Budget 2012- TDS AND TCS

[CS Swati Dodhi]

Budget 2012- TDS AND TCS (W.E.F. 1 ST JULY, 2012)

SECTION 194E AND 115BBA

• Income arising to an Entertainer, who is non resident and non citizen of India, through its performance in India has also been included under Section115BBA. Also, tax rate applicable to persons covered under this section has been increased from 10% to 20%. Accordingly the rate of TDS are also increased to 20%.

SECTION 193

• The TDS non deduction limit for interest payable on debenture (whether listed or not) paid by company in which public is substantially interested  has been raised from Rs. 2,500 to Rs. 5,000 if the payment is made by  account payee cheque.

SECTION 194J

• Remuneration or fees or Commission which is not in the nature of Salary  paid by a company to its director is now covered under section194J.  Accordingly, TDS is required to be deducted at the rate of 10%.

SECTION 194LA

• The TDS non deduction limit on compulsory acquisition of immovable property (other than agricultural land) has been raised from Rs. 1 lacks to Rs. 2 lacs.

SECTION 194LAA (NEWLY INSERTED) (W.E.F. 1^ST OCTOBER, 2012)

• Any person acquiring (other than to whom sec 194LA applies) an immovable  property (other than agricultural land) from a resident transferor shall deduct TDS  @ 1%.
• TDS is to be deducted at the time of credit or payment whichever is earlier on  Consideration paid or value adopted by Stamp Authority whichever is higher.
• TDS is required to be deducted only if the consideration value is equal to or more  than Rs. 50 lacs for property situated in urban specified areas and Rs. 20 lacs for  other areas.
• The immovable property will be registered in the name of acquirer only if he  furnishes the proof of TDS deduction.
• However, the provisions of sec 203A relating to attainment of Tax deduction  Account Number are not applicable to the Acquirer of Immovable Property.

SECTION 194LC (NEWLY INSERTED) AND SECTION 115A

• It is proposed to amend Section 115A of the Income Tax Act to provide that any  interest paid by a specified company to a non-resident in respect of borrowing made in foreign currency from sources outside India between 1 st July, 2012 and 1st  July, 2015 shall be taxable @ 5% as against 20% erstwhile.
• The payment of interest has to be under an agreement and rate of the interest  payable should be approved by the Central Government.
• Accordingly, TDS will be deducted @ 5% under section194LC.

SECTION 195

• The interest meaning has been changed from ‘any interest’ to ‘any interest (not being interest under section194LB or 194LC)’.
• Section 195(1) has been amended to clarify that obligation to comply with sub section (1) and to make deduction there under applies and shall be deemed to have always applied and extends and shall be deemed to have always extended to all persons, resident or non-resident, whether or not the non - resident has:-
1. a residence or place of business or business connection in India; or
2. Any other presence in any manner whatsoever in India.

These amendments will take effect retrospectively from 1st April, 1962 and will  accordingly apply in relation to the assessment year 1962-63 and subsequent  assessment years.

SECTION 197A

• For filing Form 15H for non deduction of TDS under section 193, 194, 194A, 194EE  and 194K, the age of senior citizens is proposed to be reduced from 65 years to 60  years.

SECTION 201

• As per proposed amendments in Section 201, Payer who fails to deduct the whole or any part of the tax on the payment made to a resident payee shall not be deemed to be an assessee in default in respect of such tax if such resident payee –
1. has furnished his return of income under section 139;
2. has taken into account such sum for computing income in such return of income; and
3. has paid the tax due on the income declared by him in such return of income,
4. the payer furnishes a certificate to this effect from an accountant in such form as may be prescribed.

• The date of payment of taxes by the resident payee shall be deemed to be the date on which return has been furnished by the payer.

• It is also proposed to provide that where the payer fails to deduct the whole or any part of the tax on the payment made to a resident and is not deemed to be an assessee in default under section 201(1) on account of payment of taxes by the such resident, the interest under section 201(1A)(i) shall be payablefrom the date on which such tax was deductible to the date of furnishing of return of income by such resident payee.

SECTION 204

• For the purpose of providing clarity to the meaning of “person responsible for paying” in case of payment by Central Government or a State Government, it is proposed to provide that in the case of payment by Central Government or a State Government, the Drawing and Disbursing Officer or any other person (by whatever name called) responsible for making payment shall be the “person responsible for paying” within the meaning of section 204.

SECTION 206C

• Minerals (being coal, lignite or iron ore) have been brought under the ambit of TCS which is to be collected @ 1%.
• Also, the seller of bullion and jewellery shall at the time of receipt of consideration (in cash only) collect TCS @ 1% as income tax from the buyer if the sale consideration exceeds Rs. 2 lacs.
• Provisions relating to TCS for clarifying the deemed date of discharge of tax liability by the buyer or licensee or lessee are on line with the amendments proposed under section 201.