Thursday, February 25, 2016

EPFO - TDS is compulsory on withdrawal of premature Provident Fund w.e.f. 01.06.2015

Friends,

Provident fund withdrawals before five years of completion of service will now attract income tax ranging between 10 per cent and 34.608 per cent.

A new provision in the Finance Act, 2015 that becomes effective from June 1 has mandated that premature withdrawals of retirement savings that exceed Rs 30,000 before completion of five years of service will be subject to tax deducted at source.

Tax would be deducted at the rate of 10 per cent if the subscriber provides the PAN number but the levy would go as high as the maximum marginal rate of 34.608 per cent if the subscriber does not provide his PAN number at the time of withdrawal.

The Employees Provident Fund Organisation (EPFO) is understood to be discussing the issue with the finance ministry to reconsider the issue but it has issued a notification and detailed guidelines to field offices on tax deduction.

“Income Tax shall be deducted at source… if at the time of payment of the accumulated PF balance is more than or equal to Rs 30,000, with service less than five years,” Sanjay Kumar, financial adviser said in a missive.


Exemption from TDS would be given to senior citizens and subscribers with no taxable income, provided they submit the required forms, the EPFO has said, adding that in these cases too tax would be levied if the amount withdrawn exceeds Rs 2,50,000 and Rs 3 lakh, respectively.

However, workers whose service has been terminated due to his ill health, contraction or discontinuance of business of employer or other cause beyond the control of the member will also be exempt from paying TDS on such premature withdrawals.

TDS would also not be levied on transfer of retirement savings from one account of the member to another.

Wednesday, February 24, 2016

Issue Online TDS Certificate u/s 195 - CBDT

Friends,

Income Tax Department has issued a notification regarding Section 195 to issu ONLINE Certificate under Section 195(2) and 195(3) be read as under :

SECTION 195 OF THE INCOME-TAX ACT, 1961 - DEDUCTION AT SOURCE - NON-RESIDENTS, PAYMENTS TO - ISSUANCE OF ONLINE CERTIFICATE UNDER SECTION 195(2) AND 195(3)

TDS INSTRUCTION NO.51

[F.NO.SW/TDS/02/2013/DIT(S)-II, DATED 4-2-2016

Request has been received from field formations and tax payers to provide functionality for issue of online certificate u/s 195(2) and 195(3) for lower/no deduction as manual certificates were not being considered during processing of TDS statements by CPC TDS.

2. In this regard, existing functionality to issue online certificate u/s 197 in ITD application has been enhanced to issue online certificate u/s 195(2) and 195(3) as under:
i.          Assessing Officers of International taxation charges who are authorized to issue certificate u/s. 195(2) and 195(3) may be assigned the role AR INT TAXATION in ITD application by respective Computer Centre through HRMS module, if not already assigned. The certificate type i.e. 197/195(2)/195(3) also needs to be specified.
ii.          For issue of certificate u/s 195(2) and 195(3), jurisdiction restriction of PAN has been relaxed. For issue of certificate u/s 195(3), TAN and Amount has been made optional.
iii.          As per existing procedure for issue of certificate u/s 197, certificates u/s 195(2) and 195(3) is required to be approved by Range officer through ITD application.

3. The above functionality may kindly be brought to the notice of AOs under your charge.

***************************

Tuesday, February 23, 2016

Calculation of Interest u/s 234A of Income Tax - New Amendment to Calculate the Interest

Friends,

Income Tax Department has issued a circular regarding amendment in calculation of interest on defaults in furnishing Return of Income. Reas as under :

SECTION 234A OF THE INCOME-TAX ACT, 1961 - INTEREST FOR DEFAULTS IN FURNISHING RETURN OF INCOME - CHARGEABILITY OF INTEREST UNDER SECTION 264A ON SELF-ASSESSMENT TAX PAID BEFORE DUE DATE OF FILING OF RETURN OF INCOME

Interest under section 234A of the Income-tax Act, 1961 (hereinafter the Act) is charged in case of default in furnishing return of income by an assessee. The interest is charged at the specified rate on the amount of tax payable on the total income, as reduced by the amount of advance tax, TDS/TCS, any relief of tax allowed under section 90 and section 90A, any deduction allowed under section 91 and any tax credit allowed in accordance with the provisions of section 115JAA and section 115JD of the Act. Since self-assessment tax is not mentioned as a component of tax to be reduced from the amount on which interest under section 234A of the Act is chargeable, interest is being charged on the amount of self-assessment tax paid by the assessee even before the due date of filing of return.

2. It has been held by the Hon'ble Supreme Court in the case of CIT v. Prannoy Roy, 309 ITR 231 (2009) that the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the income-tax return for the relevant assessment year. Accordingly, the present practice of charging interest under section 234A of the Act on self-assessment tax paid before the due date of filing return was reviewed by CBDT.

3. The Board has decided that no interest under section 234A of the Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing of return of income.

4. This Circular may be brought to the notice of all officers for compliance.

Sunday, February 21, 2016

Income Tax - Savings under section 80C

Friends,

The Financial Year 2015-16 (Assessment Year 2016-17) has with less than three months to go , investors are in a rush to save tax, and submit tax declarations to their accounts departments. Wealth managers say there is a general aversion to equity-linked tax-saving products among investors in the last-minute rush to invest because of the turmoil in the stock market. They say those averse to risk could opt for safer instruments such as public provident fund (PPF). One can invest up to Rs 1,50,000 in a financial year and save tax under Section 80C of the Income Tax Act. These and other options are illustrated below:

AVAILABLE TAX-SAVING OPTIONS



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