CSR (Corporate Social Responsibility) obligations under Section 135 of the Companies Act, 2013 became effective from the financial year 2014-15 (Assessment Year 2015-16). This means that companies meeting the prescribed CSR thresholds were required to start spending on CSR activities and report thesRead more
CSR (Corporate Social Responsibility) obligations under Section 135 of the Companies Act, 2013 became effective from the financial year 2014-15 (Assessment Year 2015-16). This means that companies meeting the prescribed CSR thresholds were required to start spending on CSR activities and report these expenditures in their annual reports beginning with FY 2014-15.
Key Points:
For Existing Companies: Companies that were in operation before the implementation of CSR provisions had to start complying from FY 2014-15.
For Newly Incorporated Companies: A company incorporated after CSR provisions came into force will generally have to start its CSR activities either in the financial year of its incorporation or in the immediately following financial year, as per the guidelines issued by the Ministry of Corporate Affairs.
Reporting Requirements: CSR details, including expenditure, must be disclosed in the Directors’ Report as part of the Annual Report filed with the Registrar of Companies.
Under the Companies Act, 2013, the Corporate Social Responsibility (CSR) provisions under Section 135 are designed for companies that are profit-oriented and meet certain financial thresholds (net worth, turnover, or net profit). Section 8 companies, on the other hand, are established as not-for-proRead more
Under the Companies Act, 2013, the Corporate Social Responsibility (CSR) provisions under Section 135 are designed for companies that are profit-oriented and meet certain financial thresholds (net worth, turnover, or net profit). Section 8 companies, on the other hand, are established as not-for-profit entities with a primary objective of promoting social causes, art, science, research, or social welfare.
Key Points:
Nature of Section 8 Companies: Section 8 companies are created to operate on a non-profit basis. Their main objective is to further social, charitable, or other public welfare causes, and they do not distribute profits to shareholders.
CSR Applicability: The CSR provisions under Section 135 are applicable only to companies that meet certain financial thresholds (₹500 crores net worth, ₹1000 crores turnover, or ₹5 crores net profit) and are profit-making. Since Section 8 companies operate on a not-for-profit basis, they are not required to comply with CSR provisions.
Reasoning: The intent behind CSR is to encourage profit-making companies to contribute to social welfare by setting aside a portion of their profits for CSR activities. Section 8 companies, being inherently non-profit, are already geared toward social causes and are thus exempt from these additional CSR obligations.
Conclusion:
CSR provisions under Section 135 of the Companies Act, 2013 do not apply to Section 8 companies because their primary focus is on social welfare and they operate on a not-for-profit basis.
Yes, a donation of money to a trust by a company can be treated as CSR expenditure if certain conditions are met. Here’s what you need to know: Eligibility Criteria: Trust’s Purpose:The trust must be established exclusively for undertaking CSR activities or have a proven track record of at least thrRead more
Yes, a donation of money to a trust by a company can be treated as CSR expenditure if certain conditions are met. Here’s what you need to know:
Eligibility Criteria:
Trust’s Purpose: The trust must be established exclusively for undertaking CSR activities or have a proven track record of at least three years in similar CSR projects. This ensures that the funds are used specifically for social welfare initiatives as outlined in Schedule VII of the Companies Act, 2013.
Utilization of Funds: The company must ensure that the donation is used solely for approved CSR activities. Proper documentation should be maintained to confirm that the funds are directed toward social causes.
Important Points:
Non-Deductibility for Tax Purposes: While CSR expenditure is mandatory for companies and must be reported in the Annual Report, it cannot be claimed as a tax deduction under Section 37(1) of the Income Tax Act, 1961. However, donations to eligible organizations might qualify for deductions under other provisions (e.g., Section 80G), subject to separate conditions.
Board Approval and Reporting: The donation must be approved by the company’s Board as part of its CSR policy. The expenditure should then be disclosed in the Directors’ Report along with details of the CSR activities undertaken.
Starting a business in India? The government provides several tax benefits to encourage startups and ease their financial burden. Below is a simple breakdown of key tax advantages available to eligible startups. 1. Tax Holiday (Section 80-IAC) – 100% Profit Deduction Who can claim? DPIIT-recognizedRead more
Starting a business in India? The government provides several tax benefits to encourage startups and ease their financial burden. Below is a simple breakdown of key tax advantages available to eligible startups.
Who can claim? DPIIT-recognized startups registered as a Private Limited Company or LLP.
What’s the benefit?
100% tax exemption on profits for three consecutive years within the first ten years of incorporation.
Previously, only startups incorporated until March 31, 2024, could avail of this benefit. Now, this has been extended to March 31, 2030.
2. Exemption from Angel Tax (Section 56(2)(viib))
What’s Angel Tax? If a startup raises funds from an investor at a price higher than the fair market value (FMV), the extra amount is taxed as “Income from Other Sources.”
Who is exempt? DPIIT-recognized startups with total share capital & premium not exceeding ₹25 crore.
What’s the benefit? Startups don’t have to pay tax on funds received from Indian investors above FMV.
3. Carry Forward of Losses (Section 79)
Who can benefit? Startups that incur losses within the first seven years of incorporation.
What’s the condition? Even if there’s a change in shareholding, the losses can still be set off as long as at least 51% of original shareholders remain.
4. Lower Corporate Tax Rate
For regular domestic companies:22% corporate tax (if no other exemptions are claimed).
For new manufacturing startups (set up after October 1, 2019, and starting operations before March 31, 2024):15% tax rate.
5. Other Benefits
✅ Self-Certification for Compliance: Startups can self-certify compliance with labor & environmental laws for 3-5 years. ✅ Faster Patent & Trademark Registration: Startups get a 50% rebate on trademark fees and 80% rebate on patent filing fees.
Final Thoughts
These tax benefits help startups reduce costs, improve cash flow, and grow faster. However, startups must ensure they meet eligibility conditions and file the necessary documents on time to claim these benefits.
TDS on Purchase of Property from an NRI – Rate & Process If you are buying a property from a Non-Resident Indian (NRI), you are required to deduct TDS under Section 195 of the Income Tax Act. The process is different from buying a property from a resident Indian. 🔹 TDS Rate on Property PurchaseRead more
TDS on Purchase of Property from an NRI – Rate & Process
If you are buying a property from a Non-Resident Indian (NRI), you are required to deduct TDS under Section 195 of the Income Tax Act. The process is different from buying a property from a resident Indian.
🔹 TDS Rate on Property Purchase from an NRI
The applicable TDS rate depends on the nature of capital gain:
Type of Capital Gain
Holding Period
TDS Rate
Short-Term Capital Gain
Property held ≤ 2 years
As per NRI’s income tax slab rates
Long-Term Capital Gain
Property held > 2 years
20% (plus surcharge & cess)
📌 Additional Charges:
Surcharge: 10% (if capital gain > ₹50 lakh), 15% (if > ₹1 crore)
Health & Education Cess: 4% on tax & surcharge
🚨 Key Point: Unlike resident sellers (where TDS is 1% under Section 194-IA), TDS for an NRI seller is deducted on the entire sale value, NOT just on profit.
🔹 TDS Deduction & Payment Process
✅ Step 1: Obtain TAN (Tax Deduction Account Number)
Buyers must obtain TAN (Tax Deduction Account Number) before deducting TDS.
TAN can be applied online via the NSDL website.
✅ Step 2: Deduct TDS & Pay to the Government
Deduct TDS before making payment to the NRI seller.
Deposit the TDS with the government using Challan ITNS 281.
Payment is made via the NSDL portal within 7 days of the following month.
✅ Step 3: File TDS Return (Form 27Q)
TDS return must be filed quarterly using Form 27Q (TDS on Non-Residents).
Due dates:
Q1 (Apr-Jun): 31st July
Q2 (Jul-Sep): 31st October
Q3 (Oct-Dec): 31st January
Q4 (Jan-Mar): 31st May
✅ Step 4: Issue TDS Certificate (Form 16A)
After filing Form 27Q, generate Form 16A (TDS Certificate).
Provide Form 16A to the NRI seller as proof of tax deduction.
🔹 Lower TDS Deduction Option
If the NRI seller’s total tax liability is lower than the deducted TDS, they can: ✔ Apply for a Lower TDS Certificate (Form 13) from the Income Tax Department. ✔ Submit the certificate to the buyer to deduct TDS at the reduced rate.
🔹 Key Points to Remember
✔ TAN is mandatory for buyers deducting TDS from an NRI seller. ✔ TDS is deducted on the entire sale value, not just profit. ✔ File TDS returns (Form 27Q) on time to avoid penalties. ✔ NRI sellers can claim a refund of excess TDS while filing their ITR.
Who is Required to Pay TCS (Tax Collected at Source)? Tax Collected at Source (TCS) is a tax that a seller collects from the buyer at the time of selling specified goods or providing certain services. The seller is responsible for collecting TCS and depositing it with the government. 🔹 Who is RequirRead more
Who is Required to Pay TCS (Tax Collected at Source)?
Tax Collected at Source (TCS) is a tax that a seller collects from the buyer at the time of selling specified goods or providing certain services. The seller is responsible for collecting TCS and depositing it with the government.
🔹 Who is Required to Collect TCS?
As per Section 206C of the Income Tax Act, the following sellers are required to collect TCS when selling specified goods or services:
✔ Companies (Private Ltd. & Public Ltd.) ✔ Partnership firms ✔ Proprietorships (in specific cases) ✔ Cooperative societies ✔ Local authorities & State/Central Government agencies
📌 Individuals & HUFs (Hindu Undivided Families) need to collect TCS only if their turnover exceeds ₹1 crore (for business) or ₹50 lakh (for professionals) in the previous financial year.
🔹 When is TCS Collected?
TCS is collected at the time of sale of certain specified goods or services.
📌 List of Goods/Services Liable for TCS:
Nature of Goods/Service
TCS Rate
Applicable Section
Threshold Limit
Sale of Alcoholic liquor for human consumption
1%
206C(1)
No limit
Sale of Tendu leaves
5%
206C(1)
No limit
Sale of Timber from a forest
2.5%
206C(1)
No limit
Sale of Forest Produce (other than timber/tendu leaves)
2.5%
206C(1)
No limit
Sale of Scrap
1%
206C(1)
No limit
Sale of Minerals (coal, lignite, iron ore)
1%
206C(1)
No limit
Sale of Motor Vehicles (if value exceeds ₹10 lakh per vehicle)
1%
206C(1F)
₹10 lakh per vehicle
Foreign remittances under LRS (Liberalized Remittance Scheme)
5%
206C(1G)
₹7 lakh per year
Sale of Goods (other than specified goods)
0.1%
206C(1H)
₹50 lakh per buyer per year
Overseas Tour Packages
5%
206C(1G)
No limit
🚀 Key Point: TCS is collected from the buyer at the time of receipt of payment or sale invoice generation, whichever is earlier.
🔹 When is TCS Not Required?
✔ If the buyer is the Government, an embassy, or a recognized international organization. ✔ If the buyer is liable to deduct TDS under any section of the Income Tax Act. ✔ If the sale value does not exceed the threshold limit specified above.
🔹 How is TCS Deposited?
📌 The seller must deposit the collected TCS to the government by the 7th of the following month. 📌 TCS is reported in Quarterly TCS Returns (Form 27EQ). 📌 Buyers can claim TCS credit when filing their Income Tax Return (ITR).
🔹 Conclusion
✔ Sellers of specified goods/services are required to collect TCS from buyers. ✔ TCS rates vary based on the nature of the goods/services. ✔ Buyers can claim TCS as a credit while filing ITR. ✔ Proper compliance with TCS deposit & return filing deadlines is necessary to avoid penalties.
Use of Form 15CA and 15CB under the Income Tax Act Forms 15CA and 15CB are required for making remittances (payments) to non-residents to ensure compliance with TDS (Tax Deducted at Source) provisions under the Income Tax Act. These forms help track foreign remittances and prevent tax evasion. 🔹 WhaRead more
Use of Form 15CA and 15CB under the Income Tax Act
Forms 15CA and 15CB are required for making remittances (payments) to non-residents to ensure compliance with TDS (Tax Deducted at Source) provisions under the Income Tax Act. These forms help track foreign remittances and prevent tax evasion.
🔹 What is Form 15CA?
📌 Purpose: Form 15CA is a declaration by the remitter (payer) stating whether TDS is applicable on the foreign remittance. It helps the Income Tax Department track taxable foreign payments. 📌 Who files it?: The remitter (payer) files Form 15CA electronically on the Income Tax e-Filing portal. 📌 When is it required?:
If the remittance is taxable in India and TDS is deducted.
If the remittance amount exceeds ₹5 lakh, then Form 15CB is also required.
🚀 Key Point: Form 15CA is MANDATORY in most cases, even if TDS is not applicable.
🔹 What is Form 15CB?
📌 Purpose: Form 15CB is a certificate issued by a Chartered Accountant (CA) confirming the taxability of a foreign remittance. The CA verifies:
Nature & purpose of the remittance
Taxability under the Income Tax Act & DTAA (Double Taxation Avoidance Agreement)
TDS rate and deduction compliance
📌 Who issues it?: A Chartered Accountant (CA) issues Form 15CB before submitting Form 15CA (Part C).
📌 When is it required?:
If the remittance exceeds ₹5 lakh in a financial year.
If the remittance is taxable in India under the Income Tax Act.
If a DTAA benefit is claimed.
🚀 Key Point: Form 15CB is NOT required for transactions where: ✔️ Remittance is covered under Rule 37BB (specified list of exempted payments). ✔️ Payment is below ₹5 lakh in a financial year.
🔹 When Do You Need Both Forms?
Remittance Amount
Taxable in India?
Form 15CA Required?
Form 15CB Required?
Below ₹5 lakh
No
❌ Not Required
❌ Not Required
Below ₹5 lakh
Yes
✅ Required (Part A)
❌ Not Required
Above ₹5 lakh
No
✅ Required (Part D)
❌ Not Required
Above ₹5 lakh
Yes
✅ Required (Part C)
✅ Required
🔹 How to File Form 15CA & 15CB?
1️⃣ Obtain Form 15CB from a CA (if required). 2️⃣ Log in to the Income Tax e-Filing Portalhttps://www.incometax.gov.in/. 3️⃣ Navigate to “File Income Tax Forms” > “Form 15CA”. 4️⃣ Fill in details & submit the form. 5️⃣ Provide acknowledgment to the bank for processing the remittance.
🔹 Key Takeaways
✔ Form 15CA is filed by the remitter for foreign remittances. ✔ Form 15CB is required only if the remittance exceeds ₹5 lakh and is taxable in India. ✔ These forms help track foreign payments and ensure TDS compliance. ✔ Banks will not process foreign remittances without Form 15CA (and 15CB, if required).
Procedure for Obtaining a Lower TDS Deduction Certificate under the Income Tax Act (Section 197) A taxpayer can apply for a Lower TDS Deduction Certificate under Section 197 of the Income Tax Act if they believe that their total income justifies a lower or nil rate of TDS deduction. The procedure isRead more
Procedure for Obtaining a Lower TDS Deduction Certificate under the Income Tax Act (Section 197)
A taxpayer can apply for a Lower TDS Deduction Certificate under Section 197 of the Income Tax Act if they believe that their total income justifies a lower or nil rate of TDS deduction. The procedure is as follows:
Step-by-Step Process to Obtain Lower TDS Certificate
Step 1: Eligibility Check
✔ The applicant should be earning income where TDS is applicable (e.g., salary, interest, professional fees, rent, etc.). ✔ The applicant must justify that the TDS deduction at normal rates would result in excess tax deduction leading to a refund situation.
Computation of estimated total income and tax liability
Copies of previous years’ ITRs
Financial statements (if applicable)
Relevant agreements, contracts, or invoices
Submit the application online.
Step 3: Processing by the Assessing Officer (AO)
✔ The Assessing Officer (AO) reviews the application and may request additional documents. ✔ If satisfied, the AO will issue a Lower/Nil TDS Deduction Certificate (Form 13). ✔ The certificate specifies the validity period and applicable TDS rate (which could be lower than the standard rate).
Step 4: Submission to Deductor
✔ The taxpayer must provide the lower TDS certificate to the deductor (payer). ✔ The deductor will deduct TDS at the specified lower rate instead of the standard rate.
Key Points to Remember:
✔ Validity: The certificate is valid for a financial year or a specific period mentioned in the approval. ✔ Deadline: Apply at the beginning of the financial year to avoid excess TDS deductions. ✔ Form 15G/15H: For individuals with income below the taxable limit, Form 15G (for non-senior citizens) or 15H (for senior citizens) can be submitted instead of Form 13.
TCS (Tax Collected at Source) Rates for FY 2024-25 The TCS rates under Section 206C of the Income Tax Act vary based on the nature of the transaction. Below is a summary of the latest applicable rates: Nature of Transaction Section TCS Rate (with PAN/Aadhaar) TCS Rate (without PAN/Aadhaar) Sale of ARead more
TCS (Tax Collected at Source) Rates for FY 2024-25
The TCS rates under Section 206C of the Income Tax Act vary based on the nature of the transaction. Below is a summary of the latest applicable rates:
Nature of Transaction
Section
TCS Rate (with PAN/Aadhaar)
TCS Rate (without PAN/Aadhaar)
Sale of Alcoholic Liquor, Tendu Leaves, Timber, Forest Produce
206C(1)
1% – 5% (varies)
5%
Sale of Scrap
206C(1)
1%
5%
Sale of Minerals (Coal, Lignite, Iron Ore)
206C(1)
1%
5%
Sale of Motor Vehicle (above ₹10 lakh)
206C(1F)
1%
5%
Sale of Goods (if turnover > ₹10 Cr & buyer purchases > ₹50 lakh in a year)
206C(1H)
0.1% (on excess amount)
1%
Foreign Remittance under LRS (except for education/medical purposes)
206C(1G)
20%
20%
Foreign Tour Package Purchase
206C(1G)
5%
10%
Education Loan financed by a financial institution
206C(1G)
0.5%
5%
Sale of Overseas Tour Program Package
206C(1G)
5%
10%
TCS on E-commerce Operator (Payments to Seller)
206C(1H)
1%
5%
Important Points:
✔ PAN/Aadhaar is mandatory for lower TCS rates. ✔ TCS must be collected at the time of receiving payment from the buyer. ✔ TCS must be deposited by the 7th of the next month. ✔ The buyer can claim TCS credit while filing their Income Tax Return.
A trader is liable to deduct TCS (Tax Collected at Source) on the sale of goods under Section 206C(1H) of the Income Tax Act, subject to the following conditions: 1️⃣ Applicability of TCS on Sale of Goods (Sec 206C(1H)) ✔️ The seller must have a turnover exceeding ₹10 crore in the previous financialRead more
A trader is liable to deduct TCS (Tax Collected at Source) on the sale of goods under Section 206C(1H) of the Income Tax Act, subject to the following conditions:
1️⃣ Applicability of TCS on Sale of Goods (Sec 206C(1H))
✔️ The seller must have a turnover exceeding ₹10 crore in the previous financial year. ✔️ TCS applies when the buyer purchases goods worth more than ₹50 lakh in a financial year. ✔️ TCS is applicable only on the amount exceeding ₹50 lakh.
2️⃣ TCS Rate on Sale of Goods
✔️ 0.1% of the amount exceeding ₹50 lakh (If PAN is available). ✔️ 1% if the buyer does not provide a PAN or Aadhaar.
3️⃣ When to Collect & Deposit TCS?
✔️ TCS should be collected at the time of receipt of payment from the buyer. ✔️ It must be deposited with the government by the 7th of the next month.
4️⃣ Exemptions from TCS on Sale of Goods
❌ TCS is NOT applicable if:
The buyer is the government, embassy, RBI, or public sector company.
The sale is already subject to TDS under any other provision.
✅ Example: If a trader has a turnover of ₹12 crore in the last financial year and sells goods worth ₹60 lakh to a customer, TCS will be applicable on ₹10 lakh (₹60 lakh – ₹50 lakh).
TCS Calculation: 👉 TCS @0.1% on ₹10 lakh = ₹1,000 (if PAN is available).
From which Financial Year does the CSR expenditure & reporting begin ?
CSR (Corporate Social Responsibility) obligations under Section 135 of the Companies Act, 2013 became effective from the financial year 2014-15 (Assessment Year 2015-16). This means that companies meeting the prescribed CSR thresholds were required to start spending on CSR activities and report thesRead more
CSR (Corporate Social Responsibility) obligations under Section 135 of the Companies Act, 2013 became effective from the financial year 2014-15 (Assessment Year 2015-16). This means that companies meeting the prescribed CSR thresholds were required to start spending on CSR activities and report these expenditures in their annual reports beginning with FY 2014-15.
Key Points:
For Existing Companies:
Companies that were in operation before the implementation of CSR provisions had to start complying from FY 2014-15.
For Newly Incorporated Companies:
A company incorporated after CSR provisions came into force will generally have to start its CSR activities either in the financial year of its incorporation or in the immediately following financial year, as per the guidelines issued by the Ministry of Corporate Affairs.
Reporting Requirements:
CSR details, including expenditure, must be disclosed in the Directors’ Report as part of the Annual Report filed with the Registrar of Companies.
See less
Whether the provisions of CSR are applicable to section 8 companies?
Under the Companies Act, 2013, the Corporate Social Responsibility (CSR) provisions under Section 135 are designed for companies that are profit-oriented and meet certain financial thresholds (net worth, turnover, or net profit). Section 8 companies, on the other hand, are established as not-for-proRead more
Under the Companies Act, 2013, the Corporate Social Responsibility (CSR) provisions under Section 135 are designed for companies that are profit-oriented and meet certain financial thresholds (net worth, turnover, or net profit). Section 8 companies, on the other hand, are established as not-for-profit entities with a primary objective of promoting social causes, art, science, research, or social welfare.
Key Points:
Nature of Section 8 Companies:
Section 8 companies are created to operate on a non-profit basis. Their main objective is to further social, charitable, or other public welfare causes, and they do not distribute profits to shareholders.
CSR Applicability:
The CSR provisions under Section 135 are applicable only to companies that meet certain financial thresholds (₹500 crores net worth, ₹1000 crores turnover, or ₹5 crores net profit) and are profit-making. Since Section 8 companies operate on a not-for-profit basis, they are not required to comply with CSR provisions.
Reasoning:
The intent behind CSR is to encourage profit-making companies to contribute to social welfare by setting aside a portion of their profits for CSR activities. Section 8 companies, being inherently non-profit, are already geared toward social causes and are thus exempt from these additional CSR obligations.
Conclusion:
CSR provisions under Section 135 of the Companies Act, 2013 do not apply to Section 8 companies because their primary focus is on social welfare and they operate on a not-for-profit basis.
See lessCan donation of money to a trust by a company be treated as CSR expenditure of the company?
Yes, a donation of money to a trust by a company can be treated as CSR expenditure if certain conditions are met. Here’s what you need to know: Eligibility Criteria: Trust’s Purpose:The trust must be established exclusively for undertaking CSR activities or have a proven track record of at least thrRead more
Yes, a donation of money to a trust by a company can be treated as CSR expenditure if certain conditions are met. Here’s what you need to know:
Eligibility Criteria:
Trust’s Purpose:
The trust must be established exclusively for undertaking CSR activities or have a proven track record of at least three years in similar CSR projects. This ensures that the funds are used specifically for social welfare initiatives as outlined in Schedule VII of the Companies Act, 2013.
Utilization of Funds:
The company must ensure that the donation is used solely for approved CSR activities. Proper documentation should be maintained to confirm that the funds are directed toward social causes.
Important Points:
-
-
See lessNon-Deductibility for Tax Purposes:
While CSR expenditure is mandatory for companies and must be reported in the Annual Report, it cannot be claimed as a tax deduction under Section 37(1) of the Income Tax Act, 1961. However, donations to eligible organizations might qualify for deductions under other provisions (e.g., Section 80G), subject to separate conditions.
Board Approval and Reporting:
The donation must be approved by the company’s Board as part of its CSR policy. The expenditure should then be disclosed in the Directors’ Report along with details of the CSR activities undertaken.
What are the benefits available to startups under Income Tax Act?
Starting a business in India? The government provides several tax benefits to encourage startups and ease their financial burden. Below is a simple breakdown of key tax advantages available to eligible startups. 1. Tax Holiday (Section 80-IAC) – 100% Profit Deduction Who can claim? DPIIT-recognizedRead more
Starting a business in India? The government provides several tax benefits to encourage startups and ease their financial burden. Below is a simple breakdown of key tax advantages available to eligible startups.
1. Tax Holiday (Section 80-IAC) – 100% Profit Deduction
2. Exemption from Angel Tax (Section 56(2)(viib))
3. Carry Forward of Losses (Section 79)
4. Lower Corporate Tax Rate
5. Other Benefits
✅ Self-Certification for Compliance: Startups can self-certify compliance with labor & environmental laws for 3-5 years.
✅ Faster Patent & Trademark Registration: Startups get a 50% rebate on trademark fees and 80% rebate on patent filing fees.
Final Thoughts
These tax benefits help startups reduce costs, improve cash flow, and grow faster. However, startups must ensure they meet eligibility conditions and file the necessary documents on time to claim these benefits.
See lessI am buying a property from NRI, How much TDS is required to be deducted on it and what is the process?
TDS on Purchase of Property from an NRI – Rate & Process If you are buying a property from a Non-Resident Indian (NRI), you are required to deduct TDS under Section 195 of the Income Tax Act. The process is different from buying a property from a resident Indian. 🔹 TDS Rate on Property PurchaseRead more
TDS on Purchase of Property from an NRI – Rate & Process
If you are buying a property from a Non-Resident Indian (NRI), you are required to deduct TDS under Section 195 of the Income Tax Act. The process is different from buying a property from a resident Indian.
🔹 TDS Rate on Property Purchase from an NRI
The applicable TDS rate depends on the nature of capital gain:
📌 Additional Charges:
🚨 Key Point: Unlike resident sellers (where TDS is 1% under Section 194-IA), TDS for an NRI seller is deducted on the entire sale value, NOT just on profit.
🔹 TDS Deduction & Payment Process
✅ Step 1: Obtain TAN (Tax Deduction Account Number)
✅ Step 2: Deduct TDS & Pay to the Government
✅ Step 3: File TDS Return (Form 27Q)
✅ Step 4: Issue TDS Certificate (Form 16A)
🔹 Lower TDS Deduction Option
If the NRI seller’s total tax liability is lower than the deducted TDS, they can:
✔ Apply for a Lower TDS Certificate (Form 13) from the Income Tax Department.
✔ Submit the certificate to the buyer to deduct TDS at the reduced rate.
🔹 Key Points to Remember
✔ TAN is mandatory for buyers deducting TDS from an NRI seller.
See less✔ TDS is deducted on the entire sale value, not just profit.
✔ File TDS returns (Form 27Q) on time to avoid penalties.
✔ NRI sellers can claim a refund of excess TDS while filing their ITR.
Who is required to pay TCS?
Who is Required to Pay TCS (Tax Collected at Source)? Tax Collected at Source (TCS) is a tax that a seller collects from the buyer at the time of selling specified goods or providing certain services. The seller is responsible for collecting TCS and depositing it with the government. 🔹 Who is RequirRead more
Who is Required to Pay TCS (Tax Collected at Source)?
Tax Collected at Source (TCS) is a tax that a seller collects from the buyer at the time of selling specified goods or providing certain services. The seller is responsible for collecting TCS and depositing it with the government.
🔹 Who is Required to Collect TCS?
As per Section 206C of the Income Tax Act, the following sellers are required to collect TCS when selling specified goods or services:
✔ Companies (Private Ltd. & Public Ltd.)
✔ Partnership firms
✔ Proprietorships (in specific cases)
✔ Cooperative societies
✔ Local authorities & State/Central Government agencies
📌 Individuals & HUFs (Hindu Undivided Families) need to collect TCS only if their turnover exceeds ₹1 crore (for business) or ₹50 lakh (for professionals) in the previous financial year.
🔹 When is TCS Collected?
TCS is collected at the time of sale of certain specified goods or services.
📌 List of Goods/Services Liable for TCS:
🚀 Key Point: TCS is collected from the buyer at the time of receipt of payment or sale invoice generation, whichever is earlier.
🔹 When is TCS Not Required?
✔ If the buyer is the Government, an embassy, or a recognized international organization.
✔ If the buyer is liable to deduct TDS under any section of the Income Tax Act.
✔ If the sale value does not exceed the threshold limit specified above.
🔹 How is TCS Deposited?
📌 The seller must deposit the collected TCS to the government by the 7th of the following month.
📌 TCS is reported in Quarterly TCS Returns (Form 27EQ).
📌 Buyers can claim TCS credit when filing their Income Tax Return (ITR).
🔹 Conclusion
✔ Sellers of specified goods/services are required to collect TCS from buyers.
See less✔ TCS rates vary based on the nature of the goods/services.
✔ Buyers can claim TCS as a credit while filing ITR.
✔ Proper compliance with TCS deposit & return filing deadlines is necessary to avoid penalties.
What is the use of form 15 CA and 15 CB under the Income Tax Act?
Use of Form 15CA and 15CB under the Income Tax Act Forms 15CA and 15CB are required for making remittances (payments) to non-residents to ensure compliance with TDS (Tax Deducted at Source) provisions under the Income Tax Act. These forms help track foreign remittances and prevent tax evasion. 🔹 WhaRead more
Use of Form 15CA and 15CB under the Income Tax Act
Forms 15CA and 15CB are required for making remittances (payments) to non-residents to ensure compliance with TDS (Tax Deducted at Source) provisions under the Income Tax Act. These forms help track foreign remittances and prevent tax evasion.
🔹 What is Form 15CA?
📌 Purpose: Form 15CA is a declaration by the remitter (payer) stating whether TDS is applicable on the foreign remittance. It helps the Income Tax Department track taxable foreign payments.
📌 Who files it?: The remitter (payer) files Form 15CA electronically on the Income Tax e-Filing portal.
📌 When is it required?:
🚀 Key Point: Form 15CA is MANDATORY in most cases, even if TDS is not applicable.
🔹 What is Form 15CB?
📌 Purpose: Form 15CB is a certificate issued by a Chartered Accountant (CA) confirming the taxability of a foreign remittance. The CA verifies:
📌 Who issues it?: A Chartered Accountant (CA) issues Form 15CB before submitting Form 15CA (Part C).
📌 When is it required?:
🚀 Key Point: Form 15CB is NOT required for transactions where:
✔️ Remittance is covered under Rule 37BB (specified list of exempted payments).
✔️ Payment is below ₹5 lakh in a financial year.
🔹 When Do You Need Both Forms?
🔹 How to File Form 15CA & 15CB?
1️⃣ Obtain Form 15CB from a CA (if required).
2️⃣ Log in to the Income Tax e-Filing Portal https://www.incometax.gov.in/.
3️⃣ Navigate to “File Income Tax Forms” > “Form 15CA”.
4️⃣ Fill in details & submit the form.
5️⃣ Provide acknowledgment to the bank for processing the remittance.
🔹 Key Takeaways
✔ Form 15CA is filed by the remitter for foreign remittances.
See less✔ Form 15CB is required only if the remittance exceeds ₹5 lakh and is taxable in India.
✔ These forms help track foreign payments and ensure TDS compliance.
✔ Banks will not process foreign remittances without Form 15CA (and 15CB, if required).
What is the procedure for obtaining certificate of lower TDS rate deduction under the Income Tax Rate?
Procedure for Obtaining a Lower TDS Deduction Certificate under the Income Tax Act (Section 197) A taxpayer can apply for a Lower TDS Deduction Certificate under Section 197 of the Income Tax Act if they believe that their total income justifies a lower or nil rate of TDS deduction. The procedure isRead more
Procedure for Obtaining a Lower TDS Deduction Certificate under the Income Tax Act (Section 197)
A taxpayer can apply for a Lower TDS Deduction Certificate under Section 197 of the Income Tax Act if they believe that their total income justifies a lower or nil rate of TDS deduction. The procedure is as follows:
Step-by-Step Process to Obtain Lower TDS Certificate
Step 1: Eligibility Check
✔ The applicant should be earning income where TDS is applicable (e.g., salary, interest, professional fees, rent, etc.).
✔ The applicant must justify that the TDS deduction at normal rates would result in excess tax deduction leading to a refund situation.
Step 2: Online Application on TRACES Portal
Step 3: Processing by the Assessing Officer (AO)
✔ The Assessing Officer (AO) reviews the application and may request additional documents.
✔ If satisfied, the AO will issue a Lower/Nil TDS Deduction Certificate (Form 13).
✔ The certificate specifies the validity period and applicable TDS rate (which could be lower than the standard rate).
Step 4: Submission to Deductor
✔ The taxpayer must provide the lower TDS certificate to the deductor (payer).
✔ The deductor will deduct TDS at the specified lower rate instead of the standard rate.
Key Points to Remember:
✔ Validity: The certificate is valid for a financial year or a specific period mentioned in the approval.
See less✔ Deadline: Apply at the beginning of the financial year to avoid excess TDS deductions.
✔ Form 15G/15H: For individuals with income below the taxable limit, Form 15G (for non-senior citizens) or 15H (for senior citizens) can be submitted instead of Form 13.
What are the TCS rates?
TCS (Tax Collected at Source) Rates for FY 2024-25 The TCS rates under Section 206C of the Income Tax Act vary based on the nature of the transaction. Below is a summary of the latest applicable rates: Nature of Transaction Section TCS Rate (with PAN/Aadhaar) TCS Rate (without PAN/Aadhaar) Sale of ARead more
TCS (Tax Collected at Source) Rates for FY 2024-25
The TCS rates under Section 206C of the Income Tax Act vary based on the nature of the transaction. Below is a summary of the latest applicable rates:
Important Points:
✔ PAN/Aadhaar is mandatory for lower TCS rates.
See less✔ TCS must be collected at the time of receiving payment from the buyer.
✔ TCS must be deposited by the 7th of the next month.
✔ The buyer can claim TCS credit while filing their Income Tax Return.
When a trader is liable to deduct TCS on sale of goods?
A trader is liable to deduct TCS (Tax Collected at Source) on the sale of goods under Section 206C(1H) of the Income Tax Act, subject to the following conditions: 1️⃣ Applicability of TCS on Sale of Goods (Sec 206C(1H)) ✔️ The seller must have a turnover exceeding ₹10 crore in the previous financialRead more
A trader is liable to deduct TCS (Tax Collected at Source) on the sale of goods under Section 206C(1H) of the Income Tax Act, subject to the following conditions:
1️⃣ Applicability of TCS on Sale of Goods (Sec 206C(1H))
✔️ The seller must have a turnover exceeding ₹10 crore in the previous financial year.
✔️ TCS applies when the buyer purchases goods worth more than ₹50 lakh in a financial year.
✔️ TCS is applicable only on the amount exceeding ₹50 lakh.
2️⃣ TCS Rate on Sale of Goods
✔️ 0.1% of the amount exceeding ₹50 lakh (If PAN is available).
✔️ 1% if the buyer does not provide a PAN or Aadhaar.
3️⃣ When to Collect & Deposit TCS?
✔️ TCS should be collected at the time of receipt of payment from the buyer.
✔️ It must be deposited with the government by the 7th of the next month.
4️⃣ Exemptions from TCS on Sale of Goods
❌ TCS is NOT applicable if:
✅ Example:
If a trader has a turnover of ₹12 crore in the last financial year and sells goods worth ₹60 lakh to a customer, TCS will be applicable on ₹10 lakh (₹60 lakh – ₹50 lakh).
TCS Calculation:
See less👉 TCS @0.1% on ₹10 lakh = ₹1,000 (if PAN is available).