TDS Rates For A.Y 2018-19

  TDS Rates FOR  A.Y 2018-19

In this article, we look at transactions that require TDS deduction and the TDS rates for AY 2018 – 19.
In some transaction, the person making payment is required to deduct tax at source (TDS) while making payment.

TDS Rate for Salary

TDS on salary is the most common type of tax deducted at source. TDS must be deducted by employers while paying salaries to employees. The TDS rate for salary must be based on the estimated total income of the employee.TDS @30% if no valid PAN.

Calculating TDS on Salary
To calculate the TDS applicable on salary:-

• Determine the Gross Salary of employee.

• Deduct all deductions under Section 16.

• Determine the gross Total Income.

• Allow deduction under Section 80C to Section 80U.

• Compute income tax payable.

• Add surcharge and education cess (if applicable).

Note: 1. No other loss can be set off from salary income only loss from house property can be set off from salary income in computing amount of TDS.

         2.If the total income does not exceed the basic exemption, no need to deduct TDS from Salary.

TDS Rate for Deemed Dividends

TDS must be deducted on deemed dividends paid to residents by an Indian company. Whenever, an indian company or closely held company(say Private company) provides loan or advance to a shareholder in which shareholder holds at least 10% voting power(equity share cap.), the payment is treated as deemed dividend. Such deemed dividends are taxable in the hands of shareholders and TDS on such dividend deducted @10% at the of payment @30% if no valid PAN.

Note: Dividends payable by a domestic company under Section 2(22)(a) to (d) does not attract TDS but Dividend Distribution Tax (DDT) may be applicable.

TDS Rate for Commission or Brokerage

Whenever any person other than an Individual or HUF makes a commission or brokerage payment TDS must be deducted.

• In case of professionals, if sales turnover exceeds Rs.25L in the previous F.Y TDS must be deducted on commission or brokerage payment.

• In all other cases, if the total turnover exceeds Rs.1cr in the previous F.Y TDS must be deducted on commission or brokerage payments.

• Commission or brokerage includes any payment made for services rendered in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing not being securities. TDS @5% (20% if no valid PAN) if payment exceeds 15000/- in such cases from 01/06/2017.

TDS Rate for Rent

Any person except an individual or HUF is required to deduct TDS on rent paid.

“Rent” means any payment under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of any land or any building (including factory building), together with plant, machinery or equipment, furniture, fittings whether or not such building is owned by the payee. Advance payment of rent is also subject to TDS.

• TDS rate for rent on plant or machinery is 2% (20% if no valid PAN).

• TDS rate for rent for land, building, furniture and other assets is 10% (20% if no valid PAN).

NOTE: TDS on rent is not required for payment of upto Rs.1.80 lakhs of rent to each co-owner. TDS on rent is also not applicable for rental payments made to the Government, RBI or Corporation established under Central Act or local authority.

TDS Rate for Fee for Professional or Technical Service

Any person except an individual or HUF is required to deduct TDS on any sum paid by way of:

• Fee for professional services,

• Fee for technical services
• Royalty,
• Remuneration/fee/commission to Director or,
• For not carrying out any activity in relation to any business,
• For not sharing any Know-how, Patent , Copyright etc.

NOTE: Professional or Technical Services means services rendered by a person in the course of carrying on a legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or such other profession as may be specified.

The TDS rate applicable for fee for professional or technical services is 10% (20% if no valid PAN).
TDS need not be deducted on payment of upto Rs.30,000/- for each type of income separately. Threshold limit do not apply to payment made to director.

TDS Rate on Payments to Contractors and Job Workers

TDS must be deducted on payments to contractors and job workers except by an Individual or HUF.

In case of any other person or business entity, if they are liable to get their accounts audited under Income Tax Act in the previous year, then they must deduct tax at source. Examples of payments to contractors and job workers include:

• Payments for advertising (Print media, internet, mobile, TV, radio, hoardings, metro, cinema, making of ad films).
• Payments for broadcasting and telecasting including production of programmes for such broadcasting or telecasting.
• Payments for carriage of goods and passengers by any mode of transport other than by railways.
• Payments for catering.
• Payments for job work.

Job work means manufacturing or supplying a product according to requirement or specification of customer by using material of such customer.
The TDS rate for payment to contracts and job workers differs based on the person from whom tax is deducted at source.

• If the payment is made to an individual or HUF, TDS rate of 1% (20% if no valid PAN). is applicable.
• If payment is made to partnership firm or company, TDS rate of 2% (20% if no valid PAN) would be applicable.

TDS Rate for Property Sale
TDS must be deducted by all persons who are involved in purchase of property, not required if the consideration is less than Rs.50L.
TDS rate for property sale is 1% (20% if no valid PAN). of the payment made.

TDS must be deducted by the buyer at the time of transfer of money to the seller or at the time of payment in cash or by issue of cheque or draft or by any other mode, whichever is earlier.
The TDS deducted must be deposited within 30 days from the end of the month in which deduction is made.

TDS Rate for Interest Paid

TDS must be deducted on interest paid to residents by all persons and entities other than individuals and HUFs on interest paid other than on securities.

TDS rate applicable for interest paid is 10% (20% if no valid PAN).

NOTES: The following types of interest payment do not attract TDS:-

• Interest paid to banks.
• Interest paid by a partnership firm to its partners.

• Interest on deposits with a primary agricultural credit society or a primary credit society or a co-operative land mortgage bank or a co-operative land development bank.

……...THANKS……..

to be continued with new article….☺️☺️☺️

👉CLICK HERE FOR ALL UPDATED ARTICLES.
Do not forget to share.

Tax applicable on Gift Received.

                    Taxes on Gift

In this article, we look at income tax applicable on gift in detail.

Income tax was not applicable on all gift received by a person until the financial year 2003-04. In 2004, changes were made to the Income Tax Act. Currently, any amount received by a person or HUF over Rs.50000/- in a year from any unrelated person, in cash or in kind, will be included as income.

Gifts from Friends and Unrelated Persons

Income tax is not applicable on gifts received from relative (Meaning of ‘relative’ is provided below). Friends do not fall under the definition of relative as per Income Tax Act. Thus, gift received from friends will be charged to tax if it exceeds the threshold.

Deduction for Gift

Gifts received from relatives is not taxable and there is no limit on the amount of money that can be received as gift from relative that is not chargeable to income.

However, money received without consideration by an individual or HUF from any other persons other than a relative is chargeable to tax if the aggregate value of the money received during a year exceeds Rs.50000/- .

Hence, if the total value of gifts received by a person exceeds Rs.50000/- in a year and he/she did not receive the money as a gift for wedding, then the entire amount received by the taxpayer will be taxed.

Example:-

If a taxpayer received a gift of Rs.45000/- during his/her birthday from a friend, the entire amount of Rs.45000/- will not be taxable under income tax.

On the other hand, if a taxpayer receives a gift of Rs.55000/- during his/her birthday from a friend, the entire amount of Rs.55000/- will become taxable under income tax, as it exceeds the threshold.

Gift from Relatives

Gift from relatives are not taxable under the Income Tax Act. As per the Income Tax Act, the following lists of persons are defined as a relative of an individual. Hence, only money received from the following persons will be exempt from income tax for an individual taxpayer.

• 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 descendent of the individual.

• Any lineal ascendant or descendent of the spouse of the individual.

• Spouse of the persons referred to in (2) to (6).

• In case of HUF, gift received from any of the member of the HUF is exempt from Income Tax.

Gifts Received at Wedding

Money and gifts received by an individual taxpayer on the occasion of his/her marriage are exempt from income tax.

Inheritance is Not Taxable

Money received by way of Will or by way of inheritance is exempt from income tax. Hence, no income tax will be payable on any movable or immovable assets inherited, consequent to the demise of a relative.

Money Received in Contemplation of Death

Similar to inheritance being not taxable, money received in contemplation of death of an individual or karta or member of a Hindu undivided family is also exempt from Income Tax. According to the Dictionary, the word contemplation means “the state of being considered or planned”.

Gift Received from Local Authority or Charitable Trust

According to the Income Tax Act, any money received from a local authority or fund, foundation, university, other educational institution, hospital or other medical institution or any trust having 12A registration is exempt from income tax.

Under this section, money received by a meritorious student from a college or University or a patient under medical care can be exempt from income tax.

                                                  ……...END……..

   

to be continued with new article….☺️☺️☺️

👉CLICK HERE FOR ALL UPDATED ARTICLES.
Do not forget to share.

Types of Invoices in GST

                 GST Invoices

GST invoice should be issued by a person when supplying goods or services to a person in India. An invoice or bill of supply must be mandatorily issued, when the value of supply is more than Rs.200/-. 

In this article, we look at the different types of GST invoice in details along with an overview of all related documents pertaining to GST.

GST Invoice
A GST invoice should be issued by a taxable person under GST while supplying goods or services. An invoice for goods must be issued before or at the time of :-
    
    • Removal of goods for supply to the recipient, where the supply involves movement of goods; or
    • Delivery of goods or making available thereof to the recipient, in any other case.

In case of supply of services, the invoice must be issued before or after the provision of service but within a period of 30 days from the date of supply of service.

In case the supplier of services is an insurer or a banking company or a financial institution, including a non-banking financial company, an invoice must be issued within 45 days from the date of the supply of service.

B2B Invoice
In a B2B GST invoice, the name, address and GSTIN or UIN of the customer must be mandatorily mentioned. Also, after issuing an invoice, the item level details pertaining to all B2B invoices must be uploaded to GSTN while filing GSTR-1 return.

B2CL (Large Invoice)
In B2CL invoices wherein the value of taxable supply is more than Rs.50,000/- the name and address of the recipient must be mentioned along with address of delivery and place of supply. Invoice level information must also be uploaded to the GSTN for all B2CL invoices with a taxable value of over 2.5 lakhs.

B2CS (Small Invoices)
All B2CS invoices must be serially numbered and should contain invoice date, value of supply, amount of tax applicable, GST rate applicable and HSN code or SAC code of the goods supplied.

Bill of Supply
A bill of supply can be issued by a person registered under GST, when the supply consists of only exempted goods or services or the taxable person is registered under the GST composition scheme. Hence, a bill of supply does not contain details of IGST or CGST or SGST collected from the customer.

Consolidated Tax Invoice
A registered person may not issue a tax invoice or a bill of supply if the value of supply or services is less than Rs.200/- unless requested by a customer and the transaction is B2C in nature. In such cases, the taxpayer can issue a consolidated tax invoice for all supplies at the close of each day.

Receipt Voucher
In case a person registered under GST receives an advance payment from a customer, a receipt voucher must be issued. 

As per changes announced in the 22nd GST Council Meeting, SMEs with a turnover of less than Rs.1.5 crores are now not required to pay GST on advances received. After receiving an advance, if no supply is made and no invoice is issued, then the taxpayer can issue a refund voucher against the receipt voucher.

                                                ........thanks.........

  to be continued with new article.....

👉CLICK HERE FOR ALL UPDATED ARTICLES.

Do not forget to like and share.

Tax Free Income in India

Tax Free Income in India    

The following types of incomes and receipts are fully exempt from income tax in India.

Agricultural Income

Under Section 10(1) of the Income Tax Act, agricultural income is fully exempt from income tax. However, for individuals and HUFs, agricultural income of more than Rs.5000 is added to the total income for the purposes of computing the slab rate that will be applicable for the taxpayer on income earned other than from agriculture. Hence, there is no tax on agricultural income, but declaring agricultural income increases overall income tax rate applicable for the taxpayer.

Receipts from Hindu Undivided Family

Receipts received by an individual as a member of a HUF is exempt from income tax. Provided that the HUF has been separately assessed and paid Income Tax.

Share from a Partnership Firm or LLP

If an assessee is a partner of a partnership firm or LLP, which has been separately assessed for income tax, his/her share of the total income of the partnership firm will be exempt from income tax.

NRI Tax Free Incomes

Certain types of incomes or receipts earned by NRIs are exempt from income tax. For instance, income earned by way of interest (including premium on the redemption of such bonds) on certain bonds notified by the Central Government from time to time are exempt from income tax. Similarly, the interest and deposit in the name of NRI NRE, FCNR and RFC account are exempt from income tax.

Income Earned by Foreigners

Certain types of incomes and receipts of foreigners are exempt from income tax. Remuneration received by a foreigner who is an official of an embassy is exempt from income tax. Also, any money received by a foreigner from his employer for himself, his spouse, or children, in connection with his proceeding on home leave out of India or after retirement or termination of service, is fully exempt from income tax.

Allowance for Foreign Service

Allowance and perquisites paid by the Government of India to a citizen of India, while rendering services outside of India are exempt from Income Tax.

Gratuities

The gratuity shall be payable on retirement or on after completion of at least 5yrs or  becoming incapacitated or on contemplation of death.

Any amount of gratuity received by a government employee is exempt from income tax.
The gratuity received by private sector employees shall be taxable.

The least of these items is exempt from income tax.

• The maximum amount of exemption is 10,00,000/-
• Half-month’s salary for each year of completed service, calculated on the basis of average salary for the 10 months immediately preceding the year in which the gratuity is paid, or
• Actual amount of gratuity received.

Commutation of Pension

The amount received in commutation of pension by a Government servant or any payment in commutation of pension from LIC or any other insurer from their pension funds is exempt from income tax.

For private sector employee, only the following amount of commuted pension is exempt:

Where the employee received any gratuity,

1.The commuted value of one-third of the pension which he is normally entitled to receive;

2.And In any other case, the commuted value of half of such pension.

Note:- The monthly pension receivable by a pensioner is liable to income tax like any other item of salary or income and no standard deduction is now available in respect of pension received by a taxpayer.

Leave Salary

The maximum amount receivable by an employee of the Central Government as cash equivalent, upto 10 months of leave at the time of their retirement, whether on superannuation or otherwise, is exempt from income tax.

For private sector employees, the exempt amount would be least of:

• 10 months average salary calculated on the basis of the salary during 10 months preceding the employee's’ retirement on superannuation or otherwise.
• Earned leave standing to the credit of the employee limited to 30 days for every year of actual service rendered for the employer from whose service he has retired.
• The actual amount of leave encashment.
• Maximum amount of Rs.300000/-

Voluntary Retirement or Separation Payment

Any amount received by an employee of a public sector company or of any other company or of a local authority or a statutory authority or a cooperative society or university or IIT or IIM at the time of his voluntary retirement (VR) or voluntary separation is completely exempt from tax.

The maximum amount of money received at such voluntary retirement, exempt from income tax is capped at Rs.5 lakh.

Money Received from Insurance

Any amount received under a Life Insurance Policy (LIP) or under a Keyman Insurance Policy or under an insurance policy for which the premium payable for any of the years during the term of the policy exceeds 10% of the actual capital sum assured, is fully exempt from tax.

However,  Also, all proceeds received on the death of an insured person is fully exempt from income tax. Hence, money received from life insurance policies whether from the LIC or any other private insurance company is exempt from income tax.

Money Received from Provident Fund

Any amount received from a government or recognised provident fund (PF) or approved superannuation fund, or PPF is exempt from income tax.

Special Allowances and Benefits

Any special allowance or benefits received by an employee which is not in the nature of a perquisite and specifically granted to meet the expenses wholly, necessarily and exclusively incurred in the performance of duties of an office or employment or profit is exempt from income tax.

Interest Income Exempt from Income Tax

Certain types of interest payments are fully exempt from income tax under Section 10(15) of the Income Tax Act.

The following are some of the interest income exempt from income tax, subject to change from time to time:-

• Interest on securities held by the issue department of the Central Bank of Ceylon constituted under the Ceylon Monetary Law Act, 1949.
• Interest payable to any bank incorporated in a country outside India and authorised to perform central banking functions in that country on any deposits made by it, with the approval of the Reserve Bank of India, with any scheduled bank.
• Certain interest payable by Government or a local authority on moneys borrowed by it, including hedging charges on currency fluctuation (from the AY 2000-2001), etc.
• Interest on Gold Deposit Bonds.
• Interest on certain deposits for Bhopal Gas victims.
• Interest on bonds of local authorities as notified.
• Interest on bonds of local authorities as notified.
• Certain new Tax Free Bonds and Tax Free Infrastructure Bonds to be notified from time to time.
• Interest received by a non-resident or non-ordinarily person on deposits in Off-shore Banking Unit.
• Interest from Tax Free Infrastructure Bonds.
• Bank interest of girl child from Sukanya Samridhi Scheme.
• Income by way of interest, premium on redemption or other payment on such securities, bonds, annuity certificates, savings certificates, other certificates issued by the Central Government and deposits as the Central Government may, by notification in the Official Gazette, specify in this behalf.

Scholarship and Awards

Scholarship granted to meet the cost of education and certain awards are exempt from income tax. 

For example the amount provided as pension and family pension of Gallantry Award Winners like Paramvir Chakra, Mahavir Chakra, and Vir Chakra and also other Gallantry Award winners notified by the Central Government are exempted.

Dividends on Shares and Mutual Funds

As per Finance Act, 2003 from the Assessment Year 2004-05, the dividend income and income of units of Mutual Funds would be completely exempt from income tax.

Capital Gains On Transfer of Agricultural Land

The capital gains received on transfer of agricultural land (used in the past 2 years for agricultural purposes) is exempt from income tax, provided the proceeds are reinvested in an agricultural land again.

Capital Gains on Transfer of Securities

With effect from FY 2004-05, any income arising to a taxpayer on account of sale of long-term capital asset being securities is completely outside the purview of tax liability especially when the transaction has been subjected to Securities Transaction Tax (STT). Thus, if the shares of any company listed in the stock exchange are sold after holding it for a minimum period of one year then there will be no liability to payment of capital gains.

Gifts Received

Gifts received from a relative and gifts received during wedding are fully exempt from income tax without any limit.

Gift received from any other person is subject to a limit of Rs.50,000/-.

Reverse Mortgage Scheme

Transfer of a capital asset in a transaction of reverse mortgage for senior citizens would not attract capital gains tax. Further, the loan amount is also exempt from tax.

                                 ........thanks.........

  to be continued with new article.....

Do not forget to like and share.