This lecture covers TDS (Tax Deducted at Source) and TCS (Tax Collected at Source) provisions under the Income Tax Act, including Section 194J for professional fees, technical services, director's remuneration, royalty, and non-compete fees with 30,000 threshold (except director's remuneration); Section 194M for individuals/HUFs with turnover ≤1 crore making payments exceeding 50 lakhs; Section 194N for cash withdrawals exceeding 1 crore (20 lakhs for non-filers); Section 194P for specified senior citizens (75+ years) with pension income; Section 194R for perquisites exceeding 20,000; Section 194DA for life insurance maturity proceeds exceeding 1 lakh; Section 194IA for immovable property sales exceeding 50 lakhs; Section 194Q for buyers with turnover exceeding 10 crore; and TCS provisions under Section 206C for specified goods including motor vehicles, tour packages, and foreign currency.
Lecture - 47B | CA/CMA INTER DT (INCOME TAX) | 100% ENGLISH | SEP -25 & JAN-26Añadido:
So 194J see there are five payments which are covered in 194J. Five payments five number one professional fees. Number two fees for technical services.
Number three remuneration or fees or commission to a director. We can call it director's remuneration also. Yes or no? But which is not covered under section 192.
Meaning that director is getting this remuneration not in the form of salary.
If he's getting this remuneration in the form of salary definitely the TDS will be deducted under section 192.
Meaning that all the remuneration which is received by non executive directors do you remember sitting fees, board meeting fees, commission etc. which is not in the nature of salary in the hands of director will be covered here. Okay. No.
Then royalty is there. Then non-compete fees. Do you remember Mr. Dubai Amani had a two had two sons Mkkesh Amani Anil Amani I gave you the example Anil paid 5,000 crores to MKkesh for not starting business telecommunication business that non-compete fees will also be covered now see if this payment is more than 30,000 if this payment is more than 30,000 if this payment is more than 30,000 if this payment is more than 30 30,000 separate limits are there. Okay. No. So during the relevant year, relevant financial year, if you are making any of these payments to a resident to a resident person and the aggregate amount of each of such payment is more than 30 then the TDS will be deducted under 194J. So 30,000 limit is given for 1 2 1 2 4 and five and not for three.
Meaning that director's remineration no limit is given.
What does that mean?
Any payment to the director whatever amount even if it is less than 30,000 TDS will be deducted under 194J. But on all the other payments the TDS will be deducted if those payments are more than 30,000. Yes or no? And these payments are made to a resident person by any person. So if I'm a person remember other than individual or HUF whose last year's turnover was not more than 1 CR whose last year professional receipt was not more than 50 lakhs other than this any payer can be there any payer making these payments to any resident person and the aggregate of each of such payment is more than 30,000 then the TDS is required to be deducted under 194J and for that uh director's remineration this limit of 30,000 is not applicable 30,000 limit is applicable for professional fees separately 30,000 limit applicable for fees for technical services separately 30,000 limit applicable for royalty separately 30,000 limit applicable for non-compete fees separately okay sir so now uh Krishna to you I'm paying professional fees of 25,000 Will I deduct any TDS? No, because the amount is not more than 30.
But to you only during the previous year I'm making a payment of royalty also 20,000.
Will I deduct TDS sir? 25 + 20 is more than give you a tight slap if you'll do that. 20,000 is royalty. Separate limit of 30,000. Is it more than 30? No. No. TDS 25,000 professional fees separate limit 30 you are going to check hello is it more than 30 no TDS even if the person is same and these payments are made you are not supposed to club all the payments yes or no but club all the professional fees received during the year total should be 30 or more than 30 club all the fees for technical services yes or no aggregate fees for technical services more than Got it sir? Now what is the rate of TDS?
When the TDS will be deducted payment or credit whichever happens earlier yes or no but what is the rate of TDS? The rate of TDS is 2%.
And sometimes it is 10% also.
Now see 2% will be on technical services fees for technical services. So if fees for technical services given then the TDS will be at what rate 2% fees for technical services okay not being professional services or even for royalty in the nature of consideration for sale distribution or exhibition of cinema cinematographic films wait now for technical services fees 2% is there.
Okay.
Royalty it can be 2% also or it can be 10% also.
2% on which royalty?
2% on the royalty for cinema films. So if you are paying royalty on c uh cinematographic films then it is 2%. Any other royalty it is 10%.
any other royalty it is 10% yes or no technical services fees 2%. Now they are saying that 10% in other cases meaning on this professional services 10%.
Director's remineration 10% non-compete fees 10%. Will you remember this only at two places 2% is there fees for technical services 2% and royal royalty on cinematographic films it is 2%. Rest everywhere it is 10%. Will you remember?
Now if the payment is made to a call center what the call center will be doing? Come on tell me call call center will be giving the technical services only. For example I'm a very big company. Okay.
Uh let's take an example of LG washing machines.
So I am LG washing machine manufacturer.
I am LG.
I'm selling my washing machines to all the customers. Now what if some customers are having some technical issues in operating the washing machine?
There is some technical fault in the washing machine.
Who will resolve my responsibility only?
So I will give a customer care number which will be printed on that washing machine. Have you seen that number?
Whenever you buy a refrigerator, there is a customer care number. You buy a washing machine, there is a customer care. That customer care number is not my number. That is a call center whom I have appointed. That see we are into what? We are into manufacturing. We know these these problems will come. Okay.
No. So the customers will keep on calling us.
See the clothes are not getting washed properly. The soap remains. The you know the water is not flowing properly.
Water intake is not happening. The water is getting clogged. It is not getting out. These problems they will ask. So what we are going to do? We'll appoint a call center to to that call center whatever technical questions which the customer will ask no we are going to train them once we are going to train them. So if Krishna is having that call center I'll tell the tell Krishna that Krishna I want 50 people or I will say that do whatever you want.
If you want to appoint 50 people, you appoint 50 people. But I am going to give the entire training on the technical issues to your staff. Now whenever the calls, technical calls will come regarding any issues in my my washing machines, we are training your staff. Let your staff provide the technical assistance.
Yes or no?
So now that call center which is run by Krishna they are giving Krishna is giving technical services to me.
We will just give the training and according to the training provided you are supposed to answer to our customers.
Can you do this? Yes. Monthly this much amount we are going to give you. So what we are doing? We are giving technical fees to call center.
It is a technical fees only now. So earlier what what used to happen technical fees used to uh there used to be a 10% rate on technical fees. But if the technical fees is paid to a call center it was only 2%.
So last year onwards what they did you know that for all technical services sorry the technical services provided by the call center the rate of TDS is only 2% then why a different rate of TDS is there for all the other technical services it should not be 10% it should be 2% only so all the technical services are now 2% because to call centers also the rate was 2% only getting my point so any technical services provided by the call center and for that if we are paying to the call center we will deduct TDS at the rate of 2%.
And any other person also providing technical services to that person also if you are paying the technical fees then also the TDS rate is 2%. Now will you remember professional fees it is 10% always director's remuneration 10% always non-compete fees 10% always royalty 10% always but only one royalty royalty from cinematographic films it is 2%. Will you remember? So in this section no remembering the rates is a task otherwise this section is done okay will you remember okay 194 J is done so when the TDS will be deducted payment or credit whichever is earlier what will be the threshold limit 30,000 30,000 threshold limit for all the payments except director's remuneration there is no threshold limit for director remuneration remember this Okay, next one. See the summary is given. Summary of the rates and threshold limit under 194J. Please read this summary properly once.
Read properly.
You'll come to know. Okay. Now pay attention.
Illustration number eight.
See, can you see here? In case the pay engaged only in the business of operation of call center, the tax shall be deducted at 2%. Which I've already told you. So please write it down here.
Technical services 2% if from call center or others.
If from call center or others both the places it is 2% only correct okay now pay attention illustration number eight very easy XY Z limited makes a payment of 28,000 28,000 less than 30 to Mr. Ganesh on 2nd August 2024 towards fees for professional service.
Okay. So he is Mr. Ganesh is getting 28,000 as fees for technical uh professional services and another payment of 25,000 to him on the same date on the same date towards fees for technical services. Discuss whether TDS under section 194J attracted or not.
Come on tell me the same example I gave with Krishna before even starting before even looking at this. The same example I gave if you remember 25,000 is not more than 30,000 fees for technical services not more than 30,000 no TDS then then 28,000 not more than 30,000 fees for professional services not more than 30,000 no TDS for both 30,000 limit shall be checked separately will you remember this is the end of question number eight okay Non-applicability of TDS under 194J.
An individual or HUF not liable to deduct tax at source if last year turnover this this this. Did I tell you this?
You all know this. Okay. Next one.
Since this provision requires such individuals to deduct tax only in respect of fees for professional service or fees for can be inferred that individuals and HFs are not required to deduct tax at source under 194J on royalty and non-compete fees. So on royalty and non-compete fees there will be no TDS if it is given by individual or HF. Okay. and individuals or HS will deduct TDS if their last year last year turnover is more than 1 CR or more than 50 lakhs as the case may be yes or no on some payable by way of fees for professional services exclusively for for personal purposes do you remember common point in the common point only I have discussed this okay what is the meaning of professional services don't do this don't do do all these things.
What is space for technical services?
Don't do all these things. Okay. Now, seventh also ignore. Don't do it.
This one also ignore. Point number eight also ignore. No need to do all these things. Okay. Now coming to 194 M. See after 194 J 194 K is there but that we have already seen. 194 LA A is also there. That also we have seen. Okay.
Now, now coming to 194 M. Now see 194 M talks about talks about if you are an individual or you are HUF and your last year turnover from business was less than equal to 1 CR or your last year gross receipt of the profession was less than equal to 50 lakhs then definitely Under 194 C, you are not liable to deduct TDS.
Under 194 H, you are not liable to deduct TDS. And under 194J, on professional fees, you are not liable to deduct TDS because these three sections are not applicable if the payer is individual or HF. Yes or no? So, you are an individual or HUF.
Last year, your business turnover was not more than one CR. Last year your professional gross receipt were not more than 50 lakhs. But this year you are making payment of any contract fees or you are making payment of any brokerage or commission or you are making payment of professional fees. Will you be liable to deduct TDS under 194 C 194 H1 194J?
No. Now because these sections are not applicable for you this year.
Understanding? But wait, if the contract fees paid by you during this year to any resident is more than 50 lakhs, deduct TDS under 194 M.
Or if the if the commission or brokerage paid by you during the current year to any resident, if it was more than 50 lakhs, deduct TDS under 194 M. Or if the professional fees paid by you during the current year to any resident then also deduct TDS under 194. If these three sections are not applicable on you and still you are making a payment such type of payments during the year to any resident person and these type of payments are more than 50 50 lakh limit separately for each huh not to combine.
So 50 lakhs uh more than 50 lakhs contract fees payment TDS has to be deducted on the entire payment.
More than 50 lakhs commission or brokerage TDS has to be deducted on the entire payment. Hello. More than 50 lakhs professional fees paid during the current year TDS has to be deducted under 194 M. Now this TDS no will be deducted only once when the payment exceeds 50 lakhs. getting my point?
Every now and then you are not supposed to deduct the TDS. So can I say under section 194 M also if you are getting covered you are not required to obtain TAN and follow the other procedures of TDS. Yes or no? So not required to obtain the TAN and follow the other TDS related compliances filing the TDS return quarterly return this that getting my point everyone.
So see rate of TDS has been reduced to 2%, earlier the rate was 5% over here.
So if the 50 lakh limit is crossed prior to 1st October only then the rate was 5%. But if that 50 lakh limit will be crossed on or after 1st October 2024, now the rate is 2%. when the TDS will be deducted at the time of credit or at the time of payment whichever is earlier.
Okay. Credit or payment of that sum because because of which the amount exceeds 50 lakhs. Yes or no? No tax is required to be deducted where some case may be aggregate amount of such sum during the financial year does not exceed 50. Meaning that 50 lakh is the threshold limit. If these payments are beyond 50 then on the entire payment the TDS is required to be deducted. Yes or no? Next one. Now non-applicability of TDS under section 194 M.
If you are already liable to deduct TDS under 194 C then go and deduct there.
Don't come here. Hello. If you are already liable to deduct TDS under 194 H, then go there. Don't come here. And if you are already liable to deduct TDS on professional fees under 194J, go there. Don't come here. Simple.
Okay. When are you going to come under 194 M? If you are an individual or HUF whose last year turnover or uh gross receipt was not more than 1 CR, not more than 50 lakhs and you were not li because of that reason you were not liable to deduct TDS under 194 C, 194 uh H and 194 J only then you are supposed to come here. But if you are already liable to deduct TDS under 194 C, go there. No. Why are you coming here? If you are already liable to deduct TDS under 194 H or 194J, go there. Why are you coming here? Getting my point? Now, no requirement to obtain 10. Okay. Now, illustration. Illustration number nine.
Okay. Examine whether TDS provisions would be attracted in the following cases and if if so under which section also specify the rate of TDS applicable in each case assume that all payments are made to residents. Okay. Now Mr. Ganesh an individual carrying on retail business with turnover of 2.5 crores in the previous year 2324. He is the payer.
Payer is an individual and last year turnover is also more than 1 CR. Now this type of pay making what type of payment? Contract payment for repair of repair of residential house. It is it is a contract of personal nature. See not covered by 194 C but can be covered under 194 M.
Getting my point? Not covered by 194 C but can be covered under 194 M. For 194 C I told you that professional nature contracts are not covered. But for 194M there is no such requirement. Only the payment which is referred under 194 C.
Such type of payment you are making. Now that payment can be made for your professional work also or or for your personal work also. Getting my point? So payment is how much? Five lakhs. See you are fortunate that the payment is not more than 50 lakhs. You are not going to deduct any TDS. No TDS is there. Come on see the solution since Mr. Ganesh an individual carrying on retail business turnover businesses contract payment for repair of residential house aggregate payment is five lakhs no TDS is not attracted under 194 C since the payment is for personal purpose TDS under section 194 M is not attracted why because it is not it is a personal no as the aggregate of the contract payment does not exceed 50 lakhs this is the reason if this would have been more than 50 no definitely the TDS under 194M would have been there getting my point next One. Next one. Point number two.
Mr. Rajesh. Again an individual wholesale trader whose turnover was 95 lakhs. Done. Done. Done. Done. Done. If your turnover was 95 lakhs. No. Meaning not more than 1 CR. Are you liable to deduct TDS under 194 C 194 J 194 H?
No. Sure. But can you be liable to deduct TDS under 194?
See here. No. Here definitely 194 C was getting applicable because the turnover was more than 1 CR. So such type of individual will not be covered by 194 M.
Getting my point.
Even if you try to cover no that the payment is not more than 50 lakhs. But first of all this is not covered by 194 M because the turnover was more than 1 CR. So for an individual if the turnover is more than 1 CR the TDS provisions of 194 C gets attracted and under section 194 C no TDS will be deducted because the payment was for personal purpose.
Getting my point and even if you would have been covered by 194 M. Hello 194 M for the first time not applicable here. Why? because 194M gets attracted only if you are a individual whose last year turnover is not more than 1 CR.
So because of that reason he's not getting covered under 194 M and even if he would have got covered under 194 M still 194 M was not attracted because the payment is not more than 50 lakhs.
Getting my point in the first point I'm talking about now the second point if I'm saying see no the turnover is not more than 1 CR. Okay. So definitely you are not going to be covered by you are not going to be covered by 194 C.
194 C does not apply. Now what are you doing? You are making the contract payment for reconstruction of residential house made during the period January to March 25. So Jan to March 25.
This year in 3 months you are making this payment and see the amount 20 lakhs 15 lakhs 20 lakhs. Total is 55 lakhs.
Will there be any TDS?
Under 194 C there will not be any TDS.
But under 194 M there will be TDS because the payment now is more than payment now is more than 50 lakhs. 194M will get attracted here. Please check.
See 55 lakhs yes 194 m will get attracted and see all the payments are made on or after 1st October 2024 and with effect from 1st October 24 the rate of 5% has been made 2%.
Okay. So Rajes is a is an individual whose last year turnover was not more than 1 CR. So definitely he is not going to get covered by 194 C but he can be covered by 194 M. Yes he is getting covered under 194 M as the total payment made for one contract total payment aggregate payment is more than 50 lakhs.
So on the entire entire amount of what 55 lakhs he's going to deduct 2%.
Since the aggregate of payment exceed 50 lakhs since it turnover does not exceed TDS provision under 194 C has not attracted in respect of such payments because for him 194 C is not applicable.
M is applicable and under section 194 M he is going to deduct 2%. Okay. Now is he going to deduct TDS when he'll make the first payment 20 lakhs? No. Second payment 15 lakhs? No. The third payment when he'll make no at that time he's going to deduct the TDS on the entire amount getting my point everyone now Mr. Satish who is a salaried individual. Now tell me Satish is a salaried individual.
Definitely he is not doing any business or profession. So last year his turnover and gross assets are definitely less than the thresh uh limits once or 50 lakhs as the case may. So now he's making the payment of brokerage 194h to buy a residential house and see the brokerage paid is 51 lakhs. Is it more than 50? Yes, 194 M will be attracted because he is also not covered by 194 H.
So he'll be covered by 194 M. And as per 194M, he's going to deduct TDS at the rate of 2% on this entire 51 lakhs.
Please check 51 lakhs. Yes, 194 M 2%.
Yes or no?
And for Satish 194 H was not getting applicable. Hence we have covered him under 194 M. Getting my point? Next one.
DJ a pensioner. Pensioner means definitely he's not doing any business or profession. So last year turnover, last year gross receipt not more than once year, not more than 50 lakhs. So he is making a contract payment from October to November for reconstruction of residential house and it is 48 lakhs not covered by 194 C for sure and 194 M also not applicable since the aggregate payment is not more than 50. Getting my point? So TDS provisions 194 C are not attracted and uh TDS provisions under section 194 M are also not applicable since the payment is 48 lakh does not exceed threshold of 50 lakhs.
See these kind of questions will come in your exams please for God's sake four out of four you should get the in this TDS provisions four out of four in TDS four out of four in return of income eight marks will you be able to do it eight marks and the rest of the things we have done out of that please score 32 out of 32 sorry how much 42 marks out of 42 please score 30 so 30 + 8 at least 38 35 If you are scoring out of 50 that will be a decent score for me.
Okay.
Now see in your bank account when you put the money when you deposit the money your income you are earning you are paying tax on that income. Now that income which is there in your bank account on which you have already paid tax. Now whenever you'll withdraw that money from the bank also know on that withdrawal also the TDS is there.
Cash withdrawal.
Government wants to demotivate the transactions in cash.
Hence 194 N is there. Otherwise the amount which you are withdrawing from your bank know is not your income.
Withdrawn amount withdrawn amount. The amount which is there already in your bank account when you withdraw it. The government cannot say that see you have withdrawn. No this is your income. No this is not my income. The amount which got deposited in my bank was my income.
that is already taxed. Now out of that if I'm withdrawing cash, how can you say that cash withdrawal is my income?
So cash withdrawal is not your income.
But still this is the only exceptional case where what happens even if the amount coming to you amount withdrawn by you in cash from your bank even if that amount is not your income still there is a TDS 2%.
If that withdrawal is more than 1 CR during the year. But wait, wait, wait.
If a cooperative society is withdrawing, who is withdrawing? Cooperative society is withdrawing, then the bank will not deduct TDS at 2% when the withdrawal is more than 1 CR. The bank will deduct 2% when the withdrawal is more than 3 CR.
Getting my point? So under section 194N what they are saying that every person being a bank cooperative bank or a post office. So you might be having some account in any bank. You might be having some account in a post office. You might be having some account in cooperative bank. From that account in a bank cooperative bank or a post office if you are withdrawing money. Okay. If you are withdrawing money in cash exceeding rupees 1 CR so during the year your total withdrawal so first start withdrawing there will be no TDS no TDS till the time you don't reach 1 CR the moment your withdrawal becomes more than 1 CR in this year so any excess withdrawal over and above 1 CR on that the bank will deduct TDS at the rate of 2%.
Hello. How much? 2%. But wait, the person who is withdrawing is a cooperative society. The person who is withdrawing is a cooperative society.
Then the limit is 3 crores over and above 3 crores the withdrawals will go only then the TDS will be applicable and that is also 2%. 2% of the entire sum no anything over and above 1 CR on that excess amount the TDS will be deducted so till the time during this year now you'll keep on withdrawing over and above 1 CR whatever withdrawals you'll make on that excess withdrawals 22% TDS will be deducted but don't worry that 2% you are not going to show as your income still you are going to get the credit of that so this is the only case where the TDS which got deducted. You are not showing that TDS as your income. Still this TDS is allowed to you as a credit tax credit. Why? Because this is the only case where the TDS is not deducted on the amount of your income.
The cash withdrawal is not your income.
So out of the cash withdrawal some amount is deducted as TDS. Are you going to show this cash cash withdrawal as your income gross amount? No. So definitely the TDS which got deducted was never shown as your income.
Still you are going to get the credit of this TDS. Write down there only. Write down there only. Even if please write down I'm dictating even if this TDS is not shown as income because cash withdrawal is not your income.
Even if this cash even if this TDS is not shown as income because cash withdrawal is not an income still the tax credit for this amount of TDS still the tax credit for this amount of TDS under section 194N n shall be available.
So don't forget to reduce this amount of TDS from your total tax liability. Even if you have not shown this TDS as your income, still take the credit of this TDS. Getting my point? Now if you are a regular non-filer, you have not filed your return for the last 3 years and now you are withdrawing money from your bank. Now the limit for you is not one cr it is only 20 lakhs.
So the moment your cash withdrawal from the bank will go beyond 20 lakhs 2% TDS will be deducted and in this year up to one year 2% TDS will be deducted. The moment you'll cross one CR the TDS will now be 5%.
But this is applicable only if you are a regular non-filer. Meaning that since the last 3 years you have not filed your return. Okay. So in the last 3 years all the 3 years you have not filed your return then in this year whatever cash withdrawal you are going to do from the bank over and about 20 lakhs 2% TDS will be deducted up to 1 CR. Okay. And the moment in this year your turnover your cash withdrawal exceeds once year on the excess over and above once year now the TDS the bank will deduct at the rate of 5%.
Getting my point? Now just imagine why do you want this much cash?
If you want to make some payments to someone only then you are you want this cash in your hand. No otherwise what you will do with this cash this much amount of cash the logic behind this section I'm telling you see if you are withdrawing this much amount from your bank meaning that you are going to pay this to someone no and don't you think the person to whom you will pay in cash is he ever going to come and show this amount to us as his income? No. So you are you are motivating the tax evasions.
If you want to pay that person pay in check no pay through bank. Why are you withdrawing money and giving it to him?
People like you know because of the people like you. Those people who are getting income in cash from you they are not paying tax to the government.
So we cannot do anything about them. But we can pinch you. No, we are pinching you.
Don't don't no not more than once a year. See more than once a year. Wait.
TDS. So now you will be you know worried and you will convince that guy please I will not pay more than more than no if you want to take from me take in check.
Now you will insist because if you are not you know insisting him the TDS you will have to bear getting my point. So to demotivate the persons different different types of assess that please don't deduct please don't withdraw the cash and please don't pay the cash to someone pay the amount in bank through banking modes this 194 n is there now see the moment it has come no the rate is what the rate is 2%. And that too also if it is more than once we are very relaxed because we never have this much amount in our bank accounts who are supposed to worry. Those people who are having this much cash in their bank.
So forget that. No what is our what is our problem? There is no problem to us.
After some time no this once year will reduce.
So more people will come in this coverage. See starting from the very beginning if they would have kept the lower threshold no for tax deduction and more people would have covered everyone would have started talking against the government. So the government is very smart.
Let us not bring this thing for all. Let us bring this thing for those people who are very big. They cannot agitate. If they will come to agitate, we'll catch them.
Others will not say anything because the provisions are not made applicable for them. After few years, no slowly and gradually we will keep on reducing this limit so that majority of the people's people are getting covered and if majority of the people are getting covered no now even a single rupee withdrawn from the bank will attract TDS.
Just imagine if the person who is withdrawing more than 50,000 in a year TDS will be deducted. Will you ever dare to withdraw more than 50,000? No.
But to get that 50,000 of limit it will not be directly made applicable otherwise everyone will be against the government. Getting my point?
Slowly and gradually slowly and gradually one day this section you'll see. See now in the new provisions now the new income tax act has come 2025 just now rolled out yesterday only. Okay. So in the new provisions I'm yet to see these things.
Okay. Maybe in the new income tax act they would have changed something here.
God knows and maybe later on in that new income tax act they want to bring s such kind of changes. Who knows? Yes or no? So did you understand what I discussed about?
Okay. Now please pay attention and 3 cr limit you will always see a if the person withdrawing the money is cooperative society always check 3 crores okay now see nonapplicability of 194 end transaction 194 ntds please read this part properly once read why white label ATM operators do you remember do you know ATM have you gone to ATM ATM is not run by the Bank ATM is a property of the bank only that is a location where the bank you know puts keeps some money in that ATM machine.
So refilling the money is done by some other agency. That agency will keep a will maintain a account with the bank.
That agency will tell the bank see you are not supposed to send your people to each and every ATM location. Don't worry we are good at that.
We have security staff with us. Black color van also we are having. You must have seen standing outside the ATMs. So black color van we are having. We are security agencies. Okay. So we'll maintain one account with you. In that account we'll maintain some cash also with you. Okay. And what we'll do from this account only we'll withdraw money and we'll go to different different different different ATM at different locations and we'll what we'll do we'll refill the ATMs with money. So to refill the cash in the ATMs I will have to withdraw the cash from my account. No. And if that is more than one CR the bank is going to deduct the TDS. No in these cases the TDS will not be deducted. So these are genuine cases.
Just read them once you'll understand.
Okay. Next one examples. Person in 1 to4. See the example which is given below. Okay. In all these examples the TDS under 194N is applicable or not applicable. Okay. So see four in all the cases no return of income is filed for last 3 years. So the limit for TDS will not be 20 lakhs. It will be 1 CR over and above 1 CR TDS will be deducted and if the person withdrawing is what a cooperative society then limit not will not be 1 CR it will be 3CR. Now in case number 7 and 8 and 9 and 10 in all four cases return of income for the last four years sorry last 3 years is not filed.
Getting my point? So for them the by default the limit will be 20 lakhs. Over and above 20 lakhs it will be 2%. And over and above 1 CR it will be 5%.
Getting my point? So please see these examples properly. Any of these cases can come in your examination.
Okay. Mark these examples important just now. Right now only mark these examples important please.
Done sir.
Hershit.
Person making the withdrawal is an individual. Hershit from which bank? SBI. On 1st July 24 he has withdrawn 1 cr 10 lakhs.
Is he withdrawing more than 1 CR? Yes.
On the excess 10 lakhs 2% TDS will be deducted.
Yes or no? Now Mr. Pranau he is also an individual from SBI on 1st August 2024 he is withdrawing only 90 lakhs. Will there be any TDS? No TDS since the withdrawal is less than what once year.
Now check cooperative society is withdrawing from a bank on 1st September 24. How much? 2 cr 70 lakh. Is it more than 1 cr? Yes but still there will be no TDS because for cooperative societies the limit is 3 crores. Okay. No. Now another cooperative society 1st September withdrawing 3 cr 10 lakh. Will there be a TDS? Yes. On 10 lakh rupees 2% TDS will come. Yes or no? Now next one. Mr. WBO an individual he's withdrawing from a cooperative bank. See you are not supposed to see from where it is withdrawn. You are supposed to see who is the withdrawer. Withdraw person withdrawing. Person withdrawing is a individual. He is withdrawing 2 cr 10 lakh. 2 cr 10 lakh is more than 1 cr no no so on the excess 1.1 cr 2% tds will be there now person withdrawing is a company so how much uh the company is withdrawing 1 cr 5 lakhs hello so on the 5 lakh rupees which is in excess of 1 crds will be deducted assuming that they have filed their return on or before the due dates okay last 3 years returns they have filed now coming to 78 Eight a firm is withdrawing 90 lakh rupees is the withdrawal more than 20 lakhs because since the firm has not filed the return for last 3 years then we don't have to check we don't have to check 1 CR we have to check 20 lakhs so is the withdrawal more than 20 lakhs yes even if it is less than 1 CR but it is more than 20 lakhs so 20 lakhs to 90 lakhs on this entire 70 lakh 2% % TDS will be deducted yes or no and now Mr. Wun who has not filed his return for the last 3 years okay 1 cr 20 lakh withdrawal is there so anything over and above 20 lakhs up to 1 CR is 80 lakhs on that 2% will be there and anything over and above 1 CR 20 lakhs it will be 5%.
Hello sir easy no very easy okay next one Mr. Rakesh withdrawing 45 lakhs over and above 20 lakhs how much he's withdrawing 25 lakhs on that 2%.
Cooperative society. Now even if the cooperative society is there 3 cr limit will not be applicable here for the limit of 3 cr this society should have filed return last 3 years return non- filer so for all the non- filers the limit is 20 lakhs only getting my point so over and above 20 lakhs up to 1 cr it will be 80 lakhs into 2%.
And over and above 1 CR it is 2 crores 30 lakhs 2 crores 2 crores 80 lakhs 30 lakhs at the rate of 5% sorry for cooperative society we'll see one year not not uh this uh one year over and about 20 lakhs the TDS will be deducted over and about 20 lakhs TDS will be deducted but up to three crores up to one no up to 3 kores it will only 2%, and over and above three three uh 3 crores then it will be 5%. Okay. So for all of the others 20 lakhs limit is there. For cooperative societies also 20 lakh limit is there but for others 20 lakhs to 1 CR 2% and for cooperative societies 20 lakhs to 3 crores the limit will be TDS will be 2%. Over and above 1 cr 5 5% over and above 3 crores it will be 5%. Yes or no? So these are few examples which you are supposed to see properly. Okay. 194 N is done. Now coming to see this chart. 192 A done 194 done. Then we have also done 194 B also done 194 BB. Then we have done 194 D 194 DA also done 194 G I A done. Then 194 K also done 194 LA also done. Now, now 194 P last section P and then there is 190 for Q and R. Okay. See 194 Q I will be covering with always do this section.
Please write it down here only along with 206 C 1 H.
So there is a TCS provision along with TCS provision of 206 C1H we are going to do this. Okay. Now so with that section I will connect it. Okay. Pay attention.
194 P is applicable to a specified senior citizen. Tell me a specified senior citizen. Now who is a specified senior citizen? I'll tell you whose age at any time during the previous year is greater than equal to 75 years. So we are not talking about all the senior citizens who are 60 years or more. We are talking about only those senior citizens whose age at any time during the previous year is 75 years or more.
Now this senior citizen is earning only one income pension.
Now this pension is coming in a bank.
So pension is getting credited in a bank account. In any bank in a bank account in any bank.
So what your employer is doing? Your employer is giving you pension but he is depositing that pension in any bank account. So you have a bank account with any bank. You have a bank account in any bank and in that bank account your pension is getting credited. Now with that same bank what did I say? With that same bank same bank where you are having this account where your pension is getting credited. Yes or no? With that same bank you are having a time deposit account also.
Time deposit account you mean fixed deposit sir? Yes sir. Yes. Yes. With that same bank where your pension is getting credited with that same bank you are having one more account that is a time deposit account. Now on this time deposit account whatever interest whatever interest this bank is going to pay to this senior citizen if that interest is more than 50,000 the TDS provisions of 194A will be applicable don't you think so because under section 194A interest on time deposit account given to a senior citizen if that amount is more than 50,000 the TDS will be deducted under 194 for a yes or no. So do one thing.
Senior citizen, Mr. Senior citizen, please give one declaration.
Please give one declaration in prescribed format to this bank.
Please give one declaration in the prescribed format to this bank that I don't have any other income except this pension and the time deposit account interest.
other than these two incomes I'm not having any other income. So in the declaration what this senior citizen has to say in that declaration senior citizen has to declare to that bank only where he is having the pension account and this time deposit account also that C bank I don't have any other income except for the pension income which you know only that how much I am earning because the account is with you only hello and except for the interest on the time deposit account which is given by you only. So are you aware about all my incomes?
Calculate my total income and file my to calculate my total income and calculate the tax on that. So what the bank will do on receipt of such declaration, the bank will now bank will now compute compute the total income of such senior citizen and on that total income the bank will determine the tax liability.
Out of that tax liability, bank will reduce the TDS which was deducted under section 192 by your employer from your pension.
possible. No, pension is your salary income. So on that pension income, your employer might have deducted some TDS under section 192.
After deducting that TDS, whatever balance tax remains, no balance tax, that balance tax is the TDS under section 194P which the bank will deduct from this interest. There is no requirement to deduct this 194 ATDS.
Got it sir.
There is no requirement to deduct any TDS on this time deposit account under 194A. If if if the senior citizens gives the declaration to the bank to compute the total income as he is not having any other income other than these two incomes to compute the total income and compute the tax liability and after reducing the TDS on his pension income his salary income under section 192 whatever balance tax is there you deduct that balance tax out of my interest which you are going to give me as what?
As my income. Yes or no? So that balance tax which is supposed to be now deducted by the bank is a TDS which the bank will deduct and this TDS is as per section 194P.
Now this much tax will be deducted by the bank out of the interest income on this time deposit account and will be given to the government. Now tell me whatever tax which this poor fellow was supposed to pay to the government entire tax he has paid on the pension income whatever tax was there who has deducted employer has deducted and paid to the government and on the balance income whatever tax was there which was supposed to be paid by him that got deducted by the bank who is paying what interest on time deposit account entire tax is gone no other than this he's not having any other income So there will be no requirement of deducting TDS under 194A because now this amount balance amount is deducted is deducted as what his TDS under 194B and this senior citizen will get an exemption from filing his return of income also. Now you are not required to file your return of income also. Got it sir? This was your section 194P. Since the time this section has come, this has not been asked for a single time. Might be you are the lucky person to whom this can be asked.
Okay. Will you be able to write down?
Did you understand this entire section?
Okay. Now 194 P is done. Read this at home. Okay. No, you'll get the same things which I have explained. Not a single thing will be different. Don't worry. Okay, next one. See how much stories they have written and if you'll keep on you know reading these stories you'll go mad understanding. Now come to 194Q let it uh let's do that uh later on. 194R have you heard about perquisets?
Perquisites given by an employer to employee will be taxable for employee under the head salary as your salary income on that the TDS will be deducted under 192. So we are not bothered about that TDS perisites can be received in the course of business or profession also by a businessman.
So the person who is going to give you these benefits, the person who is going to give you these benefits in the course of your business or profession will also deduct the TDS on your perisites which are taxable for you under the head PGBP provided the value is more than 20,000 and provided that the person To whom this perquisite is given? That person is a resident.
So is the perquisite given in the course of business or profession? Yes.
Is the amount more than 20,000? Yes. Is it given to any resident person? Yes.
Then 194 R says that TDS will be deducted.
Understanding?
If the perquisite is given in cash then on the entire value TDS will be deducted. But what if the perquisite is given in kind you know what to do. Tell the opposite person to deposit that tax.
Hello. If that opposite person has deposited that tax only then release that benefit otherwise don't give that benefit.
Understanding? But wait if that opposite person has not deposited the tax then it will be assumed that whatever benefit you have released is after TDS so we'll recover that TDS from you just like that cross multiplication which we did know for winnings that same type of cross multiplication will happen here but the rate of TDS now it will not be 30% it will be only 10%. Got it sir? Hello. So now any benefit any benefit or proposite whether convertible into money or not arising from business or profession okay the provisions would apply to any benefit or proposite whether cash or in kind partly in cash or in kind okay no why are you giving the same thing again write down perisite in the course of business or profession that's it this payment is covered now who is going to give this payment any person can give this payment can you see other than an individual or HUF not whose last year's turnover was not more than 1 CR last year's gross receipt was not more than 50 lakhs such type of individual or HF making this payment giving this benefit they are not liable to deduct TDS under 194R so six places where the payer should not be an individual or HUF whose last year turnover was not more than one CR last year gross it was not more than 50 lakh six places I told you 194 A 194 C 194 H 194 I 194 J and this 194 R.
If the payer is such individual or HF then these provisions are not getting applicable.
Will you remember who should be the pay? Pay can be any person but he has to be a resident.
Then the value of benefit value of benefit should be how much? More than 20,000. See more than 20,000 in the financial year. Then the on the entire value of benefit 10% TDS will be deducted by the payer. Done sir?
Sure sir.
Very good.
Now this was the end of your TDS provisions up to 194 are whatever TDS provisions are there we have covered all of them okay not a single TDS provision is left now pay attention illustration number 10 we are going to solve this examine the applicability of the provisions of TDS under section 194DA now this section is related to 194DA if you remember 194DA life insurance premium sorry life insurance policy amount coming not exempt under 1010D then on that amount the TDS will be deducted. If the total amount coming is more than more than or equal to 1 lakh then whatever taxable amount is coming on that TDS will be deducted at what rate 5% but that rate has been changed to 2% with effect from 1st October do you remember? No. So now this is Mr. X is resident due to receive 4.5 lakhs.
He's receiving more than one lakh. Due to receive how much? 4.5 lakhs mean receiving more than one lakh on 30th June 2024. Meaning prior to 1st October 2024 yes or no towards maturity proceeds of LIC policy taken on 1st July 2021.
See the policy was taken on 1st July 2021 and the sum assured was four lakhs and the annual premium was 1 lakh 25.
Gone gone gone. Gone. Why? I'll tell you. See if the policy is taken on or after 1 April uh 1st April 2012 and the policy is not taken for any handicap etc. Then on that policy how much should be the premium? 10% of capital sum assured. So what is the capital sum assured? Four lakhs 10% of that 40,000.
So the maximum premium on this policy should have been 40,000. How much premium you are paying every every year?
1 lakh 25 1 lakh 25 are you paying? No.
So tell me will the maturity proceeds on this policy which you are receiving right now 4 lakh 50,000 will it be exempt? No it will not be exempt under 1010D. So now there will be a TDS requirement. Now TDS will be deducted on the entire 4 lakh50 or on the taxable amount on the taxable amount. Okay. Now see since the annual premium exceed 10% then maturity proceeds of 4.5 lakhs are not exempt under 1010D in the hands of Mr. X. Therefore, tax is required to be deducted at the rate of 5%. Why 5% is taken? Because the maturity proceeds are coming prior to 1st October 2024. Yes or no? In the hands of Mr. X uh on the amount of income compressed there in 75,000 was the income and how this 75,000 they have calculated 1 lakh 255,000 into three meaning the total premium total premium was 1 lakh 25,000 for 3 years starting from 1st July 2021 July 21 to 22 22 to 23 23 to 24 3 years premium would have been paid 125 125 125 so that 125 premium for 3 years will be 3 lakh75,000 so can I say in in that 4 lakh 50 this 3 lakh75,000 is coming back but don't you think that this entire 1 lakh 25 1 lakh 255 1 lakh 255 you would have already claimed as a deduction under ATC so the premium which is coming back to you which was not allowed under the income tax act will only be reduced getting my point will only be reduced reduced. So what they are assuming that this 1 lakh 25,000 would not have been allowed. So reduce that 3 lak 75,000 fully. So what is the income component?
They are talking about the income component.
The taxability the taxability under the head if I have already discussed with you that the premium which was not allowed to that extent the amount will be reduced. So now they are not saying anything that whether this 1 lakh 25,000 was allowed or not allowed. Getting my point?
Maybe some other deductions other other payments under section ATC would have been claimed. So if this amount was not allowed then this amount is coming back.
If this amount was not allowed this amount is coming back. Since nothing is mentioned they are reducing that entire 1 lakh 25 1 lakh 255 1 lakh 25 so how much is the taxable amount 75 so even if that 75,000 is not not more than one lakh on that entire amount the TDS will be deducted getting my point so on that 75,000 the TDS will be deducted at what rate 5,000 4 lakh50 minus 3A75 - 3A75 why - 3A75 because it was the premiums which are coming back and assuming that these premiums were not allowed assuming that these premiums were not allowed these premiums are reduced.
Okay. So out of 450 minus 375 how much excess money is coming how much excess money that money is your income the premiums coming back to you is not your income anything over and above that premium is your income on that the TDS will be deducted at the rate of 5%. Did you understand this? Hello sir. Next one. Now Mr. Y a resident is due to receive 3.95 lakhs. Again more than one lakh he's going to receive okay on 31st of December 2024 on LIC policy taken on 31st December 2011.
So on this policy 3.5 lakhs 20% should be the premium because the policy was taken prior to 31st March 2012. So how much should be the premium? Come on tell me. Premium should be 3 lak 50,000 into 20%. So every year premium should not be more than 70,000.
Is the premium more than 75,000 70,000 every year? No. Every year the premium is 26,100 only. So whenever such type of policy gets matured, its entire maturity proceeds gets exempted. And if the majority proceeds only is exempt there will be no TDS under section 194 DA. Got it sir? Everyone next one. Mr. Zed a resident is due to receive 95,000. Go on gone gone. Here only since the amount which is coming to you on maturity that amount itself is not more than one lakh there will be no TDS under 194D.
Even if even if this amount is not exempt under 1010D this amount will not be exempt. Please check the amount of policy was taken for 90,000.
So the annual premium and the policy was taken on 1st August 2017. So the annual premium should not be more than 9,000.
Every year you are paying 10 10,000 premium more than 9,000. So the maturity proceed should not be exempt. It should be taxable only. out of this whatever premium coming back reduce that and the balance amount will be taxable. Getting my point but still there will be no TDS on that amount. Why? Because the total amount coming is not more than 1 lakh.
194DA will be applicable only if the amount coming from the life insurance policy is 1 lakh rupees or more. And since that amount is not more than is not 1 lakh rupees or more there will be no TDS even if this amount is not exempt.
Getting my point? So this was your third point. Now illustration number 11.
X sold his house property in Bangalore as well as his rural agricultural land for a consideration of 60 lakh and 15 lakh. forget about rural agricultural land because there will be no TDS when the rural agricultural land or urban agricultural land is sold.
So the buyer will deduct TDS only from the sale consideration of immobile property other than agricultural land. Do you remember? So other than agricultural land, house property what was the sale consideration? 60 lakhs 194 with section I A the TDS will be deducted at what rate 1%.
1% the TDS will be deducted. First of all, please check here the value is how much? Wait a h okay this is not about TDS. This uh this question talks about the tax treatment.
First let me read the entire question then I'm going to discuss. Okay. X sold his property in Bangalore, house property in Bangalore as well as rural agricultural land for a consideration of 60 lakh and 15 lakhs respectively to Mr. Why? On 1st August 2024, he has purchased the house property and the land in the year 2023.
So 2023 he purchased the land and the house property and in 2024 only meaning the meaning that the period of holding is less than equal to 24 months and he has sold it less than equal to 24 months period of holding and he has sold it. So short-term capital asset for 40 lakhs and 10 lakhs. So he has purchased for 40 and 10 and he has sold for 60 and 15.
Okay. Stamp duty value of the date of transfer is 85 lakhs and 20 lakhs.
85 lakhs and 20 lakhs. Stamp duty value sir. If the stamp duty value is more than the sale consideration then sale consideration will be ignored and the stamp duty value will be deemed to be the full value of consideration sir in both the cases. But for rural agricultural land no sir for rural agricultural land there will be no capital gain calculation. So forget about it selling price also and forget about its standard value also. Getting my point sir? Next one.
Examine the tax implications in the hands of Mr. X and Mr. Y and the tedious implications if any in the hands of Mr. Y assuming that both Mr. X and Y are resident Indians. Now first of all let us talk about Mr. X. Mr. X is selling two properties.
One is capital asset another is not a capital asset. Okay. So residential property is selling for 60 but what is the stamp duty value? 85. 50 C will be applicable and his capital gain will be calculated on the basis of stamp duty value. So for Mr. X 50C will be applicable and his time duty value his time duty value will be deemed to be his full value of consideration minus the cost of acquisition 40 lakhs so 45 lakhs will be the short-term capital gain in the hands of Mr. X will you remember this and since rural agricultural land is not a capital asset so no capital gain will arise in his hands now talk about Mr. Y Mr. Mr. Y is buying the property for 40 uh for 60 lakhs whose stamp duty value is 65 lakhs and Mr. X and Mr. Y are not relatives. So can I say for Mr. Y the provisions of gift will now be applicable 56 to 10. Hello sir Mark this question important this can be asked in the exam. Okay so for Mr. Why gift provisions will be applicable? Because something whose stamp duty value is 85 lakhs, you are buying it for 60 lakhs.
25 lakhs is the difference that 25 lakhs is more than 50,000 or more than 10% of sale concentration which is 6 lakh.
Hello.
So the difference is 25 lakhs which is more than six lakhs. So the gift provisions are applicable and the entire 25 lakhs will be taxable for Mr. Y as what? as gift under the head if rural agricultural land there will be no gift provisions applicable because that is not a capital asset only for the transfery also for the recipient also the asset should come as a capital asset no so that rural agricultural land itself is not a capital asset so for rural agricultural land whatever benefit is happening it will not be treated as his gift okay but only the benefit happening in the case of residential property will be treated as his gift. 25 lakhs. Will you remember this? 25 lakhs.
Hello sir. Now pay attention. What are the tedious implications? Come on tell me. TDS implication. Since the sale consideration of the house property or the stamp duty value of the house property exceeds 50 lakhs.
Exceeds 50 lakhs. Mr. Y is required to deduct tax at source under section 194 IIA. The TDS would be 85,000 being 1% of 85 lakhs. Now what did you understand from here? If you have to check the sale consideration or the stamp duty value, both the amounts you are supposed to check. If any of these amounts is more than 50 lakhs, the TDS provisions will be applicable.
So if you are buying an immobile property, you are a buyer. Are you buying it from a seller? Resident seller? Yes. Now from the resident seller whatever property you are buying the sale consideration should be more than 50 lakh 50 lakhs or more then the TDS will be applicable. Now sometimes what happens you suppress your sale consideration then stamp duty value will be checked.
If the stamp duty value is 50 lakhs or more the TDS will be deducted understanding but the amount of TDS will be deducted on the sale consideration or the stamp duty value whichever is higher.
So what is the sale consideration here?
60 lakhs. Are we charging 60 lakhs as your income or we are charging 85 lakhs as your income? Mr. X, what is your income?
To calculate your capital gains, what was your income, Mr. X? Did we take 60 lakhs or we have taken 85 lakhs? So we are considering your income to be 85 lakhs. Would we tell Mr. Y to deduct TDS on 60 lakhs or we will tell him to deduct TDS at 85 lakhs? 85 lakhs. See whatever amount will be taxable as income in the hands of transfer on that amount only the TDS has to be deducted.
Here for example if the selling price you would have taken to calculate the capital gains. No. So on that selling price the TDS would have got deducted.
Yes or no? But since we have not taken that selling price we have taken what the stamp duty value hello as your full value of consideration as your income.
So the TDS Mr. Y is not going to deduct TDS on this 60 lakhs. He is he is now liable to deduct TDS at on 85 lakhs.
Getting my point? This 85 lakhs and TDS provisions under 194 I are not attracted in respect of the transfer of rural agricultural land. Got it? The same question can be asked in the exam without even changing the names and the amounts also. Trust me on this. And if they want to give you some, you know, surprise element in the in the exams, they can give the same question but with a little bit of twist. They can change the amounts or they can change the names. Okay. They will either ask you only the TDS provisions or they can ask you what will be the pro what will be the tax effect in the hands of Mr. X.
They will not ask you anything about Mr. Y. And they will tell you what were what will be the tedious implications in the hands of Mr. Why getting my point? So this entire question please do this question very properly. Just watch this question before the exam once. Okay. Now coming to 12th. Mr. Sharma a resident Indian aged 77 years meaning that he is a specified senior citizen 75 years or more. H gets pension of 52,000 per month. 52,000 per month from up state government. The same is credited to his savings account in SBI Lucknau branch. Okay. In addition, he gets interest at the rate of 8% peranom on the fixed deposit of 20 lakhs with the said bank. See in that same bank where he receiving his pension in that same bank he is having a FD also time deposit account. On that he how much time deposit account he is having? 20 lakhs. On that he is going to get interest of 8%. Okay. Now out of the deposit of 20 lakhs, two lakh represent the 5-year term deposit made by him on 1st April 2020 24. Can I say out of 20 lakhs two lakh he has deposited this year only as 5-year term deposit for this he is going to get ATC deduction this year. Fiveyear term deposit in any schedule bank will allow you to take deduction under ATC.
Yes or no? If you would have kept this in the last year. So last year you would have already got the deduction under ATC. But you are keeping this fivey year FD this year. So you are going to get the ATC deduction for this two lakh in this year. But entire two lakh will not be allowed because under ATC the limit is only 1 lakh 50. Getting my point?
Next one. Interest on saving bank credited to his SBI savings account is 9,500. Don't you think that this will be allowed as a deduction undert?
So the interest is also getting credited in that savings account. Okay. Now from the above facts compute the total income and the tax liability. First we are supposed to compute the total income and the tax liability assuming that he has exercised the option of shifting out the default tax revenue. Shifting out. Okay.
No. Now first of all tell me what will be his pension 52 lakh into sorry 52,000 into 12 will be 6 lakh 24,000. If he's shifting out he is going to get standard deduction of 50,000. So his taxable salary will be 5 lakh74. Now on along with this he's going to get interest on fixed deposit amounting to 1 lak 60 and he's also how come 1 lakh 60 sir 20 lakh deposit was there. No friends 20 lakh on that 8% he will get what? He will get uh 1 lak 60 and 9,500 savings account interest is also there. So both these amounts will be his income from other sources. So income from salary plus income from other sources no other income this will be his GTI out of GTI he's going to take deduction of 1 lak 50,000 for that 2 lakh rupees of 5 year FD on that 2 lakh also 8% interest is there and on the balance 8 lakh 8 18 lakhs also 8% is there okay no so on 18 lakh 8% on 2 lakh 8% what I would have done you know I would have given you the information that that 2 lakh rup rupees is not deposited on 1st of April. It is deposited on 1st of September, 1st of October. So now if you have calculated 8% on that entire 20 lakh, this amount will be wrong.
8% on 18 lakh for the full year and on two lakh 8% will be only for 6 months then your interest will come. Getting my point? But you are very lucky that see examiner is very a straightforward guy.
He's saying no take it from 1st April.
So on two lakh also full year 18 lakh also full year. So on the entire 20 lakh you are supposed to take for full year.
Getting my point sir everyone? Now pay attention. Now 1 lakh 50 you are going to take as a deduction under section ATC for that 5year time deposit. But that is 2 lakh will not be allowed fully will be allowed up to 1 lakh 50. Now 9,500 no sir. 9,500 plus FD interest both taken together sir because FD interest also gets qualified for ATDB deduction no for senior citizen so 1 lak 60 plus 9,500 1 lakh 69500 will qualify but out of that only 50,000 will be allowed under ATTB because the maximum limit under ATTB is this much only so how much is your total deduction 2 lakh on that how much is the tax how much is the uh total income 5 lakh 43 500 on that now the tax will be calculated. Now for a senior citizen, see he is not a super senior citizen.
For a senior citizen, the limit is three lakh. Up to three lakh there is no tax.
Three lakh to 5 lakh. On this 2 lakh 10% sorry uh 5% it will it will be 10,000 and any total income over and above 5 lakhs 43,500.
So 43,500 into 20% will be 8,700 plus 10,000 it will be 18,700 tax and will he get any rebate? No. Because his total income is already more than 5 lakhs. Getting my point. Now 18,700 plus 4% will be the sess 19,448.
So this will be the 19,450 which is his tax liability. This was your first point. Okay. Second, what would be the amount of tax deductible at source by SBI assuming that the same is a specified bank? Is Mr. Sharma required to file his return of income if the tax deductible at source has been fully deducted? The answer is no. In that case 194p is applicable. So whatever tax out of this out of this whatever tax which was deducted by the employer on his salary pension okay after reducing that whatever balance amount of tax this specified bank is deducting under 194p then then there is no requirement for Mr. Sharma to file his return of income.
Did I tell you under 194p sir? So SBI being a specified bank is required to deduct tax at source under section 194p and remmit the same to the government.
In such a case Mr. Sharma would not be required to file his return. Okay. So under 194p how much TDS bank will deduct this much amount is the total tax minus the TDS under section 192 if any deducted by the employer if nothing is given. So I will say this much amount the bank will deduct and deposit in the form of TDS under 194p and in that case Mr. Mr. Sharma will not be liable to file his return. Getting my point next one what they're saying is Mr. Sharma required to file his return of income if the fixed deposit of 20 lakh was with Canada bank instead of SBI other facts remaining the same. Yes, absolutely.
then 194P will not be applicable on the entire amount of interest coming from SBI sorry coming from Canada bank 194A TDS would have got deducted because Canada bank is not a bank where he's having his pension account bank is not a specified bank but so from Canada bank whatever interest will be given on the FD yes yes or no 1 lakh 60,000 on that Canada bank will deduct TDS at the rate of 10% under 194A because that interest is more than 50,000. Getting my point? So 194A TDS is deducted. His salary is also there.
Hello sir. Now the tax will be this much only but he will be compulsorily required to file his return. Now getting my point. Hello sir. But how much will be the TDS which will be deducted by the Canara Bank? that amount will be reduced out of the total tax amount. Getting my point and after that whatever tax remains that tax will be paid by Mr. Sharma but he will have to file his return also. Now 194P the exemption given by 194p will not be applicable because the FD is not maintained with the same bank. It is maintained with some other bank. Got it?
Next one. If the fixed deposit is with other bank which is the bank where his pension is credited then Mr. Sharma would not qualify as a specified senior citizen.
In this case Mr. Sharma would have to file his return of income under section 139 since his total income without giving effect to deduction chapter 6A exceeds the basic exemption limit. Did you see 139 which we did the impact of that also came over here.
Got it sir?
Now pay attention 195A Y KT you know this income payable net of tax whenever you are liable to deduct any TDS and the amount you have given to the pay the government will always think that you have deducted the TDS and made the payment do you remember so you'll have to gross up that amount and the tax will be reduced tax will recovered from you. Yes or no? So where any agreement? You just have to read this. Just read once. Just read once. No need to put your efforts here. Just read once. Okay? And whenever you'll read, no, trust me on this. This particular thing has been explained n number of times while you know teaching you different different chapters. This thing has been covered. Don't worry at all.
Okay. 196. Mark this point. Important.
Important.
Now if any of these pays are there payable to meaning government is the pay, RBI is the pay, any corporation established under any central act. Okay.
Or any mutual fund is there. If any of these pays are there. So whatever whatever payments are made to these pays there will never be any TDS because immunity or exemption is granted under section 196 to these pays.
So whether they are getting any type of payment any type of payment in terms of interest or dividend or any other income arising or if they are getting interest or a dividend there will be no TDS.
Please a person paying dividend person paying interest to these pays he is not liable to deduct any TDS. Okay. Or any other incomes also to these pays. There is no requirement of any TDS. This is a common point applicable for all the provisions. Getting my point? Will you remember? So mark this point important.
They can test you on this exception also. Yes or no? Now see there are two points 197 and 197A. These are two common points you have to keep in mind.
See if if the payer is giving you some income. If the payer is giving you some income. Okay. And on that income you want that the payer should not deduct any TDS or deduct but not at this much rate.
Deduct at a lower rate.
Can you tell the payer not to deduct TDS or deduct at a lower rate? So payer will ask you why are you saying this? You will say see payer the amount which you are giving me is my income.
So the amount which I am receiving you from you as my income and my other incomes if all the things are taken together no still this year my total income will be below my basis basic exemption limit and still I'll not be liable to pay any tax.
So why are you you know bothering me?
Why are you deducting the TDS? Because even if you'll deduct that TDS I will have to you know now file the return and claim that TDS in the form of refund. So why are you putting me in the trouble of filing my return of income? I'm telling you the income which you are going to give me plus my other incomes for this year even if I take all these incomes.
No I am not liable to pay any tax this year and even if there is some tax payable everything goes for rebate. So why are you deducting the TDS on my income? Because even if you'll deduct that TDS ultimately my tax liability is going to come nil only and out of that nil tax liability I will claim this TDS as a tax credit I am going to get a refund of this TDS. So please instead of deducting this TDS give it give give that entire amount to me as my income only. No, don't deduct. Don't give it to government because if you'll deduct give it to the government then later on I will have to show this amount as as my tax credit claim that amount from the government. Why are you putting me in such kind of problem?
So the thing which is told by the pay is a logical thing. He will be definitely suffering because of the tax deduction.
Unnecessarily he'll have to file his return. Unnecessarily he'll have to claim that refund. On that refund the government will also have to issue interest to him.
But don't you think that payer does not have any choice?
Payer cannot accept these kind of arguments from you. If the payer has been told to deduct the TDS, payer is going to deduct the TDS.
What if payer believes you and he does not deduct TDS but later on the things were different? How can he have a trust on you? Can he have can he have a trust on you?
Are you that much genuine person or a loyal person or an honest honest person?
What if you are lying to me?
See I understand your concern. I understand your problem but that does not mean know that I will believe you without any evidence. Do you have any evidence to prove your claim? No. No. Then I am going to deduct the TDS because if I'll not deduct the TDS, this is my payment.
The government is going to grab me that why you did not deduct the TDS and disallows will happen because it is my expense. The government will disallow this payment to me.
So I am going to deduct the TDS. Don't give such kind of arguments. Okay? And if you actually feel that I should not deduct it, bring me some evidence and tell some person from the income tax department only. So you said good idea.
So you went to your assessing officer.
Where did you go? You went to your assessing officer. You told your assessing officer that assessing officer, assessing officer, you know me better than myself.
Do you think that I am a person who is earning more income? I am liable to pay taxes. No. Now you have all the details available in your records regarding an assesse like me. Okay. No. So please assessing officer from your records check and if you if you are satisfied that a person like me is not liable to pay tax then please issue a certificate to me. certificate for non-deduction or lower deduction of TDS but issue that certificate only after only after getting satisfied that I am actually not liable to pay tax.
So what the assessing officer will do? I will have to first make an application to my assessing officer. So when I'll make that application to the assessing officer that I am not liable to pay tax that al that you also know then tell that fellow not to deduct my TDS. No issue a certificate for this because your certificate will be a valid evidence to to be shown to my to my payer to whom I can show this certificate. He'll believe on whatever you will say. getting my point?
So I will go and make an application. I will go and make an application to whom?
To my assessing officer. Now based on the data available based on the records of the assesse, if the assessing officer is satisfied that no if the TDS is deducted for this employee uh for this pay then it will be unnecessary hardship for him.
He should get himself satisfied first.
Once he gets satisfied, he can issue a certificate.
Certificate where he will write that no TDS should be deducted from this this this payment coming to me or even if the TDS he says that even if the TDS is to be deducted it has to be deducted at a lower rate. So my assessing officer has issued a certificate for non-deduction or lower deduction of TDS but that he will issue only after I make an application to him getting my point. So on my application he will issue a certificate certificate for non-deduction or lower deduction of TDS and this certificate I can furnish to my payer payer who is making any of these payments only. Huh? This certificate I cannot give for all the payments. This certificate I can give only to that payer who is making these payments.
Hello sir. Hello. Now based on the certificate now the t uh now the payer will give me the full amount if the certificate states no deduction. If the certificate states lower deduction should happen then the rate of TDS which is mentioned in that certificate at that rate only the TDS will be deducted by the payer. Did you understand this entire 197? So the certificate for lower or non-deduction can be obtained by the pay from his assessing officer on an application made by him to the assessing officer. But that certificate can be obtained only only for these payments. Please remember 194Q is also covered with effect from this year. Okay. So with effect from 1st October 2024 194 Q has been inserted within the scope of 197. So this certificate can be given for salary.
Yes. If I give this certificate to my employer, my employer will not deduct any TDS or he will deduct TDS at a lower rate. Okay. 193 interest on securities.
For that also this certificate can be given. 194 A 194 194 means dividend. 194 K dividend on units. So for dividends also this certificate can be given to domestic company paying me dividend. Yes or no? Then 194 A interest. 194 C contract fees. 194 D insurance commission. 194 G commission on sale of lottery tickets. 194 H any other commission. 194 I rent. Then 194J professional fees, technical fees, royalty, non-compete fees, director remuneration. Hello sir. Then 194 LA. LA means compensation on compulsory acquisition of my immobile property.
Then 194 M, 194 C, 194 H and 194 J payments made to an individual or HUF whose last year turnover was not more than 1 CR or 50 lakhs. Getting my point?
All the payments which are covered in these sections. No, for those payments I can very well take a certificate for lower deduction or non-deduction of TDS from my assessing officer and that certificate I can furnish to my to my payer and based on the certificate the payer will not deduct TDS or he will deduct the TDS at lower rates. Did you understand this everyone? Now pay attention.
Now if you'll come to 197A this is also similar type of section but in 197A no payer and pay will not involve assessing officer. See you are saying to the payer that payer payer the income coming from you plus my other incomes all taken together my total income will not exceed my basic exemption limit and as a result of that my tax liability is going to come less only less no zero I'm not liable to pay any tax only why I'm not liable to pay tax because this year's total income is not going to be more than basic exemption limit even if I consider all my other incomes plus the incomes which you are g giving me.
So please don't deduct TDS. No pay will say okay I will not deduct TDS.
Give me a declaration.
See for other payments which are given in those section the declaration may or may not work.
For those payments compulsory you'll have to get the certificate from your assessing officer. Yes or no? But here don't involve your assessing officer. Do one thing. Give me a declaration.
Declaration in a form. It can be form number 15 G also. Form number 15 H also.
15H applies to a senior citizen and form number 15 G applies to others. Yes or no? If you are a senior citizen in form number 15 H give your declaration. If you are any other person in form number 15G give your declaration.
And if you are giving this declaration to your payer then based on this declaration the payer will not deduct any TDS. But this declaration you cannot give for all the payments. The payments which are specified here only for those payments the declaration can be given. You can see the section numbers also. Okay.
C without deduction of tax 194 duplicate duplicate in the prescribed form form 15G declaration furnished in writing in duplicate by declarant uh paying any income of the nature referred in 194. 194 means dividend dividend. Hello. For dividend also filing of declaration for receipt of dividend also you can give this declaration to the company 194. Okay. No or 192 A 193 194 A 194 D 194 DA 194 I 194 K. Okay.
So if you are receiving any of these payments mentioned in these sections also for these payments also you can give such declaration. Ultimately declaration will be given in duplicate.
One copy no you are not supposed to keep any copy. One copy the payer will keep himself with himself and the other copy he will pass it on to the income tax department telling the department that department see the income tax law allows the assess to give such declaration. He has given such declaration hence I have not deducted TDS. Please don't disallow my expense. allow it to me and I am giving you this evidence which the pay has given me. Okay. So this evidence is there because I have not deducted the TDS. Okay. No. So one copy I will keep in my records and the other copy I will have to submit to my assessing officer based on this declaration. I have not deducted TDS from dividend. I have not deducted TDS from premature withdrawal from provident fund. I have not deducted TDS from interest on securities. Getting my point everyone? So this was 197 filing declaration not permissible if income aggregate of income exceeds basic exemption limit. If your income is more than basic exemption limit but still your tax liability is uh zero. Wait, wait. Your tax liability should be zero because your total income was not more than basic exemption limit only then you can file this declaration.
Your tax liability is becoming zero because of rebate and this and that relief. No, then you cannot file. Your tax liability is zero because your total income was less than basic exemption limit. Only then you can give such declaration. But for senior citizen this restriction is not applicable. For senior citizen their tax liability should be zero. They can declare that whether their total income was more than basic exemption limit less than basic exemption limit will not have any effect. But for others declaration should be given that their total their tax liability is supposed to be zero because of their total income becoming less than basic exemption limit. Only then the other persons can give this declaration. Getting my point?
Very good. Next one. Now read the entire part once. No need to get into details.
Okay. No, just check which payments are there. For which payments this 197A declaration can be given. And whenever you are giving any declaration, no. Or whenever you are making an application to the AO under section 197 for issue of that certificate. Yes or no? Every time compulsorily you have to quote your pan.
Without your pan the declaration is invalid. Without your pan that certificate cannot be issued. Your application will be invalid. Everywhere compulsory you have to quote your pen.
Getting my point?
Now miscellaneous provisions are there. 198.
Write down YKT.
Read it at home. Okay? I have already taught you these things n number of times. This is also YKT.
You know this. You know this. You know this. And this is this section 200 is there. No. Okay. Now from here all the procedural part is starting. And I told you for procedural part only one page you have to see only one page and that I'm going to tell you okay please don't touch all these things I'm telling you otherwise you will you'll you'll never be able to complete it and these things are all procedural parts never asked in your exams okay so don't touch all these provisions now just do this thing consequences of failure to deduct or pay only this only 201.
That's it. That's it. No need to do anything else. Now come to this page.
Can you see page number 7.75?
Okay. Can you see 7.75? In 7.75, this entire page one small chart is created.
Okay. Now in this chart now what they have written that which month TDS is to be deposited within how much time.
So once you have deducted the TDS as per the above provisions now will you deposit that TDS?
So every month's TDS you are supposed to deposit within how much time? How you are going to deposit it? Okay. So once this deposit thing is done then you are supposed to file the returns TDS returns also. See income tax returns are filed after the previous year is over in the assessment year once in a year but TDS returns are not filed once in a year.
During the previous year every quarter they are filed. So in what form the TDS return will be filed. What will be the due date for filing the TDS returns? Yes or no? So that is given over here. Now next point next TDS certificates also you are supposed to issue to the to the pay. So in what form in what format the TDS return uh sorry TDS certificates needs to be issued? What is the format for TDS certificate? Form number 16 form number 16 A yes or no. And within how much time this TDS certificate should be issued provisions are there. Just read this entire chart only once. These are just a procedural part. No need to waste your time in these cases. Getting my point everyone?
Sure sir. Should I move ahead? Only this page. No need to do anything else. Okay.
Next one.
Person responsible for deducting TDS bar against demand mandatory requirement of furnishing pan in all TDS statement bills 206A mark this point imp.
Don't you think I have already covered 206A if you don't furnish your pan to the payer the payer will deduct TDS at applicable rate of 20% whichever is higher told you know this is that same section I have already told you okay just read it once that's it and this is also important read it once also because if you are a regular non- filer you're not filing your return on a regular basis this then for you the provision is 206AB under this provision they are saying that what will be the rate of your TDS okay so just read this also once and 206A also once okay next one no need to do anything now the advanced tax provisions have started which we have already completed now after advanced tax provisions if you'll you know skip these provisions you are going to get TCS provisions can you the TCS provisions.
So I'll explain this TCS provisions.
Okay. Just like TDS provisions, these provisions are also very easy. Okay. In TDS, what happens? Tell me. In TDS, what happens? one payer is there he'll make the payment to the payee so he'll make the payment after deducting TDS and give the balance to the pay and the TDS amount he will deposit to the government okay now in the case of in the case of TCS the reverse thing happens the person receiving the money will also receive the tax there the person giving the money will deduct the tax from the income of the pay.
Here the person receiving his income along with his income is going to collect the tax for the government also.
Tax collected at source. See the provisions which you are supposed to study for your intermediate exam are 206 C. So all the provisions regarding TCS are given in 206 C. This section is there. Now in this section no there are different different subsections. Okay.
Subsection one is there.
Subsection 1 C is there 1 F is there. 1 G is there and one H is there.
Okay. Now in one they have specified some goods specified goods.
1 C 1 C is lease lease rent now lease rent of three things I'll tell you mines lease rent of parking uh toll plaza lease rent of parking spaces okay now from that lease rent also. Along with that lease rent also TCS is collected. In 1 F that is motor vehicle.
1g is foreign tour package or foreign exchange meaning foreign currency and in one H No all goods other than other than one 1 F and 1 G.
All goods other than one 1 F and 1 G they are covered by 1 H.
Now see if you identify these things. Now everywhere everywhere the seller selling these items the seller selling these items to the buyer the seller will take the selling price along with the selling price the seller will also collect the TCS at the rates prescribed. So in every subsection there are prescribed rates for TCS. Okay. And very simple logic is there. What logic is there? I'll tell you. Wait. See if I talk about 206 C subsection 1. Can you see these? This table is given. So this table is given in which section? 206 C subsection 1. Okay. In this subsection one these are the specified goods. Just read the names. Just read the names.
Alcoholic liquor for human consumption.
Tendu leaves are there. What do you mean by tendu leaves? Have you heard about tendu leaves?
People smoke that be. No cigarette is there but one is be. No. So be is manufactured from tendu leaves. Okay.
Tendule leaves are there. Then timber is there. Then uh any type of timber is there. Then scrap is there. Then minerals being what? Coal, ligignite or iron ore.
Now are you a seller? Yes. Are you selling these items? Yes. To any buyer?
Yes. Why that buyer is taking this from you for his consumption? Yes. Then no TCS.
But don't you think you are a big seller? You are a wholesaler and the buyer coming to you is a retailer or a reseller.
He'll take these items from you and he will himself sell them. Yes or no? For example, you are a wholesaler of alcoholic liquor for human consumption.
Okay. No. So you are a wholesaler. You are selling alcoholic liquor to whom? retailer.
So now retailer will give you selling price.
So wholesaler is selling alcoholic liquor for human consumption to the retailer.
For example, the selling price was 1 lak rupees. How much? 1 lak rupees. So the retailer is buying the alcohol worth 1 lak rupees from you.
Hello. Are you selling liquor worth 1 lakh rupees? Wow. So that fellow is buying a leaker of 1 lakh rupees from you. Very good. Very good. So what is the TCS rate? 1%. Take 1% of one lakh it will be 1,000 rupees. So along with your 1 lak rupees charge 1% from him and don't take your one lakh rupees take 1 lakh 1,000 from retailer.
Now 1 lak rupees belongs to you. Keep that with yourself. And 1,000 rupees no pay to the government.
Pay to the government. 1,000 rupees.
Got it sir? Now pay attention. Pay attention why this is done. I'm telling you.
See from you. If that retailer will buy alcohol worth rupees 1 lakh, why he is buying this much alcohol from you to consume or to sell?
Now if that retailer will sell, how much he will earn by selling?
Minimum this one lakh rupees he is going to earn plus profit also he will add but definitely he's going to recover this cost.
We don't trust that retailer.
These retailers know sell on their income and don't show this income as taxable.
So do one thing how much income he's going to earn by selling this item which he's buying from you. He's going to earn one lakh rupees minimum. on that one lakh rupees charge 1% as a TCS and take right now that is 1,000 rupees getting my point now wait collect his pan also collect his pen also so that we identify so that the government identified that this 1,000 rupees you are giving for this person.
Now the government can catch this retailer that retailer retailer how much income you are showing as your taxable income. Retailer says only 30,000 sir gone.
We came to know that you have bought a leaker of rups 1 lakh.
So definitely this year's income should not be less than one lakh. It should be one lakh or more. See just by telling you to take 1%.
It is not going to affect your sales.
Hello if that retailer has to sell he has to give you 1% otherwise don't give understanding. So just by taking this 1% we got the information about that person who is going to earn income now by reselling the goods taking taken from you.
Now now if you want to catch him later on we can very well catch him because we now has have his pen number which you would have taken from him and given it to us. Sir what if he does not give the pen then it is a non-pan case.
You remember what you do in non-pan case applicable rate or 20% whichever is higher. No here 20% will not be applicable. Don't don't don't applicable rate twice of the applicable rate or 5% whichever is higher.
Twice of the applicable rate applicable rate twice of the applicable rate or 5% whichever is higher. So if he does not want that you collect 5% from him definitely he is going to give his what pen. If he gives the pen then give give the pen and now file your return show this amount as your income and out of your income claim that TCS as a credit we are going to give you. But for that now this retailer will have to show taxable income file his return also in that return show this amount as his income. Now that retailer if showing less than 1 lakh rupees as his income he will be gone.
Understanding? So to catch him that he does not show an income below this amount we have to do this.
Understanding?
Now in certain cases in cases where these goods are sold only these goods are covered by one. See there is no etc written anywhere. Okay. So if you are a seller if you are a seller selling any of these goods selling any of goods to the to the buyer.
So along with the selling price take this much amount as TCS.
Will you remember?
But seller should be this person.
This person cannot be seller. Buyer should be this person. Buyer should not be this person. Yes or no? Buyer should not be the person who is taking it for consumption.
Buyer should not be the person who is taking these items for manufacturing.
Taking these items as a raw material for manufacturing. Buyer should not be a person who is taking this coal etc. for power generation etc. Getting my point?
If the buyer is giving such kind of declaration to the seller hello then the seller should not collect the TCS.
getting my point? So when you'll go there no see when you will come to this part this table there is one table given see meaning of certain terms can you see on page number 7.94 on page number 7.94 they are selling they are saying that who is the buyer who is the buyer in terms of section 206 C subsection one. So for 206 C subsection 1 the buyer will be this person only which is mentioned here.
Okay. For 206 C subsection 1H they are the buyer. These are the buyers. For 206 C subsection 1F these are the buyers.
So every section what you are supposed to do? Write down seller. Write down buyer. So below the buyer come to this point.
Pick up the buyer and write down below the buyer. They are the buyers. Buying what? Specified goods from the seller.
So who is a seller? C. The definition of seller is also given for 206 C. 1 H he is the seller. One and 1 F he is the seller. So whenever you will write 206 C1 you'll write seller below the seller you will write these names below the buyer you will write these names okay no and what are the goods which are specified write these names hello write these names the TCS will be collected on sale of such goods by this seller to this buyer.
Getting my point?
When the TCS will be collected? TCS will be collected at the time of receipt or debit whichever happens earlier. Do you remember payment or credit whichever was earlier in in in TDS provisions? So here I'm not making the payment. Here I am receiving the payment. Here I will not credit. Here I will debit in my books. Yes or no? So at the time of debit in my books or at the time of receipt whichever happens earlier at that time the TCS has to be recovered.
Will you remember this? Sure. 206 C subsection 1 over. Now if you'll come to 206 C 1 C 1 C. Do you remember? See in one C what I have written lease rent. So now there will be a lesser. Pay attention everyone here. Lesser is there. Lessie is there. Lesser is leasing his property. What property he will be leasing? Any of these three properties? Parking lot, toll plaza, mine or quarry.
Become a lesser and think. Okay. You don't become a lesser. You become a ley.
You become a lei. You are taking these things on a lease from me. Why are you taking these things on lease from me?
You want to run a mines. You want to run a mines. Meaning you want to do this mining business.
You want to run a toll plaza. You want to do the toll plaza business. Why do you take this much big parking lot having the parking space of thousand vehicles? Why are you taking this parking lot from me? You want to do the business of pay and park now? Will you pay me the lease rent? I am a lesser. I'm giving these items on lease, yes or no? So, will I recover the lease rent from you? Along with the lease rent, I will recover 2%.
2% TCS also. Why sir? Why? Why? Why?
Because see by running a toll plaza, by running a parking lot, by running a mines or quarry, will you earn business income?
How much?
At least that much income you are going to earn which you are giving me as a lease rent which you might not show correctly to the government.
So the government wants to catch you.
How?
Government tells me to collect TCS from you along with the lease rent. So when I'll be taking lease rent from you, I'll collect 2% TCS also with your PAN. Now your PAN and TCS amount I'll give to the government. Can the government now catch you?
Now if you will show any income which is lower than this lease rent you are gone because nobody will ever believe you that you are not earning this income also at least you are going to earn this income or more than this.
So show your correct income calculate the tax on that income and take the tax credit of this TCS we are going to allow. Hello sir, will you remember this much?
So this is your lease rent of these three items. Yes or no? Receipt or a debit whichever happens earlier at that time the TCS will be collected. Will you remember this? Now coming to 1F sale of motor vehicle of value exceeding 10 lakhs.
Now I am a motor vehicle seller. I am a motor vehicle seller and you are a buyer and you are coming to buy a motor vehicle from me and the value of that motor vehicle is more than 10 lakhs. So the government has put a responsibility on me to the car dealer to the motor vehicle dealer that whenever someone will come he will give you the selling price of the vehicle. No along with the selling price of vehicle collect TCS at the rate of 1%.
Hello. Now see with effect from 1st January 2025, the scope of section 206 C1F has been expanded to include every person being a seller who receives any amount as consideration for sale of any other notified goods exceeding 10 lakhs at the time of receipt of such amount. Collect tax from the buyer at 1% of the sale consideration. Now, not just the motor vehicles. Getting my point? Not just the motor vehicle seller.
Now, seller who receives any amount for sale of any other notified goods exceeding 10 lakhs any other notified goods. So right now there are no goods notified but this provision has been inserted here so that whenever the government would want 10 lakh is GST see on the value of the motor car ma not on the value of sales and GST etc. Understanding what what is the sale value of the motor car on that sale value this amount will be collected because that GST and that says is not going to be my income. No. Hello sir. So excluding GST excluding says what is the value of the car value? See no value motor vehicle they are saying motor vehicle of value exceeding 10 lakhs.
Motor vehicle value not the invoice value including everything. No no no motor vehicle value.
So in that invoice check what is the value of the motor vehicle? On that value there will be TCS at what rate?
1%.
Why sir? Why this on this motor car? See bloody you are earning income. H you are earning income. No. So where will you spend your income?
To buy a motor car and definitely if the motor car is more than 10 lakh rupees that means you have so much income which you are using to buy this motor car and showing your taxable income as nil.
Let us catch you also.
So the seller will take the pen and seller will collect 1%. Seller will give your pan and 1% to the government. Now government will come to know that this fellow who is buying a car worth rupees this much. Definitely in this year or in the last few years he would have earned this much amount.
And if you're showing less than this amount, you'll be caught immediately.
You will be caught. Getting my point? So these are the ways in which your information is being collected.
Okay? You cannot now deny because from these things they are going to catch you. Okay? So with effect from 1st of January 2025 any seller who is selling notified goods of a value which is more than 10 lakhs. Okay. So even those sellers are supposed to collect TCS at the rate of 1% on the entire sale value of those notified goods. Okay. Now pay attention. Now this one G is there.
In 1G no see in 1G there are two things.
One is foreign tour package and another is foreign currency.
Now are you buying a foreign tour package?
6 days, eight, six days, seven nights Dubai tour package. So to buy that tour package, you would have earned income and by using that income only you are buying this tour package. No. So that tour operator from whom you are going to buy the tour package that tour operator along with the selling price of tour package, he will also charge TCS.
Getting my point everyone?
So 206 C1G provides that collection of tax by every person being a seller of overseas tour program package who receives any amount from the buyer who purchases the package. Any amount any amount now there is no restriction also any amount tax has to be collected at the time of debit or at the time of receipt whichever happens earlier rate of TCS in case of collection by authorized dealer what are the rates of TCS see these are the rates of TCS now pay attention now these rates are very important overseas tour program package amount is for purchase of overseas tour program package is up to 7 lakh 5%. So if the tour package is costing only five lakhs only five lakhs then the TCS rate is 5%. But if the tour package is more than more than 5 lakh rupees sorry more than 7 lakh rupees then the TCS rate will be 20%. getting my point?
Now where the amount is remitted? See this this remittance I will do 2 minutes. Give me 2 minutes. Okay. Now see uh what are the cases when TCS is not required? Okay. This is done. Now please pay attention. One was the tour package. For tour package whose value is 7 lakh rupees or less, what is the TCS rate? 5%. And what if the value is more than 7 lakhs? Then the rate of TCS will be 20%. On the entire value on the enter value. Okay. Now sometimes instead of using your income to buy tour package you are using your income to buy foreign currency also. So you are using your income to buy foreign currency which you will remit outside India under liberalized remittance scheme.
Liberalized remittance scheme means without any specific approval of the RBI or the central government you can buy this much amount of foreign currency.
That is nothing but liberalized remittance scheme. Okay. Now, so to the extent of this much amount of foreign currency, you can buy the foreign currency to the extent of this much and you can send it outside India. So that is under the liberalized remittance scheme. Now tell me if you want to buy some dollars you will have to use your rupees, you'll have to use your income.
So if what you are doing you are earning income and converting it into foreign currency and sending outside India definitely to buy the foreign currency you are using your income only. No what if that income you have earned and you have not paid tax on that income. What you are doing earning that income converting it into foreign currency and then sending that foreign currency outside India. Meaning you are transferring your income outside India without even our knowledge. Wow. And after few years you'll vanish.
No. Whatever amount you are using to purchase the foreign currency even that is your income. So the person from whom you are purchasing meaning that authorized dealer the foreign exchange dealer from whom you are going to buy that foreign exchange dealer will take your money. He will charge you some amount along with that he will charge TCS also because the amount which you are going to give him will be your income only which you are using for buying the foreign currency.
Getting my point everyone? So what will happen here? See remittance under liberalized remittance scheme of RBI.
RBI through an authorized dealer or purchase of overseas tour package. In this see uh yes an authorized dealer who receives amount under the liberalized remittance scheme for remittance from a buyer being a person remitting such amount. In short, in short, you are purchasing foreign tour package of any amount or you are purchasing foreign currency. In short, understanding. So, they're trying to make the uh language complicated, but this is not complicated at all.
Understand? You are using your income to buy what? Foreign tour package. That foreign tour operator will charge TCS from you along with the foreign tour package amount. He'll charge TCS also.
that authorized dealer who is going to give you the foreign currency to remmit outside India. That authorized dealer also will charge TCS from you and that TCS along with that TCS uh you are supposed to give them give the amount to that authorized uh dealer then the amount will only be given to you. Getting my point? See now what they're saying what will be the what will be the TCS rates in the case of foreign currency. Okay when when are you purchasing foreign currency when you are purchasing foreign currency at that time see amount is remitted outside India meaning foreign currency you are buying and sending that foreign currency outside India. So whenever you buy the foreign currency to be sent outside India no TCS up to 7 lakhs. So up to seven lakhs if you're buying the foreign currency no there will be no TCS but for the purpose of education or medical treatment 5% of amount or aggregate of amounts in excess of 7 lakhs.
So you are you are purchasing foreign currency but that foreign currency you are purchasing for what purpose? For education or medical treatment outside India.
So till 7 lakh there will be no TCS but any amount over and above 7 lakhs on that excess 5% TCS will be charged.
So now for example you are spending 10 lakh rupees you're spending 10 lakh can I say you are spending more than 7 lakh to buy the foreign currency. So whatever foreign currency you are supposed to use for education outside India. Whatever foreign currency you are supposed to use for medical treatment outside India to buy that foreign currency how much amount you are using 10 lakh. Is it more than seven lakhs? Yes. So anything over and above 7 lakhs on that how much will be charged? 5%.
Okay. But it was only for only for remittance outside India for education or medical treatment. Yes or no? Now if amount remitted out of loan out of loan obtained from any financial institution as defined in section 80 for the purpose of pursuing any education. See if that same amount of 10 lakhs you are giving out of the loan that 10 lakh is not your money which you are using for buying the foreign currency.
If you are using your own money to buy the foreign currency up to 7 lakh no TCS over and above 7 lakhs three lakhs on that 5% TCS but that 10 lak rupees you are not using your money you have taken a loan from some financial institution 10 lakh rupees for the higher education and that loan amount is converted into foreign currency and being sent there.
So on that will there be an ATCS? TS up to 7 lakh there will be no TCS but over and above 7 lakh it will be.5%.
Will you remember the complications they have tried to create but no not at all complicated if you'll understand these rates. No this entire thing is piece of cake for you.
Sure sir should I move ahead? Now wait where the amount is remitted for the purpose other than mentioned in a of then 20% of the amount or aggregate amount in excess of 7 lakhs. Now it will not be 5% or 0.5% now it will be 20%.
See for the treatment of for the medical treatment or for education if you are sending that amount any amount in excess of 7 lakh 5%. If that amount you are sending outside India for the higher education out of the loan then on excess amount it will be 0.5 not 5%.5 up to 7 lakh there is no TCS only now if you are sending that amount outside India for any purpose other than for education other than for medical treatment then anything over and above 7 lakh on that now 5% will not be applicable 5% % will not be applicable. 20% will be applicable but up to 7 lakh buy we are not going to collect any TCS up to 7 lakh for any purpose you can buy we are not going to charge any TCS going understanding or not sure so this was your LRS now cases where no tax is to be collected just read these points once okay read these points once no need to be worried about sale of goods of value exceeding 50 lakhs so did I tell 206 C 1 H.
Now see the goods which are not covered by one not covered by 1 F not covered by 1G meaning that you are buying any goods.
So sorry you are a seller of any goods which are not a specified good which is not motor vehicle and which is not foreign tour package which is not foreign currency any other goods you are selling and the aggregate value of the goods sold by you to the buyer during the year is more than 50 lakhs is more than 50 lakhs then you are supposed to collect a TCS on the value Over and above 50 lakhs at what rate? At what rate, sir? 0.1%.
0.1%.
Wait. Huh? That you are going to do only if you are a seller. Only if you are a seller and your last year business turnover, your last year business turnover was more than 10 CR.
So are you a seller? Tell me. Yes. Your last year business turnover was more than 10 CR. Yes. This year you are selling to any buyer for a value which is more than 50 lakhs. Yes. So on the value which is more than 50 lakhs excess value you are going to collect TCS at the rate of 0.1%.
Will you remember this? But this you are going to charge this TCS you are going to charge for all the goods except one except one F and except one G for all the goods. But wait wait wait wait wait. There is one section 194Q which I left. 194Q says if you are a buyer if you are a buyer whose last year's turnover was more than 10 CR. If you are a buyer your last year's turnover was more than 10 CR. Okay. No sir. See I'll come to 194 Q. This was given in that table. If you remember I had left that sir where is the table sir?
Here is the table. See buyer whose last year business turnover exceeds 10 cr.
Buyer whose last year turnover exceeds 10 cr. Now this buyer is buying from any resident seller. This buyer is buying from any resident seller any goods whose value is more than 50 lakhs. So this buyer will make the payment up to 50 lakhs. Whatever payments he'll make he'll not deduct any TDS. But the payment if it exceeds 50 lakhs. So on the payment which is exceeding 50 lakhs, he's going to deduct TDS at 0.1%.
Now what is happening here? No. See now both the things are getting clashed.
Two things are getting clashed. 194 Q also and 206 C 1H. See this is a buyer and this is a seller.
Now first talk from the point of view of the buyer. Buyer last year business turnover greater than 10 CR. This buyer is buying the goods.
This buyer is buying any goods whose value is more than 50 lakhs during the previous year from the seller. So what this buyer is supposed to do? Buyer will make the payment.
Buyer will make the payment.
payment for such goods in excess of 50 lakhs. So on that excess payment over and above 50 lakhs on that excess payment under section 194 Q excess payment under section 194 Q TDS at the rate of 0.1%.
This is the requirement of 194 Q. Now same requirement is there in 206E 1H.
What says 206E? 1 H says if the seller whose last year whose last year turnover in the business was more than 10 CR. If the seller is selling the goods worth 50 lakhs more than 50 lakhs. So on the excess amount over and above 50 lakhs the seller under section 206 C 1H he's going to collect TCS at the rate of 0.1%.
So TDS and here it is TCS. Now what will happen on the same value I will deduct TDS and I I will give you the money and on the same same amount you will say no no sir don't deduct TDS rather I am supposed to collect so pay me the full amount and along with that pay 0.1% extra hello whereas I am telling you no no no no whatever amount I am supposed to give you from that I am supposed to hold back.1% and give it to the government you are saying no no no sir it is not like that whatever amount you supposed to give me no give it fully but along with 0.1% because the government has told me also to do that we both will fight now so 206 C 1 H you are a seller hello you are a seller you are not going to apply this if 194 Q is applicable on me then 20C 1H not applicable for you hello sir Which section comes first? 206 C1H will come first or 194 Q will come first. 194 Q and if the buyer is already deducting TDS under 194 Q then the seller is not required to collect this TCS. Hello sir.
So pay attention 206 C 1 H I'm writing this and I'm writing this also 194 Q okay and I'm writing other TDS provisions other TDS provisions see now you will see the now you'll see the priority okay if as per the other TDS provisions The buyer is required to deduct TDS on this amount not as per 194Q. As per the other TDS provisions, if the buyer is required to deduct TDS, then the buyer will deduct the TDS as per the other specific provision, then 194Q is also not applicable. 206 C1H is also not applicable. Yes or no? But if as per other provisions, the buyer is not required to deduct TDS as per other provisions then the buyer will be deducting the TDS under 194Q. If he is covered there, then the seller will not be collecting TCS.
But if the buyer is not required to deduct TDS at all, not even under specific provision, not even under 194Q, then only the seller gets this opportunity to collect the TCS.
Got it sir?
Please remember this. If I would have done this 194 Q at that time, you would not have you know correlated this. So the correlation was required. That is why it was taken along with 2061H.
All the TCS provisions are over.
Now you just have to concentrate here.
See now this question answer and everything is given. know power of CBD2 issue guidelines and all. Just read all these things once. No need to get into details. Just read all these things once. So what is to be read by you? This is read once only read once and then meaning of certain terms. This is important for all these sections. Seller and buyer. Definition of buyer and seller for each section will come from this table. Okay. No.
So today only do one thing. Prepare a small chart for 2061.
Write down seller write down buyer.
Seller pick up the definition from here.
Buyer pick for seller pick up the definition from here. And for buyer pick up the definition from here. Okay. No.
And what are the goods specified? It is already given there. Now look at this provision you'll come to know TCS under section 206 C one over now when you'll come to when you'll come to 1 C there is no buyer seller forget it when you'll come to 1 F motor vehicle hello for motor vehicle seller seller will come from here and buyer buyer will come from here getting my point and motor vehicle the value is more than 10 lakhs Getting my point? 206 C 1 F after that 1 G is also there. So for 1G who is authorized dealer, who is money changer? Yes or no? All things are given here. Just read it once.
Everything is covered. Okay. Now pay attention this higher rate of TCS. Mark this important I have told you non-pen cases higher rate of TCS is applicable just like higher rate of TDS is applicable in the case of non-pan cases do you remember higher rate of TCS for non- filers of income tax return mark this also important read it once that's it important why because for the purpose of theory this may may be asked okay no otherwise Not important at all. CBD clarification regarding certain issues with respect to 206 C1F mark this also important. Read it only once. Okay.
So if the motor car will be sold by a dealer to the customer then TCS will be there. Now issue was if the factory is selling motor car to the motor car dealers is the factory required to collect ECS.
So there are few you know doubts which were arising in the case of motor vehicles. So those doubts are clarified in the question answer format. Once you will read no you'll understand very easy. Okay.
Yes. 206 C 1 H read this also once read it only once this is also important read it only once okay now illustration number 13 I'll start with this illustration Mr. Gupta a resident Indian is in retail business and his turnover for last year was 12 cr okay Mr. Gupta is a resident and this turnover for the last year was was more than 10 crores 12 crores. Okay. Now he regularly purchases goods from another resident Mr. Agarwal a wholesaler. Wait wait wait wait. Who is the buyer? Mr. Gupta his turnover for the last year was more than 10 year. Who is the seller from whom he is buying the goods? Mr. Agarwal. Okay.
And the aggregate payment during the financial year 2425 was 95 lakhs.
How come? 20 25 22 and 28 lakhs. Now tell me first payment 20 lakhs. Will there be any TDS or TCS?
No TDS TCS because single payment is also not more than 50 lakhs and total is also not more than 50 lakhs. Second payment 25 lakhs. Tell me is the payment uh is the payment more than 20 50 lakhs? No. And aggregate is also not more than 50 lakhs. Yes or no?
Total is 45 only. Now see the third payment is 22 lakhs. Now can you add 45 lakhs plus 22 lakhs you'll get 67 lakhs.
So when this 22 22 lakh payment will be made. Can I say because of this 22 lakh payment the payment is in excess of 50.
So how much payment is in excess of 50?
67 minus 50 will be 17 lakh on that 17 lakh and even on the next payment of 28 lakhs. Now whatever payment is made is over and above 50 only. No. Hello sir.
So now on the 17 lakhs also the TCS or TDS TDS under 194Q or TCS 206 C1H and on 28 lakhs TDS under section 194Q or TCS 206 C1H will be applicable but which one will be applicable see Mr. Agarwal's turnover for the financial year 23 24 was 15. Buyer seller both are having a turnover of more than 10 CR. So seller will collect the TCS or buyer will deduct the TDS.
What should happen? Agarwal should collect the TCS or Gupta should deduct the TDS.
Which is the correct answer? Come on tell me.
Based on the above examine TDS TCS implication if any both are eligible to deduct and collect TCS and TDS yes or no so TDS implications are there on Mr. Gupta and TCS implications are there on Mr. Agarwal TDS will be deducted on 17 lakhs and 28 lakhs at the rate of 0.1% and TCS will be collected on 17 lakhs and 28 lakhs at at the rate of 0.1%. Yes or no? So these are the TDS and TCS implications. But would your answer be but who will be deduct who will be deducting or who will be collecting both will be deducting collecting or anyone anyone. And here the priority will be given to Gupta because under section 194Q if he liable to deduct TDS he will deduct the TDS then Agarwal will not collect the TCS.
This is your answer for first point. Now would your answer be different if Mr. Gupta's turnover for financial year 2324 was 8 crores all the facts remaining same yes absolutely then Gupta is not liable to deduct TDS now otherwh okay now would your answer to one and two change if pan has not been furnished by the buyer or seller as required yes absolutely if pan is not furnished then double of the applicable rate or 5% whichever is higher but see here it cannot be 5% otherwise he will 5% is too much. Hello. So only in this one case there is an exception. What is an exception? Please check.
In case if pan is not furnished by Mr. Agarwal, if pan is not furnished by Mr. Agarwal to Gupta, then then TDS will be deducted at the rate of 5% instead of 0.1%.
So only in this one case TDS or 20% whichever is higher will not be applicable 5% TDS will be deducted understanding and if in the second case TCS was supposed to be collected because no TDS is getting applicable yes or no so in that case if Mr. Gupta is not giving his pan to Agarwal.
So TCS will be collected at the rate of 1% instead of 0.1%. There 5% cannot be there. Only in this one case double of the applicable rate or 5% will not be applicable. 1% will be applicable. Only in this one case applicable rate of TDS or 20% whichever is higher will not be applicable. 5% will be applicable. So if if TDS was supposed to be deducted by whom? By Gupta. So Gupta will deduct TDS at the rate of applicable rate 0.1%. But if Mr. Agarwal is not giving the PAN, Gupta will not deduct TDS at 0.1% or 20% whichever is higher. He will deduct TDS at the rate of 5%. Hello. But if if if Agarwal was supposed to collect the TCS then he will collect TCS at the rate of 0.1% from Gupta provided Gupta gives his span. If Gupta does not give his span then Agarwal will collect TCS at double of the applicable rate or 5%. No no no no no 1%.
Got it? Only in this one case there is an exception. Will you remember?
Okay. So with this the chapter gets over and the syllabus also gets over.
So fortunately we have covered everything. Okay. And uh see till now we have covered everything in detail. Still you have any doubts you have any queries you all have my number. Okay. So you can contact me anytime any day even at night also. I'll be available to solve your doubts and I'll be in touch with you all. So I wish all the best to all of you all. Study well. Make all of us proud.
Make me proud so that I can also say to someone that see she is my student, he is my student. Okay. So just like the way you would be telling others that you are the student of um sir I also want to tell everyone that no she is my student he is my student okay so give me that opportunity to be proud of you all okay with this I'll be signing off and we'll you know meet in final CA very soon hope you all come out with flying colors in this attempt only okay but don't worry this is not the end this is not the last time when we are interacting we'll be interacting more and I'll be always available with you as your elder brother okay in case of any doubts any difficulties any requirement any help I'm always there okay so I wish all the best to all of you bye-bye Right.
Bye.
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