1. Payment when liable to TDS under section 194C
Tax under section 194C is deducted where any sum is paid to any resident contractor for carrying out any work in pursuance of a contract between the contractor and the specified person
As per clause (iv) of the Explanation to section 194C, “work" shall include: -
2. broadcasting and telecasting including production of programs for such broadcasting or telecasting.
3. carriage of goods or passengers by any mode of transport other than by railways.
5. manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from such customer, but does not include manufacturing or supplying a product according to the requirement or specification of a customer by using material purchased from a person, other than such customer
2. Payment when liable to TDS under section 194J
Section 194J provides for deduction of tax at source from payments of fees for professional services, technical services, royalty or sums referred to in section 28 (va) like non-compete fee, etc.
3. Nature of payment made for maintenance services
As clarified via CBDT Circular No. 681, dt. 8-3-1994 Service contracts would be covered by the provisions of this section since service means doing any work as explained above. However fees for technical services is governed by section 194J.
As per Circular No. 715, dt. 8-8-1995 routine, normal maintenance contracts which include supply of spares will be covered under section 194C. However, where technical services are rendered, the provision of section 194-J will apply in regard to tax deduction at source
Therefore one has to differentiate between routine services and technical services while ascertaining the applicability of TDS provision.
4. Payment for maintenance of machinery where held to be covered by section 194C
In ITO v. Maharashtra Pollution Control Board 2016 TaxPub(DT) 4437 (Mum-Trib) It was observed that repairs and maintenance and quality monitoring services, etc., provided under an annual maintenance contract (AMC) in Relation to machinery, were not of technical nature and were not covered under section 194J. Being contractual work, assessee was liable to x under section 194C.
Merely because technical persons were involved in rendering the services relating to maintenance, of installed machines it could not be inferred that these services were technical or professional in nature liable to TDS under section 194J. Therefore, tax was liable to be deducted under section 194C, and not under section 194J.—Vide Facets Polishing Works (P) Ltd. V. ITO (2015) 69 SOT 361 (Ahd V'-Trib).
In ITO Mumbai Metropolitan Regional Development Authority (2015) 40 ITR (Trib) 60 (Mum ‘B'-Trib): (2015) 155 ITD 314 (Mum 'B'-Trib). It was held that annual maintenance contract services related to minor repairing, replacement of spare parts, oiling, greasing, etc., would not fall Category of technical services and therefore, the payment made by assessee towards them was not subjected to TDS under section 194J. Also see, Dy.CIT v. Asian Heart Institute & Research Centre (P) Ltd. (2015) 173 TTJ (MUM 'A'-Trib) 832.
An assessee entered into a contract with the government department for repairing and servicing typewriter and other machines in government offices at periodical intervals and certain specified rates. The above contract was held to be a work contract—Vide Eastern Typewriter Service v.State of Andhra Pradesh (1978) 42 STC18 (AP).
Annual maintenance charges paid towards services of repetitive nature not requiring very high technical qualification, were subject to TDS under section 194C and not under section 194J Vide SBI Life Insurance Co.Ltd. v.Dy. CIT2016 TaxPub (DT) 4958 (Mum-Trib).
5. Payment for rendered towards maintenance of medical equipments
In CIT v Saifee Hospital 2019 TaxPub (DT) 2050 (Bom-HC) the supplier of medical equipments to the assessee hospital had also rendered services of maintenance of these equipments. The assessee deducted tax under section 194C while making payment for maintenance services. However, the departmental authorities sought deduction of tax at source under section 194J.
The Tribunal in respect of the same assessee in earlier year held that the services which are rendered for maintenance of equipment would not be in the nature of technical services. These services being of routine nature, would not be qualified to be called technical services which would require deduction under section 194J of the Act. Purpose of these services was only to ensure the proper maintenance of the machinery/equipment so as to ensure long life for the same. Thus impugned payment would be covered under section 194C for being made for work contract
Where the services rendered in respect of the machinery and equipment are only in nature of maintenance services provided to ensure they function properly and would be able to provide services for a long period of time. This does not involve any technical service. Hence payment for routine maintenance services would be liable for TDS under section 194C instead of section 194J.
Many of us would have received a refund from the income tax department in the past. A tax refund or tax rebate is a refund furnished to the taxpayer when the tax liability is less than the taxes paid.
Taxpayers can avail a tax refund on their income tax if the tax they owe is less than the sum of the total amount of the withholding taxes and estimated taxes that they paid, plus the refundable tax credits that they claim. Tax refunds are usually paid after the end of the tax year.
Refunds arise in those cases where the amount of tax paid by a person is greater than the amount which he/she is properly chargeable, as per the Income Tax and other Direct Tax laws. The same is noted under Sections 237 to 245 of the Income Tax Act, 1961.
Eligibility criteria for Income Tax Refund
1. If the tax that you have paid in advance, on the basis of self-assessment, is greater than the tax that you are liable to pay as per the regular assessment
2. If your tax deducted at source (TDS) from interest on securities or debentures, dividends, salary etc. is more than the tax payable based on regular assessment.
3. In case the same income is taxed in a foreign country (with which the government of India has an agreement to avoid double-taxation) and in India as well.
4. If the tax charged on the basis of regular assessments is reduced due to an error in the assessment process which was resolved.
5. If you find that that the tax payable is in the negative, after considering the taxes you’ve paid and the deductions you are allowed.
6. In case you have investments that offer tax benefits and deductions, which you are yet to declare.
But what is tax e-refund?
Electronic filing is the process of submitting tax returns over the Internet using tax preparation software that has been pre-approved by the relevant tax authority.
How do you claim tax e-refund.
1. The Income Tax Department issues refunds, if any, only as an e-refund to the assessee. The process of issuing refunds through cheques has been discontinued.
2. To be able to receive the refund amount, the bank account of the assessee should be linked to his permanent account number (PAN) and should have been pre-validated on the income tax e-filing portal.
3. The assessee is required to visit the e-filing portal of the Income Tax Department at https://www.incometaxindiaefiling.gov.in.
4. To access the portal, one needs to enter user name (PAN of the assessee) and password, along with Captcha code to log in.
5. After logging in, the assessee should check the ‘dashboard’ tab. Then, click on the ‘profile settings’ tab to see a drop-down menu of options. Choose the ‘prevalidate your bank account’ option and proceed.
6. The assesee will have to enter the bank account number, IFSC code, bank name, mobile number and e-mail ID. Note that the PAN, mobile number and e-mail ID should be the same as that registered with the bank account. After this, the assessee should click on ‘pre-validate’ button.
7. The pre-validation status is sent to the registered e-mail ID and mobile number of the assessee. Alternatively, view your status by logging in to the e-filing portal, and clicking on ‘profile settings’ and ‘pre-validate your bank account’ tabs.
What do I if the refund is not processed?
Income Tax Return form has to be verified by the relevant authority to process income tax returns. If you are yet to receive your refund even after 3 or 4 months after the deadline of 31st July of a particular assessment year, it perhaps implies that your refund has not been verified yet.
Interest payable on delay:
A number of cases have been reported where the taxpayers have stated that they haven’t received their refund in due time. If this has happened to you too, don’t panic. You will receive an interest of 0.5% on your expected refund amount, for every month or the part of a month for which the refund is delayed. This interest rate is calculated from the 1st of April of the assessment year. However, in case it is found that the reason for the delay can be attributed to you, you will not be liable to receive any interest for that duration.
Setting-off outstanding taxes against refunds:
There may also be a case where you have a certain amount of taxes is outstanding against your name. In this case, under Section 245, tax authorities have the power to set-off your refund amount against such outstanding taxes.
Whereas concessional rate GST of 8% and 12 % was respectively applicable for affordable and other than an affordable residential unit in a residential complex which has been brought down to 1% and 5% without the benefit of input credit with effect from April 1st 2019.
There was the controversy on the GST rate applicable for parking facility, preferential location charges(PLC) and other facilities provided as part of purchase of residential unit. Under pre-April rate structure, many builders (adopting a conservative approach) were charging tax at the full rate of 18 percent on PLC, parking charges, transfer charges etc. instead of charging the lower rate of 12 percent as applicable to construction services (post abatement).
The West Bengal Authority for Advance Ruling (AAR-WB) has made it clear that construction of a dwelling unit in a residential complex, bundled with services relating to the preferential location of the unit and right to use car parking space and common areas and facilities, is a composite supply —construction service being the principal supply.
"Entire value of the composite supply is, therefore, to be treated, for the purpose of taxation, as supply of construction service," it said.
Though the rates have been lowered, but the practice of differential rate still continues.
As the AAR Ruling is binding only such individual case in which ruling has been given, and does not have precedent value, it has persuasive value. It means buyers can use the ruling of this matter in their petitions before jurisdictional officer.