TDS on Salaries
This query is : Resolved
12 August 2010
I am working in Dairy Industry having turnover of Rs. 2000 crore and having employee 2500.
Pl. give me advice about TDS on salary if somany employee covered under exemption limit and they have not PAN No. and somany exployee cross the exmption limit and they have or not have PAN so, what is the effect of this and give me true advice for applicable rate of TDS Means 20% for not having PAN No.
Thanks
Pl. give me advice about TDS on salary if somany employee covered under exemption limit and they have not PAN No. and somany exployee cross the exmption limit and they have or not have PAN so, what is the effect of this and give me true advice for applicable rate of TDS Means 20% for not having PAN No.
Thanks
12 August 2010
TDS @ 20 % for not having PAN is applicable for all sections except section 192 i.e salary.
That means TDS @ 20 % will not apply to the employees.
Only regular individual slab rate will apply.
That means TDS @ 20 % will not apply to the employees.
Only regular individual slab rate will apply.
12 August 2010
Further, you have to insist your employees to get their PAN, in anyway if they fail to provide their PAN to you, its only them who will lose the tax (deducted by you) credit in their ITR.
12 August 2010
absoluetly agree with mr.subhash jha.
12 August 2010
SECTION 206AA starts with “Not withstanding anything contained in this Act” and hence this has an overriding effect on all the provisions of the Income Tax Act, 1961.
Since this section applies to any sum/amounts/income on which tax is deductible under Chapter XVII B, all the TDS provisions laid down in the chapter XVII – B are covered.
When this section gets attracted?
1. The deductee should be entitled to receive any sum/amount/income
2. Tax is deductible under the provisions of chapter XVII – B
3. The deductee should be liable to furnish PAN to the deductor responsible to deduct tax at source on such income
4. The deductee has failed to furnish PAN to the person responsible to deduct TDS
All the above provisions should be satisfied to trigger Sec 206 AA(1)
HENCE.
THE EMPLOYEES WHOSE GROSS SALARY EXCEED RS. 160000/- AND HE IS CLAIMING DEDUCTION SECTION 80C FOR TAX SAVING, THEN HE HAS TO PROVIDE PAN NO. IF HE IS NOT PROVIDE PAN NO, THEN TDS 20% WILL BE DEDUCTED ON TOTAL INCOME.
Since this section applies to any sum/amounts/income on which tax is deductible under Chapter XVII B, all the TDS provisions laid down in the chapter XVII – B are covered.
When this section gets attracted?
1. The deductee should be entitled to receive any sum/amount/income
2. Tax is deductible under the provisions of chapter XVII – B
3. The deductee should be liable to furnish PAN to the deductor responsible to deduct tax at source on such income
4. The deductee has failed to furnish PAN to the person responsible to deduct TDS
All the above provisions should be satisfied to trigger Sec 206 AA(1)
HENCE.
THE EMPLOYEES WHOSE GROSS SALARY EXCEED RS. 160000/- AND HE IS CLAIMING DEDUCTION SECTION 80C FOR TAX SAVING, THEN HE HAS TO PROVIDE PAN NO. IF HE IS NOT PROVIDE PAN NO, THEN TDS 20% WILL BE DEDUCTED ON TOTAL INCOME.
12 August 2010
Applicability of this section in case of TDS U/s 192
• The provisions of this section are applicable in all cases whether estimated taxable survey income is less than the exemption limit or more than exemption limit.
• The Act nowhere mentions that Sec 192 is applicable only in case where the salary income is above exemption limit.
• For deducting TDS U/s 192, one has to keep in mind the provisions of Sec 192 and tax should be computed in accordance with the method specified in the TDS circular issued by CBDT.
• Normally the CBDT issues circular every year with guidance on the manner in which TDS should be calculated and deducted from income U/s 192. [The recent circular being circular no 1 of 2010].
• As per the circular, the responsible person responsible for paying any income chargeable under the head salaries shall deduct income tax on estimated income of the assessee under the head “salaries”.
• The circular specifies that no tax is required to be deducted at source in any case unless the estimated salary income including the value of perquisites for the FY exceeds Rs. 160,000 or Rs. 190,000 or Rs. 240,000 (or the applicable limit for the financial years as as may be notified by the Department) as the case may be depending upon the age and gender of the employees.
• It is not clear that the Board will issue similar instruction in the forthcoming TDS circulars after insertion of Sec 206AA.
• If similar instructions are issued in the next TDS circular for the FY 2010-11, then no tax will be deducted U/s 192 if salary income is below exemption limit.
• In the absence of such instructions, tax will be deductible @ 20% if employee whose income is below exemption limit does not disclose PAN.
• The provisions of this section are applicable in all cases whether estimated taxable survey income is less than the exemption limit or more than exemption limit.
• The Act nowhere mentions that Sec 192 is applicable only in case where the salary income is above exemption limit.
• For deducting TDS U/s 192, one has to keep in mind the provisions of Sec 192 and tax should be computed in accordance with the method specified in the TDS circular issued by CBDT.
• Normally the CBDT issues circular every year with guidance on the manner in which TDS should be calculated and deducted from income U/s 192. [The recent circular being circular no 1 of 2010].
• As per the circular, the responsible person responsible for paying any income chargeable under the head salaries shall deduct income tax on estimated income of the assessee under the head “salaries”.
• The circular specifies that no tax is required to be deducted at source in any case unless the estimated salary income including the value of perquisites for the FY exceeds Rs. 160,000 or Rs. 190,000 or Rs. 240,000 (or the applicable limit for the financial years as as may be notified by the Department) as the case may be depending upon the age and gender of the employees.
• It is not clear that the Board will issue similar instruction in the forthcoming TDS circulars after insertion of Sec 206AA.
• If similar instructions are issued in the next TDS circular for the FY 2010-11, then no tax will be deducted U/s 192 if salary income is below exemption limit.
• In the absence of such instructions, tax will be deductible @ 20% if employee whose income is below exemption limit does not disclose PAN.
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