Tds applicability for charitable trusts
This query is : Resolved
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17 February 2015
Dear sir,
here i am rising my doubt as, when we are going to make a payment to a Charitable trust which was already registered under 12A and 80G of income tax act 1961, whether we have to deduct TDS or not.
In the same way when the trust is going to make a payment to others whether the trust has to be deduct the TDS or not.
Because the Trust Income is exempted and which was not included in Gross total income.
Please solve my query.
Thanking you sir.
Article.
here i am rising my doubt as, when we are going to make a payment to a Charitable trust which was already registered under 12A and 80G of income tax act 1961, whether we have to deduct TDS or not.
In the same way when the trust is going to make a payment to others whether the trust has to be deduct the TDS or not.
Because the Trust Income is exempted and which was not included in Gross total income.
Please solve my query.
Thanking you sir.
Article.
17 February 2015
Charitable Trust may be registered under 12A and 80G of the I T Act but unless specifically exempted for TDS, yearly based on application made, TDS provisions applicable to the trust even trust income is exempted.
TDS provisions applicable to the trust when it makes payment to others.
TDS provisions applicable to the trust when it makes payment to others.
17 February 2015
But in the case law below mentioned, Disallowance u/s 40(a) not applicable to charitable trust/institution u/s 11
Mahatma Gandhi Seva Mandir vs Deputy Director of Income tax (e)1(2), mumbai
IT appeal no.4138(MUM) of 2011-{Assessment year 2007-08}
date of decision May 11,2012.
Mahatma Gandhi Seva Mandir vs Deputy Director of Income tax (e)1(2), mumbai
IT appeal no.4138(MUM) of 2011-{Assessment year 2007-08}
date of decision May 11,2012.
17 February 2015
But other provisions of TDS interest and penalty is applicable.
Failure to deduct tax
Where the any person has failed to deduct tax or when short deduction of tax has been done, following statutory provisions are attracted:-
Charging of interest u/s 201(1A) – The deductor is treated to be ‘assessee in default’ in respect of the short deduction/non deduction of tax. Under Section 201(1A) he is liable to pay simple interest @ 1% for every month or part of a month on the amount of tax in arrear from the date on which such tax was deductible to the date on which such tax is actually deducted. Further such interest shall be paid before furnishing the quarterly statement of each quarter. Charging of interest u/s 201(1A) is mandatory and there is no provision for its waiver.
Penalty u/s 221 - The assessee in default is liable to imposition of penalty where the assessing officer is satisfied that the defaulter has failed to deduct tax as required without good and sufficient reason. The quantum of penalty is not to exceed the amount of tax in arrear. Besides, a reasonable opportunity of being heard is to be given to the assessee.
Penalty u/s 271C – A penalty equivalent to the amount of tax the deductor has failed to deduct, is leviable u/s 271C. Such penalty is however only leviable by a Joint Commissioner of Income Tax.
Failure to deduct tax
Where the any person has failed to deduct tax or when short deduction of tax has been done, following statutory provisions are attracted:-
Charging of interest u/s 201(1A) – The deductor is treated to be ‘assessee in default’ in respect of the short deduction/non deduction of tax. Under Section 201(1A) he is liable to pay simple interest @ 1% for every month or part of a month on the amount of tax in arrear from the date on which such tax was deductible to the date on which such tax is actually deducted. Further such interest shall be paid before furnishing the quarterly statement of each quarter. Charging of interest u/s 201(1A) is mandatory and there is no provision for its waiver.
Penalty u/s 221 - The assessee in default is liable to imposition of penalty where the assessing officer is satisfied that the defaulter has failed to deduct tax as required without good and sufficient reason. The quantum of penalty is not to exceed the amount of tax in arrear. Besides, a reasonable opportunity of being heard is to be given to the assessee.
Penalty u/s 271C – A penalty equivalent to the amount of tax the deductor has failed to deduct, is leviable u/s 271C. Such penalty is however only leviable by a Joint Commissioner of Income Tax.
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