Illegal deduction of income tax
Piyush Vaishnava
(Querist) 23 April 2013
This query is : Resolved
Dear Experts
That a contractual Computer Operator working with a government organization (Tuberculosis Eradication Program GOI Health Ministry)and contract is renewable for yearly basis. That a monthly remuneration of Rs. 12000 has been made out in favor of him but after deduction of Income Tax (TDS) under section 194J,
does he is covered under this section.
if no than where he should have to go for rectification of this mistake before High Court or any tribunal etc.
Raj Kumar Makkad
(Expert) 24 April 2013
He should contact to ITO and should specifically get instructions that being having low income, no TDS is required to be deducted out of his salary.
Guest
(Expert) 24 April 2013
Deduction is not illegal on the part of your employer. You being a contractor, the employer is legally bound to deduct tax at source. You need to get certificate of deduction of tax at source from your employer. If your total income does not qualify for tax, you may submit tax return after the close of the financial year to claim refund from the Income Tax Officer of your ward.
Raj Kumar Makkad
(Expert) 24 April 2013
Id the total income is not above than permitted limit then the deduction should not be mandatory.
Anirudh
(Expert) 24 April 2013
Dear Mr. Makkad,
I am afraid you have not gone through the relevant provisions in the I.T. Act. I will be happy, if you provide the answer to the query, after going through the following is the provision:
Payments to contractors.
194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor59) for carrying out any work59 (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to—
(i) one per cent where the payment is being made or credit is being given to an individual or a Hindu undivided family;
(ii) two per cent where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family,of such sum as income-tax on income comprised therein.
(2) Where any sum referred to in sub-section (1) is credited to any account, whether called "Suspense account" or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the payee and the provisions of this section shall apply accordingly.
(3) Where any sum is paid or credited for carrying out any work mentioned in sub-clause (e) of clause (iv) of the Explanation, tax shall be deducted at source—
(i) on the invoice value excluding the value of material, if such value is mentioned separately in the invoice; or
(ii) on the whole of the invoice value, if the value of material is not mentioned separately in the invoice.
(4) No individual or Hindu undivided family shall be liable to deduct income-tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family.
(5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed 60[thirty] thousand rupees :
Provided that where the aggregate of the amounts of such sums credited or paid or likely to be credited or paid during the financial year exceeds 61[seventy-five] thousand rupees, the person responsible for paying such sums referred to in sub-section (1) shall be liable to deduct income-tax under this section.
(6) No deduction shall be made from any sum credited or paid or likely to be credited or paid during the previous year to the account of a contractor during the course of business of plying, hiring or leasing goods carriages, on furnishing of his Permanent Account Number, to the person paying or crediting such sum.
(7) The person responsible for paying or crediting any sum to the person referred to in sub-section (6) shall furnish, to the prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed.
Explanation.—For the purposes of this section,—
(i) "specified person" shall mean,—
(a) the Central Government or any State Government; or
(b) any local authority; or
(c) any corporation established by or under a Central, State or Provincial Act; or
(d) any company; or
(e) any co-operative society; or
(f) any authority, constituted in India by or under any law, engaged either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both; or
(g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or
(h) any trust; or
(i) any university established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a university under section 3 of the University Grants Commission Act, 1956 (3 of 1956); or
(j) any Government of a foreign State or a foreign enterprise or any association or body established outside India; or
(k) any firm; or
(l) any person, being an individual or a Hindu undivided family or an association of persons or a body of individuals, if such person,—
(A) does not fall under any of the preceding sub-clauses; and
(B) is liable to audit of accounts under clause (a) or clause (b) of section 44AB during the financial year immediately preceding the financial year in which such sum is credited or paid to the account of the contractor;
(ii) "goods carriage" shall have the meaning assigned to it in the Explanation to sub-section (7) of section 44AE;
(iii) "contract" shall include sub-contract;
(iv) "work" shall include—
(a) advertising;
(b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting;
(c) carriage of goods or passengers by any mode of transport other than by railways;
(d) catering;
(e) 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.
Guest
(Expert) 24 April 2013
Makkad ji,
It is mandatory for the DDO to deduct TDS in the case of contractors, if the consolidated amount in the assessment year exceeds the specified sum, as you can see in the extract of relevant section provided by Shri Anirudh.
H.M.Patnaik
(Expert) 24 April 2013
Dear Piyush,
The recipients of service ( wing of the Health Deptt.) are legally bound to effect TDS on payments made to you for rendering Technical or professional services as per provisions laid down under Section -194J of the Income Tax Act irrespective of the fact that your annual receipt from the above source is less than the threshold limit attracting incidence of Income Tax .
However, as suggested by respected Dhingraji,after the end of the financial year you can file your IT Return to claim refund of the amount deducted at source stating details as per procedure for obtaining refund of TDS amount.
Raj Kumar Makkad
(Expert) 24 April 2013
+Anirudh & Dhingra ji! thanks for providing right path to me. Truely speaking, I have not gone through the income tax law as compared to civil, criminal, consumer, property and other laws. This field is really my weakness. I shall try to be specific in future while dealing with the queries pertaining to Income Tax act.
prabhakar singh
(Expert) 24 April 2013
The fine distinction i realized that none here can match with Dhingra ji when it comes
to service laws and labor laws.
Mr.Anirudh is equivalent and can match a celebrated authority (in my view at least)
Mr.Ramachandran in the area of excise and
IT taxation and personal law of inheritance.
And none can match Mr. Makkad when it comes to GK of laws as i find him jack of all but
master of none.
Among these i feel my self to be poorest lot because of being a practitioner of civil side,often i find myself twisting criminal law in civil side of laws which keeps me in jerk.
Raj Kumar Makkad
(Expert) 24 April 2013
Thanks Mr. Singh for providing the chance for introspection. I have already mentioned in my profile that I am a student of law and know nothing. I try to learn through GK but while doing so I could not become master of any field. Really you have shown me mirror on today which you would have shown me much earlier and would have guided me being a most senior lawyer. I do regard you and appreciate your opinion about other colloquies also. I shall try to come to your expectations. It shall be good if you may guide to become master of a particular field of law as you know me better since we are here for about 4 years.
prabhakar singh
(Expert) 24 April 2013
" know nothing" is taht shall sail you none else.
