Update: Changes in taxation from 01.04.16

CHANGES APPLICABLE FROM 01.06.2016

GboxUpdate

It’s often said change is the only constant. This is very true when it comes to Indian Taxation. There are a slew of changes envisaged in the Finance Act of 2016 that are applicable from 01.06.2016. The changes are important and path breaking. Let’s have a look at the various changes.

A.INCOME TAX

  1. Changes in the Tax Deduction at Source  [TDS] & Tax Collection at Source [TCS]
1.1.    TCS on sale of goods and services – Section 206C(1D)

Every person, being a seller, who receives any amount in cash as consideration for sale of goods, bullion, jewellery or providing of any service shall, at the time of receipt of such amount in cash, collect from the buyer, a sum equivalent to 1% of sale consideration as income tax, if such consideration –

–          For bullion exceeds Rs.2 Lakhs

–          For jewellery exceeds Rs. 5 Lakhs

–          For any goods, other than those referred above or any service exceeds Rs.2 Lakhs.

Provided that if any transaction covered under TDS or TCS will not be applicable on it.

1.2.    Exceptions to TCS on sale of goods and services  – Section 206C(1E) – Not yet Prescribed

1.3.    TCS on sale of Motor Vehicles– Section 206C(1F)

Every person, being a seller, who receives any amount as consideration for sale of motor vehicle of the value exceeding Rs.10 Lakhs, shall, at the time of receipt of such amount, collect from the buyer, a sum equal to 1% of the sale consideration as income tax.

NOTE

  • If even a single rupee of cash payment is made TCS will be on the entire amount. Rs.10 Lakhs of sale Rs.20 K received in cash balance in cheque the entire 10 Laks is subject to TCS
  • If cash payment is made exceeding the limit for different invoices each invoice under the limit then TCS provisions are not applicable.
  • Provision to obtain lower deduction certificate is available in Form 13
  • In case the buyer doesn’t have PAN, Form 60 has to be obtained. The copy Form 60 has to be maintained for 10 years.
1.4.    For the purpose of deduction of tax in the case of contractors  (194C) the yearly aggregate limit has been increased from Rs.75,000 to Rs.1,00,000 

1.5.    For the purpose of deduction of tax for commission agents (194H & 194 ) the aggregate limit has been increased from Rs.5,000 to Rs.15,000. Further the rate of tax has been reduced from 10% to 5% 

1.6.    Form 15H (SC) & Form 15G can be now furnished for rental income as well. [Form 15G/H have to be uploaded using DSC in the income tax website] 

1.7.    Due date for filing of TDS return has been extended from 15th of succeeding month to 31st of succeeding month for all quarters except Q4. [Due dates now are 31st July, 31st October, 31st January, 31st May] [Word of caution – TCS returns filing due dates aren’t changed] 

 

  1. Changes in the dates for Advance tax.
  • There is no distinction between advance tax payments for companies and non-companies from hereon.
15th June 15%
15th September 45%
15th December 70%
15th March 100%
  • In the case of assessee’s declaring income tax on presumptive basis, 100% of the tax due has to be remitted before 15th
  1. Equalisation Levy

 It is determined with reference to the gross amount of the payment and the rate of equalisation levy applicable on it, which is full and final tax.

 Specified Services:

  1. Online advertisements
  2. Provision for digital advertising space or any other facility as notified

Applicability: 

Service Provider Service Receiver Applicability
Resident Resident Not Applicable
Resident Non Resident with PE Not Applicable
Resident Non Resident without PE Applicable
Non Resident with PE Resident Not Applicable
Non Resident with PE Non Resident with PE Not Applicable
Non Resident with PE Non Resident without PE Applicable
Non Resident without PE Resident Not Applicable
Non Resident without PE Non Resident with PE Not Applicable
Non Resident without PE Non Resident without PE Not Applicable

 

Non Applicability:

Further it’s not applicable to following transactions:

  1. Services is for purposes not for business and profession
  2. Aggregate amount of consideration for services received / receivable in the previous year doesn’t exceed Rs.1,00,000/-

Taxation:

  • Not part of the income tax act but part of the Finance Bill – 2016.
  • Certain provisions of the income tax are applicable to equalisation levy
  • Levy shall be @ 6% on the gross amount of service provided
  • 7th of succeeding month shall be due date of payment of levy to the government.
  • Interest at the rate of 1% per month or part of shall be charged in case of delay u/s 170.
  • Penalty for non-compliance can be upto the amount of levy
  • Penalty for deduction and non-remittance will be Rs.1000 per day but shall not exceed the liability.
  • If equalisation levy is not paid by the deductor such expenses shall be disallowed under section 40a(ib)

Prescribed Statement:

  1. To be filed once an year and the due date shall be 30th June immediately following the financial year.
  2. Will have one more year for revising the returns.
  3. 100 per day penalty for delay in filing the returns.

B.SERVICE TAX LAW

 Applicability of Krishi Kalyan Cess[KKC]

  •  50% shall be collected on value of service chargeable to service tax. [Total tax to be collected now will be 14% + SBC of 0.50% + KKC of 0.50% = 15.00%]
  •  CENVAT can be claimed against KKC paid unlike SBC
  •  KKC is not a cess but a tax itself charged at 0.50%
  •  KKC shall not be charged on the abatement value as per Notf. 28/2016-ST

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