The Amendments in TDS and TCS Provisions effective from 1st June 2015

Requirement for obtaining evidences

New Clause (2D) has been inserted in section 192 w.e.f 01.06.2015: The person responsible for making the payment shall obtain evidences with respect to deductions, exemptions or allowances including claim for set off of loss claimed by the employee while estimating the income of the employee for the purpose of deduction of tax under section 192.

TDS on premature withdrawal from EPF
New Section 192A has been inserted to be effective from 01.06.2015 for deduction of tax from withdrawal of Provident Fund. 

Till now the withdrawal of accumulated balance by an employee from Recognized Provident Fund is exempted from taxation. The Finance Act 2015 provides the tax on withdrawn amount to be by calculated by re - computing the tax for earlier years after treating the contribution as contribution to a un recognized Provident Fund. This has been provided to discourage the Pre- mature withdrawal and to give a boost to long term savings.

(i)     Trustees of EPF Scheme or any person responsible to make payment of accumulated balance due to an employee at the time of making payment shall deduct income tax @ 10%
(ii)   No Deduction as above shall be made if aggregate amount payable yp an employee is less than Rs.30000/-
(iii) No Deduction of tax if account is transferred from one employer to another.

(iv)  Rate of tax will be maximum marginal rate in lieu of TDS @ 10% if NO PAN is provided to the employer or to authorized person.

TDS on Interest Amendments

Following amendments have been made with respect to TDS on interest (other than interest on securities) to take effect from June 1, 2015:

(i)     The current exemption from TDS on payments of interest to members by a co-operative society will not be applicable for interest on term deposits by co-operative banks.
(ii)   The definition of 'time deposits' amended to include recurring deposits within its scope. However the threshold limit of Rs.10000/- for non deduction shall be applicable for Recurring deposits also but such limit will be computed bank wise and not branch wise.
(iii) The deduction of tax under this section from interest payments on the compensation amount shall be made only at the time of payment, if aggregate amount of such payments during a financial year exceeds INR 50,000.

TDS from payment to transporters

Presently, section 194C of the Act provides for TDS @1% if payment is made to an Individual or HUF and @ 2% in case of any other payee from contractual payment if exceeds Rs.3000/- or Rs.75000/- in aggregate in one Financial year but exempts payments made to contractors during the course of plying, hiring and leasing goods carriage if the contractor furnishes his PAN. After the amendment it provides NO TDS in case where such transporter owns ten or less goods carriages at any time during the previous year and furnishes a declaration to such effect, along with PAN.

 Such amendment is effective from June 1, 2015.

Furnishing Information of Payment to Non- Resident even if payment is not taxable or NO withholding Tax or TDS attracted

Section 195(6) of the Act provides that any person responsible for making payments to a non-resident of any sum chargeable to tax under the Income Tax Act shall furnish the information by filing form 15CA and 15CB ( from Chartered Accountant ) on or before making such payment. Now after the amendment such reporting requirements extended even in respect of payments which are not chargeable to tax under the Income Tax Act.

Further, now penalty of Rs One Lac has been provided to be imposed in case of non-furnishing of information or furnishing of incorrect information under section 195(6) through form 15CA and form 15CB.

The Amendments in Processing of TDS and TCS Quarterly Statements

(i)     The Amendment for computation of late fee payable under section 234E of the Act at the time of processing of TDS statement under Section 200A of the Act.
(ii)   The Amendment to allow the collector of tax to furnish TCS correction statement under section 206C of the Income Tax Act.
(iii) Amendment for introducing a mechanism for processing of TCS statements on the same lines of the existing provisions for processing of TDS statements.
(iv)  Amendments to provide that the intimation generated after the processing of TCS statement shall be at par with the intimation generated after processing of TDS statement.

(v)    Such Intimation generated after processing of TCS Statement shall be subject to rectification under Sec154 and/or appealable under Sec246A and demand notice will be treated as demand under Section 156.

Filing of Form 15G/15H for payment made under Life Insurance Policy

Section 194DA was inserted with effect from 1.10.2014 to provide for TDS @2% from payments made under Life Insurance Policy which are chargeable to Tax and if amount exceeds Rs. One Lac. However threshold limit of Rs. 100000/- is to high but still there may be many cases where the recipients’ total income including receipt from LIC Policy is below the taxable limit and to settle such cases the amendment is made to enable the recipient to file Form 15G or Form 15H for no TDS on receipts from LIC policies.

Relaxing requirement of obtaining TAN for certain deductors

Obtaining of TAN Under Section 203A for one time transactions e.g buying property from Non Resident above Rs.50 Lacs is burdensome for Individuals and HUFs not subject to Tax Audit. To reduce the compliance burden of these type of deductors is relaxed by inserting Section 203A(3) which provides that requirement of Obtaining TAN and quoting the same for one time transaction shall not apply to the notified deductors or collectors of Tax at source.

Penalty for failure in filing statement under section 200(2A) or Section 206C(3A)

The penalty of Rs.100/- per day for the period of failure in filing statement under section 200(2A) and Section 206C(3A) shall be levied but such penalty shall not exceed the amount of TDS or TCS..