New Turnover Threshold for the Purpose of TDS Applicability

 

New Turnover Threshold for the Purposes of Tax deducted at Source (TDS) Applicability as per the Finance Act 2020.

• TDS was applicable to individuals and to HUF if their accounts were subject to audit in Section 44AB of the preceding year.
• The Finance Act 2020 specifies that All individuals & HUF will be liable to deduct TDS if the revenue exceeds Rs. 1 Crore in the case of corporation and Rs. 50 Lakhs in the case of the profession in the previous year. Such revisions shall take effect from 1 April 2020.

Also Read : Different meanings of turnover

• Below is the TDS average for the year 2020-21. In the following table valid from 14th May 2020

o   Individuals include the individual and HUF

o   Company and others include Company, Company, LLP, Co-op Society, Local Authority.

New List of Announcement made under Direct Tax made by the Minister of Finance Smt. N. Sitharaman

• Minister of Finance, Smt. N. Sitharaman conducted a media briefing on 13 May 2020 to make arrangements for the Rs 20 Lakh Crore Economy Plan launched by the P.M Sh. N. Modi.
• The FM issued a number of packages for the Micro, Small, and Medium Enterprises Sector to provide a little relief under the COVID-19 disease outbreak.
• A variety of steps have been declared by the FM, including collateral-free automatic lending, updated description of MSME, etc.

List of notified new rate and announcement

The Minister of Finance has outlined a series of relief measures under the Income Tax Act, which are set out below:

(a) The TDS/TCS rates for defined payments/receipts shall be decreased by 25%. This reduction in the rate shall be applicable for tax deducted or assessed between 14-05-2020 and 31-03-2021.

• This provision shall not be made applicable to a salaried and non-resident taxpayer. The TDS and TCS preliminary rates are shown in the chart following.

(b) All unpaid refunds to nonprofit organizations and non-corporate companies and occupations shall be issued shortly.

(c) The due date of all revenue-tax returns for the financial year 2019-20 will be increased from 31 July 2020 and 31 October 2020 to 30 November 2020.

(d) The deadline date for the tax audit referred to in Section 44AB shall be increased from 30 September 2020 to 31 October 2020.

(e) The final date of selecting for the Vivad se Vishwas scheme without paying an extra 10%  of the tax at issue shall be expanded until 31 December 2020.

(f) The deadline of 30-09-2020 for completion of the evaluations shall be extended to 31- 12-2020. If the evaluation is blocked on 31-03-2021, it shall be extended to 30-09-2021.

• By lowering the rate of TDS/TCS, the Government. It allows taxpayers to have much more money in their hands. In this tough moment, this declaration would help self-employed employees, professionals and senior citizens receiving interest income or rental income.
• It does not offer any comfort to employees. But it should be remembered that the relaxation of the TDS/TCS rate would have no effect on the final tax liability of the taxpayer. As a result, any shortfall in tax liability due to a decreased rate of TDS/TCS should be payable by advance tax installment payments.
• Any deficit in the deposit of advance tax would draw interest under Sections 234B and 234C. The first payment of the advance tax is due on 15 June 2020.
• A taxpayer can recalculate his advance tax obligation to be deposited next month in order to postpone any charge of interest.

Rates of TDS FY 2020-21

Section	Nature of Income	Rate of TDS applicable for the period		Threshold Limit for deduction tax
		01-04-2020 to 13-05-2020	14-05-2020 to 31-03-2021
193	Interest on Securities	10%	7.50%	–
194	Dividend	10%	7.50%	Rs. 5,000 in case of Individual
194A	Interest other than interest on Securities	10%	7.50%	Rs. 5,000 to Rs. 50,000
194C	Payment to Contractors	–   1%: If deductee is an individual or HUF –   2%: In any other case	–   0.75%: If deductee is an individual or HUF –   1.50%: In any other case	–   Single payment : Rs. 30,000 –   Aggregate payment: Rs. 100,000
194D	Insurance Commission	–   10%: If deductee is domestic Company –   5%: In any other case	–   7.50%: If deductee is domestic Company –   3.75%: In any other case	15,000
194G	Commission and other payments on sale of lottery tickets	5%	3.75%	15,000
194H	Commission and Brokerage	5%	3.75%	15,000
194-I	Rent	–  10%: If rent pertains to hiring of immovable property –  2%: If rent pertains to hiring of plant and machinery	–  7.50%: If rent pertains to hiring of immovable property –  1.50%: If rent pertains to hiring of plant and machinery	2,40,000
194-IB	Payment of Rent by Certain Individuals or HUF	5%	3.75%	50,000

 

194J	Royalty and Fees for Professional or Technical Services	–  2%: If royalty is payable towards sale, distribution, or exhibition of cinematographic films –  2%: If the recipient is engaged in business of operation of call Centre –  2%: If sum is payable towards fees for technical services (other than professional services) –  10%: In all other cases	–  1.50%: If royalty is payable towards sale, distribution, or exhibition of cinematographic films –  1.50%: If the recipient is engaged in business of operation of call Centre –  1.50%: If sum is payable towards fees for technical services (other than professional services) –  7.50%: In all other cases	–  Director’s fees: Nil –  Others: Rs. 30,000
194M	Payment to contractor, commission agent, broker or professional by certain Individuals or HUF	5%	3.75%	50 lakhs
194N	Cash withdrawal	–  2%: In general if cash withdrawn exceeds Rs. 1 crore –  2%: If the assessee has not furnished return for the last 3 assessment years and cash withdrawn exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore –  5%: If the assessee has not furnished return for last 3 assessment years and cash withdrawn exceeds Rs. 1 crore	–  1.50%: In general if cash withdrawn exceeds Rs. 1 crore –  1.50%: If the assessee has not furnished return for the last 3 assessment years and cash withdrawn exceeds Rs. 20 lakhs but does not exceed Rs. 1 crore –  3.75%: If the assessee has not furnished return for last 3 assessment years and cash is withdrawn exceeds Rs. 1 crore	–  If a person defaults in the filing of return: 20 lakhs –  If no default is made in the filing of return: Rs 1 crore

Tentative rates of TCS

Section	GST liable to TCS	Rate of TDS applicable for the period
		14-05-2020 to 31-03- 2021	14-05-2020 – 31-03- 2021
Section 206C(1)	Alcoholic liquor for human consumption	1%	0.75%
Section 206C(1)	–           Timber obtained under Forest lease –           Timber obtained by any mode other than under a forest lease –           Any other forest produce not being timber or tendu leaves	2.50%	1.875%
Section 206C(1)	Tendu leaves	5%	3.75%
Section 206C(1)	Minerals, being coal or ignite or iron ore	1%	0.75%
Section 206C(1)	Scrap	1%	0.75%
Section 206C(1C)	Parking Lot	2%	1.50%
Section 206C(1C)	Toll Plaza	2%	1.50%
Section 206C(1C)	Mining & quarrying	2%	1.50%
Section 206C(1F)	Motor Car	1%	0.75%
Section 206C(1G)	Overseas tour travel package	5%	3.75%
Section 206C(1G)	Remittance of Forex under LRS of Rs. 7 lakh or more in a financial year	0.5%: Where remittance is a repayment of loan obtained for the purpose of pursuing any education 5%: In any other case	0.375%: Where remittance is a repayment of loan obtained for the purpose of pursuing any education 3.75%: In any other case
Section 206C(1H)	Sale of goods in excess of Rs. 50 lakh	0.10%	0.075%

Interest in delayed payment and late deduction of TDS:

As per section 201(1A), Interest at the rate of 1 % per month or part of the month on the balance of TDS deductible from the date of tax before the date of the tax finally deducted shall be paid for the late deduction.

In addition, interest for late payment at a rate of 1.5 percent per month or half of the month on the number of TDS withheld from the date of tax to the day on which the tax is collected shall be levied.

Related Articles/pieces of information : How to file the return of TDS online

• New revise TDS/TCS due date for filing Return and Payment for the year 2020

Profit in late payment of TDS: amendments made pursuant to the Taxes and Other Laws (Relaxation of Other Provisions) Order 2020 of 24 March 2020:

• For late fees payable on self-assessment tax; advanced tax, income tax, TDS, TCS, equalization cessation, STT, CTT made between 20 March 2020 to 30 June 2020, the interest rate will be decreased by 9% instead of 12%/18% per year (i.e. 0.75% per month instead of 1/1.5% per month).
• No late fee/penalty shall be paid for any delay in respect of that time.

Default fees for the TDS / TCS return file:

Fees are payable at Rs. 200 a day for each day on which the loss continues. The amount of the fees can not exceed the value of the TDS.

New Section 206AB and Section 206CCA: ITR Return filing: Higher rates TDS/TCS on non filed the ITR on time.

In order to have a better knowledge of the newly inserted section, let us first know the applicability of Section 206AA & 206CC in brief as the following –

• Above Section 206CC & 206AA shall apply if the person fails to provide the PAN, where in case the person is responsible for deducting/collecting the tax, as the case may be, is asked to apply the tax rate at the higher of the aforementioned:

Tax is required to be collected	Tax is required to be deducted
(i) at 2 time of the rate specified in the relevant section provision of this Act;	(i) at the rate specified in the relevant provision of this Act;
(ii) at the rate of 5%:	(ii) at the rate or rates in force; or
	(iii) at the rate of 20%:

Also Read : New TDS deduction No cash transactions exceeding 1 Crore -Section 194N

Purpose of (Section 206CCA & Section 206AB) increase in compliance burden

• The purpose of the Government is likely to be to compel consumers themselves to compel their suppliers to comply with the requirements on income tax and to file everyone’s ITR and their commitment to increase compliance with income tax.
• Even so, it may create a major burden of compliance for taxpayers with a huge number of providers to whom such regulations would apply.
• We will have to wait and see how the sector reacts to this provision and compile with it.

Related Articles/pieces of information : key features of TCS on goods sale section-206c

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