March Forward >>>
February is the month to remind you that March is next! and March is to remind you that nothing is left!
In the context of Income Tax planning for the Financial Year 2009-10, February and March are the last chances to do your bit to save the tax bite!
Most of the Salaried Employees would have received the Investment Declaration forms to be filled and submitted. Others who do not get this kind of reminder, better beware now!
Certain Do’s:
- Do invest to the maximum of Rs.1,00,000/- under section 80C. Please exhaust the limit in your best interest. By this you make certain savings for yourself and also save tax also…. which means double thrift.
- Do also check out the precautions to take… (Caution Note to 80C Deductions)
- Do pay your mediclaim premiums also within march… to claim u/s 80D of Income Tax Act
- For those in business — If you are planning to buy certain vehicles or fixed assets, feb and march are the best months to buy. Why? Because using the asset for one or two months before march end, will get you depreciation for whole 6 months!!!
- For those in business — If you are liable to deduct and remit tax at source (TDS) then better deduct and remit all the TDS relating to the period from April to February within 31st March. OR ELSE, the expenditure amount subject to TDS will be disallowed. Also do not forget PF/ESI dues… becuase they also warrant disallowances due to delay in payment.
- Do Check out the Budget for next Financial Year which will be announced in Feb end.
- Do consult your tax doctor i.e. your Tax consultant or your Chartered Accountant.
Certain Dont’s:
- Do not submit fake rent receipts or rental agreements for getting HRA exemptions, Do not submit fake medical bills for getting medical reimbursement exemption
- Don’t Invest for the sake of Tax Savings — Check out your liquidity requirements and THEN ONLY should you save for tax purposes. Remember: Savings, Investment and Business should be guided on merits and not dictated by Tax Laws.
- Don’t fall prey to Mutual Funds which claim as though they are tax planners and Investment managers for you. They silently add the danger disclaimer that “MUTUAL FUNDS ARE SUBJECT TO MARKET RISKS”. You know the market right! In-fact no-one knows the market. One day it touches sky, another day it sinks deep into the sea. What happens in the midst of this is that you are no-where!!!
- Do not consult your friends and colleagues for tax-planning. Consult only your tax consultant or chartered accountant. Remember: Crocin is neither for ‘all fevers’ nor for ‘all patients’.
There may be others to add to the list of dos and donts. I’ll do it whenever those strike me. You may also comment if something can be added.
- TAXE
Income Tax Rules Amendments – TDS Related
Certain amendments have been made by the Income Tax Department in relation to TDS related compliances. The Notification No. S.O.858(E) on TDS dated 25th March 2009 has been issued.
My personal analysis on the notification and summary of the amendments are given below in the most crisp manner possible!!!! Hope its useful!
Remittance:
* No change in TDS remittance due date
* The person responsible for making deduction, or payment of tax, under Chapter XVII-B shall, within the time specified in sub-rule (1), or sub-rule (2), -
(a) electronically furnish income-tax challan in Form No.17; and
(b) pay the amount by electronically remitting.
Certificates
| Form No. | Description | Mode of Submission | Due Date |
| F16 | Cert. Salary TDS | Physical | 30 Apr following the end of FY |
| F16A | Cert. Non-Salary TDS | Physical | 30 Apr following the end of FY |
| F27D | Cert. TCS | Physical | 30 Apr following the end of FY |
Challan
| Form No. | Description | Mode of Submission | Due Date |
| F17 | Challan | Electronic | within 1 week from end of the month, For 31 March within 31 May |
Returns
| Form No. | Description | Mode of Submission | Due Date |
| F24C | TDS Compliance Statement | Electronic | Q1-15Jul Q2-15Oct Q3-15Jan Q4-15Jun |
| F24Q | Return Salary TDS | Electronic | 15 June following the end of FY |
| F26Q | Return Non-Salary TDS | Electronic | 15 June following the end of FY |
| F27Q | Return Non-Residents | Electronic | 15 June following the end of FY |
| F27EQ | TCS Return | Electronic | 15 June following the end of FY |
A query to be solved!
TDS on professional fees
1. Facts of the Case:
Company:
- Company follows mercantile basis.
- Company creates a provision for audit fees for Rs.40,000/- for ‘FY 05-06’
- Company deducts TDS on above amount @ 10.3% = Rs.4120/- and remits to govt.
- Company issues TDS certificate to Auditor for the above TDS stating ‘FY 05-06’
CA Firm:
- Firm may follow mercantile basis or cash basis.
- Whatever it follows, Firm will raise the bill in ‘FY 06-07’ only and probably receive money in ‘FY 06-07’ only. So, income accounted in ‘FY 06-07’
- Firm will have to claim the TDS. But Certificate mentions ‘FY 05-06’. It can claim TDS certificate in ‘FY 06-07’ because TDS relates to the income which is accounted and offered as income, in ‘FY 06-07’.
2. Queries in the above Case:
Company:
- Whether Company should show as Provision for Audit Fees under provisions or Outstanding Expenses under Current Liabilities?
- If it is just a provision, should the company deduct TDS (because TDS should be deductible at the time of credit to the party or payment to the party whichever is earlier)?
- When should the company deduct TDS? In the TDS certificate what Financial Year should be mentioned?
- What happens, if auditor bill is different and provision for audit fee amount is different?
CA Firm:
- When should firm account the fees?
- When should TDS be claimed?
The query above relates to conceptual issues like provisions vs. liability, tds credit, accrual vs. matching concept….. The above is a food for thought and there is no proper consensus among the professionals. If you give your feedback the same may be beneficial for the public at large and the professionals at large. Your feedbacks are invited!
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