this exemption will be available only to those transporters who own ten or less goods carriages at any time during the previous year. If any transporter more than 10 carriages then TDS require to be deducted u/s. 194C(6) @1% when :

a) An individual payment to such a transporter is Rs. 30,000/- or more

or

b) The total payments to such a transporter during any Financial year is Rs. 75,000/- or more.
Now, a declaration required to be obtain from every transporter stating that he does not own 10 or more carriages.
A draft of the declaration can be downloaded from the following link
Download

Please note that failure to obtain such a declaration  will result in to contravention of Sec. 194C (6) of the Income Tax Act, 1961.

Courtesy: CA C. Maneklal
May 272015
 

INCOME TAX- For TDS & TCS- Nine Amendments shall be effective from 1st June 2015

1. Requirement for obtaining evidence/ particulars by employer for TDS–Section 192-Prescribed form from employee to be obtained for his claims.

2. TDS from premature withdrawal from Employees’ Provident Fund Scheme (EPFS)–Sections 192A and 197A – Trustees of RPFs shall, at the time of payment of the accumulated balance due to the employee, deduct tax at source at the rate of 10%, where the aggregate withdrawal is R30,000/- or more. Form No. 15G/15H available for non deduction. No PAN- Marginal Rate.

3.TDS from interest (other than interest on securities)–Section 194 N – TDS from Recurring deposit-TDS from deposit in cooperative Banks- Interest from all branches of a Bank is to be considered to check cut off amount of Rs 10000/-

4.TDS from payments to transporters–Section 194C- Exemption will be available
only to those transporters who own ten or less goods carriages at any time during the previous year

5. Obtaining/quoting tax deduction and collection account number (TAN) relaxed for certain notified persons–Section 203A- proposed to amend Section 203A to the effect that the requirement of obtaining and quoting of TAN shall not apply

6. Processing of TCS returns–Section 206CB- Processing of TCS (tax collected at source) statements on the same lines as TDS statements.

7.Self-declaration for non-deduction of tax from life insurance payments–Sections 194DA and 197A- Self-declaration in the prescribed Form No. 15G/15H made applicable.

8.Interest on certain bonds and Government securities earned by FIIs–Section
194LD-Concessional rate of tax is proposed to be extended up to 30th June 2017.

9. Furnishing of information made more stringent and penalty introduced – Sections 195 and 271-I-The obligation to furnish Form 15CA (and also Form 15CB) will have to be complied with. Section 271-I to levy a penalty of R1,00,000/- if the person required to furnish information under Section 195 fails to furnish such information or furnishes inaccurate information.

Courtesy: CA C. Maneklal

May 292014
 

This is regarding the procedure for furnishing of e-TDS/TCS correction statements to TIN Faciliation Centres, with effect from June 1, 2014 the procedure stands revised as below.

Physical Form 27A duly signed along with .fvu file in a CD/Pen drive and Deductors/Collectors need not submit copy of Provisional Receipt of original statement and Statement Statistics Report (SSR) for furnishing e-TDS/TCS correction statement.

This is for your information and necessary action, if any.

Mar 262014
 

Form 26AS with respect to Tax Deducted at Source (TDS)


Form 26AS is, in essence, an acknowledgement of sorts when it comes to Tax Deducted at Source (TDS). Which is to say that Form 26AS shows the amount of TDS, which has been deducted and is available as credit against our Income Tax liability, if any.

To understand this concept and in order to make it work in one’s favour, one needs to understand the basics with respect to TDS and Form 26AS:

TDS:

1. TDS or Tax Deducted at Source refers to the deduction of Tax from the respective source of one’s income. Example: Let’s say that you are a Salaried employee in an organization so, subject to the applicable basic deduction/exemption limit, the organization pays Salary to you after deducting TDS from the same. Thus, Salary is your source of income and the deduction of Tax by the organization from Salary (the source of income) before paying the same to you is referred to as Tax Deducted at Source (TDS).

2. Tax is Deductible from various sources of income subject to applicable basic deduction/exemption limits. Example: Bank deducts TDS from interest (the source of income) on Fixed deposits etc.

3. Now, TDS which has been deducted by the deductor (the person responsible for making the payment, example: Bank which pays interest on Fixed deposit so Bank will be referred to as a deductor), has to be deposited in Government account on behalf of the deductee (deductee is the one who receives the income, example: the receiver of interest on Fixed deposit from Bank).

4. After depositing TDS in Government account, the deductor, files a TDS return after the end of every quarter with National Security Depositories Limited (NSDL).

5. The main purpose of filing TDS return is to inform the Government as to what all payments have been made during the quarter, to whom have the payments been made, what was the nature of payment like interest, Salary etc., PAN no. of the person to whom the payments have been made, the rate and amount of TDS deducted etc.

6. Thus, basis these returns, Government gives the credit of TDS to the respective persons on behalf of whom TDS has been deducted by the deductor.

Form 26AS:

1. Government gives the credit of TDS on the basis of TDS return and this credit gets reflected in Form 26AS. Example: Let’s say that you have a Fixed deposit of Rs.10,00,000/- @8% with ICICI bank and the Bank paid the interest of Rs.18,000/- (20,000-2,000 (TDS)) for the period April to June and then in July filed the TDS return for the period April to June. Thus, after filing of TDS return by ICICI bank, a credit of Rs.2,000/- will get reflected in your respective Form 26AS because in the TDS return filed by Bank, Bank had given the details of interest payable to you i.e. Rs.20,000/-, the amount of TDS deducted from the same i.e. Rs.2,000/- , your PAN number, Name etc. Hence, on the basis of your PAN number, the Government gives the credit of Tax deducted from your income which gets reflected in Form 26AS.

2. The organization deducting TDS from your income, like ICICI bank in the aforementioned example, will issue a TDS certificate to you after filing TDS return.

3. You can compare Form 26AS with TDS certificates issued to you and if the amount of TDS deducted as per Form 26AS and as per TDS certificates is the same then it means that the Tax credit reflecting under your PAN in Form 26AS is correct. However, in case if TDS in certificates and Form 26AS does not match then you need to inform the deductor i.e. ICICI bank in the aforementioned example. The deductor will then revise the TDS return filed because such an issue of TDS credit not getting reflecting in Form 26AS occurs only when there is some error in TDS reurn filed by the deductor.

4. Most common reason due to which proper credit does not get reflected in Form 26AS is that the deductor has not quoted or has quoted incorrect PAN number (your PAN number) in TDS return.

5. Once the revised TDS return is filed by the deductor after making necessary corrections then the credit will get reflected in one’s Form 26AS after sometime.

6. Thus, before filing the return of income one must check Form 26AS to make sure that proper TDS credit is appearing in Government records.

Please remember that irrespective of TDS certificates you have, credit of Tax shall be given on the basis of Form 26AS only. However, these days TDS certificates are being downloaded from TRACES portal, thus, chances of mismatch between TDS certfificates and Form 26AS are minimal.

Please take care that you claim TDS credit in your Income Tax Return after tallying TDS certificates received by you with Form 26AS so that you get 100% benefit of TDS deducted from your income. As, at times, it so happens that the amount of TDS credit appearing in Form 26AS is more than the amount in TDS certificates and this happens because one or some of the deductors who have deducted TDS on your behalf have not issued TDS certificate(s), for the same, to you.

Courtesy: CA Sahil Jolly

Jan 062014
 

Dear Deductor,

A new version 4.1 & 2.137 of the File Validation Utility (FVU) have been released by NSDL.

As the due date of filing of quarterly TDS statement for third quarter of FY 2013-14 is approaching fast, you are advised to use the new version of EasyTDS and validate the file with new FVU to submit TDS statements, well before due date (15th January for Non-Government deductors and 31st January for Government deductors).

The new versions of FVU features following significant changes from the previous:

->> Discontinuation of functionality to delete Deductee records: For the purpose of correct reporting, deletion of Deductee rows is no longer permissible in the TDS statements.
->> Date of deduction should not pertain to previous quarter: The relevant quarter in a TDS statement is determined by the date of deduction. Further, to correct any transaction having a Default, there would be a necessity to report transactions, where date of deduction may be of subsequent quarter. In the light of above, Date of deduction in deductee records should not be that of previous quarter. For example, if the statement pertains to Q3 of FY 2013-14 (i.e. Oct- Dec 2013), then the date of deduction should not be earlier than 01/10/2013.
->> Please note that the challan paid with a specific section code can be utilised for consumption with any other section code in the Deductee rows. For example, a challan with Section Code 194I can be used for any other sections 193, 194, 194A etc. in the challan detail row.
->> Generation of Form 27A by TDS/TCS FVU: An acknowledgement in form 27A can now be generated and printed using the new versions of EasyTDS and FVU.

Nov 012013
 
Due dates for the Month of November 2013
05-11-2013
Service Tax
- Service Tax payments by Companies for October
06-11-2013
Central Excise
- Payment of Excise Duty for all Assessees (other than SSI Units)
07-11-2013
Income Tax
- TDS Payment for October
10-11-2013
Central Excise
- Filing ER-1 Return (Other than SSI Units)
– Filing Quarterly ER-2 Return by 100% EOUs
– Filing monthly ER-6 Return by specified class of Assessees regarding principal inputs.
15-11-2013
Providend Fund
- PF Payment for October
20-11-2013
MVAT
– TDS Payment for October
21-11-2013
ESIC
- ESIC Payment for October
MVAT *
– MVAT Monthly Return for October (TAX>1000000/-)

MVAT
– Monthly payment of October
30-11-2013
Central Excise
-
Filing Annual Financial information Statement in Form ER-4 by the specified Assessees.
Income Tax
- Return of Income & Wealth of all assessees covered under Transfer Pricing Regulations
MVAT
– Audit Report in Form No. 704

Profession Tax
- Payment of October
*If payment of MVAT made as per time prescribed, additional 10 days are given for uploading e-return
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Oct 082013
 

Dear Deductor,

You are the esteemed stakeholder of CPC(TDS). As the due date of filing of quarterly TDS statement for second quarter of FY 2013-14 is approaching fast, you are advised to file TDS statement well before due date (15th October for Non Government deductors and 31st October for Government deductors). You are requested to make note of the following facts before filing the quarterly TDS statement:

a)      CORRECT REPORTING: Cancellation of TDS statement  no longer permissible. Accordingly, it is very important to report correct and valid particulars (TAN of the deductor, Category (Government/Non Government) of the deductor, PAN of the deductees and other particulars of deduction of tax) in the quarterly TDS statement.

b)      Quote correct and valid lower rate TDS certificate in TDS statement wherever the TDS has been deducted at lower/zero rate on the basis of certificate issued by the Assessing Officer

c)      Last provisional receipt number to be quoted in regular TDS/TCS statements: While filing new regular (original) TDS statement, it is mandatory to quote the last accepted provisional receipt number of the regular quarterly TDS/TCS statement of any form type

d)      TDS statement can not be filed without quoting any valid challan and deductee row.

e)      Late filing fee, being statutory in nature, can not be waived.

f)       Download the PAN master from TRACES and use the same to file new statement to avoid quoting of incorrect and invalid PAN.

g)      Validate PAN and name of the fresh deductees from TRACES site before quoting it in TDS statement

h)      Download TDS certificate (Form16A) from TRACES (www.tdscpc.gov.in) bearing unique TDS certificate number and issue to the taxpayers within due date

i)        File correction statements promptly in case of incomplete and incorrect reporting.

j)        Download the justification report to know the details of TDS defaults, if any, on processing of TDS statement

k)      Do view your Dashboard regularly to know about your TDS performance.

l)     Government deductors should obtain BIN (Book Identification Number) from their Accounts Officer (AIN holder) in time and quote the same correctly in TDS statement.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) Team

Oct 042013
 
NSDL FVU version has changed from 1st October 2013. NSDL latest FVU version is 4.0

Key feature of FVU version 4.0

->> Change in validation of Section code 194LC:
o Section code 194LC will be applicable only for deductor category (as per the statement) “Company” and “Branch of Company”.
o This validation will apply for regular and correction statements.

->> Incorporation of new section code 194LD: This Section code will be applicable for:

o Regular and correction statements pertaining to FY 2013-14 and onwards.
o Statement pertaining to Form no. 27Q.

->> Nil challans/transfer vouchers with deductee record:

Validation as below will be applicable:
o Nil challans/transfer vouchers need to mandatorily have deductee records.
o In deductee records, flag in the remarks for lower or non-deduction should be “A”, “B”, “Y”, “S”, “T” or “Z” (as applicable).
o This validation will apply for regular and correction statements.

->> Last provisional receipt number to be quoted in regular TDS/TCS statements:

Deductors are require to mandatorily quote the last accepted provisional receipt number of the regular quarterly TDS/TCS statement.

->> Date of deposit of Non-nil Challan:

Validation for Date of deposit of non-nil challan has been relaxed. This date can pertain to immediate previous financial year of the statement.

->> FVU version 3.9 and 4.0 are applicable upto September 30, 2013. Further, FVU version 4.0 would be mandatory from October 01, 2013.