tax deducted for a non trading association

TDS / TCS 1384 views 3 replies

CA Gaurav Agrawal

Credit Analyst

60 Points Posted on 19 August 2009

The facts of case

One Non-Trading Association which collects maintenance charges from Members and spends the amount collected for the maintenance of building. Every year saved money is invested in Bank FDR. The Bank is deducting TDS on income earned as Interest.

Questions:

a) How one can stop the Bank for deducting the Tax? Whether there are any arrangements of form for this purpose??

b) The Association collects around 10 lacs as maintenance charges and spends around 8 lacs per year and interest income around 3 lacs per year. Whether return filling is compulsory? Whether there is any exemption limit available to association?

c) Return of 31/03/2007 and 31/03/2008 were not filled but TDS is deducted. Whether tax deducted during 2006-07 and 2007-08 is recoverable?

Replies (3)

CA Kingsley

Audit Manager

470 Points Posted on 19 August 2009

1. the assessee is an AOP. Therefore he should file return of income

2. Since the membership charges less maintenance expenses is positive, there is income. Thus AOP shall pay tax on profits.

3. To prevent bank from deducting from TDS, AOP should give self declaration that they are not liable to tax. But here since AOP is liable for tax, self declaration is not possible. Therefore, TDS is unavoidable.

4. I think in your case, the association is taxed at maximum marginal rate 33.99%. So no basic exemption limit will be applicable.

5. You cant file ROI for fyr 06-07. But you can file ROI for fyr 07-08, fyr 08-09. You can file return for fyr 06-07 only in response to notice issued by IT department.

6. TDS for fyr 06-07 can be adjusted only with fyr 06-07 returns and so on....