How to ensure correct credit of TDS to dedcutee & generation of TDS certificate
As the due date for filing quarterly TDS statement for 4th quarter is approaching close,TDS deductors musttake note of following important information before submitting TDS statements to ensure that the deductees are able to correctly claim TDS Credits and for generating correct TDS Certificates.
Payment of Taxes deducted/ collected:
- In accordance with Central Government Account (Receipts and Payments) Rules, 1983, Government dues are deemed to have been paid on the date on which the cheque or draft tendered to the bank, was cleared and entered in the receipt scroll.
- Rule 125 of Income Tax Rules, 1962 provisions for Electronic Payment of Tax by way ofinternet banking facility, for a Company and a Person to whom provisions of section 44AB of the Act are applicable.
Timely Filing:
- The due date to file TDS statements for Q4, FY 2013-14 is 15th May, 2014.
- Please submit the statement within due date to avoid Late filing fee, which, being statutory in nature, cannot be waived.
Correct Reporting:
- Please use your correct contact details, including Contact Number and email IDs in TDS Statements.
- It is very important to report correct and valid particulars in respect to deductor and deductees. Please report the TAN of the deductor, Category (Government / Non-Government) of the deductor, PAN of the deductees and other particulars of deduction of tax correctly in the quarterly TDS statement.
- Please make use of TAN-PAN Master from TRACES to Validate PAN and name of deductees before quoting it in TDS statement. Please note that there are restrictions for correction of PAN.
- Quote correct and valid lower rate TDS certificate in TDS statement wherever the TDS has been deducted at Lower/Nil rate on the basis of certificate issued by the Assessing Officer. Please raise Flag "A"/ "B", as appropriate, and quote valid and correct Certificate Numbers.
- TDS statement must be filed by quoting challan(s) validated by CSI (Challan Status Inquiry) File and using correct Challan Identification Number (CIN)/ Book-entry Identification Number(BIN).
- Please maintain your correct Contact details in your Registration profile at TRACES.
Complete Reporting:
- Please ensure completeness of your TDS statement by including all your deductees. Please note that the obligation to report each transaction correctly in the relevant quarter is on the deductor and non-compliance amounts to incorrect verification of completeness of TDS statement.
- Completeness of statement will ensure that a C5, C3 or C9 correction can be avoided. It may be noted that CPC (TDS) does not encourage C9 corrections by addition of a new challan and underlying deductees.
- Please also complete Annexure II (in case of 24Q) for all deductees employed for any period of time during the current financial year, including Annexure I for TDS details.
Downloading TDS Certificates from TRACES:
- On the basis of information submitted by the deductor, CPC(TDS) will issue TDS Certificates that can be correct depending on correct and complete reporting by deductors.
- Your attention is invited to CBDT circulars 04/2013 dated 17.04.2013, No. 03/2011 dated 13.05.2011 and No. 01/2012 dated 09.04.2012 on the Issuance of certificate for Tax Deducted at Source in Form 16/16A as per IT Rules 1962. It is now mandatory for all deductors to issue TDS certificates after generating and downloading the same from TRACES.
- Please note that under the provisions of section 203 of the Income Tax Act, 1961 read with rule 31A, Certificate of tax deducted at source is to be furnished within fifteen (15) days from the due date for furnishing the statement of tax deducted at source.
Tax Implication of receiving Gifts
We know that gifts received from relatives are tax-exempt. But what is not widely known, at all, is that gifts received even from non-relatives can also be completely exempt from income tax. Here is the complete run-down.
It is very common for people to receive gifts from friends and relatives. In some cases, gifts are also received from NRls. Let us consider the latest provisions of the Income Tax Act, 1961 regardinggifts, and analyse how individuals can achieve complete exemption from income tax in respect of the gifts during the current financial year.
Gifts are Taxable Only in the Case of Individuals and HUFs
Certain gifts are liable to income tax as "income from other sources", Sec 56(2)(vi). However, this provision is applicable only for individuals and Hindu Undivided Families (HUFs). Thus, if gift is received by any Trust or AOP, then it is not liable to income tax as "income from other sources".
The provision of taxation of gifts became applicable in respect of gifts received on or after 1.9.2004 and before 1.4.2006 if the gift money exceeded Rs. 25,000. From 1 April 2006, this amount has been increased to Rs. 50,000 so that cash gifts and gifts by cheque or bank draft from non-relatives and from non-exempted categories can be fully exempt from income tax up to Rs. 50,000 in aggregate in one financial year.
Gifts from Relatives are Tax-Exempt
Importantly, the provisions of the aforesaid Section 56(2)(vi) applicable to the taxation of gifts in excess of Rs. 50,000 in a financial year in the aggregate are applicable for gifts received from non-relatives.
Thus, any gift from relatives of any amount during the financial year is completely exempt from tax. Therefore, it's crucial to know the meaning of the expression 'relative' for this purpose. The expression "relative" means:
- Spouse of the individual;
- Brother or sister of the individual;
- Brother or sister of the spouse of the individual;
- Brother or sister of either of the parents of the individual;
- Any lineal ascendant or descendant of the individual;
- Any lineal ascendant or descendant of the spouse of the individual; and
- Spouse of the person referred to in clauses (ii) to (vi).
For example, if Mr. A receives a gift of Rs. 200,000 in cash from his maternal uncle, that is, his mother's brother, it would be exempt since the maternal uncle would be brother of the parent of the individual concerned and would come within clause (iv) of the aforesaid Explanation.
Hence, whenever you receive any gifts from relatives you must carefully apply the test to ascertain whether the person concerned falls within one of the seven categories of "relatives" or not. If a person who makes a gift does not fall within any of the above categories, then he would be considered as a non-relative and gifts from such people would be exempt only up to the extent of Rs. 50,000 in a financial year. It may be noted that since a Hindu Undivided Family can't have relatives, any gifts received by it in excess of Rs. 50,000 in a year would be liable to full income tax.
Exemption for Marriage Gifts
One very happy feature of the provision of taxation of gifts is that any gift received from any person on the occasion of the marriage of the gift's recipient would not be liable to income tax at all. There is no monetary limit attached to this exemption, which is provided by the proviso to Section 56(2)(vi). However, it is not made clear by this provision whether the gifts should have been on the exact date of marriage, or a few days before or later. Normally, it should suffice if the gift is given just on the occasion of the individual's marriage, which means either on the day of the marriage itself, or a day or two before or after. Practical common sense view would prevail in such cases.
Tax-Exempt Gifts from Other Persons
Besides gifts received from a relative or on the occasion of an individual's marriage, the following are the other gifts which are completely exempt from tax as provided in the proviso to Section 56(2)(vi) of the I.T. Act:
- Gift received under a Will or by way of inheritance;
- Gift in contemplation of death of the donor;
- Gift from any local authority;
- Gift from any fund or foundation or university or other educational institution or hospital or any trust or any institution referred to in Section 10(23C); and
- Gift from any trust or institution, which is registered as a public charitable trust or institution under Section 12AA.
Thus, scholarships, stipends or charities received from a charitable institution would be completelyexempt from income tax in the hands of the recipients without any limit provided the trust or institution giving the charity is registered under Section 12AA. Likewise, all gifts under a Will, and all amounts received on the death of a person as a part of the inheritance are fully exempt from income tax.
Gifts in Kind are Tax-Exempt
One point which should be very carefully noted that the provisions relating to taxation of gifts from non-relatives and non-specified persons in excess of Rs. 50,000 would be liable to income tax only when the gift is a sum of money, whether in cash, by way of cheque or a bank draft. Thus, gifts in kind such as a gift of shares, gift of land, gift of house, gift of units or mutual funds, jewellery, etc. would not be liable to any income tax at all.
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