TAX DEDUCTED AT SOURCE (TDS)
01/02/2023 Dronna Academy of Management & Technology , Accounts training & Placement institute,Angamaly,Ernakulam
Introduction
The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.
Who is liable to deduct TDS
Any person who is responsible for making payment of nature covered under the TDS provisions of Income Tax Act, 1961 shall be liable to deduct tax at source. But no TDS has to deducted if a person making the payment is an individual or HUF whose books are not required to be audited.
TDS on sale of property
As per Finance Bill of 2013, TDS is applicable on sale of immoveable property wherein the sale consideration of the property exceeds or is equal to ₹ 50,00,000 (Rupees Fifty Lakhs). Sec 194 IA of the Income Tax Act, 1961 states that for all transactions with effect from June 1, 2013, Tax @ 1% or 0.75% should be deducted (depending upon the Date of Payment/Credit to the Seller) by the purchaser of the property at the time of making payment of sale consideration. Tax so deducted should be deposited to the Government Account through any of the authorised bank branches
Points to be remembered by the Purchaser of the Property:
1. Deduct tax @ 1% or 0.75% from the sale consideration (depending upon the Date of Payment/Credit to the Seller).
2. Collect the Permanent Account Number (PAN) of the Seller and verify the same with the Original PAN card.
3. PAN of seller as well as Purchaser should be mandatorily furnished in the online Form for furnishing information regarding the sale transaction.
4. Do not commit any error in quoting the PAN or other details in the online Form as there is no online mechanism for rectification of errors. For the purpose of rectification you are required to contact Income Tax Department.
Points to be remembered by the Seller of the Property:
1. Provide your PAN to the Purchaser for furnishing information regarding TDS to the Income Tax Department.
2. Verify deposit of taxes deducted by the Purchaser in your Form 26AS Annual Tax Statement
TDS Payment on sale of Immovable Property
• The buyer of any immovable property need not obtain a TAN (Tax Deduction Account Number) for making payment of the TDS on immovable property. You can make the payment using your PAN.
• For the purpose of making payment of TDS on immovable property, the buyer has to obtain the PAN of the seller; else TDS is deducted at 20%. PAN of the buyer is also mandatory.
• TDS is deducted at the time of payment (including installment payments) or at the time of giving credit to the seller, whichever is earlier.
• The TDS on the immovable property has to be paid using Form 26QB within 30 days from the end of the month in which TDS was deducted.
• After depositing TDS to the government, the buyer is required to furnish the TDS certificate in form 16B to the seller. This is available around 10-15 days after depositing the TDS. The buyer is required to obtain Form 16B and issues the form to the seller
_____________________________________________________
Understanding CTC Salary and its Breakup
10/01/2023 Dronna Academy of Management & Technology , Accounts training & Placement institute,Angamaly,Ernakulam
Whether you are joining your first job or changing jobs, it is important to understand the difference between Cost To Company or CTC Salary and take home salary. It will help you in better negotiation with the HR and structuring of the salary.
One of the most commonly used terms by companies, yet least understood by its employees is “Cost to Company” or CTC. The CTC Salary, as quoted by employers and the take home pay are two different amounts. Also salary hikes in the form of an increased CTC doesn’t necessarily increase the monthly salary. So what exactly is this CTC and as an employee what all are you entitled for? This article aims to clarify the confusions that often arise in people’s minds when it comes to salary structures.
Demystifying Cost to Company (CTC)
Ravi, a fresh software graduate, joined a top notch IT Company. For his first job, he was extremely happy with the total CTC of Rs 6,00,000. On the basis of this CTC, Ravi made lavish plans with his first month’s salary. Expensive gifts for family, a swanky new bike and the latest mobile phone. But with the first salary, he realized some of his plans had to wait. His take home salary was nowhere close to his estimation of his salary. He approached his HR, who then explained the breakup of his CTC, which he had just glanced over at the time of joining.
The Cost to Company refers to the total expenditure a company would have to incur to employ you. It includes monetary and non-monetary benefits. These include monthly pay, training costs, accommodation, telephone, medical reimbursements or other expenses, borne by the company to keep you employed. The total CTC as need not be the actual salary in hand at the end of the month. It is simply a sum of various components put together.
Components of CTC
Companies, offer various attractive components in the CTC to retain and boost the morale of the employees. Where some salary components are fully taxable some are fully tax-exempt. The composition of your CTC and a few of its components could be grouped as below.
1) Fixed Salary – This is the major part of your CTC and forms part of your monthly take home. It commonly consists of:
• Basic Salary: The actual pay you receive for rendering services to the company. This is a taxable amount.
• Dearness Allowance: A taxable amount, this is paid to compensate for the rising cost of living.
• House Rent Allowance (or HRA): Paid to meet expenses of renting a house. The least of the following is exempt from tax.
– Actual HRA received
– 50% of salary (basic + DA) if residing in a metropolitan city, or else 40%
– The amount by which rent exceeds 1/10th of salary (basic + DA)
• Conveyance Allowance: Paid for daily commute expenses. Up to an amount of Rs 800 per month is exempt from tax.
2) Reimbursements – This is the portion of your CTC, paid as reimbursements through billed claims
• Meal coupons: Many companies provide their employees with subsidized meal coupons in their cafeterias. Such costs incurred by companies in the form of subsidies are included in the CTC. Meal coupons are tax exempt provided it is not in the form of cash.
• Mobile/Telephone Bills: Telephone or mobile expenditure up to a certain limit is reimbursed by many companies through a billed claim, and is a taxable amount.
• Medical Reimbursements: Paid either monthly or yearly, for medicines and medical treatment. The entire amount is taxable. However, up to Rs 15,000 could be tax exempt, if bills are produced.
3) Retirement Benefits – This is available to you only on retirement or resignation.
Provident Fund: Employers contribute an equal 12% to the provident fund account. This employer’s contribution though received only on retirement or resignation, is an expense incurred by the company every month and thus is included in the CTC.
Gratuity: Companies manage gratuity through a fund maintained by an insurance company. The payment towards the gratuity annually is sometimes shown in CTC.
4) Other Benefits and Perks
Leave Travel Allowance (LTA): It is the cost of travel anywhere in India for employees on leave. Tax exemption if allowed twice in a block of four calendar years.
Medical Allowance: Some companies offer medical care through health facilities for employees and their families. The cost of providing this benefit to the employee could also form part of CTC.
Contribution to Insurance and Pension: Premiums paid by companies on behalf of employees for health, life insurance and Employees Pension Scheme, could form a part of the CTC.
Miscellaneous Benefits: Other perks which companies include under CTC could be electricity, servant, furnishings, credit cards and housing.
5) Bonus: This is the benefit paid on satisfactory work performance for employee motivation. Though this amount is not assured to the employee, most companies include the maximum amount that can be paid as bonus, to the CTC. It is a part of Variable Salary. The two types of bonuses that are normally paid out are:
• Fixed Annual Bonus: Paid on the basis of employee performance, either monthly or in most cases annually, it is a fully taxable amount.
• Productivity Linked Variable Bonus: Complete bonus amount is paid only on 100% achievement of target, nevertheless it still is included as part of your CTC.
Having understood what CTC is:
Each company too has its own way of calculating the cost to company. Let us revisit Ravi’s case. Ravi realized, that an attractive CTC does not necessarily indicate a heavy monthly take home. Benefits like training and development, whether undertaken by him or not was still considered part of his CTC. This is what he now feels.
One must take time to find out what the actual benefits are by asking for the break-up of the CTC so as to know the entitlement. If you are just joining the company, try to negotiate with the HR as to opting out of some facilities in exchange for increasing the take home.
Finally, understand the expenditure limits and tax angle of perks and benefits, and use them smartly
________________________________________________________________________________
Importance of Accounting in Business?
06/01/2023 Dronna Academy of Management & Technology , Accounts training & Placement institute,Angamaly,Ernakulam
it keeps a systematic record of the organization’s financial information. Up-to-date records help users compare current financial information to historical data. With full, consistent, and accurate records, it enables users to assess the performance of a company over a period of time.
In Simple words Without proper maintenance of accounting , you wouldn’t be aware of the real financial situation of your company. All the decision you are taken would be based on pure speculation.