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Hi,

Accommodation facility provided by company to it's employee on account of transfer from one place to another place subject to taxable perk if stay excceeds 15 days. However, in the given case it is short term deputation, your company  may take the benefit tax free allowance  given in Sec 10(14) read with rule 2BB.

"any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty ";

Regards,
Ram

Dear Siba Prasad,

In your case, you are not allowed to set off the payment so made against current or future service tax payout merely because you are not received the money from your customer for long period.

You need to written off debt by raising credit note against those original invoice to adjust those service tax against your current liability.

Hi

Could any one please clarify  whether amendment proposed in Sec 115A to increase the TDS rate of royalty and FTS payment to NR will have any impact in TDS deduction u/s 206AA where non resident does not have PAN card and DTAA rate also less or equal to 20%?

Example : Suppose if one indian company want to make a royalty or FTS payment to non resident ( USA ) company who does not have PE and PAN card in India however non resident furnished valid TRC for the year 2013 to indian company. As per Sec 206AA, higher of the following three rate will be deducted.

i) rate specified in the relevant provision of the act or

ii ) rate or rates in force ( Sec 2 (37)(iii) ) - Rate as per sec 115A or DTAA rate whichever lower - 15%

iii) 20%

My doubt is what is the relevant provision of the act for the purpose clause i of Sec 206AA.

Is it  Sec 195 or 115A ? Though sec 195 does not specify any rate,  it give direction to deduct TDS as per rates in force.

Employer can't deduct TDS u/s 192 on the notice period pay amount received from employee as employer  not accounted any salary expenses nor paid any amount to employee. That is a reason this amount is treated as income in the hands of employer. Though TDS under section 192 needs to be deducted on  estimated income of whole year, monthly deduction is always  r propertinate to the monthly income.  Currently there is no IT provision allow deduction while computing income of employee for notice period pay paid by employee.  Govt, has to insert some new section to enable employee to claim the notice period pay expenses incurred by them while computing their annual tax liability provided that the same expenses not reimbursed by the new employer by way of joining bonus.

All the securities including foreign companies shares sold after 12 month from the date of acquisition will be treated as Long term capital Gain

[shall not, in each case, be reduced by the aforesaid amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income, if the person responsible for deducting tax]

As per section 15, employee has to pay tax on salary income on due or receipt whichever is earlier basis. So, tax liability arise even if salary actually not received but due in current financial year. However, employer required to deduct TDS u/s 192 only at that time of making salary payment. If employee get his march salary in the month of April, his employer deduct tax only in April month not in March month though employer created salary accural in his books .  As far as advance tax computation purpose, earlier employee not required to pay any advance tax on salary income as full amount of tax would be deducted from his salary but as per the amended provision it says that assessee can considred only tax deducted or tax already paid amount while comuting his advance tax liability.

[Provided that for computing liability for advance tax, income-tax calculated under clause (a) or clause (b) or clause (c) shall not, in each case, be reduced by the aforesaid amount of income-tax which would be deductible or collectible at source during the said financial year under any provision of this Act from any income, if the person responsible for deducting tax has paid or credited such income without deduction of tax or it has been received or debited by the person responsible for collecting tax without collection of such tax.].

Please correct me if my understanding is wrong.

Till last financial year , the amount of advance tax payable is computed after reducing the amount of  TDS that would be deductible on the estimated annual income. However, in a case where TDS is not deducted, tax is directly payable by the income receiver. In the past various court held that interest on delay in payment of advance tax is not chargeable in cases where tax is not deducted at source from income nor advance tax is paid.

The finance Act 2012,  amended the above position such that only tax already deducted at source will be allowed as a credit against tax payable while computing advance tax. Therefore, while estimating annual advance tax, tax deductible at source on estimated income cannot be claimed as credit for the computation of advance tax unless already paid.

While the amendment was aimed to correct the position as far as interest payable on advance tax was concerned, the wording is not good. A technical interpretation of this amendment would mean that even a salaried employee who earlier was not required to pay advance tax (as full amount of tax would be deducted from his salary) would be required to pay advance tax in respect of salary income pertaining to current FY but not  received on or before 31st March 13.

The impact is that interest will become payable in case advance tax is not paid in respect of salary income to be received. We would have to see whether any clarifications will be issued by CBDT in this behalf.

[Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or]

I agree your logical view but can any one of you clarify me why below highlighted line was not removed from one of the sub clause mentioned in Section 40 (a) (ia) when legislature amended  this section in  Finance act 2010 & Finance Act 2012.


Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.]

[it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso.]

Please read highlighted line items of sub clause given in Section 40 a (ia) together.

Provided further that where an assessee fails to deduct the whole or any part of the tax in accordance with the provisions of Chapter XVII-B on any such sum but is not deemed to be an assessee in default under the first proviso to sub-section (1) of section 201, then, for the purpose of this sub-clause, it shall be deemed that the assessee has deducted and paid the tax on such sum on the date of furnishing of return of income by the resident payee referred to in the said proviso.

[Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.]

Hi Satyanveshi

We are not discussing about the case where TDS has been deducted in the book within the same financial year but remittance made in the subsequent FY on or before due date of return filing. As per the amendment made in finance act 2012, deemed date of deduction and payment of TDS will be the date of furnishing return of income by resident payee.The due date of furnishing of return by the resident payee will always be in the next financial year. Therefore, deduction for business expenses will be available in the next financial year if resident payee has paid the tax and filed his return . However, in the year of incurrence of business expenses there will always be disallowance under section 40(a)(ia) due to non-deduction of TDS.

Hi Anumita

In my opinion, amendment made in Section 201 (1) in line with SC ruling to protect deductor only from the recovery of tax  equivalent to non deduction if  resident payee has paid tax on the non deduction amount by way advance tax or self assessement tax. However, deductor is still  can be penalized under section 201 (1A) - Interest @ 1% p.m from the date of deductible to till the date of return filed by resident payee and similiary u/s 40 (a) (ia) for non deduction of TDS within the same financial year. However, deductor has option to claim the disallowed amount u/s 40 (a) (ia) in the subsequent financial year in which resident payee has paid the tax and filed the return... Please correct me if i am wrong.

As per the amended provision, the date of submission of return by resident recipient shall be taken as date of deduction of tax and payment of tax. Since, resident payee can file return of income only in subsequent financial year, i had a doubt that whether AO can allow that expenses only in the FY in which actual tax paid by resident recipient.

Whether TDS needs to be deducted on the service charges paid to STPI ?

Dear All

An amendment to section 9 has been made through Finance Act, 2012 raising certain doubts about TDS on use of Telephone Bills, Mobile Bills and Broadband (Internet Charges) under section 194J. There is no clarification from the Board (CBDT) in this regard.

Need your views on the same

Is Grossing up u/s 195A needs to be done at rate in force not at the rate at which the tax is to be withheld by the taxpayer?