TDS CREDIT TO PERCOLATE DOWN TO LEGAL HEIRS, PARENTS Recently, the Central Board
of Direct Taxes amended the rule for grant of Tax Deducted at Source (TDS) to a
person in whose hands the income is assessable when paid to another person.
Until now, the credit of TDS was given to the deductee, based on the deductor's
TDS-related information. And, the information in the returns filed with respect
to TDS credit. The amendment has been applicable from November 1. If tax is
deducted at source on all or a part of the income assessable in the hands of the
non-deductee, the credit of the TDS (complete or partial, as the case may be)
shall be given only to him/her. However, the deductee (in whose name the tax is
deducted) needs to file a declaration with the deductor (employer), which is
filed in case the tax liability is nil. This is filed before the deductor
furnishes the TDS information. And, the deductor is supposed to report the
source in the name of the non-deductee and issue a pertinent certificate.
APPLICABILITY: Tax experts say a taxpayer till now got the credit even when
(s)he is dead. Now on, the legal heir of a deceased will be granted the TDS,
says Sharad Shah, partner, tax advisory services, Haribhakti & Co. "As the legal
heir, he/she is entitled to the grant of TDS when the person in whose hand the
income was assessable has passed away. There was clarity required on such
cases," he adds. Explains Amitabh Singh, tax partner at Ernst & Young: If one is
putting money in the name of a minor, the TDS deducted used to be credited in
the minor's name. "But, this amendment will allow the person (guardian or
parent) who is putting the money in the minor's name or in whose hand the income
is assessable, to get the TDS credit in place of the minor." Alike case was if
the asset of a Hindu Undivided Family (HUF) was held in the name of an adult
member, but the income is assessable in the hands of the HUF. Similarly, there
was no rule on the method of grant of credit in case of corporate
reorganisations (amalgamation, demerger), where the income of one company will
be assessable in the hands of the other. Also, in cases where the asset was held
by trustees of a trust but income was assessable in the hands of the beneficiary
of such trusts, tax experts.
EXCEPTIONS: Till now, the credit was to a non-deductee only under specific
circumstances. Like clubbing of incomes, incomes from association of persons or
trusts assessable in the hands of the member or trustees or joint ownership of
assets. Here too, the deductee was suppose to file a declaration for nil tax
liability.
DECLARATION FOR NIL TAX: Currently, the rule which provides for the form, manner
and periodicity (quarterly) for deductors to provide withholding tax statements
does not specify the need to furnish information pertaining to cases where tax
is not deducted based on the declarations. Henceforth, the rule will provide
that the deductor furnishes particulars of the amount paid or credited on which
tax was not deducted due to the nil tax liability declaration. –
www.business-standard.com
of Direct Taxes amended the rule for grant of Tax Deducted at Source (TDS) to a
person in whose hands the income is assessable when paid to another person.
Until now, the credit of TDS was given to the deductee, based on the deductor's
TDS-related information. And, the information in the returns filed with respect
to TDS credit. The amendment has been applicable from November 1. If tax is
deducted at source on all or a part of the income assessable in the hands of the
non-deductee, the credit of the TDS (complete or partial, as the case may be)
shall be given only to him/her. However, the deductee (in whose name the tax is
deducted) needs to file a declaration with the deductor (employer), which is
filed in case the tax liability is nil. This is filed before the deductor
furnishes the TDS information. And, the deductor is supposed to report the
source in the name of the non-deductee and issue a pertinent certificate.
APPLICABILITY: Tax experts say a taxpayer till now got the credit even when
(s)he is dead. Now on, the legal heir of a deceased will be granted the TDS,
says Sharad Shah, partner, tax advisory services, Haribhakti & Co. "As the legal
heir, he/she is entitled to the grant of TDS when the person in whose hand the
income was assessable has passed away. There was clarity required on such
cases," he adds. Explains Amitabh Singh, tax partner at Ernst & Young: If one is
putting money in the name of a minor, the TDS deducted used to be credited in
the minor's name. "But, this amendment will allow the person (guardian or
parent) who is putting the money in the minor's name or in whose hand the income
is assessable, to get the TDS credit in place of the minor." Alike case was if
the asset of a Hindu Undivided Family (HUF) was held in the name of an adult
member, but the income is assessable in the hands of the HUF. Similarly, there
was no rule on the method of grant of credit in case of corporate
reorganisations (amalgamation, demerger), where the income of one company will
be assessable in the hands of the other. Also, in cases where the asset was held
by trustees of a trust but income was assessable in the hands of the beneficiary
of such trusts, tax experts.
EXCEPTIONS: Till now, the credit was to a non-deductee only under specific
circumstances. Like clubbing of incomes, incomes from association of persons or
trusts assessable in the hands of the member or trustees or joint ownership of
assets. Here too, the deductee was suppose to file a declaration for nil tax
liability.
DECLARATION FOR NIL TAX: Currently, the rule which provides for the form, manner
and periodicity (quarterly) for deductors to provide withholding tax statements
does not specify the need to furnish information pertaining to cases where tax
is not deducted based on the declarations. Henceforth, the rule will provide
that the deductor furnishes particulars of the amount paid or credited on which
tax was not deducted due to the nil tax liability declaration. –
www.business-standard.com
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