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Beginner
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  1. sharmas89 Teacher

    The TDS rate on software subscription charges is 2% as per section 194J Fee for technical services.

    The TDS rate on software subscription charges is 2% as per section 194J Fee for technical services.

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Ramesh Kumar
Beginner
Asked: In:

  1. CA Vishnu Ram Enlightened

    What is allowed  Cash Payment-up to INR 10,000 Cash receipt- below to INR 2 Lakhs (up to 20,000 for Loan and Advance) Cash Payment of Loan/advance--below 20,000   Now let's discuss the complete provision  Section 40A(3) and Section 43 – Cash Payment Section 269SS and Section 269ST – Cash ReceipRead more

    What is allowed 

    1. Cash Payment-up to INR 10,000
    2. Cash receipt- below to INR 2 Lakhs (up to 20,000 for Loan and Advance)
    3. Cash Payment of Loan/advance–below 20,000

     

    Now let’s discuss the complete provision 

    1. Section 40A(3) and Section 43 – Cash Payment
    2. Section 269SS and Section 269ST – Cash Receipts
    3. Section 269T – Repayment of Certain Loans / Deposits

    1. Section 40A(3)

    Cash Payment

    • Payment for any expenditure of over Rs.10,000 is made in cash, then the expenditure will be disallowed.

    Exemption:

    • Payment though banking channels like debit card, account transfer, cheque or demand draft, digital payments.

     

    Section 269ST

    Cash receipt limit- Receipt of cash amount of Rs 2 Lakh or more not allowed

    • In aggregate from a person in a day; or
    • In respect of a single transaction; or
    • In respect of transactions relating to one event or occasion from a person.

    Exemption:

    • On cash received through an Account Payee Cheque/Draft or through a bank account/post office.
    • To Government, any banking company, post office savings bank or co-operative bank.
    • To such other persons or class of persons or receipts, which the Central Government may specify.

    Penalty under Section 269ST

    • Equal to the amount of receipt is payable.

     Section 269SS

    Cash receipt limit

    • Receipt of cash amount of more than Rs 20,000 not allowed from Loan/Deposit/advance

    Exemption

    • Up to INR 20,000
    • From Government;
    • From any banking company, post office saving bank or co-operative bank;
    • From ny corporation established by a Central, State or Provincial Act
    • From any Government company as defined in section 2(45) of the Companies Act, 2013
    • From an institution, association or body or class of institutions, associations or bodies notified by Central Government in the official gazette.
    • If both the person, have agricultural income and do not have any taxable income then section 269SS will not apply.

    Penalty under Section 269SS

    Equal to the amount of loan or deposit or specified sum accepted.

    Section 269T

    • Repayment of Loans / Deposits with Interest (in his name or jointly with another person)- INR 20,000 or more not allowed otherwise than by an account payee cheque or account payee bank draft
    • Applicable to any branch of a banking company or a co-operative society, firm or another person

    Exemption:

    When the loan is repaid, or deposit taken or accepted from below mentioned person:

    1. Below to INR 20,000
    2. Government;
    3. Any banking company, post office saving bank or co-operative bank;
    4. Any corporation established by a Central, State or Provincial Act
    5. Any Government company as defined sec 2(45) of the Companies Act, 2013
    6. An institution, association or body or class of institutions, associations or bodies notified by Central Government in the official gazette.

    Penalty under Section 269T

    Equal to the amount of loan or deposit repaid is payable.

     

     

     

     

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    Yes, TDS @10% shall be deducted from the membership fee U/s 194J. Membership fees collected by an association usually include access to managerial, technical, and consultancy services, reflecting the benefits provided to members. Consequently, such fees are subject to TDS at 10% under Section 194J.Read more

    Yes, TDS @10% shall be deducted from the membership fee U/s 194J.

    Membership fees collected by an association usually include access to managerial, technical, and consultancy services, reflecting the benefits provided to members. Consequently, such fees are subject to TDS at 10% under Section 194J.

    Exemption: where the amount of such sum or, the aggregate of the amounts of such sums credited or paid during the financial year does not exceed by INR 30000.

    As per Section 194J, professional fee means:

    (a) “professional services” means services rendered by a person in the course of carrying on legal, medical, engineering or architectural professions or the profession of accountancy or technical consultancy or interior decoration or advertising or such other profession as is notified by the Board for the purposes of section 44AA or of this section;

     (b) “fees for technical services” means rendering of any managerial, technical or consultancy services

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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Manish Kumar Gupta Enlightened
    This answer was edited.

    TDS shall be deducted under section 194J@10% if the payment exceeds the threshold limit i.e. INR 30000 on certification charges like ISO, Great Place of Work, Best Coach, etc. Here is the detailed analysis of sec 194 J   TDS under section 194J is deducted on payments exceeding the threshold limRead more

    TDS shall be deducted under section 194J@10% if the payment exceeds the threshold limit i.e. INR 30000 on certification charges like ISO, Great Place of Work, Best Coach, etc.

    Here is the detailed analysis of sec 194 J

     

    TDS under section 194J is deducted on payments exceeding the threshold limit for below payments.

    Type of Payments Rate of tax deduction Threshold Limit
    Technical service 2% Rs. 30,000
    Payment of royalty for sale, distribution or exhibition of cinematographic films. 2% Rs. 30,000
    Other Royalty 10% Rs. 30,000
    Professional Services 10% Rs. 30,000
    Non-compete fees or fees paid not to share any technical knowledge or know-how 10% Rs. 30,000
    Payments made by the company to directors by way of fees, commissions or remuneration 10% Nil

     

    Professional services include following services:

    • Legal
    • Medical
    • Engineering
    • Architectural
    • Accountancy
    • Technical consultancy
    • Interior decoration
    • Advertising
    • Film artist
    • Company secretary
    • Authorised representatives
    • Profession of information technology
    • Sportspersons
    • Commentators
    • Event managers
    • Anchors
    • Umpires and referees
    • Physiotherapists
    • Coaches and trainers, team physicians, and sports columnists

     

    Fees for technical services include the following payments:

     

    • Services that involve technical expertise or expertise in technology.
    • Managerial services and management of the client’s business.
    • Consultancy services and business advisory services.

    Note: Technical service does not include services provided by machines or robots.

    Royalty means the payment made for:

    • Transfer of rights or usage of an invention, model, design, trademark, patent, etc.
    • Use of patents, inventions, designs, etc.
    • Provide any information related to using an invention, patent, formula, etc.
    • Transfer of rights related to scientific findings, literary work, films or videotapes for radio broadcasting but does not include consideration for the sale, exhibition, or distribution of cinematographic films.
    • Providing any information related to technical, industrial, commercial or scientific knowledge, experience or skill

     

    Non-compete fees include the payment made for an agreement for not sharing any license, patent, trademark, franchise, know-how, commercial or business rights, or information to any other person for processing, manufacture, or provisional service.

    Thanks

     

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CA Manish Kumar Gupta
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    The Finance Act, 2023, introduced a significant amendment to Section 115A of the Income Tax Act, impacting non-residents earning royalties and fees for technical services (FTS) in India. Key Changes: Increased Tax Rate: The withholding tax rate on royalties and FTS for non-residents has been raisedRead more

    The Finance Act, 2023, introduced a significant amendment to Section 115A of the Income Tax Act, impacting non-residents earning royalties and fees for technical services (FTS) in India.

    Key Changes:

    • Increased Tax Rate: The withholding tax rate on royalties and FTS for non-residents has been raised from 10% to 20%, effective April 1, 2023. This means payments made to non-residents for these services will now attract a higher tax burden, along with applicable cess and surcharge.
    • Impact on Non-Resident Taxpayers: Earlier, non-residents were not required to file tax returns in India if their income consisted only of dividends, royalties, FTS, or interest and if tax was withheld at the prescribed rate. However, due to the increased tax rate, many non-residents may now prefer to claim benefits under the Double Taxation Avoidance Agreement (DTAA) to reduce their tax liability.
    • Additional Compliance for DTAA Benefits: Non-residents seeking DTAA benefits must comply with additional tax filing requirements in India, including:
      • Obtaining a Permanent Account Number (PAN)
      • Furnishing a Tax Residency Certificate (TRC)
      • Submitting a No Permanent Establishment Declaration
      • Electronically filing Form 10F
      • Mandatory Tax Return Filing: Non-residents availing DTAA benefits are now required to file income tax returns in India.
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Ramesh Sharma
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    If the invoice clearly separates the value of goods and services, then:✅ TDS is applicable only on the service component, as TDS is not deductible on the purchase of goods.✅ No TDS on the goods portion, as per the CBDT Circular No. 715 (1995) and various case laws. Check the contract terms to determRead more

    If the invoice clearly separates the value of goods and services, then:
    ✅ TDS is applicable only on the service component, as TDS is not deductible on the purchase of goods.
    ✅ No TDS on the goods portion, as per the CBDT Circular No. 715 (1995) and various case laws.

    Check the contract terms to determine if it falls under works contract or pure goods purchase.

    if it falls under the works contract then TDS u/s 194 C will be deducted.

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Anonymous
Anonymous
Asked: In:

  1. CA Vishnu Ram Enlightened
    This answer was edited.

    Hi, This single question covers two questions in itself Applicability of TDS on consultancy services on NRI (Bhutan Citizen) Requirement of form 15ca/15cb on payment made to a resident of Bhutan. Section 195 of the Income Tax Act, 1961 covers the TDS  provision on the payments made by an individualRead more

    Hi,

    This single question covers two questions in itself

    1. Applicability of TDS on consultancy services on NRI (Bhutan Citizen)
    2. Requirement of form 15ca/15cb on payment made to a resident of Bhutan.

    Section 195 of the Income Tax Act, 1961 covers the TDS  provision on the payments made by an individual by way of interest or any other amount other than salary to an NRI or a foreign company and also requires the payer to furnish an undertaking in the form 15CA along with a certificate of Chartered Accountants in form 15CB.

    Now let’s discuss the first issue involved in the question:

    The TDS liability in India is to be decided on two levels:

    • First with reference to the provision of this section of the Income Tax Act and
    • Second with reference to the provision of the Tax treaty/Double Taxation Avoidance Agreement (DTAA) between India and the country of residence of the NR receiver.

    Now if you refer the clause 2 of article 12 of the DTTA between the Indian Government and the Roya Government of Bhutan, it is clearly stated that

    Royalties or fees for technical or professional services may also be taxed in the Contracting State i.e India, and according to the laws of that State, but if the beneficial owner of the royalties or fees for technical or professional services is a resident of the other Contracting State i.e Bhutan than the tax so charged shall not exceed 10 percent of the gross amount of the royalties or fees for technical or professional services.

    Now let’s discuss the second issue involved in the question i.e requirement of form 15CA and 15CB:

    Form 15CA and 15CB  are not required to be furnished for remittance in two cases:

    1. if it is covered in the negative list of RBI as per rule 37BB.
    2. if the remittance is made by an individual and it does not require prior approval of RBI [as per the provisions of section 5 of the Foreign Exchange Management Act, 1999 (42 of 1999) read with Schedule III to the Foreign Exchange (Current Account Transaction) Rules, 2000]

    In your case, it is not covered in the negative list, hence forms 15CA and CB is required to be furnished, there is no such exemption for the country of an NRI.

    Thanks.

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. dhirajgupt4u Beginner

    PF Withdrawal Rules for Different Purposes Following are the EPF withdrawal rules for different purposes: Medical Eligibility: No eligibility criteria Limit: Six times the monthly basic salary or total employee’s contribution plus the interest, whichever is lower. Conditions: For medical treatment oRead more

    PF Withdrawal Rules for Different Purposes

    Following are the EPF withdrawal rules for different purposes:

    Medical

    • Eligibility: No eligibility criteria
    • Limit: Six times the monthly basic salary or total employee’s contribution plus the interest, whichever is lower.
    • Conditions: For medical treatment of self, spouse, parents or children.

    Marriage

    • Eligibility: Should have been in service for a minimum of 7 years.
    • Limit: Only up to 50% of employee’s contribution to EPF.
    • Conditions: For the marriage of self, daughter/ son, and brother/ sister.

    Education

    • Eligibility: Should have been in service for a minimum of 7 years.
    • Limit: Only up to 50% of employee’s contribution to EPF.
    • Conditions: For your education or for a child’s education that is post-matriculation.

    Purchase or Construction of a House or Purchase of a Land

    • Eligibility: Should have been in service for a minimum of 5 years.
    • Limit:
      • House: Up to 36 times the monthly basic salary plus dearness allowance.
      • Land: Up to 24 times the monthly basic salary plus dearness allowance. (The limits are restricted to the total cost)
    • Conditions:
      • The house or land must be in your name or jointly with the spouse.
      • Withdrawal is allowed only once during the entire service.
      • The construction must begin within six months and must finish within 12 months from the last withdrawn instalment.

    Home Loan Repayment

    • Eligibility: Should have been in service for more than ten years.
    • Limit: Least of the:
      • Up to 36 times of Monthly basic salary plus dearness allowance;
      • Total corpus consisting of employer and employer’s contribution with interest;
      • Total outstanding principal and interest on housing loan.
    • Conditions:
      • The property must be registered in your name or spouse or jointly with the spouse.
      • Submission of required documentation as per the EPFO requirements for a home loan.
      • The PF corpus accumulated in your account or together with your spouse (including the interest) must be more than INR 20,000.

    Home Renovation

    • Eligibility: Should have been in service for a minimum of 5 years.
    • Limit: Least of the:
      • Up to 12 times the monthly basic salary plus dearness allowance;
      • Employee’s contribution plus interest;
      • Total Cost
    • Conditions:
      • The property must be registered in your name or spouse or jointly with the spouse.
      • The home renovation facility can be availed twice:
        • (i) After five years of the completion of the home.
        • (ii) After ten years of the completion of the home.

    Partial Withdrawal before Retirement

    • Eligibility: Can withdraw up to 90% of the accumulated balance plus the interest.
    • Limit: The account holder must be at least  54 years, and withdrawal must be made before one year of superannuation or retirement.
    • Conditions: No other conditions

    Non-Receipt of Wages

    • Eligibility: No eligibility criteria
    • Limit: Your share (employee’s share) with interest.
    • Conditions: You haven’t received wages for a period of more than two months continuously (other than a strike).

    Job Loss

    • Eligibility: No eligibility criteria
    • Limit: Up to 75% of the EPF balance. The remaining 25% can be withdrawn if you are unemployed for two months continuously.
    • Conditions: You are unemployed for a period of not less than one month.

    To meet Pandemic Related Financial Exigencies (Covid-19)

    • Eligibility: No eligibility criteria
    • Limit: Least of the following:
      • Three months basic salary plus dearness allowance;
      • 75% of EPF balance
    • Conditions: If the area where you stay/ employed is declared to be affected by an epidemic or pandemic.

    Investment in Varishtha Pension Bima Yojana

    • Eligibility: After 55 years of age.
    • Limit: Up to 90% of the available EPF balance (including your share, employer’s share and interest).
    • Conditions: The amount must be directly transferred to the Life Insurance Corporation of India for investment in Varishtha Pension Bima Yojana.

    EPF Withdrawal Rules 2023

    Employee Provident Fund investments focus on saving towards retirement. Hence withdraw only if it is an emergency.

     

    Before 5 Years of Service

    Following are the PF withdrawal rules for withdrawing the corpus before five years of continuous service:

    • Withdrawals before five years of continuous service are subject to TDS.
    • No TDS is applicable if the withdrawal amount is less than INR 50,000.
    • As per ITR Forms 2 and 3, it is mandatory for you to provide a detailed breakup of the PF deposits every year.
    • The Income Tax Department can then easily assess whether or not your withdrawals are taxable.
    • They can also check if you are liable to pay additional tax after revaluation.
    • EPF contributions have the following four components to them – Employee’s contribution, Employer’s contribution and the interest on both the deposits.
    • If you have claimed the EPF contributions under Section 80C of the Income Tax Act, 1961, for exemption, then all the four components of the EPF will be taxable.
    • If you haven’t claimed for exemption in the past. The employee’s contribution portion of the corpus will not attract any tax at the time of withdrawal.
    • The tax rates for the withdrawals depend on the income tax slabs in which you fall for that year.
    • The tax will be applicable only in the year of withdrawal but the consideration will be done separately for each year.

    After Retirement

    Following are the PF withdrawal rules for withdrawing the corpus amount after retirement:

    • For withdrawals after the age of 58, EPF Act mandates application for claim of the final settlement. In other words, you should apply for the claim of the final settlement.
    • The total PF corpus or balance comprises both your (employee) contribution and the employer’s contribution.
    • If you have more than ten years of continuous service, you will be eligible for Employee Pension Scheme (EPS) amount as well.
    • In case if you did not complete ten years of service by the time of your retirement you will be able to withdraw the entire EPS sum along with the EPF amount.
    • Completing the service period of 10 years will give you the pension benefits post-retirement.
    • Post-retirement, EPF withdrawals are tax-free. The interest earned on the EPF corpus is taxable after retirement.
    • To claim the funds, you will have to register yourself on the Official EPF member portal. Fill the forms and also claim them online. The entire process is online, and you can also do it in the comfort of your home.

    Tax on EPF Withdrawal

    Before 5 Years of Service

    EPF withdrawals before five years of continuous service attract TDS. If the withdrawal amount is less than INR 50,000, then no TDS is cut. The applicable TDS rate is 10% on withdrawals if the PAN details are furnished. In case PAN details are not provided, then the rate is 34.608%.

    EPF withdrawals made before five years of service are tax-free under the following scenarios:

    • Serious illness
    • Employer’s discontinuation of operations or winding down the organisation.
    • Withdrawals for reasons that do not fall under the employer’s authority.
    • Any advance made under the EPF Scheme is exempt from tax.

    After Retirement

    EPF withdrawals post-retirement (age of 58 years) is completely tax-free. The interest on the EPF amount is taxable as per applicable income tax slab rates. If you do not withdraw the EPF funds post three years of retirement, you will have to pay tax on the interest earned.

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    Penalty codes 11C and N11C serve different purposes under the Income Tax Act: 11C is used for general penalties imposed by the Income Tax Department under various sections, such as under-reporting of income (Section 270A) or concealment of income (Section 271(1)(c)). If you have received a penalty dRead more

    Penalty codes 11C and N11C serve different purposes under the Income Tax Act:

    • 11C is used for general penalties imposed by the Income Tax Department under various sections, such as under-reporting of income (Section 270A) or concealment of income (Section 271(1)(c)). If you have received a penalty demand notice, you should use Code 11C when making the payment.

    • N11C is specifically for late filing fees under Section 234F. If you file your Income Tax Return (ITR) after the due date, you will need to pay a penalty of ₹1,000 (if total income < ₹5 lakh) or ₹5,000 (if total income > ₹5 lakh). For this, use Code N11C while making the payment through the Income Tax e-filing portal.

    ✅ Conclusion: If you’re paying a late filing fee for delayed ITR submission, use N11C. For other penalties issued by the tax department, use 11C. Always verify the payment details before proceeding.

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CA Sanjiv Kumar
Enlightened
Asked: In:

interest paid on personal loan
  1. CA Vishnu Ram Enlightened

    Section 24(b) of the Income Tax Act allowed the deduction of Interest paid on money borrowed for the purpose of purchase, repairs, renovation, etc. of house. However,  it is not necessary that the money should have been borrowed as a home loan or from any banking institution. Interest paid to your fRead more

    Section 24(b) of the Income Tax Act allowed the deduction of Interest paid on money borrowed for the purpose of purchase, repairs, renovation, etc. of house. However,  it is not necessary that the money should have been borrowed as a home loan or from any banking institution.

    Interest paid to your friends and relatives in respect of money borrowed for the purposes specified above can also be claimed under section 24(b).

    But the actual use of the personal loan should be only for the purpose of the purchase, repairs, renovation, etc. To prove this, the personal loan should be taken through a bank account and the expenditures made for the above purpose and payment of interest should also be made from the bank account.

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