Tax Deducted at Source (3/7) Particulars 194C - Payment to ContractorsPayer Specified PersonPayee Resident ContractorRate of Deduction 1 % - In case of Individual or HUF 2 %- In case of any other personThreshold limit Single payment – Rs.30,000/- Aggregate of payments – Rs.1,00,000/-TDS in case of Transport Shall not Deducted provided :Contractor ➢ Contractor Furnishes his PAN & ➢ Does not own more than 10 goods carriage at any time during the p.y & provides declaration to that effect.Due date to deposit tax Government deductee: Same day of deduction Other deductee : Within 7 daysCertificate of deduction Form 16-A on quarterly basis (to be issued by deductor)Any payment by Individual or HUF to resident contractor for per personal purpose is not subjected to TDS51 [email protected] www.sbsandco.com +91 9440883366
Tax Deducted at Source (4/7)Particulars 194H - Commission or brokerageNature of payment Any payment of commission or brokerage to a resident person (other than an individual or a HUF)Amount of Deduction @ 5 per centException Where amount or aggregate of amount does not exceed Rs.15,000/- no TDS is deducted.Other Points :➢ However, an individual or a HUF, whose Total sales/Gross receipts/Turnover from the business or profession carried on by him exceeds the monetary limits u/s 44AB during the financial year immediately preceding the financial year in which such commission or brokerage is credited or paid, they shall be liable to deduct income-tax under this section.➢ No deduction shall be made on any commission or brokerage payable by BSNL or MTNL to their public call office franchisee52 [email protected] www.sbsandco.com +91 9440883366
Tax Deducted at Source (5/7) Particulars 194IA - Payment on transfer of certain immovable propertyTransferor Resident TransferorTransferee Any personPerson liable to deduct TransfereeNature of Payment Consideration for transfer of immovable property(Other than agricultural land)Rate of Deduction @ 1 per centThreshold limit Rs.50,00,000/-Consequence of Non Tax is to deducted at higher of the following rates:furnishing of PAN ➢ the rate prescribed in the Act; ➢ at the rate in force, i.e., as mentioned in the Finance Act; or ➢ at the rate of 20 per centDue date to deposit tax Within 7 daysForm 26QBCertificate of deduction Form 16-B (to be issued by deductor)Provisions relating to Tax Deduction and Collection Account Number, shall not apply.53 [email protected] www.sbsandco.com +91 9440883366
Tax Deducted at Source (6/7) Particulars 195- Other Sums (TDS on Non-Residents paymentsPayer ResidentPayee Non-ResidentNature of Payment Any sum paid (including for purchase of immovable property)Rate of Deduction At rates in forceThreshold limit No threshold limitDue date to deposit tax Within 7 daysForm 27Q (quarterly) returnsCertificate of deduction Form 16-AOther Points :➢ Payer should obtain TAN. The same can be obtained by applying in Form 49B electronically.➢ He should have his own PAN number and PAN number of the NRI payee54 [email protected] www.sbsandco.com +91 9440883366
Tax Deducted at Source (7/7) Section 197 – Certificate for deduction at lower rate If tax is deducted at source under section 192,193,194,194A, 194C, 194D,194G, 194H, 194I, 194J, 194LA & 195 1. • Assesse feels that no or lower rate of TDS should be there . 2. • Assessing Officer is satisfied with the same. Assessing Officer shall give him certificate so as to non-deduction of tax on any of the income received by the recipient55 [email protected] www.sbsandco.com +91 9440883366
Disallowances on payments madeParticulars Disallowances – Non Residents Disallowances – Disallowances – Non 40a(i) Residents 40a(ia) Residents 40a(ib)Income Interest, Royalty, Fees for Any sum paid or Any consideration paid or technical services or Other sum payable payable for specified servicePayable • Outside India or - - • In India to non-residentTax Deductible TDS TDS Equalisation levyViolation • Such Tax has not been deducted • Having deducted, has not been paid on or before due date of furnishing the returnAmount of 100 % of such sum 30 % of such sum 100 % of such sumdisallowance underhead “PGBP”Provided if such tax is deducted or paid in subsequent year the same shall be allowed as deduction insubsequent year.56 [email protected] www.sbsandco.com +91 9440883366
Consequences for non payment of TDSS. No. U/s Description1 40(a) Disallowance of expenses in computing taxable income of payer. Allowance in the year of deduction2 201(1) Recovery of tax not deducted / deposited or short deducted / deposited3 201(1A) Interest @ 1% / 1.5% per month or for part of the month4 221 Penalty – not exceeding the amount of tax not paid5 271C Penalty – not exceeding the amount of tax not withheld6 276B Prosecution57 [email protected] www.sbsandco.com +91 9440883366
Un-accounted Income IMPLICATIONS OF UNACCOUNTED INCOMETAX U/s 115 BBE of IT Act (A) SEARCH U/s 132 (B) (A.1) (A.2) (B.1) Income (B.2) Income NotSelf-Declaration Detected By AO Admitted Total Tax Admitted Total Tax = 107.25% Incl. = 137.25% (incl. Cess &penalty) Cess & penalty) (A.1.1) Advance Tax (A.1.2) Advance TaxPaid Total Tax =77.25% Not Paid Total Tax =(60% Tax +25% sc+3% 83.25% (+ Penalty U/s.271AAC @ 10% of cess) Tax)58 [email protected] www.sbsandco.com +91 9440883366
Disclosure in Real Estate Sector Tax Audit Income Computation Disclosure Standards59 [email protected] www.sbsandco.com +91 9440883366
Form 3CD – Part AAmendments in Form 3CD so as to present “True and correct“ view :Additions/Amendments in Nature of Item Response clausesClause 4 “Whether the assesse is liable to pay • The tax auditor should get(Newly added) Indirect taxes like excise duty, service tax, Management Representation sales tax, customs duty, etc. If yes, please Letters from the assesse a list of furnish the Registration Number or any taxes applicable and obtain the other identification number allotted for copy of registration certificates the same.” available with assesse. • If the assesse has multiple registrations, then get the all the certificates for proper disclosure. • If the assesse is liable but not registered, then this will come in qualification.60 [email protected] www.sbsandco.com +91 9440883366
Form 3CD – Part BAdditions/Amendments Nature of Item Response in clausesClause 11 Clause 11(a) • In case the books of accounts are kept Whether books of account are at more than one location then auditor prescribed under Section 44AA, if is required to mention the details of yes, list of books so prescribed address of each location along with the BOA maintained. Clause 11 (b) List of books of account maintained • Minutes and Statutory registers and and the address at which the books records should be maintained since of accounts are kept. (even if inception as these are principle maintained electronically) documents. Clause 11 (c) • The auditor should make a checklist of List of books of account and nature the details asked and hand it over to of relevant documents examined assessee for getting the data.61 [email protected] www.sbsandco.com +91 9440883366
Form 3CD – Part B Addition/ Nature of item Response Amendment Where any land or building or both is • Points to remember: in Clauses The auditor has to report under this clause about details the transactions done inClause 17 previous year which attracts section 50C/43CA as discussed earlier. transferred during the previous year for a • Accounts/details of Fixed Assets, investments and inventory. consideration less than the value adopted or Refer to the accounts like rates and taxes, legal fees etc. (to find out if there is any assessed or assessable by any authority of a expense booked in relation to transfer of such asset). State Government referred to in Section 43CA or 50C, please furnish • •62 [email protected] www.sbsandco.com +91 9440883366
Form 3CD – Part B Addition/ Nature of item Response Amendment in (d) Disallowance/deemed income under Section 40A(3): This new insertion has brought additional ClausesClause 21(d) A. On the basis of the examination of books of account and reporting under form 3CD regarding the other relevant documents/evidence, whether the cash expense. expenditure covered under Section 40A(3) read with rule The auditor has to report two things 6DD were made by account payee cheque drawn on a bank specifically; or account payee bank draft. If not, please furnish the That the cash payment during the previous details. year exceeding Rs. 10,000 per day. That the expense allowed previously in A. On the basis of the examination of books of account and preceding years through accrual concept, other relevant documents/evidence, whether the payment for which cash payment is made beyond Rs. referred to in Section 40A(3A) read with rule 6DD were 10,000 should be treated as deemed made by account payee cheque drawn on a bank or account income and reported here. payee bank draft If not, please furnish the details of amount The auditor need not obtain any certificate deemed to be the profits and gains of business or profession from assesee that section 40A(3) is duly u/s 40A(3A): complied , if complied.63 [email protected] www.sbsandco.com +91 9440883366
Form 3CD – Part BAdditions/Amen Nature of Item Response dments in clausesClause 28 Whether during the previous year the assessee This is applicable in case of Firms or Private(Newly added has received any property, being share of a Limited Company.clause) company not being a company in which the The auditor has to report about any property public are substantially interested, without received as a share from above assesse without consideration or for inadequate consideration consideration or inadequate consideration. as referred to in Section 56(2)(viia), if yes, please Section 56(2)(viia) furnish the details of the same. If the firm or Pvt Ltd Company (which stock not traded publicly on regular basis) receives shares without/inadequate consideration then • If no consideration : FMV > 50,000 , then FMV is taxable • If inadequate consideration : Such consideration – FMV exceeds 50,000 then such difference is taxable.64 [email protected] www.sbsandco.com +91 9440883366
Form 3CD – Part BAdditions/Ame Nature of Item Response ndments in clausesClause 31 Reporting requirement: The changes in this clause includes the a) Particulars of each loan/ deposit which exceeds the limit reporting about the amendments effected in U/s 269SS. section 269SS and 269ST vide b) Particulars of each “specified sum” which exceeds the Notification vide No.58/2017 dated 3rd July, limit U/s 269SS during previous year. 2017 * c) Particulars of each repayment of loan/deposit ‘made’, exceeding the limit U/s 269T during previous year. It requires reporting by the recipient of such d) Particulars of each repayment of loan/deposit ‘received’, loan and deposits or specified advance which exceeding the limit U/s 269T otherwise than by a cheque has been repaid or bank draft or use of electronic clearing system through a bank account during previous year. It has increased the scope of reporting for e) Particulars of each repayment of loan/deposit ‘received’, section 269SS and 269T exceeding the limit u/s 269T received by cheque or bank draft which is not an account payee cheque or bank draft during the previous year.65 [email protected] www.sbsandco.com +91 9440883366
Form 3CD – Part BAdditions/Am Nature of Item Response endments in The details required to be furnished for principal items of Now, preceding years’ data should also be clausesClause 40 goods traded or manufactured or services rendered for provided in terms of ratios. Previous year and Preceding previous years. 1. Total turnover of the assessee In case, the earlier year’s form 3CD was 2. Gross profit/turnover prepared and signed by someone else then a 3. Net profit/turnover suitable note should be given, if relied on 4. Stock-in-trade/turnover that. 5. Material consumed/ finished goods producedClause 41 Please furnish the details of demand raised or refund • The tax auditor shall obtain a copy of all issued during the previous year under any tax laws other the demand/ refund orders issued by than Income Tax Act, 1961 and Wealth tax Act, 1957 along Govt. authorities during the previous year with details of relevant proceedings under any other law apart from IT Act, Wealth Tax Act. • The cess /duty would not be covered. • Disclose the refund/demand orders received during PY , pertaining to PPY66 [email protected] www.sbsandco.com +91 9440883366
Tax Audit – 44ABPenalty for failure to get accounts Audited: (U/s 271B) If the assesse fails to get his accounts audited or furnish a report of such audit u/s 44AB, Penalty of • ½ of total Sales, turnover or gross receipts Or • Sum of Rs. 1,50,000 w.e.is lower (w.e.f.1-4-2011) No penalty shall be imposed, if assesse proves that there was reasonable cause for such failure. Penalty of Rs.10,000/- is levied for furnishing incorrect information in reports or certificates by an accountant. (U/s 271J)67 [email protected] www.sbsandco.com +91 9440883366
Income Computation Disclosure StandardsAmended U/s 145(2), 10 ICDS notified vide notification 87/2016 dated 29th September, 2016 and Notified ICDSapplicable from AY 2017-18.ICDS Name of the ICDS I Accounting Policies II Valuation of Inventories III Construction Contracts IV Revenue Recognition V Tangible Fixed Assets VI Changes in Foreign Exchange Rates VII Governments GrantsVIII Securities IX Borrowing Costs X Provisions, Contingent Liabilities and Contingent Assets68 [email protected] www.sbsandco.com +91 9440883366
Income Computation Disclosure StandardsApplicability: All assesses (other than an individual and HUF not required to get accounts audited U/s. 44AB) following mercantile system of accounting. All partnership Firms and LLP following mercantile system; • irrespective of whether audit required u/s 44AB or not • having “Income from business or Profession” and “Income from Other SourcesNon- Applicability: To individual/HUF not carrying on business or profession. Person with only income from other sources following Cash system of accounting. Not applicable where books of accounts not maintained. Persons following cash system of accounting. Individual/HUF falling under presumptive tax not subject to audit u/s 44AB –CBDT Circular No. 10 of 2017 dated 23rd March 2017. Other heads of income - computation of capital gain, House Property, etc., For Sections 68, 69, 69A and 69B, books of account are relevant.69 [email protected] www.sbsandco.com +91 9440883366
Income Computation Disclosure StandardsOther Points Tax auditor is required to certify that the computation of total income is made in accordance with the provisions of ICDS – (accordingly the Form 3CD containing the details). The net effect on the income due to application of ICDS is to be disclosed in the Return of Income. Best judgment assessment is made when A.O is not satisfied about:U/s 144 1.Correctness or completeness of the accounts. is 2.Method of accounting is not regularly followed.attracted 3.Income not computed as per ICDS.70 [email protected] www.sbsandco.com +91 9440883366
Income Computation Disclosure Standards Disclosure Requirement w.r.t Form 3CDUnder clause 13 ”New sub clause is added as under”(d) Whether any adjustment is required to be made to the profits or loss forcomplying with the provisions of income computation and disclosure standards.(e) If answer to (d) above is in the affirmative, give details of such adjustments: ICDS Name of ICDS Increase in Profit (Rs) Decrease in Profit (Rs) Net Effect (Rs)71 [email protected] www.sbsandco.com +91 9440883366
Income Computation Disclosure StandardsICDS II – Valuation of Inventories: Disclosure Requirement: the accounting policies adopted in measuring inventories Where standard costing has been used as a technique for measurement the cost, details of such inventories and a confirmation of the fact that standard cost approximate actual cost; and the total carrying amount of inventories and its classification appropriate to a person Clause 13(f)(ii) of the Tax Audit Report.“When the inventory valued without including duties & taxes, the same should beincluded in valuation of inventory as per ICDS “72 [email protected] www.sbsandco.com +91 9440883366
Income Computation Disclosure StandardsICDS III – Construction Contracts - Disclosure Requirement: The methods used to determine the stage of completion of contracts in progress. Clause 13(f)(iii) & (iv) of the Tax Audit Report.S. No. Description of Total Amount of For the year ended 1. Contract revenue recognized 2. Contract cost 3. Profit recognized 4. Advances received 5. Retention money73 [email protected] www.sbsandco.com +91 9440883366
Income Computation Disclosure StandardsICDS IV – Revenue Recognition - Disclosure Requirement: for service transactions in progress at the end of previous year: recognized profits less recognized losses up to end of previous year the amount of advances received the amount of retentions Clause 13(f)(iv) of the Tax Audit Report.74 [email protected] www.sbsandco.com +91 9440883366
GST Taxation Construction Services (Notification No 11/2017-Central Tax-Rate) GST shall not be applicable where the entire consideration has been received after issuance of completion certificate, where required, by the competent authority or after its first occupation, whichever is earlier In all other cases, Construction of a complex, building, civil structure or a part thereof, including a complex or building intended for sale to a buyer, wholly or partly is taxable at 18% (CGST 9% & SGST 9%) The value of such supply shall be equivalent to the total amount charged for such supply less the value of land or undivided share of land, as the case may be, and the value of land or undivided share of land, as the case may be, in such supply shall be deemed to be one third of the total amount charged for such supply.75 www.sbsandco.com
GST Taxation Reverse Charge Mechanism In case of supply of taxable goods or services or both made by unregistered person to a registered person, tax on such supply shall be payable by such registered person (recipient) on reverse charge basis. However, the registered recipient shall not be liable to pay tax if the aggregate value of such supplies of goods or service or both from any or all the unregistered suppliers does not exceeds five thousand rupees in a day. (Notification No 8/2017-Central Tax-Rate). The tax payable under reverse charge mechanism shall be paid in cash only and such paid tax can be eligible to claim input tax credit.76 www.sbsandco.com
At Thank you!!!Visakhapatnam Branch CA Suresh Babu S of SIRC of ICAI Managing Partner on M/s SBS and Company LLP 26-08-2017 [email protected] 9440883366Our Presence in: Hyderabad, Kurnool, Nellore, TADA, Vizag & Bengaluru: [email protected]; 040-40183366 Disclaimer: Please logon to: http://www.sbsandco.com/disclaimer/ Read our monthly e-Journals www.sbsandco.com/wiki77 www.sbsandco.com/digest
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