06 January 2012
Suppose in respect of a contractor we have received an invoice of Rs.27000 in may,11 and then we again receives invoice of Rs.50000/- and then we deduct tds on the entire amt of Rs.77000/- as the billing exceeds Rs.75000/- now the department raises a demand notice that the amount of the tds has been deducted late hence we are required to pay interest @1% from the date on which it is required to be deducted till the actual date of deduction. Is the demand raised valid. PLS answer the above query thanks in advance.
06 January 2012
Hi Ankit, Apparently, it seems harshful but as per the provisions, you have to aticipate your future transactions and if you belive that you will cross the threshhold limit, you have to deduct tax right from the 1st payment itself even if its below threshhold to avoid such consequences. However, it can be challenged.
08 January 2012
• Guidelines for reporting TDS transactions not exceeding / exceeding threshold limit in quarterly TDS statements (as issued by Directorate of Income Tax - Systems).
Below guidelines may be referred, if deductor wishes to report the transaction in the quarterly TDS statement where no tax is deducted as threshold limit (as per the provisions of the Income tax Act) of amount paid/credited to deductee has not exceeded in the initial quarter (s) but has exceeded in subsequent quarter.
1) Flag “Y” may be selected in the field of ‘Reason for non deduction/ lower deduction/ higher deduction’ to highlight transactions where TDS is not deducted as the threshold for deducting tax has not exceeded. 2) Threshold flag can be quoted only against the following section codes in corresponding challan details: 193, 194, 194A, 194B, 194BB, 194C, 194D, 194EE, 194G, 194H, 194I, 194J, 194LA 3) Following approach may be referred for reporting threshold transactions in quarterly statements: 1. In case there is no deduction of tax in the first two quarters of a F.Y. where the prescribed rate of deduction as per Income Tax Rules is 10%. In the third quarter the threshold limit exceeds. Approach 1: The deductor may report those transactions in the respective quarterly TDS statements with zero rate of deduction (‘0.0000’), zero tax deducted/ deposited (‘0.00’) and amount paid in the respective quarters with threshold flag. The deductor will mention the prescribed rate of deduction, the amount paid in the third quarter, tax deducted/ deposited (deductee) on the total amount paid till that quarter. The same is represented as follows: Pertaining to quarter Reporting Quarter PAN Rate of deduction Date of payment* Amount paid (Rs.) Date of deduction Amount deducted (Rs.) Amount deposited (Rs.) Reason for non deduction /lower deduction Q1 Q1 PAN1 0 Q1 1,00,000 - 0 0 Threshold flag Y present Q2 Q2 PAN1 0 Q2 1,00,000 - 0 0 Threshold flag Y present Q3 Q3 PAN1 30 Q3 1,00,000 Q3 30,000.00 30,000.00 No flag present *The deductor must report the actual date of payment irrespective of the manner of reporting Approach 2:
The deductor may report all transactions in the quarter in which the threshold has exceeded, represented as follows:
Pertaining to quarter Reporting Quarter PAN Rate of deduction Date of payment* Amount paid (Rs.) Date of deduction Amount deducted (Rs.) Amount deposited (Rs.) Reason for non deduction /lower deduction Q1 Q3 PAN1 0.0000 Q1 1,00,000 - 0 0 Threshold flag Y present Q2 Q3 PAN1 0.0000 Q2 1,00,000 - 0 0 Threshold flag Y present Q3 Q3 PAN1 30.0000 Q3 1,00,000 Q3 30,000.00 30,000.00 No flag present *The deductor must report the actual date of payment irrespective of the manner of reporting
Approach 3:
The deductor may report all transactions in the quarter in which the threshold has exceeded, represented as follows:
Pertaining to quarter Reporting Quarter PAN Rate of deduction Date of payment* Amount paid (Rs.) Date of deduction Amount deducted (Rs.) Amount deposited (Rs.) Reason for non deduction /lower deduction Q1 Q3 PAN1 10.0000 Q1 1,00,000 Q3 10,000.00 10,000.00 Threshold flag Y present Q2 Q3 PAN1 10.0000 Q2 1,00,000 Q3 10,000.00 10,000.00 Threshold flag Y present Q3 Q3 PAN1 10.0000 Q3 1,00,000 Q3 10,000.00 10,000.00 No flag present *The deductor must report the actual date of payment irrespective of the manner of reporting
CAclubindia
