FM tries to alienate elements of 'tedium' from TDS - a welcome proposal, indeed!
By TIOL News Service
NEW DELHI, MAR 02, 2010: TAX Deduction at Source (TDS) is a major component of the total direct taxes collections. According to the latest statistics it constitutes for about 40% of the total revenue mop-up. Experts believe that it has many more miles to go in the coming years. Apart from its contribution to the exchequer's kitty, it is equally important for the policy makers to keep pace with the changing business practices in the economy, and keep revising the basic threshold limits notified long back for various sorts of transactions on which TDS is to be deducted. In a significant move, the Finance Minister, Mr Pranab Mukherjee, has upped the threshold limits under various heads so that they reflect not miles behind the reality.
The
Finance Bill has proposed to raise the threshold limit for
payments mentioned in sections 194B, 194BB, 194C, 194D, 194H, 194-I and 194J
as under:
Sl.
No. |
Section |
Nature
of Payment |
Existing
threshold limit of payment (Rupees) |
Proposed
threshold limit of payment (Rupees) |
| 1. | 194B | Winnings from lottery or crossword puzzle | 5,000 |
10,000 |
| 2. | 194BB | Winnings from horse race | 2,500 |
5,000 |
| 3. | 194C | Payment to contractors | 20,000 |
30,000 (for a single transaction) ________________ |
50,000 (for aggregate of transactions during financial year) |
75,000 (for aggregate of transactions during financial year) |
|||
| 4. | 194D | Insurance commission | 5,000 |
20,000 |
| 5. | 194H | Commission or Brokerage | 2,500 |
5,000 |
| 6. | 194-I | Rent | 1,20,000 |
1,80,000 |
| 7. | 194J | Fees for professional or technical services | 20,000 |
30,000 |
These amendments are proposed to take effect from 1st July, 2010.
Certificate of TDS & TCS
AT present the provisions of section 203(3) of the Income-tax Act dispense with the requirement of furnishing of TDS certificates by the deductor to the deductee on or after 1st April, 2010. Similarly, under section 206C(5) of the Act, a collector of tax at source will also not be required to issue tax collection certificate to the person from whom tax has been collected on or after 1st April, 2010.
Considering the fact that the TDS/TCS certificate constitutes an important document for the deductee/collectee, it is proposed that the deductor/collector will continue to furnish TDS/TCS certificates to the deductee/collectee even after 1st April, 2010. These amendments are proposed to take effect retrospectively from 1st April, 2010.
Disallowance
of expenditure
There is no taxpayer who is not aware of the rigour of Sec 40(a)(ia). Despite such draconian effect of this Section, it is also a common phenomenon that a large number of taxpayers albeit tend to deduct tax at source but also fail to deposit the same in the Govt account for many months spilling over the next fiscal. Although they do pay interest on such late deposit but they are sometimes subjected to the penal stick of the provisions.
Now, the Bill has proposed to amend the said section to provide that no disallowance will be made if after deduction of tax during the previous year, the same has been paid on or before the due date of filing of return of income specified in sub-section (1) of section 139.
This amendment is proposed to take effect retrospectively from 1st April, 2010 and will, accordingly, apply in relation to the assessment year 2010-11 and subsequent years.
Under the existing provisions of section 201(1A) of the Act, a person is liable to pay simple interest at one per cent for every month or part of month in case of failure to deduct tax or payment of tax after deduction. With a view to discourage the practice of delaying the deposit of tax after deduction, it is proposed to increase the rate of interest for non-payment of tax after deduction from the present one per cent to one and one-half per cent for every month or part of month.
This amendment is proposed to take effect from 1st July, 2010.