TDS Deduction 194C - Transporters owning more than 10 goods carriage -Rules and Draft Declaration Form

Under the existing provisions of section 194C of the Income Tax Act, 1961 payment to contractors is subject to tax deduction at source (TDS) at the rate of 1% in case the payee is an individual or Hindu undivided family and at the rate of 2% in case of other payees if such payment exceeds Rs. 30,000 or aggregate of such payment in a financial year exceeds Rs. 75,000.

Prior to 1.10.2009, section 194C of the Act provided for exemption from TDS to an individual transporter who did not own more than two goods carriage at any time during the previous year. Subsequently, Finance (No.2) Act, 2009 substituted section 194C of the Act with effect from 1.10.2009, which inter alia provided for non- deduction of tax from payments made to the contractor during the course of plying, hiring and leasing goods carriage if the contractor furnishes his Permanent Account Number (PAN) to the payer.

The memorandum explaining the provisions of Finance (No.2) Bill, 2009 indicates that the intention was to exempt only small transport operators (as defined in section 44AE of the Act) from the purview of TDS on furnishing of Permanent Account Number (PAN). Thus, the intention was to reduce the compliance burden on the small transporters. However, the current language of sub-section (6) of section 194C of the Act does not convey the desired intention and as a result all transporters, irrespective of their size, are claiming exemption from TDS under the existing provisions of sub-section (6) of section 194C of the Act on furnishing of PAN.

As there is no rationale for exempting payment to all transporters, irrespective of their size, from the purview of TDS, it is proposed to amend the provisions of section 194C of the Act to expressly provide that the relaxation under sub-section (6 ) of section 194C of the Act from non-deduction of tax shall only be applicable to the payment in the nature of transport charges (whether paid by a person engaged in the business of transport or otherwise) made to an contractor who is engaged in the business of transport i.e. plying, hiring or leasing goods carriage who fulfils the following two conditions:

(a)    such contractor owns ten or less goods carriages at any time during the previous year, and

(b)    such contractor furnishes a declaration with respect to (a) above along with his PAN

The amended sub section (6) would be as under:

(6) No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, where such contractor owns ten or less goods carriages at any time during the previous year and furnishes a declaration to that effect along with his Permanent Account Number, to the person paying or crediting such sum.

This amendment will take effect from 1st June, 2015.

Declaration Form Format

No format of declaration/undertaking has however  been prescribed. In view of this, the declaration ca take any form so long as it fulfills the requirement of the section 194C (6). However, an illustrative declaration could be on the following lines which may not be notarized. Please bear in mind that the declaration is required for each previous financial year.

Declaration under section 194C (6) for Non-deduction of Tax at Source

To

..................... (Name, address of the payer)

  

Declaration

  

I, Mr. XYZ, Proprietor/Partner/Director of M/s Sample Transport Agency, New Road, Delhi (hereinafter "The Contractor") do hereby make the following declaration as required by sub section (6) of Section 194C of the Income Tax Act, 1961 for receiving payment from the payer without deduction of tax at source.

1. That I/We am/are authorized to make this declaration in the capacity as Proprietor/Partner/Director.

2. That the contractor is engaged by the payer for playing, hiring or leasing of goods carriage for its business.

3.  That the contractor does not own more than ten goods carriage as on date.

4. That if the number of goods carriage owned by the contractor exceeds ten at any time during the Previous year 2015-16 (01-06-2015 to 31-03-2016), the Contractor shall forthwith, in writing intimate the payer of this fact

5.  That the Income Tax Permanent Account Number (PAN) of the contractor is AAAXX1234X. A Photocopy of the same is furnished to the payer along with this declaration.

Place: 

Dated:                                                                                                                        Declarant 

  

Verification

I the above named declarant do hereby verify that the contents of paragraphs one to five above are true to my own knowledge and belief and no part of it is false and nothing material has been concealed in it.

Place:

Dated:                                                                                                                         Declarant

Source-http://abcaus.in/

MS Word  Draft format of above declaration form under section 194C(6) are as under
https://drive.google.com/file/d/0B9EbT202gPKzSzF2cHM3TzcxZ3M/view?usp=sharing

TDS: Purchase of Immovable property- (Steps to fill form 26QB), Part-2

TDS on Sale of Property

I. Steps to fill form 26QB :

1. Log on to TIN NSDL website​ ( www.tin-nsdl.com ).
2. Under 'TDS on sale of property', click on "Online form for furnishing TDS on property (Form 26QB)".
3. Select the applicable challan as "TDS on Sale of Property".
4. Fill the complete form as applicable.
   (User should be ready with the following information while filling the form 26QB :
   1. PAN of the seller & buyer
   2. Communication details of seller & buyer
   3. Property details
   4. Amount paid/credited & tax deposit details
5. Submit the duly filled form to proceed. ​A confirmation screen appears. After confirming, a screen appears showing two buttons as "Print Form 26QB" and "Submit to the bank". A unique acknowledgement number is also displayed on the screen. It is advisable to save this acknowledgment number for future use.
   ​​Click on "Print Form 26QB" to print the form. Then click on "Submit to the bank" to make the required payment online through internet banking. Then proceed to the payment page through internet banking facility of various banks. For list of authorized banks, please referhttps://onlineservices.tin.nsdl.com/etaxnew/Authorizedbanks.html
6. On successful payment a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment​ being made.

Proceed to TRACES portal( www.tdscpc.gov.in) after 5 days to download Form 16B.

II. Steps to Download Form 16B:

1. Register & login on TRACES portal ( www.tdscpc.gov.in) as taxpayer using your PAN.
2. Select "Form 16B (For Buyer)" under "Downloads" menu.
3. Enter the details pertaining to the property transaction for which Form 16B is to be requested. Enter the Assessment Year, Acknowledgment Number, PAN of Seller and click on "Proceed".
4. A confirmation screen will appear. Click on "Submit Request" to proceed.
5. A success message on submission of download request will appear. Please note the request number to search for the download request.
6. Click on "Requested Downloads" to download the requested files.
7. Search for the request with request number. Select the request row and click on "HTTP download" button.

Source- www.incometaxindia.gov.in
http://www.incometaxindia.gov.in/pages/tds-sale-of-immovable-property.aspx

TDS: Purchase of Immovable property- Provisions of Section 194-IA, Part-1

As per a newly introduced section in the Income-Tax Act, 1961, (IT Act), a tax at the rate of 1% will be deducted on transfer of immovable property of R50 lakh and above. These changes are effective from June 1, 2013, and immovable property will include land (other than agricultural land). It will also include any building or part of a building.

Section 194IA of the IT Act provides that any person, responsible for paying to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land), shall, at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to 1% of such sum. Further it also mentions that no deduction is required if the consideration is less than R50 lakh.

A buyer will be required to deduct tax from the payment and deposit it. The buyer would be required to obtain the PAN of the seller, deposit TDS with the government and file a challan-cum-statement in Form No 26QB. A seller on the other hand will get a reduced amount from the actual sale consideration, which he had never anticipated.

Buyers will be required to issue a TDS certificate in Form 16B within 15 days to the seller. Form 16B can be downloaded from the website of the tax authorities. TDS credit would also be reflected in Form 26AS of the seller for claiming credit while filing the income tax return. It is important to note that in the absence of PAN, TDS up to 20% may be required to be deducted instead of 1%, subject to certain conditions.

The earlier provisions of the income tax Act didn't require buyers of immovable property to deduct tax before making any payment to a resident. A significant number of real estate transactions either remained under reported or unreported. Even if they were reported, PAN was not mentioned or incorrect PAN was mentioned. The latest change has been introduced to track such property transactions and promote proper reporting.
http://www.incometaxindia.gov.in/Charts%20%20Tables/TDS%20Purchase%20of%20Immovable%20property.htm