TDS for Housing Society
On registration of housing society, the society gets the status of legal entity.
Under the Income Tax Act 1961, a Cooperative Housing Society is taxable entity.
It is mandatory for any legal entities to file TDS return and Income tax returns
thus it is also obligatory to all housing societies to deduct and file TDS Deducted.
What is Tax Deducted at Source (TDS)?
TDS is a certain percentage of payment which is deducted at the time of payment
made to the party, who can be a contractor or professional. TDS is deducted
after considering the amount of payment is made in his favour by the society.
Such deducted payment is paid to the Government account by the society.
The society deducting the tax is called Deductor and the person or company
whose tax is deducted is called Deductee.
Frequently asked questions regarding PAN and TAN –
Managing Committee members are of the opinion that income of Co–operative
Societies is not chargeable to tax and therefore many societies do not take PAN &
file Income Tax returns. This is incorrect; although certain types of income of
Cooperative housing societies are exempted still there are other incomes which
are chargeable to Tax. These are the answer to question which are commonly
asked-
1. Cooperative housing society is non-profit making organisation than is it
required to file income tax returns? Is it necessary to apply for PAN & TAN?
Ans. Even though the Cooperative housing society is non-profit making
organisation still the society is supposed to file the return of income by virtue
of provisions of Sec.139(1) of the Act if its income is chargeable to tax.
2. Why is it important to have PAN?
Ans. PAN enables to link all transactions of the society with the income tax
authority. These transactions include tax payments, TDS payments, Income tax
returns, claiming refunds etc. Every society is required to have PAN as it is
mandatory to quote PAN on all correspondence with income tax authority.
PAN is also required to open bank account and for investment in fixed deposits.
3. In case, the society has not deducted TDS of any party whether the society
has to file ‘Nil return’ on obtaining PAN and TAN?
Ans. NO. Return is to be filed only if the society has deducted TDS or has taxable
income. It is not mandatory to file Nil return.
4. Whether there has been any compulsion for filling income tax return for the
co op housing society?
Ans. As far as housing society is concerned the income by contributions from
members will not be taxable (Except where maintenance charges is above Rs.
5000/- per month service tax is applicable) but any other income will be
charged to tax. Like Rental from mobile tower, rental from use of open space
from non members, interest income earned other than Cooperative Banks is
taxable.
Application for Permanent Account Number (PAN) –
On registration of housing society every society should apply for PAN card. The
application for PAN card is required to be made in form no. 49 A. Cooperative
Housing Society registration certificate is the only document which is required to
be attached with the application for PAN.
1. Application form must be typed or hand written in black ink.
2. Form is to be filled in capital letters.
3. Address should be written in details, as all further communication would be
sent at the written address.
PAN is a 10 digit alphanumeric number issued by Income Tax department. PAN
card is issued in the form of a laminated card. A payment of Rs. 96 is required to
be made for application of PAN. PAN application form can be downloaded online
from –
http://law.incometaxindia.gov.in/DITTaxmann/IncomeTaxRules/pdf/49A.PDF
Application for Tax deduction Account Number (TAN) –
TAN is also 10 digit
alphanumeric number. Every assessee liable to deduct TDS is required to apply
for a TAN.
All those societies who are required to deduct tax at source on behalf of Income
Tax Department are required to apply for and obtain TAN. TAN is required to be
quoted in all TDS Returns, TDS payments, and any other communication
regarding TDS with the income Tax Department. Societies should note that TDS
returns and TDS payments would not be received by the Banks if TAN is not
quoted on the challans.
Cooperative Housing Society shall file application in form no. 49B. A payment of
Rs. 62 is required to be made for application of TAN. Tan application form can be
downloaded online from –
http://law.incometaxindia.gov.in/DITTaxmann/IncomeTaxRules/pdf/49B.PDF
No document is required to be attached with the TAN application. Only duly
filled form is to be submitted mentioning PAN.
Before deducting TDS the society should follow below procedure –
1. Every society is required to obtain TAN (Tax Deduction Account Number)
On registration of the society. It is always advisable to obtain TAN even if
TDS is not likely to be made in near future.
2. While deducting TDS the society should obtain correct PAN of the deductee
preferably Xerox copy of the PAN card and should maintain PAN details in
proper file.
3. Society should deduct the Tax (TDS) at correct rate depending upon the
section applicable.
4. The tax deducted has to be deposited in the selected banks within
prescribed period. The prescribed period is within seven days from the end
of the month in which the payment is made. For example if you have
deducted TDS on payment in the month of June than the same must be
deposited in the bank by 7th of July. Only the TDS deducted in the month of
March can be deposited by 30th April.
5. The TDS deducted payment is to be made through challan no. 281. If you
are depositing the cheque in SBI bank than make a cheque in favour of ‘SBI
A/c TDS’ and submit it with challan no. 281.
6. Society who has deducted TDS is required to prepare quarterly returns and
submit such quarterly returns within a period of 15 days from end of that
particular quarter (Except fourth Quarter). The due dates for filing of TDS
are –
a. 15th of July for the quarter April to June
b. 15th of October for the quarter July to September
c. 15th of January for the quarter October to December
d. 15th of May for the quarter January to March.
The rate of TDS –
Usually society deducts TDS on security service, lift maintenance charges, on
contractors’ fees, professionals. The rates prescribed for TDS are –
Under section 194 C (Payment to Contractors – Category 1) – TDS to be deducted
at 1% to individual / HUF if single contract is in excess of Rs. 30000 or in case the
total payment in the financial year is in excess of Rs. 75000/-.
Under section 194 C (Payment to Contractors – Category 2) – TDS to be deducted
at 2% to Company / Firm if single contract is in excess of Rs. 30000 or in case the
total payment in the financial year is in excess of Rs. 75000/-.
Under section 194 J (Payment to Professional / Technical services) – TDS to be
deducted at 10% if the payment is in excess of Rs. 30,000/-.
TDS certificate –
The society is required to issue TDS certificate in form 16 A to the deductee within
one month. TDS certificate is issued to deductee so that he can adjust the amount
of TDS against the tax payable during the regular assessment of his income tax.
Non deduction, late deduction and late deposit of TDS may lead to following
consequences:
Rate of interest on late deduction /late deposit of Tax at source –
As per Income-tax Act, interest is payable under the following two circumstances:
1. Tax is not deducted , when it was deductible
2. Tax once deducted, is not paid on or before due date
Rate of interest –
From the date when TDS was deductible till date of actual deduction, rate
of interest is 1% per month.
For delayed deposit, from date of deduction till actual date of payment,
rate of interest is 1.5% per month.
Dis-allowance of Expenses, on which tax has not been deducted /deposited.
Due date of payment of interest –
Interest must be calculated and paid before filing of eTDS statement of the
quarter.
Source: Sakal News , Manisha Prabhu housing Society Document