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 272015
 

Possible tax planning due to change in service tax rates

We have discussed in detail in our previous article on new Service tax rate becoming effective from June 1, 2015 and how this change in going to change our service tax bill for services already completed or in the process of completion. In this article we will dig it out further this concept in detail and try to find out possibility of planning in terms of applicability of services tax rates.

As we are aware that service tax rates are revised to 14% (including education cess and secondary and higher secondary education cess) from existing rate of 12.36%. Hence, as far as old rates are applicable in your tax invoice, you can save 1.64% of total service value of your client. Here we will discuss the possibility of saving money due to applicability of point of taxation rules.

Services Completed Earlier to 1.6.2015:

Illustrations when old rate would apply

  • Where payment received before and invoice issued after 1.6.2015: The invoice raised on 15th June 2015, and service provided on 20th May 2015. Payment received on 30th May 2015. The service tax to be paid at 12.36%.
  • When the invoice issued before and payment received after 1.6.2015: The invoice raised on 15th May 2015, service provided on 4th May 2015 and payment received on 30th June 2015. The service tax to be paid at 12.36%.

Illustrations when new rate would apply

  • Invoice raised and payment received after 1.6.2015: The invoice raised on 15thJune 2015, and service provided in May 2015. Payment received in June 2015. The service tax to be paid at 14%.

Services Provided Post 1.6.2015:

Illustrations when old rate would apply

  • Invoice raised and payment received before 1.6.2015: If invoice raised on 5th May 2015, service provided in June 2015 and payment received on 15th Then service tax to be paid at 12.36%.

Illustrations when new rate would apply:

  • When invoice raised after 1.6.2015 and payment received before rate change: If invoice is raised on 5th June 2015, service provided in June 2015 and payment received on 15th Then service tax to be paid at 14%.
  • When invoice raised earlier to 1.6.2015 and payment made post change in rate: If invoice raised on 15th May 2015, service provided in June 2015,payment made on 1.6.2015. Then service tax to be paid at 14%.

 2 out of 3 planning:

From the above it can be understood that out of the 3 elements viz. (Date of issue of invoice, Date of payment and date of provision of service) if any of the 2 events occur before the effective date of change in rate, then the old service tax rate shall be applicable.

Conclusion:

Since the new rate is to be effective from June 1, 2015 therefore if any 2 events takes place before that then the benefit of old rate can be taken even after June 1, 2015. Hence, ask your service provider to issue tax invoices before June 1, 2015 for all services completed on or before May 30, 2015 or try to make advance payment to your service provider for services to be completed in near future.