Changes in TDS Provisions w.e.f. 1st June 2016

1. Section 192(A) –Payment of an Accumulated Balance Due to an Employee from EPF. No Tax is required to be deducted in case amount does not increase Rs 50000. (Increased from 30000)

2. Section 194BB – Wining from Horse Race, Tax to be deducted at Source in case amount Increase Rs 10000. (Increased from Rs 5000)

3. Section 194C – Payments to Contractors-Tax in required to be deducted in case where aggregate of the amount paid or credited during the financial year exceeds Rs100,000( Increased from Rs 75000)

4. Section 194D — Insurance Commissions. Here the Limit of Tax deduction has been reduced from Rs 20000 to RS 15000. Means Payment of any commission on Insurance will attract TDS in case Amount Exceeds Rs 15000.

5. Section 194DA – Payments In Respect of Life Insurance Policy- Payment of any sum under Life insurance policy including Bonus other than the amount not included in the total income under clause (10D0 of Section 10, Rate of TDS has been reduced to 1% from 2%

6. Section 194EE – Payments in Respect of Deposits under NSS. Rate of TDS has been reduced to 10% from 20%.

7. Section 194G – Commission on Sale of Lotteries- Limit has been increased from Rs 1000 to Rs 15000(Means No TDS on Payments up to Rs 15000). And Rate of TDS has also been reduced to 5% from 10%.

8. Section 194H – Payment of Commission and Brokerage- Rate of TDS has been reduced to 5% from 10% and under proviso – (Limit has been increased from Rs 5000 to Rs 15000(Means No TDS on Payments up to Rs 15000).

9. Section 194 K and 194 L omitted w.e.f 1st June 2016.

10. Section 194LA –Payment of Compensation on acquisition of Certain Immovable Property – Previously no TDS was required to be deducted in case amount Does not exceeds Rs 200,000. This limit has been increased to Rs 250,000.

11. Section 194LBB – Income In respect of Units of Investment Fund- Rate of TDS has been Changed from 10 % to following

1. At the Rate of 10% – In case of Resident payee

2. At the Rate in Force- In case on Non-Resident Payee(not Being a Company ) or a foreign company

12. Insertion of New Section 194LBC-

1. Where any income is payable to an investor, being a resident, in respect of an investment in a securitisation trust specified in clause (d) of the Explanation occurring after section 115TCA, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon, at the rate of—

(i) 25%, if the payee is an individual or a Hindu undivided family;

(ii) 30%, if the payee is any other person.

2. Where any income is payable to an investor, being a non-resident (not being a company) or a foreign company, in respect of an investment in a securitisation trust specified in clause (d) of the

Explanation occurring after section 115TCA, the person responsible for making the payment shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon , at the rates in force.

Explanation.—For the purposes of this section,—

(a) “Investor” shall have the meaning assigned to it in clause (a) of the Explanation occurring after section 115TCA;

(b) Where any income as aforesaid is credited to any account, whether called “suspense account” or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be the credit of such income to the account of the payee, and the provisions of this section shall apply accordingly.’.⁠

1. *Finalisation of Accounts*- 15th May
2. *Accounts to be handed over for Audit* -1st June
3. *Audit Completion*:31st July
4. *Audit Report Upload* – 31st Aug or 15th Sept.
5. *AGM Date*- 30th Sept.
6. *Mandatory Annual Return by Society* – by 30th Sept.
7. *Mandatory Return by society About Auditor appointment* – one month from AGM or 31st Oct.
8. *Online Audit order generation by auditor* – 31st Oct.
9. *Audit Rectification Report by Society*: 3 months from the date of submission of report by auditor.
10. *Rectification report upload by Auditor thru Audit login*: Once received from society

Annual filing of the LLP for the year 2015-16 are going on :

Every LLP which are registered with the Ministry of Corporate Affairs have to file the following major compliance, which is mandatory for the LLP:

Annual Return (Form 11)
Statement of the Accounts &
Solvency (Form 8)
Income Tax Returns (ITR 5)

Most of the Entrepreneurs in India or Startups are confused that filings of the above is mandatory thing even if they are doing the business or not?

The answer is yes. Every LLP have to maintain the compliance even if they are doing the business or not.

The reason is simple you know that you are not doing the business but government doesn’t know that. So through the annual statements or filings you are giving information to the government about your organisation.

Filing of Annual Return:

Annual Return or Form 11 is a Summary of LLP’s Partners like whether there is any changes in the management of the LLP. Every LLP is required to file Form 11 to the Registrar within *60 days* from the closure of financial year i.e. on or before 30th May every year.

Filing of Statement of the Accounts & Solvency: All LLPs are required to maintain the Books of Accounts in Double Entry System and has to prepare a Statement of Solvency (Accounts) every year ending on 31st March. Every LLP is required to file Form 8 to the Registrar within 30 days from the end of six months of financial year i.e. on or before 30th October every year.

Filing Income Tax Return: LLP being separate legal entity, has to determine its Income Tax liability based on Annual Accounts, pay the due tax and file its Income Tax Return with department on or before 31st July. In case where Audit is required, last date of filing Income Tax Return is 30th September.

Audit Requirement under LLP Act: LLP, whose annual turnover exceeds Rs. 40 lakhs or whose contribution exceeds Rs. 25 lakhs, are required to get their accounts audited by a qualified CA.

Audit requirement under Income Tax Act: Audit of accounts is mandatory requirement under Income Tax Act when the annual turnover of LLP is more than one hundred lakhs rupees.

DSC Requirements: While uploading e-forms, Digital Signatures of any 2 Designated Partners are required for filings.

Penalties for defaulting :

100 per day (unlimited/no upper limit) till the default is made good.

Therefore, due caution needs to be exercised and in time compliance is advised.And those who think that if you don’t file the returns, the LLP would turn dormant and you could close it/strike it off absolving yourself of the penalty and the compliance. Remember, to close your LLP too, you would require making good the compliance first.

http://www.mca.gov.in/MinistryV2/CARFiling.html

*SALARIED EMPLOYEES TO SUBMIT PROOF FOR LTA, HRA CLAIMS*

The CBDT (Central Board of Direct Taxes) has introduced a new form (Form 12 BB) for claiming tax deduction towards LTA, LTC, HRA & interest paid for home loans. The new form mandates people to furnish proof of travel while claiming LTA, LTC, and details of landlord in case of HRA claims. Let us understand this in detail:-

*Why this Rule?*

The main reason behind introducing this rule is to plug the loopholes under tax laws by tightening the entire procedure for claiming these tax exemptions. This becomes more important because there was no standard or prescribed format until now for filing these declarations. And in the Budget 2015, the Finance Act had already introduced Section 192(2D) of the Income Tax Act mandating employers to collect all necessary evidences, but the rules and form were yet to be prescribed. The same has been done now.

*What is this form about?*

The declaration needs to be filed for claiming deductions in a prescribed form i.e. Form 12 BB as set up under rule 26C.

*What is the obligation on the Employer?*

Earlier the employers were not under any statutory obligations for collecting bills or other proofs in order to prove the fact that their employees have actually utilized the money they are claiming towards these claims.

But, the current amendment with the introduction of this rule will now make all the employers obligated to collect all the relevant information in the prescribed format apart from collecting the proof of evidence, before they can allow the respective benefits under various tax benefits to the employees.

Details needed to furnish LTA, LTC and HRA claims

The circular as issued by the government has not specified the documents required to be submitted for claiming deductions but the existing documents that employees used to provide should hold good. Following are the documents which are required to claim these benefits:-

*HRA:*

As per the notification issued by the government, a person claiming HRA (Housing Rent Allowance) for over Rs. 1 lakh needs to furnish name, address and PAN i.e. Permanent Account Number of the landlord, apart from giving the rent receipts. With this the government can start tracking the fraudulent claims and can also verify whether the rent received by the landlord has been duly disclosed in their tax-return.

*LTA/LTC:*

To claim LTA (Leave Travel Allowance) or LTC (Leave Travel Concession), people need to provide the evidence of expenditure, and submit boarding pass and tickets for claiming LTA or LTC.

*Housing Loan:*

To claim deduction on the interest on a housing loan, people need to provide PAN of the lender and their name and address.

*Deductions u/s Chapter VI-A*

People need to submit relevant proof for claiming deductions under chapters VIA(A) and VI-A that cover Sections 80C, 80CCC, 80CCD, 80E, 80G, 80TTA. Sections 80CCC, 80CCD and section 80C allow a deduction of Rs. 1.5 lakhs on specified investments.

*What will be the impact of this new Rule?*

The new rule and the forms will make it really easy for both the taxpayer and the employer because it brings standardization which will help employees and employers both. Moreover from the government’s point of view, the new format will ensure collection and maintenance of information, and will assist them in streamlining their assessment process and curb the malpractice of fake claims.

*When will this rule come into effect?*

The rules will be applicable from June 1, 2016.