Lower TDS certificate

Application for the NIL / Lower TDS Deduction Certificate for FY 2020-21 may be made from 28 February 2020.

Under the provisions of the Income Tax Act, deduction of tax deducted at Sources (TDS) is mandatory while making payments. The taxpayer making the payment must deduct the TDS and deposit it to the Department of Income Tax before the assigned due date for depositing the TDS.

At times, the TDS is deducted from the total income of the taxpayer, i.e. the recipient, whereas the total tax liability of the taxpayer is calculated on the profit of that financial year. It is in accordance with the prevailing income tax rates/rules which may be less than the total amount of the TDS deducted.

In those cases, TDS will be deducted first, and the taxpayer can claim the refund of the excess amount of TDS deducted while filing the return on income tax (ITR). But the whole process turns out to be a hassle for many taxpayers because firstly TDS is deducted and later on the taxpayer asks for its refunds by filing ITR.

To make it easy, 

Section 197 has been issued by the government which allows taxpayers to use the Nil / Lower  Deduction of the TDS Certificate. But often the process of obtaining the Nil / Lower Deduction TDS Certificate takes a lot more time than expected.

To address this issue, the Government is allowing taxpayers to apply for the Nil / Lower TDS Deduction Certificate for the financial year 2020-21 from 28 February 2020.

Latest Updates

  • Understanding Tax Deduction at Source (TDS)
    Understanding Tax Deduction at Source (TDS) Tax Deduction at Source (TDS) is a mechanism where income tax is automatically deducted from payments made to a person during specified transactions. This process ensures timely tax collection by the government by collecting the tax upfront. TDS is typically deducted on incomes such as […]
  • Filing your income tax return early this year? Understanding these 5 essential points is crucial.
    Filing your income tax return early this year? Understanding these 5 essential points is crucial. It is precisely 45 days since the end of the 2023–24 fiscal year, and there are 75 days remaining before the July 31 deadline for filing income tax returns (ITRs). This is a great moment for an individual […]
  • CBDT Introduces Enhanced Feature in Income Tax AIS: Track Your Correction Request Status Now
    CBDT Introduces Enhanced Feature in Income Tax AIS: Track Your Correction Request Status Now Many taxpayers who identified inaccuracies in their Annual Information Statement (AIS) had provided feedback but were unsure if the reporting entities, like banks, addressed their concerns. However, the Central Board of Direct Taxes (CBDT) has updated the […]
  • Understanding the Consequences of Incorrect HRA Declarations
    Understanding the Consequences of Incorrect HRA Declarations The income-tax department has discovered between 8,000 and 10,000 high-value cases, each containing false House Rent Allowance (HRA) claims totaling more over Rs 10 lakh. Rather than the original property owners, taxpayers are claimed to have given PANs of acquaintances, lower-class relatives, and themselves […]
  • Understanding HUF in Income Tax: Benefits, Exemptions, and Rules
    Understanding HUF in Income Tax: Benefits, Exemptions, and Rules The time is almost here to file returns and pay income tax. By July 31st, all taxpayers must file their taxes. Every taxpayer attempts to save taxes when filing their ITR. Is there a separate tax exemption for Hindu families? This exemption […]

TCS on Foreign Tours & Travel:- Income Tax Amendment 1st April 2020

 TCS on Foreign Tours & Travel

As they say, the devil lies in the details, Budget 2020 has got a lot of catches to relate to. One of the important ones is that our FM Nirmala Sitharaman has seemed to have zeroed on folks traveling abroad on foreign tours & travel, their travel plan being booked by travel agents as part of small holiday packages. This is very common now in both Govt & Private Sector employees.

Union finance minister Nirmala Sitharaman has raised alarm bells for those who travel abroad on tour package booked by others, which is a common trend to oblige senior officials in government and private sectors in the country.

Come, April 1, 2020, every foreign traveler will have to pay 5% (PAN holder) and 10% (non-PAN holder) TCS (Tax Collection at Source) on the total amount of tour package. Once the TCS is charged, total income for individuals will automatically be grossed up as liability & thus a large entity will be encircled with the realms of Income-tax department, which often escapes the TAX FILED income as per IT RETURN.

Earlier provision to mention passport number in ITR is now given more teeth to levy a tax on a large number of people, who go abroad on leisure trips several times in a year.

More often than not, there is black money involved as trips are often financed by the business houses in return for undue favors from bureaucrats, govt officials and other business entities in society. Trips can be a form of bribe or enticement in return for the aforesaid work insight.

As it may look, that every foreign visitor whether he is an income taxpayer or not will now be part of the tax gambit. However, there is a relief for people whose annual income is under the threshold limit (under Rs 5 lakh) visits a foreign country. These folks can apply for a refund of TCS from the Dept. of Income-tax.

The move is seen very effective as it will restrain the massive use of unaccounted money into the system via Foreign Tours and large no. of individuals n entities will be added newly to the mainstream Tax System @ GOI.

Industry Impact-

On top of levy of taxes, Govt intends to bank on new-age technology like DATA Analytics, etc. to retrieve information about frequent flyers who often end up spending lavishly on Global tours and travel. 5% TCS is a huge sum on the foreign travel package bill which will increase the burden of this distinctive travel class. Travel Industry is also looking to change and adapt to the new business dynamics. With all this, this can turn to abound to challenging provision for government employees and their family members, doctors, etc. who visit abroad on sponsorship.

Key Changes –
  • Every foreign traveler has to pay 5% and 10% tax collection at sources (TCS) on the total amount of tour package
  • Stop the practice of Concentration of Tour operators with a view of group bookings as an operator  maligning the process with illicit funding via unorganised channels.

Latest Updates

  • Understanding Tax Deduction at Source (TDS)
    Understanding Tax Deduction at Source (TDS) Tax Deduction at Source (TDS) is a mechanism where income tax is automatically deducted from payments made to a person during specified transactions. This process ensures timely tax collection by the government by collecting the tax upfront. TDS is typically deducted on incomes such as […]
  • Filing your income tax return early this year? Understanding these 5 essential points is crucial.
    Filing your income tax return early this year? Understanding these 5 essential points is crucial. It is precisely 45 days since the end of the 2023–24 fiscal year, and there are 75 days remaining before the July 31 deadline for filing income tax returns (ITRs). This is a great moment for an individual […]
  • CBDT Introduces Enhanced Feature in Income Tax AIS: Track Your Correction Request Status Now
    CBDT Introduces Enhanced Feature in Income Tax AIS: Track Your Correction Request Status Now Many taxpayers who identified inaccuracies in their Annual Information Statement (AIS) had provided feedback but were unsure if the reporting entities, like banks, addressed their concerns. However, the Central Board of Direct Taxes (CBDT) has updated the […]
  • Understanding the Consequences of Incorrect HRA Declarations
    Understanding the Consequences of Incorrect HRA Declarations The income-tax department has discovered between 8,000 and 10,000 high-value cases, each containing false House Rent Allowance (HRA) claims totaling more over Rs 10 lakh. Rather than the original property owners, taxpayers are claimed to have given PANs of acquaintances, lower-class relatives, and themselves […]
  • Understanding HUF in Income Tax: Benefits, Exemptions, and Rules
    Understanding HUF in Income Tax: Benefits, Exemptions, and Rules The time is almost here to file returns and pay income tax. By July 31st, all taxpayers must file their taxes. Every taxpayer attempts to save taxes when filing their ITR. Is there a separate tax exemption for Hindu families? This exemption […]

Income tax – Form 26AS To Be Replaced With Annual Finance Statement

Budget 2020 introduced to replace Form 26AS with a new Annual Financial Statement in order to  prevent tax evasion and bring clarity among taxpayers

This will include details such as:-

As per Section 203AA, Form 26AS currently provides details of TDS and other prepaid taxes that are paid to the government against one’s PAN (Permanent Account Number) and it is available for verification on the website of the income tax department.

The budget for the financial year 2020-21 implemented the introduction of Section 285BB.  As per the agreed contours,  the idea is to  include a detailed financial statement  comprising of all  important financial transactions conducted by an individual in a particular year, such as  

  • Sale or Purchase of Property &
  • Sale or Purchase of Securities

to be reflected  in the prepopulated ITR’s or Income tax Return.

Annual Finance Statement will also include other financial information such as

  • Sale or purchase of immovable property
  • Stock or shares held by Income tax authority. 

Therefore, Section 203AA will be deleted and Form 26AS will be replaced by Annual Finance Statement.

The State has yet to inform the specification of this new financial statement. The proposed amendment is set to take effect from 1 June 2020.

Once this amendment is ther through there will be a big change for banks and mutuals funds  as they would have to share all the details on transactions being conducted by individuals during the year related to a particular PAN no. or Aadhar NO. 

Latest Updates

  • Understanding Tax Deduction at Source (TDS)
    Understanding Tax Deduction at Source (TDS) Tax Deduction at Source (TDS) is a mechanism where income tax is automatically deducted from payments made to a person during specified transactions. This process ensures timely tax collection by the government by collecting the tax upfront. TDS is typically deducted on incomes such as […]
  • Filing your income tax return early this year? Understanding these 5 essential points is crucial.
    Filing your income tax return early this year? Understanding these 5 essential points is crucial. It is precisely 45 days since the end of the 2023–24 fiscal year, and there are 75 days remaining before the July 31 deadline for filing income tax returns (ITRs). This is a great moment for an individual […]
  • CBDT Introduces Enhanced Feature in Income Tax AIS: Track Your Correction Request Status Now
    CBDT Introduces Enhanced Feature in Income Tax AIS: Track Your Correction Request Status Now Many taxpayers who identified inaccuracies in their Annual Information Statement (AIS) had provided feedback but were unsure if the reporting entities, like banks, addressed their concerns. However, the Central Board of Direct Taxes (CBDT) has updated the […]
  • Understanding the Consequences of Incorrect HRA Declarations
    Understanding the Consequences of Incorrect HRA Declarations The income-tax department has discovered between 8,000 and 10,000 high-value cases, each containing false House Rent Allowance (HRA) claims totaling more over Rs 10 lakh. Rather than the original property owners, taxpayers are claimed to have given PANs of acquaintances, lower-class relatives, and themselves […]
  • Understanding HUF in Income Tax: Benefits, Exemptions, and Rules
    Understanding HUF in Income Tax: Benefits, Exemptions, and Rules The time is almost here to file returns and pay income tax. By July 31st, all taxpayers must file their taxes. Every taxpayer attempts to save taxes when filing their ITR. Is there a separate tax exemption for Hindu families? This exemption […]