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The Central Government's Income Tax Department of India issues a 10-digit alphanumeric number to all persons who are responsible for deducting tax (TDS) or collecting tax (TCS) at the source. This is a unique number known as TAN, standing for Tax deduction and collection account number. As per section 203A of the Income Tax law, the TAN number should be mentioned on all TDS returns filed. A TAN starts with 4 alphabets followed by 5 numbers that end in an alphabet again. TAN number forms an important part of the compliance requirements for the Income Tax Act.
Every person who deducts tax at source and collects tax at source must apply for TAN and obtain it to make it easier to file ITR, except a person covered under the provisions of section 194IA as they are not required to obtain a TAN number.
TDS refers to the tax deducted by the payer at the time of making the payment for specified services such as rent, commission, interest, salary, etc.
The tax collected at source or TCS is the tax deducted by the seller from the buyer on the sale of certain specified goods. This amount is added to the sale price, collected from the buyer, and deposited to the Central Government.
TDS is a tax in which an amount is deducted on certain payments like salary, rent, commission, professional fees, and interest. The person making the payment has to deduct the tax, and the person receiving the payment is liable to bear the tax. This reduces the possibility of tax evasion as the tax is deducted right at the source of payment. TDS is deducted as per the rates specified in the Income Tax Act. The rates may vary depending on the type of service and products. Get to know in detail about the prevailing TDS rates.
Yes, a payee can approach the payer or the TDS deductor and request them to make the payment without deducting Tax at source. Although this is only possible if the total annual income of the payee after including the income on which TDS is being deducted is less than the basic exemption limit. In other words, if the total annual income of the payee from all the sources does not fall under the taxable bracket, the payee can request the payer not to deduct TDS. The payee must file Form 15G or 15H to request non-deduction of TDS.
Form 15G: It is applicable to individual or any other person (except a firm and company)
Form 15H: It is applicable to the request filed by senior citizens.
Section 194-IA of the Finance Act 2013 mandates the deduction of tax at source from the payment of sale consideration of immovable property (excluding rural agricultural land) to a resident seller. The deduction rate is 1% of the total amount. This provision is not applicable if the seller is non-resident or the consideration is less than ₹50 lakh. If the seller is a non-resident, then the tax will be deducted under section 195 of the Income Tax Act and not under section 194-IA. I.e., if the property is purchased from a non-resident, then section 195 will be applicable instead of 194-IA.
You can also consult a tax advisor to get more information on TDS on property purchases.
One common question in the context of tax deduction at source (TDS) is whether it applies to payments made to the Government or its entities.
No tax will be deducted if any sum is payable to the Government, Reserve Bank of India, or a corporation established by or under a central act. This means that any payment made to these government bodies, whether it is interest, commission, rent, royalty, fees, or any other income, is exempt from TDS. This exemption is based on the rationale that the Government is the ultimate recipient of tax revenue, and hence there is no need to deduct tax from payments made to the government.
Literally, the word Audit means to check, review, and inspect. An audit is often associated with the inspection of a company's books of accounts. Different laws require different types of audits for example, company law requires you to conduct a company audit, Income tax law prescribes a tax audit, and cost accounting prescribes a cost audit.
Section 44AB of the Income Tax Act provides for the classes of taxpayers who are required to get their books audited by a Chartered Accountant.
The audit of the accounts of taxpayers conducted by a CA, as per the requirement of section 44AB, is known as a tax audit.
Below are the objectives of the tax audit -
Any person mandated to conduct a tax audit of his/her books of accounts under section 44AB has to furnish either of the following -
Form 3CA: Any taxpayer having a business or profession and already mandated to get their accounts audited under any other law. For example, if a company needs to conduct an audit under the companies act, then it has to furnish Form 3CA.
Form 3CB: Any taxpayer having a business/profession but doesn't have to get their accounts audited under any other law has to furnish Form 3CB. Proprietorship or partnership firms having opted for presumptive tax schemes and having a turnover exceeding Rs. 1 crore. Such companies are required to furnish Form 3CB.
Form 3CD: Form 3CD is a detailed statement of particulars that contains 41 different points. The details of various business and professional aspects must be furnished in this form.
A person who has to follow section 44AB and does not get his accounts audited or submit the report as per section 44AB for any year or years may face a penalty from the Assessing Officer. The penalty amount will be the lower of the following:
The taxpayers who need to get a tax audit done:
Citizens having a PAN card can apply for a new PAN card 2.0 through the unified portal, which is yet to be launched by the government. They can upgrade their existing PAN card to PAN 2.0 with new QR code features at no additional cost. However, the government has yet to announce the launch date for PAN 2.0. Thus, citizens can apply for PAN card 2.0 once the government launches the new PAN card and the unified portal for applying for PAN card 2.0 free of cost. The portal will also prioritize addressing PAN card-related grievances.
The PAN 2.0 upgrade aims to enhance functionality without affecting the validity of the current PAN cards. The PAN 2.0 initiative is expected to improve taxpayer services and strengthen the digital infrastructure significantly.
The PAN 2.0 Project promises to make India’s tax system more secure, efficient, and accessible, benefiting individuals and businesses. It aims to make PAN a common identifier for all digital interactions across government systems, ensuring ease of compliance and uniformity. The project will also feature a centralized portal for all PAN-related services and improved cybersecurity to protect user data.
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