TDS / TCS Reduced - CASH FLOW - COVID 19 - *AATMANIRBHARA BHARAT*

Our Hon. Finance Minister & CBDT in its press release dated 13th May 20 has reduced almost all non salary TDS rates by 25% which means every non salary resident person will have more liquid cash in its hand. Most importantly this deduction will remain in force starting from 14th May 20 to 31st March 21. To summarize this press release below table contains most known TDS sections which will give an brief idea about Existing TDS Rates and concessional TDS rates applicable now onwards : 

Sr. No.	TDS Section	Nature of Payment	Threshold Limit	TDS up to 13th May 20 for Resident	TDS wef 14th May 20 for Resident
1	192	Payment of Salary		No change	No change
2	192A	Payment of accumulated balance of Provident Fund	50,000	No change	No change
3	193(a) (b) (c )* & (d)	Interest on securities	10000*	10.00%	7.50%
4	194	Dividend (introduced from april 20)	5,000	10.00%	7.50%
5	194A	Interest on other Interest on Securities. A. Engaged in business of banking. B. Senior Citizen C. Others	A.   40000/- B.    50000/- C.    5000/-	10.00%	7.50%
6	194B	Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort	10,000	No change	No change
7	194BB	Income by way of winnings from horse races	10,000	No change	No change
8	194C	Payment to Contractors / sub contractors	30000 per contract or 100000 during the year.	1 / 2%	0.75% / 1.50%
9	194D	Payment of Insurance commission	15,000	5.00%	3.75%
10	194DA	Payment in respect of life insurance policy w.e.f. 1/9/2019, the tax shall be deducted on the amount of income comprised in insurance pay-out	1,00,000	5.00%	3.75%
11	194E	Payment to non-resident sportsmen /sports association		No change	No change
12	194EE	Payment in respect of deposit under National Savings scheme	2,500	10.00%	7.50%
13	194F	Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India		20.00%	15.00%
14	194G	Commission, etc., on sale of lottery tickets	15,000	5.00%	3.75%
15	194H	TDS on Commission or brokerage	15,000	5.00%	3.75%
16	194I	Rent A. Plant & Machinery B. Land or Building	2,40,000	A.  - 2.00% B.  - 10.00%	A.  - 1.50% B.  - 7.50%
17	194IA	Payment on transfer of certain immovable property other than agricultural land	50,00,000	1.00%	0.75%
18	194IB	Payment of rent by individual or HUF who is not liable to tax audit (limit mentioned per month or part of the month)	50,000	5.00%	3.75%
19	194IC	Payment of monetary consideration under Joint Development Agreements		10.00%	7.50%
20	194J	Payment for professional fees or for Technical services or royalty etc. A. FTS, certain royalty, Call Centres B. Others	30,000	A.  - 2.00% B.  - 10.00%	A.  - 1.50% B.  - 7.50%
21	194K	Payment of any income in respect of a) Units of a Mutual Fund as per Section 10(23D) b) Units from the administrator c) Units from specified company (This Section is inserted by Finance Act, 2020 which is applicable from 01/04/20)		10.00%	7.50%
22	194LA	Payment of compensation on acquisition of certain immovable property	2,50,000	10.00%	7.50%
23	194LBA(1)	Payment of Income by Business Trust		10.00%	7.50%
24	194M	Payment of commission or (not being insurance commission), brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J. Tax shall be deducted wef 1/09/19.	50,00,000	5.00%	3.75%

Taxation of Unexplained Investments and Expenditure

Taxation of Unexplained Investments and Expenditure 

There may be some cases where you have purchased Jewellery,  purchased expensive cars, made huge investments, claimed false expenditures and  didn't disclose it in your books of accounts with the main intention of avoiding or escaping tax . Such cases are closely monitored by the department and if found it will be heavily taxed under income tax act 1961.

Keeping this in mind  we will be covering following provisions of Income Tax Act 1961

1. Section 68- Unexplained cash Credit 

2. Section 69- Unexplained Investments 

3. Section 69A- Unexplained Jewellery , Bullion or other valuable articles

4. Section 69B- Unexplained Jewellery or investments recorded at less value

5. Section 69C- Unexplained expenditure 

6. Section 69D- Borrowed amount repaid in cash 

7. Section 115 BBE- Tax Rate on above incomes

1. Section 68- If any sum of money is found to be credited in the books of accounts of the tax payer but he has not offered such income to tax while filing return  and it comes to the knowledge of Assessing officer he may demand explanation from tax payer on this 

However if the assessee is not able to offer any explanation relating to the source of such income or any explanation offered is not satisfactory in the opinion of Assessing officer , then such income will be charged to tax as the income of the tax payer and he will be liable to pay tax on such income at higher rate u/s 115BBE . 

2. Section 69- If any investments has been made by the tax payer but such investments are not recorded in the books of accounts and tax payer fails to give explanation regarding the source of income through which such investments are made or the explanation offered is not satisfactory as per the understanding of Assessing officer then such amount will be deemed to be the income of the assessee and will be taxed at higher rate .

3. Section 69A - If in any year tax payer found to be owner of  any bullion , jewellery, valuable articles or any money and they are not recorded in any books of accounts and tax payer does not give any explanation regarding the source of money or any explanation offered is not satisfactory then such amount will be deemed to be the income of the assessee for that particular Financial year . 

4. Section 69B- If in any year it was found that Jewellery, valuable articles, investments are recorded in books of accounts at value less then the actual expenditure incurred then in that case excess amount will be deemed to be the income of the tax payer for the particular assessment year provided tax payer fails to offer any explanation regarding the same or explanation offered is not satisfactory . 

5. Section 69C- Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or the explanation, if any, offered by him is not, in the opinion of the Assessing Officer, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year :, such unexplained expenditure will not be allowed as deduction under any head of income . 

6. Section 69D- If the taxpayer in any financial year repays the amount borrowed on hundi or any any other amount repaid in cash i.e in any mode then bank , ECS, cheque then in such case amount repaid will be deemed to be the income of the person repaying such amount . Amount repaid will include amount of interest paid on amount borrowed. 

7. Sec 115BBE- As per sec 115BBE . income tax shall be calculated @ 60% where the total income of the assessee includes any income referred u/s 68, 69, 69A, 69B, 69C, 69D . Specified tax rate will be further increased by 25% surcharge and 6% penalty i.e the final tax rate comes 83.25%

However 6% penalty will not be levied if such income is included in the return of income and tax has been paid on or before the end of relevant Assessment year . No deduction shall be allowed on such income referred under this section . 


Regards 
Team Palankarta 

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Independent Health Check up of Books of Accounts.

There are always 2 approach that are being followed:

1. Pro-Active or Precautionary

2. Reactive or Reaction

We always think that we should taken pre-cautionary measures when it comes to personnel Health but have we ever though on precautionary measure on Health Check up of yours books of accounts?

If not, this is the time to think on the same. 

Here are some of the benefits of Health check up of compliance and also do's and donts:

- First and foremost, the Health check up should be done by completely Independent professional since by Human nature if the executor is given the responsibility to check, the likelihood of identification of mistake will be very very minimal.

- Not all the errors are permanent. There are error which can be ratified by the other action. It helps in identification and ratification of such.

- Preparation for Suo Moto rectification of the error can be made.

- and Many More.

- Health checkups of Books of accounts will cover majority of all the compliance which are / may be applicable to the business entity. To name the few:

ü  Income Tax Act, 1961 and Rules made there under;

ü  Companies Act 2013 and Rules Made there Under

ü  Bombay Shops and Establishment Act, 1948

ü  Goods and Service Tax Act 2017 and Rules made there under, Maharashtra

ü  Goods and Service Tax Act 2017 and Rules made there under, Tamil Nadu

ü  Payment of Gratuity Act, 1972;

ü  The Maternity Benefit Act, 1961and Rules made there under;

ü  Employees Provident Fund and Miscellaneous Provisions Act, 1952;

ü  The Workmen’s Compensation Act, 1923

ü  The Labour Welfare Fund Act

ü  Minimum Wages Act 1948

ü  Payment of Bonus Act 1965

ü  The Maharashtra Professional tax Act

ü  The Tamil Nadu Professional Tax aCT

ü  The Trademark act 1999

ü  The Indian Contract Act, 1872, if applicable;

ü  The Indian Stamps Act, 1899

ü  Reserve Bank of India Act, 1934

ü  Foreign Exchange Management Act

ü  The Micro, Small and Medium Enterprises Development Act 2006

ü  Credit Information Companies Regulation Act, 2005

ü  Information Technology Act, 2000

ü  Intellectual Property Rights

ü  Environment Laws, if applicable;

ü  Any other Act which may be applicable to the company

So, before we end this, as always said and proven fact, prevention is better then cure similarly, pro-active measure to get the compliance health check up of business is a MUST.

By,

Team Palankarta LLP
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