The budget for F.Y. 2020-21 was announced on 01.02.2020 by Mrs. Nirmala Sitharaman. In this budget there were huge amendments in Direct tax and also in the TDS and TCS provisions and in this article we are going to discuss the same.
Firstly, a common amendment has been made in section 194A, 194C, 194H, 194-I and 194J wherein it has been stated that now for individual and HUF it won’t be necessary whether their books of accounts are getting audited u/s 44AB are not, now they are liable to deduct TDS if they total turnover from business or profession exceeds Rs. 1 crore or 50 lakhs respectively. Thus now TDS liability is not dependent on audit by turnover.
Till now co-operative societies were not required to deduct any TDS on interest paid by them to their members, however now after the amendment the co-operative societies, with turnover above Rs. 50 crore in previous financial year, is required to deduct TDS on interest paid to members if the aggregate interest paid to senior citizen is above Rs. 50000 and Rs. 40000 in any other case.
Under section 194C now the definition of work under sub clause (e) of clause (iv), would also include job work where material is purchased from the associate of customer who are covered u/s 40A(2)(b).
Now the TDS for payment made for technical services would be liable for TDS @2% instead of 10%.
New section 194K has been inserted: TDS in respect of income from units of mutual fund
Any person responsible for paying to a resident any income in respect of:
(a) units of a Mutual Fund specified under clause (23D) of section 10; or
(b) units from the Administrator of the specified undertaking; or
(c) units from the specified company,
shall, at the time of credit of such income to the account of the payee or at the time of payment thereof by any mode, whichever is earlier, deduct income-tax thereon at the rate of ten per cent.
Provided that the provisions of this section shall not apply where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year by the person responsible for making the payment to the account of, or to, the payee does not
exceed five thousand rupees.
New section 194O has been inserted: TDS by E-commerce operator
An E-commerce operator of goods or service or both shall at the time of payment or credit whichever is earlier will deduct TDS @1% of such E-commerce participant of the gross amount of sale of goods or services or both.
No deduction is required to be made if the E-commerce participant is an individual or HUF and the total transaction during the year is not above Rs. 5 lakh and the participant has furnished his PAN/ Aadhar number to the operator.
Also TDS won’t be leviable on the amount received/ receivable by E-commerce operator for hosting advertisement.
Thus there is no threshold for a company if it selling goods on such e-commerce platform and in case of individual if he doesn’t provide PAN/ Aadhar then also TDS would be deducted irrespective of the amount.
Now Let’s discuss the changes in TCS provision:
TCS on foreign remittance (sub-section 1G of section 206C):
(1) Every person being an authorised dealer, who receives an amount, or an aggregate of amounts, of seven lakh rupees or more in a financial year for remittance out of India from a buyer, being a person remitting such amount out of India under the Liberalised Remittance Scheme of the Reserve Bank of India;
TCS on foreign tour package (sub-section 1G of section 206C):
(2)Every person being a seller of an overseas tour program package, who receives any amount from a buyer, being the person who purchases such package, shall, at the time of debiting the amount payable by the buyer or at the time of receipt of such amount from the said buyer, by any mode, whichever is earlier, collect from the
buyer, a sum equal to five per cent of such amount as income-tax:
TCS by seller of goods: (sub-section 1H of section 206C)
Every person, being a seller, who receives any amount as consideration for sale of any goods of the value or aggregate of such value exceeding fifty lakh rupees in any previous year, other than the goods covered in sub-section (1) or sub-section (1F) or sub-section (1G) shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 0.1 per cent. of the sale consideration exceeding fifty lakh rupees as income-tax:
Provided that if the buyer has not provided the Permanent Account Number or the Aadhaar number to the seller, then the provisions of clause (ii) of sub-section (1) of section 206CC shall be read as if for the words “five per cent.”, the words “one per cent.” had been substituted:
In the above proviso, there has been a reduction in rate of collection of TCS in case of non furnishing of PAN/ Aadhar from 5% to 1%.
After adding the above sub section 1H there is going to be a huge exercise for the businessman whose turnover is above 10 crore to collect TCS from everyone with whom they are doing business of above Rs. 50 lakh and especially in case of exports where the customer won’t have PAN so TCS would be collected @1%.
Thus this were the major TDS and TCS amendment made by budget 2020.
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2ND Provisso to the proposed amendment / insertion of IH states that provision is not applicable if the buyer is liable to deduct TDS under any proviosion of the act and has done so. Does this imply that if buyer is deducting TDS on any transaction with anybody then this sub section would not apply or is it referring to TDS deducted by buyer in transaction with seller.
Please offer ur views.
No the proviso refers to specific buyer and seller.