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Tax and Its Effect PDF
Tax and Its Effect PDF
ON
1
STUDENT’S UNDERTAKING
I hereby certify that this is my original work and it has never been
submitted elsewhere.
ACKNOWLEDGEMENT
2
The purpose of compilation of the subject for a project report always involves
creation of huge debt towards innumerable publications ,managers ,chartered
accountants and senior officers. I hereby put my sincere thanks to one and all.
A special thanks to Mr. M.K.Singhal (AGM, Taxation), for giving me an opportunity
to work as an intern in the esteemed organization.
This project would have been incomplete without the guidance of my mentor Mrs
Pallavi Ahuja with whom I have been closely associated.
ARNAV TRIPATHI
00814188813
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CONTENTS
LIST OF FIGURES
4
LIST OF TABLES
CERTIFICATE OF COMPLETION
This is to certify that Arnav Tripathi, pursuing 5th semester of B.com (Hons) from
Jagannath International Management School, has completed his project on the topic
“Tax Deducted at Source under Income Tax Act 1961”. This project report is the work
carried out by him under my supervision and guidance.The work done by him is
appreciable and up to my satisfaction.
Project Guide
Mrs.Pallavi Ahuja
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Assistant Professor
JIMS Kalkaji
New Delhi
EXECUTIVE SUMMARY
As a part of academic requirement, I Arnav Tripathi , having enrolment number
00814188813 a student of Jagannath International Management School, Kalkaji
affiliated to Guru Gobind Singh Indraprastha University, did my summer internship
with Tata Power Delhi Distribution Limited from 2nd July 2015 to 14th August 2015.
Tata Power Delhi Distribution Limited (TPDDL) is a joint venture between Tata
Power and the Government of NCT of Delhi with the majority stake being held by
Tata Power (51%). TPDDL distributes electricity in North & North West parts of
Delhi and serves a populace of 6 million. The company started operations on July 1,
2002 post the unbundling of the erstwhile Delhi Vidyut Board (DVB). With a
registered consumer base of 1.44 million and a peak load of around 1704 MW, the
company's operations span across an area of 510 sqkms.
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I have done my internship in the Taxation group of Finance and Accounts (F&A)
department, under Mr. M. K. Singhal was my company mentor.
Tax regime in India has undergone elaborate reforms over the last couple of years in
order to enhance rationality, ensure simplicity and improve compliance. The tax
authorities constantly review the system in order to remain relevant. India has a
federal system of Government with clear demarcation of powers between the Central
Government and the State Governments. Like governance, the tax administration is
also based on principle of separation therefore well defined and demarcated between
Central and State Governments and local bodies.
The tax on local on local incomes, custom duties, central excise and service tax are
levied by the Central Government. The state government levies agricultural income
tax (income from plantations only), Value Added Tax (VAT)/ Sales Tax, Stamp Duty,
State Excise, Land Revenue, Luxury Tax and Tax on Professions. The local bodies
have the authority to levy tax on properties, octroi/entry tax and tax for utilities like
water supply, drainage etc.
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Figure 1.1
DIRECT TAXES
These are the taxes that are levied on the income of individuals or
organizations. Income tax, corporate tax, wealth tax are some examples of
direct direction.
Income tax is the levied on income of individual , HUF and Firm etc.
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Figure 1.2
Acts Abolished:-
Estate Duty
Interest Tax
Gift Tax
Super Profit Tax
Wealth Tax
INDIRECT TAXES
These are the taxes borne by the consumers when they buy goods and
services. These include excise, customs duties, service tax and central
sales tax.
Customs duty is the charge levied when goods are imported into the
country , and is paid by the importer or exporter.
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Figure 1.3
INCOME TAX
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every person in respect of whom any preceding under the act has been
taken for the assessment of his income or loss and the amount of the
refund due to him. It also includes a person a person who is assessable
in default under any provision of the Act.
These are the seven categories of persons chargeable to tax under the Act.
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Incomes under the head of salary
Salary
Wages
Fees
Commissions
Pensions
Annuity
Perquisite
Gratuity
Annual Bonus
Income from provident fund
Allowance
Leave Encashment
The phrase ‘lands appurtenant thereto’ has also been used. It needs to be clarified in
this context that income from letting of vacant plots of land when there is no
adjoining building will not be taxed under this head (will be taxed as income from
other sources).The existence of a building is therefore, an essential prerequisite.
Building will of course include residential houses (whether up for rent or self
occupied), office building, factory, godowns, flats etc as long as they are used for
business or profession by owner.
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The assessee should be the owner of the property
The property should not be used by the owner for the purpose of any business
or profession carried on by him, the profits of which are chargeable to tax.
Unless all the aforesaid conditions are satisfied, the property income cannot be
charged tot ax under the head ‘Income from House property’
The following incomes are chargeable under the head “Profits and gains of
business of profession”-
The profits and gains of any business or profession which was carried
on by assess at any time during the previous year.
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Any sum received under a keyman insurance policy including a sun
allocated by way of bonus on such policy.
Business[Section 2(13)]:-
Includes any trade, commerce or manufacture or any adventure or concern in the
nature of the trade, commerce or manufacture.
Profession [Section2(36)]:-
Includes vocation .The word ‘Profession’ implies the professional attainments in
special knowledge which is to be acquired only after patent study and application.
Any profit or gain from the sale or transfer of a capital asset is chargeable to
tax under the head “ Capital Gains”. It is deemed to be the income of the
previous year in which the transfer of a capital asset takes place. Capital gain
arising from the transfer of immovable property is chargeable to tax in the
previous year, in which the effective transfer of title is conveyed and
registered.
Capital Asset:-
Capital Asset is defined to include property of any kind, whether fixed or
circulating, movable or immovable, tangible or intangible. Property includes
any rights in or in relation to an Indian company, including the rights of
management or control or any other rights whatsoever.
Long Term-Gains on capital assets held for more than 36 months. For
shares it is more than 12 months.
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Winning from lotteries, crossword puzzles, races, card games etc.
Dividend
250,001-500,000** 10%
500,001-1,000,000 20%
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*300,000 for individual 60 years but less than 80 years.
500,000 for individual 80 years or more
** Rebate of 2000 is available if taxable income is up to 5 Lakhs
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Interest on investment in government securities
Late payment surcharge collected
Miscellaneous Income
TDS
Every individual, company, firm, organisation are affected by the tax laws. Taxation
enables the government to mobilise a substantial amount of revenue. The tax revenue
is generated by imposing direct taxes and indirect taxes. The report analyses the types
of Direct taxes and Indirect Taxes and in-depth study of the taxes which are levied by
the TPDDL.
WHAT IS TDS?
TDS means Tax Deducted Source. It is the amount withheld from payments of various
kinds such as salary, contract payment, commission, etc. This withheld amount can be
adjusted against your tax.
TDS is one of the modes of collecting Income-tax from the assesses in India. This is
governed under Indian Income Tax Act, 1961, by the Central Board for Direct Taxes
(CBDT) and is part of the Department of Revenue managed by Indian Revenue
Service (IRS).
A method of tax collection on income assessments in India. The tax collection can be
affected if the income increases. The taxpayer pays tax on income from the preceding
year. Tax collection is therefore delayed until the year has been completed. In order to
prevent from hiding income, the government collects some amount of tax owed from
the amount that is receivable by the tax payer.
Income is earned over a period of time but the assessment/ determination of tax
liability takes place much later. To avoid a liquidity problem for the tax payer and also
to ensure a regular flow of revenue for the government, the Income tax Act has
provided for periodic recovery of tax from income liable to tax by requiring the tax to
be deducted at source from certain income/payments as and when such
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income/payments are credited. The concept of TDS is that the person responsible for
making certain specified payments is required to deduct tax at the prescribed rates
from the payments made to a specified recipient in accordance with the provisions of
the Income Tax Act.
1. Points to be considered before making a 5. Analyzing the challan status and further
payment action
2. If banks does not provide a Proper CIN? 3. How to verify the inconsistencies
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1. Deductor 1. Login
2. Deductee 2. Verification
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It is now mandatory for the tax payer/ deductee to furnish his PAN to the deductor,
failing which the deductor shall deduct tax at source @ 20% or the rate in force,
whichever is higher.TDS would also be deductible @20% in cases where the tax
payer files a declaration inForm.No.15G or 15H without quoting his/her PAN. No
certificate under section 197 will be granted unless the application contains the PAN
of the applicant.
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All companies and other assesses (who are subjected to compulsory Audit u/s
44AB) are required to make electronic payment of tax through internet
banking facility offered by Authorized banks.
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payment as uploaded by the banks are available at the NSDL
website www.tin-nsdl.com under the link “Challan Status Enquiry”.
The deductor must verify the details that have been captured and
transmitted by the bank before filing the Quarterly Statements. If
there is any mistake in the challan, a correction request has to be
filed to the Bank. The fields that can be corrected through the bank
are tabulated below.
All deductors shall generate and download Part A of Form No.16 through the
TRACES portal in respect of all sums deducted on or after 1-4-2012. (Applicable for
the assessment year 2013-14 onwards). Part A of Form No.16 shall have a unique
TDS certificate number. The deductor after downloading Part A of Form No.16, shall,
before issuing it to the deductee, authenticate the correctness of the contents
mentioned therein and verify the same by using his/ her signature. (Manual/
Digital).Part B of the Form No.16 shall be prepared by the deductor manually and
issued to the deductee, after due authentication and verification, along with the Part A
of the Form No.16.
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The forms prescribed periodicity and the due dates for issuing the certificates are
given below.
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Quote his Tax deduction Account Number (TAN) in the statement
Quote his PAN in the statement (not applicable for Government Deductors)
Quote PAN of all deductees
Furnish particulars of tax paid to the Central Government including Book
Identification Number (BIN) or Challan Identification Number (CIN) as the
case maybe.
Furnish particulars of amount paid or credited on which tax was not deducted
in view of the issue of certificate of no deduction of tax under section 197 by
the Assessing Officer of the payee
Furnish particulars of amount paid or credited on which tax was not deducted
inview of the compliance of provisions of Section 194C (6) by the payee.
(payments to transporter if PAN has been provided)
Furnish particulars of amount paid or credited on which tax was not deducted
inview of the declaration under section 197A (1) or (1C). (Self declaration
filed in Form No.15G/15H)
Furnish particulars of amount paid or credited on which tax was not deducted
inview of the notification issued under section 197A(1F) (institutions notified
by the Central Government)
Deductors can prepare the quarterly e-TDS returns using in-house software or
using the Return Preparation Utility (RPU) developed by NSDL. This utility is
freely downloadable from the websites www.tin-nsdl.com. At the time of preparing
quarterly e-TDS/TCS statements, the following precautions need to be taken:
Quote the correct TAN, name & address. TAN should be the same as quoted in
your tax payment challans.
Provide details of challans by which taxes have been deposited in the bank
(i.e. the amount of tax deposited and CIN). Verify the CIN details uploaded by
the banks to TIN before these details are included in the statement.
The challan amount mentioned in the statement should be exactly the same
amount as deposited through the challan. This will enable matching the
challan details provided in the statement with the challan details uploaded by
banks.
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Against each challan, indicate the details of deductees on whose account the
tax has been deducted.
Even if the actual tax deposited as per the challan is higher than the total of the
amount of tax deducted on account of the deductees, challan details should
contain the amount deposited as per the counterfoil.
If TDS for two months (June and July) was paid using one challan, the same
challan details are to be repeated in item 4 of the TDS form for both Q1 and
Q2. However, please ensure that the total TDS deposited for the corresponding
deductees given in statements for both quarters should be less than or equal to
the challan amount.
Quote correct Permanent Account Numbers (PAN) of the deductees.
After the file is prepared, the file has to be validated using NSDL’s File
Validation Utility(FVU), which is also available in the NSDL website. After
validating the file with File Validation Utility (FVU), copy the ‘.fvu’ file on a
Compact Disk/Pen Drive, and affix a label mentioning TAN, Assessment Year,
Form Number, Periodicity and name and furnish the same to any TIN
facilitation Centre, and obtain acknowledgement thereof along with
Provisional Receipt Number (PRN). Each quarterly e-TDS returns should be
accompanied by a duly filled and signed Form.No.27A in physical form.
The deductor shall ensure that
Quarterly e-TDS/TCS statement is in conformity with the file format notified
by the Income Tax Department
Each quarterly e-TDS/TCS statement (Form 24Q, 26Q, 27Q and 27EQ) is in a
separate CD/Pen drive.
Each quarterly e-TDS/TCS statement is accompanied by a duly filled and
signed(by an authorised signatory) Form 27A in physical form.
More than one CD/Pen drive is not used for furnishing one Quarterly
statement.
Quarterly e-TDS/TCS statement should be compressed, if required, only by
using Winzip 8.1 or ZipItFast 3.0 (or higher version) compression utility to
ensure quick and smooth acceptance of the file.
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Label mentioning TAN, name of deductor/collector, period to which statement
pertains (quarter and F.Y.) and Form no. (24Q, 26Q, 27Q or 27EQ) is affixed
on each CD/Pen Drive for the purpose of identification.
There is no overwriting/ striking on Form 27A. If there is any, then the same
should be ratified by an authorised signatory.
TAN quoted in quarterly e-TDS/TCS statement and stated on Form 27A is the
same. Confirm new TAN by using search facility on ITD
website(www.incometaxindia.gov.in)
TAN details (name, address, etc.,) of the deductor as provided in the quarterly
e-TDS/TCS statement should be same as in the TAN database maintained by
ITD(these details can be verified with the TIN-FC or the ITD web-site
www.incometaxindia.gov.in). If they are different, the deductor shall submit a
TAN change request application to update the ITD TAN database.
Quarterly e-TDS/TCS statements pertain to the period for which they are
allowed to furnish.
The quarterly e-TDS/TCS statement has been successfully validated through
the latest version of the FVU.
Control totals, TAN and name mentioned in the quarterly e-TDS/TCS
statement match with those mentioned on Form 27A.
CD/Pen Drive is virus free.
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27Q Quarterly return in January 31st January 15th
respect
of payments made to May 15th May 15th
Non resident
27EQ Quarterly Return of TCS July 15th, October July 15th, October
15th, 15th,
January 15th , May January 15th ,
15th May 15th
TABLE1.3
Quarterly returns (24Q) in respect of employees who are with the employer for
apart of the year
Where an employee has worked with the deductor for part of the F.Y only, the
deductor should deduct tax from his salary and report the same in the Q.R of
respective quarter(s).Further while submitting Form No.24Q for the last quarter, the
deductor should include the particulars of that employee in Annexure II and III
irrespective of the fact that the employee was not under his employment on the last
day of the year.
The Quarterly Return in Form No.24Q in respect of Salaries is to be filed in
respect of every employee whose income under the head “Salaries” exceeded the
Maximum amount not chargeable to tax.
CORRECTION STATEMENT
The returns/ statements relating to TDS/ TCS are required to be complete and
correct. However, a procedure has been provided for correction of any genuine
mistakes in the original returns/ statements by way of submission of ‘correction
returns/ statements’. Financial Year (F.Y.), Assessment Year (A.Y.) and Quarter cannot
be updated by correction statements. Values in these fields have to be same as
specified in corresponding regular statements.
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For preparing the correction statement, the Consolidated File for the relevant
Quarter should be downloaded from TRACES website (www.tdscpc.gov.in). This file
has to be imported to the RPU for making necessary correction. Correction statement
can be furnished multiple times to incorporate changes in the regular TDS/TCS
statement.
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Interest (TDS u/s194A) Commission or Brokerage (TDS u/s194H)
Rent (TDS u/s194I) Professional/technical fee/Royalty (TDS u/s194J)
Amount paid to a contractor or sub contractor (TDS u/s194C)
The above expenditure will be allowed as a deduction in computing the income of the
previous year in which such TDS has been paid.
III. INTEREST
Section Nature of default Interest
201(1A) Non-deduction of tax at simple interest @ 1% per
source, either in whole or part. month from the date on which
After deduction, tax was deductible to the date
Non payment of tax, either in on which tax is actually
whole or part. deducted
Non-payment of tax u/s
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192(1A). @1.5% per month from the
date on which tax was
deducted to the date on which
tax is actually paid
TABLE 1.4
Failure to file TDS/TCS quarterly statements shall be liable for a fee of Rs.200 per
day of default and shall not exceed the amount of tax deductible or collectible. The
fee shall be paid before delivering the quarterly statements.
V. PENALTY
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due date.
272A(2) 1. Failure to issue TDS certificates Rs.100 for every day during
2. Failure to deliver declaration in which the failure continues
Form15G/15H but the penalty shall not
3. Failure to file quarterly exceed the amount of tax
statements (only till 30-06-2012) Deductible
TABLE1.5
VI. PROSECUTION
Section Nature of default Prosecution
276B Failure to pay Tax Deducted at Punishable with rigorous imprisonment for
Source minimum
3 months , maximum 7 years
and with fine
276BB Failure to pay Tax Collected at Punishable with rigorous imprisonment for
Source (TCS) minimum
3 months , maximum 7 years
and with fine
TABLE 1.6
PROVISIONS FOR DEDUCTION OF
TAX FROM SALARIES (SECTION 192)
Every person responsible for paying any income chargeable under the head
“Salaries” shall deduct Income Tax on the estimated income of the employee. Income
tax is required to be calculated on the basis of the rates given in Part III of the Third
Schedule of the Finance Act and shall be deducted equally at the time of payment.
Salary is taxable on due basis or on receipt basis whichever is earlier. Tax deduction is
required only at the time of payment of salary.
Salary includes:
1. Wages
2. Any annuity or pension
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3. Any gratuity
4. Any fees, commission, perquisites or profits in lieu of salary
5. Any advance of salary
6. Encashment of leave not availed
7. Interest earned in excess of 9.5% on Recognised Provident Fund
8. Amount contributed by Employer to Recognised Provident Fund in excess of
12% on salary
Some of the other Allowance which are exempt to the extent of limit specified
Nature of allowance Limit specified Remarks
Hill compensatory Rs.300 p.m to Rs.7000 p.m Rule 2BB
33
Rs.10,00,000 (Rs.3,50,000 upto May 23,2010)
34
Medical Allowance is fully taxable. The following are tax free medical benefits
Rs.5,000
2. Professional Tax [Section 16(iii)]: Professional tax or tax on employment
actually paid by an employee shall be allowed as deduction.
35
194A Interest other than from a Rs. 5000 P.A 10% 10%
banking company
194B Winnings from Rs. 10,00,000 30% 30%
Lottery/Crossword puzzles P.A
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statements
TABLE 1.11
DUE DATES OTHER THAN GOVERNMENT DEDUCTORS
for TDS made in March Salary : Form No.24Q Salary : Form No.16
: On or before 30th Others : Form No.26Q Others : Form No.16A
April Non resident : Form No.27Q TCS : From 27D
Challan No.281 TCS : Form No.27EQ
DVAT Act 2004 is an act to consolidate and amend the law relating to levy of tax on
sale of goods, tax on transfer of property involved in execution of works contract, tax
on transfer to use goods and tax on entry of motor vehicles by way of introducing a
value added tax regime in the local areas of the National Capital Territory of Delhi.
Imposition of tax:-
Subject to other provisions of this act, every dealer who is
A. Registered under this act or,
B. Required to be registered under this act;
Shall be liable to pay tax calculated in accordance with this act, at the time and in the
manner provided in this act.
Every dealer shall be liable to pay tax at the rates specified in section 4 of this
act on every sale of goods effected by him.
The amount of tax payable under this act by a dealer, is the dealer’s net tax
period calculated under section 11 of this act.
The net tax of a dealer shall be paid within first 28 days of the conclusion of
the dealer’s tax period.
Tax shall be paid in the specified manner in the section 36 of this act.
Every dealer who has become liable to pay tax under this act on the sales of
the goods shall continue to be liable unless his taxable turnover during the
37
preceding 12 months has remained below the taxable quantum and on the
expiry of 12 months or such further period his liability to pay tax shall cease.
Every dealer who has become liable to pay tax under this act has ceased or
whose registration has been cancelled, shall if his turnover calculated from the
commencement of any year be liable to pay tax on and from the date on which
his turnover exceeds the taxable quantum , on sales effected by him on and
after that day.
Where it is found that any person registered as a dealer ought not to have been
registered, then notwithstanding anything contained in this act , such person
shall be liable to pay tax for the period during which he was registered.
If any person who transports goods or holds goods in custody in custody for
delivery to or on behalf of any person , on being required by the commissioner
so to do fails-
A. To furnish any information in his possession in respect of the goods; or
B. Fails to permit inspection thereof;
Then without prejudice to any other action which may be taken against such person, a
presumption must be raised that the goods in respect of which he has failed to furnish
information or permit inspection, are owned by him and are held by him for sale in
Delhi and the provisions and the provisions of this act shall apply accordingly.
This tax is levy on purchase and sale of goods said to be take place outside a state.
In TPDDL main work is generation and distribution of electricity but it is
exempted from tax , so in TPDDL Sales Tax is levied on the following
transactions:
Sale of scrap or obsolete items
Maintenance of street lights
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Used car sales
Used laptop sales
In case of scrap sales if vendor issue the C form against the sold items then the rate of
CST will be 2% else it will be higher up to 20%
In case of purchase of items, if TPDDL purchases any goods from outside Delhi and
issues the ‘C’ form, then the CST rate will be 2%, else it will be higher up to 20%
A company can issue C form only against registered items. Registered items are
mentioned under the RC issued by the sales Tax authorities.
TPDDL deposits DVAT and CST monthly and submits the file to the DVAT officer.
SERVICE TAX
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It is a tax on services rendered by one person to another. It is not meant to be a tax
on anything else. The levy of service tax pre-supposes the existence of two important
aspects:-
There should be a tax by means of imposition of a charge
The charge should be on services rendered.
OBJECTIVES
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LITERATURE REVIEW
There are many researches done in the past by many researchers on TDS, e-TDS ,
filling of TDS, etc
Geetha R. And Sekar M studied the tax payer’s perception, awareness towards filling
of income tax returns, and to analyse the level of satisfaction among the tax payers
towards e-filling of income tax returns. Their study reveals that 56% of the
respondents are female. It is inferred from the above that majority of the individual
tax payers are male (56%) it is concluded that there is no significance relationship
between the residential status and the level of awareness regarding the e-filing of
income tax returns, time limit of returns, cost of e-filing , website address, digital
signatures, usage of computer software for e-filling , e-payment through banks, TDS
returns, registration number, usage of IRS forms and the terms and conditions of e-
payment.
Dr. Y. M. Dalvadi studied the preparation of e-TDS return File, Forms
24,26,27,,27E,24Q,26Q 26QA,27EQ,16,16A,16AA, 22,27D by giving single input,
Salary Calculation, Rebate, Relief u/s 89, Data can be imported from MS-Excel
Files/Text Files and FVU Files. Generation of TDS/TCS Certificates (Form 16,
16A,27D) in PDF Format signed with Digital Signature. Preparation of TDS/TCS
41
Book Adjustment Form (TBAF). Study shows that technology does not give
guarantee for reduction to taxation is too low among SME’s so it is advisable to
increase the usage so that they can be relieved from stress from complex rules and
regulation and concentrate in the main business and strategy for the development of
enterprise.
Saumen Chattopadhay and Arindam Das Gupta studied that TDS has a uniformly
significant and positive effect on taxes paid and also a uniformly positive on tax
compliance for two of the three tax compliance variables.
The latter impact accords with the finding of the Crane and Nourzad (1994) for US
tax payers. However the finding must be taken to be inconclusive, since the TDS
effect for the third tax evasion variable was uniformly positive, through uniformly
insignificant and numerically small.
Taxation Policy has been a widely debated issue all over the world. A large number of
studies have been conducted covering different aspects of income tax structure such
as personal income tax, capital gains taxation, agricultural taxation, efficiency of
income tax administration etc. over the years. In this chapter, the available literature
was studied to get an insight into the main objectives of the study. The review of
literature is confined to India only as income tax legal frame work varies from country
to country. Moreover, reports of important committees constituted by Government of
India have also been reviewed. A brief review of relevant studies in this regard is
given below:
42
received over the future years rather than past years. He suggested for
stablisation in tax rate structure over the years, elimination of surcharge and
raising the exemption limit to Rs. 7500 for individuals and Rs. 10000 for HUF
and discontinuation of personal allowances. He was of the opinion that
number of Public Relation Officers should be increased for the convenience of
the taxpayers.
Singh (1971) examined depreciation provisions under the Income Tax Act with
special reference to their impact on corporate financial decisions. He pointed out that
sound depreciation policy could be adopted by the corporates to minimize their tax
liability. However, depreciation policy could not be used for sound financial decisions
because of some inherent weaknesses in the depreciation provisions under the Income
Tax Act viz. complicated tax depreciation structure with too many rates for different
categories of assets, absence of depreciation allowance on the live stock which were
disabled but could not be sold, difference between actual economic life of plant and
machinery and that depicted in tax laws etc. So the author stressed the need for
a rational and liberal deprecation policy to provide incentives for industrial
development and growth. In the end, he suggested that depreciation should be
based on replacement cost in place of historical cost of the asset.
Sundram and Pandit (1979) tried to find out what ought to be the
logical tax entity and its impact on equity and revenue. The authors opined
that tax entity should be identical with the decision making unit and in India
decisions were taken by nuclear family (Husband, wife and minor children).
Under the existing system of taxation, H.U.F. and individuals have always
been taken as independent assessment units leading to multiple tax entities.
The study found that it resulted in severe revenue loss as each tax entity
enjoyed variety of deductions and exemptions and effective marginal tax rate
43
came down. The authors recommended that nuclear family should be treated
as a single tax entity by eliminating „individual‟ and „HUF‟ as tax entities.
They estimated that suggested change would generate additional revenue
amounting to Rs. 130 crore and make tax system more equitable. A decrease in
exemption limit on income from approved investments and reduction in
deductions on account of approved savings were also suggested for
rationalisation of income tax system.
Maji and Rakshit (2001) examined the provisions of Income Tax Act
relating to integration of agricultural income with non-agricultural income
over the period 1987-88 to 2000-01. The authors calculated tax liability by
taking different amounts of agricultural income for the purpose of integration
and found that higher the amount of agricultural income, lower was the
effective rate of additional tax. The study highlighted that integration
provision was disproportionate in nature. The researchers opined that
exempting agricultural 84 income from tax was unfair as it resulted in
horizontal inequity, narrowing the tax base and tax evasion. They suggested
that agricultural income should be brought under the purview of Income Tax
Act by amending constitution and a separate head of income should be
inserted for agricultural income. They further suggested that average of the
first two bracket rates should be applicable on the agricultural income.
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COMPANY PROFILE
Tata Power Delhi Distribution Limited [TPDDL] is a joint venture between Tata
Power and the Government of NCT of Delhi with the majority stake being held by
Tata Power (51%). TPDDL distributes electricity in North & North West parts of
Delhi and serves a populace of 6 million. The company started operations on July 1,
2002 post the unbundling of the erstwhile Delhi Vidyut Board (DVB). With a
registered consumer base of 1.44 million and a peak load of around 1704 MW, the
company's operations span across an area of 510 sq kms.
TPDDL has been the frontrunner in implementing power distribution reforms in the
capital city and is acknowledged for its consumer friendly practices. Since
privatization, the Aggregate Technical & Commercial (AT&C) losses in TPDDL areas
have shown a record decline. AT&C loss is a measure of overall efficiency of the
distribution business which is the difference between units input into the system and
the units for which the payment is collected. Today, AT&C losses stand at 9.87%
which is an unprecedented reduction of around 81% from an opening loss level of
53% in July 2002.
On the power supply front too, TPDDL areas have shown remarkable improvement.
The company has implemented high-tech automated systems for its entire distribution
network. Systems such as, SCADA, Geographical Information System [GIS], Outage
Management System [OMS], DMS and OTS are the cornerstone of the company's
distribution automation project. To fight the menace of power theft, modern
technologies like High Voltage Distribution (HVDS) System and LT Arial Bunch
Conductor have been adopted.
TPDDL has to its credit several firsts in Delhi: SCADA controlled Grid Stations,
Automatic Meter Reading, GSM based Street Lighting system, SMS based Fault
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Management System, etc. TPDDL has also embarked on its Smart Grid Journey and
has become the first utility to initiate Automated Metering Infrastructure based Auto
Demand Response program in the country which will help in managing peak demand
& Grid stress.
TPDDL is the only utility in the Country to have been empanelled by the Power
Finance Corporation, Govt. of India's nodal implementation agency for its
Restructured Accelerated Power Development and Reforms Program (R-APDRP), as
IT Consultant and SCADA Consultant. TPDDL is also empanelled with the Rural
Electrification Corporation as System Consultant/IT and Energy Auditing and is
currently providing consultancies to various National and International utilities on IT/
SCADA implementation e.g. Haryana, Uttar Pradesh etc. TPDDL has been assigned
with consultancy service project with newly privatized utility in Nigeria.
TPDDL's change management experience, distributed leadership system, adoption of
latest technology; robust competence development process and innovative & open
work culture are the key strategic boosters which helped in building and sustaining
competitive advantage in the changing business scenario.
TPDDL has created several milestones in its journey so far; it is now focused and
committed to the road ahead and is exploring new opportunities to replicate its
experience of distribution reforms both in India and abroad. It is leveraging its unique
learning and skill sets solely and in collaboration with leading utilities and technology
providers in the areas of communications & technology, change management,
consumer service delivery and business process re-engineering.
A journey which began a decade ago for empowering the consumers in Delhi now
holds the potential to transform the distribution sector in India and similarly help
utilities across the globe. Today, TPDDL is providing project management and
consultancy services to the states of Haryana and Uttar Pradesh. It is also exploring
opportunities in Chhattisgarh and Punjab. The company is providing a technical and
management support to a Distribution Company in Nigeria and is also looking for
consultancy assignments in Kurdistan, Turkey and Iraq.
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(JJ) clusters in its licensed area. Apart from enhancement in distribution services,
TPDDL also focuses on community engagement and welfare programmes particularly
in these areas. TPDDL continuously identifies the needs of the local communities and
undertakes relevant initiatives/ drives accordingly. These initiatives includes Adult
Literacy Centers (ALC) for women, Vocational Training Centers (VTC),
neighborhood electrician program, tutorials for children, medical aid, drug-de
addiction support, accidental insurance scheme and safety awareness drives. TPDDL
has also undertaken several community development and welfare activities under its
CSR initiatives to educate, empower and bring about transformation in the lives of
illiterate and downtrodden women, students & children especially belonging to the
families which are economically and socially underprivileged and deprived and
residing in the slum clusters and resettlement colonies within our licensed area
.TPPDL through such initiatives have touched lakhs of lives to improve their living
conditions.
Apart from this, TPDDL also works on various projects to preserve and regenerate the
environment. It is a member of the Greening Agency within the Department of Forest
& Wildlife, Government of Delhi and is committed to promote tree plantation.
TPDDL has been aggressively creating energy conservation awareness though its
Energy Club prograMmes comprising of students from over 190 member schools.
More than 2 lakhs students and 10 lakhs people have been sensitized to the issue of
climate change and conservation through this initiative.
Tata Power Delhi Distribution has won several accolades for its pioneering efforts in
transforming the power distribution scene in its licensed area both at the national and
international levels. It has been conferred with the 'National Award for Meritorious
Performance' thrice by the Ministry of Power, Government of India for outstanding
performance in power distribution. It has also won six Asian Power Awards in a row
and holds a rare distinction of becoming the first power distribution utility from India
to have received the prestigious Edison Award twice, in the international category in
2008 Edison Award for Innovative Implementation of GIS and again in 2009 for
Policy Advocacy.
Some of the other key recognitions include Best Performing Private Discom Award at
Power Line Award- 2013, IPPAI Award 2013, International Palladium Balanced
Scorecard Hall of Fame award- 2008, SAP Ace award 2008; UPN, USA metering
award. It is also the youngest company and the first power utility in India to receive
the prestigious CII EXIM Award for 'strong Commitment to Excel'. It is also the only
distribution utility to receive the ISO 9001, ISO 14001 and OHSAS 18001
certification. TPDDL is the only Indian utility to have SA8000 certification. TPDDL
has been recognized as 2nd best in the "Best in Class – Energy, Oil and Gas Industry
by the Great Places to Work, India.
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researched and lauded our performance. TPDDL's Case Study on BSC was published
in Emerald Emerging Case Studies, UK by Faculty of Management Studies (FMS).
MANAGING TEAM
Name Designation
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49
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TATA POWER-DELHI DISTRIBUTION LIMITED CSR
POLICY
As a part of the Tata Group, Tata Power Delhi Distribution Ltd. (TPDDL) believes in
the Tata Group’s ethos of giving back to society. Rich heritage and unmatchable
legacy of Tata Group for holistic development of underprivileged communities,
societies & nation becomes the guiding force for adoption of community development
initiatives.
TPDDL’s CSR vision corroborates being a responsible corporate and aims at imbibing
social alignment as a key component of all its business processes and strategy.
‘Reaching out to communities we operate in’ is an integral part of our mission
statement. TPDDL’s inclusive approach to reach out to its stakeholders and
maintaining equilibrium brings more agility to the business. The community outreach
programs, working on the lines of triple bottom line approach, aims to serve key
communities in a systematic & planned way.
There are 200+ listed JJ clusters & resettlement colonies which fall in company’s area
of operation. The residents of these JJ clusters are basically migrants from different
communities, culture, ethnicity and creed who drifted from their native places. These
clusters also have a very high representation of SC/ST communities which further
emphasizes the need for inducing various developmental initiatives there. Creating
avenues for Education, Employability, Health Services, Environment and
Empowering marginalized societal sections & communities in distress are the focus
areas of community development at TPDDL.
TPDDL looks forward for an enhanced and valuable contribution in the lives of
communities by the company, create a win win situation for all stakeholders and
strives for achieving the milestones of sustainable development and inclusive growth.
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CSR programs/projects would be targeted primarily for JJ Clusters & Resettlement
Colony residents residing in TPDDL’s licensed area spread approximately over 550
sq. kms. Across North & North West of Delhi. In addition, in case of natural disasters
& calamities TPDDL will take up relief work across country as appropriate.
The target communities of CSR programs/projects would be underprivileged,
socially and economically marginalised men, women, adolescent, school going
students, school drop outs, SC/ST, old age individuals, orphans and differently abled
individuals.
In addition, we will respond to any disasters, depending upon where they occur and
our own ability to respond meaningfully.
Taking up new projects specified in Schedule VII read with section 135 of the
Companies Act, 2013 and rules made thereunder and any amendments made thereto
from time to time.
Note: Surplus arising out of the CSR programs/projects or activities shall not form
part of the business profit of the Company.
Implementing mechanism
CSR programs/projects would be primarily implemented by proficient NGOs. In-
House CSR team would look after the identification, planning, budgeting, monitoring,
evaluation and reporting of the CSR programs/projects.
TPDDL’s CSR programs/projects have clearly defined targets, no. of beneficiaries and
timelines by which the deliverables of projects are measured & monitored. The
working mechanism, deliverables & outcome of the programs are detailed in the
contract agreement of the implementing partner.
The monitoring process will cover both programme and financial reviews. TPDDL
has adopted 3 tier monitoring & review structure to ensure effective implementation
of CSR programs/projects
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AWARDS AND RECOGNITIONS
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1. Great Places to Work 2013 : As per a Survey conducted by the Economic
Times and Great Places to Work Institute, India Tata Power- DDL has been ranked
46th amongst 100 Best Companies to Work for in India and also declared 2nd
Best in Energy, Oil and Gas Industry for the year 2013
5. Safety Innovation Award : Tata Power Delhi Distribution Ltd. (TPDDL) has
won the prestigious Safety Innovation Award for the Year 2013 for the fifth
consecutive year. This award has been instituted by The Institution of Engineers
(India) under the aegis of Safety & Quality Forum
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BOUQUET OF SERVICES
TPDDL is a unique name amongst firms providing consultancy in the power sector.
Building up on its four-fold strengths of being a Power Distribution utility, Change
Management expertise, Idea Capital and IT& Technology Expertise, TPDDL has been
offerings services laden with domain experience as well as a consultant's
vision.TPDDL's hands on experience of successful implementation and regular
maintenance enable it to act as a Project Management Consultant and handhold
utilities from the cradle to youth to embrace state-of-art technologies.
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TPDDL's success story has led to an influx of progressive measures in other power
sectors in India as well. Encouraged by the wholesome transformation witnessed in
TPDDL regions, other sectors such as water distribution, retail gas supply, solar
rooftop generation, etc. have embarked on producing the change in their business
areas. TPDDL, harnessing its pioneering presence and pool of exceptional brains, has
also been involved in assisting these firms on their path to excellence.
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MAJOR PLAYES OF POWER COMPANIES
NTPC
JINDAL
TATA Power
RELIANCEBSES
Power Link
BBMB
Tata Power
Torrent Power
BSES
BRPL
India possesses a vast opportunity to grow in the field of power generation,
transmission, and distribution. The target of over 150,000 MW of hydel power
germination is yet to be achieved. By the year 2013, India requires an additional
100,000 MW of generation capacity. A huge capital investment is required to meet
this target. This has welcomed numerous power generation, transmission, and
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distribution companies across the globe to establish their operations in the country
under the famous PPP programmes. The power sector is still experiencing a large
demand-supply gap. This has called for an effective consideration of some of strategic
initiatives. There are strong opportunities in transmission network ventures –
additional 60,000 circuit kilo meters of transmission network is expected by 2013
with a total investment opportunity of about US$ 200 billion.
Initiatives
Allowing foreign equity participation up to 100 per cent in the power sector
under the automatic route.
Introduction of the Electricity Act 2003 and the notification of the National
Electricity and Tariff policies.
Provision of income tax holiday for a block of 10 years in the first 15 years of
operation and waiver of capital goods' import duties on mega power projects
(above 1,000 MW generation capacity).
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Un-bundling of the State Electricity Boards (SEBs) into generation,
transmission, and distribution companies for better transparency and
accountability.
Potential
Large demand-supply gap: All India average energy shortfall of 7% and peak
demand shortfall of 12%
Total investment opportunity of about US$ 200 billion over a seven year
horizon.
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RESEARCH METHODOLOGY
Secondary data , is data collected by someone other than the user. Common sources
of secondary data for social science include censuses, organisational records and data
collected through qualitative methodologies or qualitative research
Secondary data analysis saves time that would otherwise be spent collecting data and,
particularly in the case of quantitative data, provides larger and higher-
quality databases that would be unfeasible for any individual researcher to collect on
their own. In addition, analysts of social and economic change consider secondary
data essential, since it is impossible to conduct a new survey that can adequately
capture past change and/or developments.
The data required was collected in the following ways:-
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FINDINGS AND INFERENCES
TPDDL is following all the statutory compliances under various tax laws like
Income Tax, Service Tax, DVAT and CSAT.
The company is deducting tax amount at the applicable tax rates under various
tax laws and depositing account on or before the due date.
TPDDL is using SAP ERP system and before depositing the tax amount it is
checked by the various levels of concerned staff by using required reports
generated by SAP system.
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DATA REDECTION, PRESENTATION AND ANALYSIS
The table presented above represents the data for First Quarter for the financial year
2014-2015 under section 194 A. The data shows that the total number of deductee
involved are 13000 and the total interest paid by all is Rs. 19 crores. The total TDS
that has been deducted is Rs. 65 lakhs. The number of deductees that have furnished
their PAN are around 5900 and the remaining are those who have not furnished their
PAN are 7100.
The amount of TDS on number of PAN available is Rs. 42 lakhs which means that
that TDS on non-availability of PAN is 23 lakhs. Interest on PAN availability is Rs.
17.8 Crores so the remaining amount indicated the interest on non availability of
PAN ie.1.2 Crores.
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First Quarter Financial Year 2015-2016
Section 194 A
The table presented above represents the data for First Quarter for the financial year
2015-2016 under section 194 A. The data shows that the total number of deductee
involved are 13300 and the total interest paid by all is Rs. 30 crores. The total TDS
that has been deducted is Rs. 2 crores and 50 lakhs. The number of deductee who
have furnished their PAN are around 6200 and the remaining are those who have not
furnished their PAN are 7100.
The amount of TDS on number of PAN available is Rs. 2 crore and 25 lakhs which
means that that TDS on non-availability of PAN is 25 lakhs. Interest on PAN
availability is Rs. 28 Crores and 25 lakhs so the remaining amount indicated the
interest on non availability of PAN ie.1.5 lakhs
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Number Of Deductee
13350
13300
13250
13200
13150 Number Of Deductee
13100
13050
13000
12950
12900
12850
Year 2014-15 Year2015-16
Figure 1.5
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Interest
350000000
300000000
250000000
200000000 Interest
150000000
100000000
50000000
0
Year 14-15 Year 15-14
Figure 1.6
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TDS Deducted
350000000
300000000
250000000
150000000
100000000
50000000
0
Year 2014-15 Year 2015-16
Figure 1.7
During the financial year 2015-16 the TDS deducted is more as compared to the
previous financial year .
LIMITATIONS
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Having not studied taxation in depth before, made it at times difficult to
understand concepts .
As the subject of taxation is so vast, it is difficult to understand whole
taxation in a short duration of training period.
At times, the employees were busy with their own work which made it a bit
difficult for me to get my doubts cleared.
RECOMMENDATIONS
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Training regarding how to use the SAP software should be given to employees
.
Employees should be educated on how to plan their tax filing and reduce their
tax liability.
Since tax rules and regulations change almost year, employees must be made
equipped with knowledge to ensure they are up to date with the latest
amendments made.
Employees must be helped on keeping the necessary documents ready for tax
filing.
CONCLUSION
Taxation is the process by which the government imposes charges on citizens and corporate
businesses. The charges collected by the government are used to fund different government
projects that would in the end benefit the citizens of the country as a whole. The taxation process
can benefit both the society and business as a whole. The government allocates the money
collected from the taxpayers to different areas of the country. The areas picked are rural areas.
Some rural areas may have resources that might be beneficial for both the country and its
economy. Therefore, the government would allocate part of the tax money to provide the essential
services required and to improve the standards of such places.
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Tax should be paid by all those who have to
Awareness as to why should one pay tax should be spread
Best possible methods of tax collection and payment should be used.
BIBLIOGRAPHY
Reference Books:
TPDDL manuals
TPDDL tax guru
TPDDL tax patrika
Systematic Approach to Income Tax , Service Tax and VAT by Girish Ahuja
Websites:
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www.wikipedia.org
www.incometaxindia.gov.in
www.tatapower-ddl.com
www.taxguru.in
www.tatapower.com
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