Important Provisions applicable from 01st June, 2015:

1)      Bank/Cooperative bank and post office Recurring Deposits (RD) interest, if more than Rs.10, 000/- per year will be liable to TDS w.e.f. 1-6-2015. If PAN is not given then TDS will be deducted @ 20%. Also, henceforth bank wise Income will be considered for TDS deduction on time deposits instead of branch wise limits. So if you have different RDs in different branch of the same bank the interest from all the branches  will be added to arrive whether it exceeds Rs. 10,000/- or more.

2)       W.e.f. 1-6-2015, any transaction in Real Estate including agricultural land shall be required to be made through Account Payee cheque or RTGS if it is of Rs. 20,000/- or more. Only such farmers where both of them have agricultural income only, and not any other income is exempt. If transaction is done in cash then penalty of an amount equal to such cash transaction will be imposed on seller who accepts cash or refund of advance is made in cash by the seller of Property.

3)       For any purchase of more than Rs.1 Lakh PAN of buyer will have to be quoted. Therefore while making purchases of consumer durables like fridge, TV, Car, Jewellery etc can be made in cash or cheque, but if the transaction is above Rs. 1 lakh PAN of the buyer is to be manadorily quoted.

4)        W.e.f. 1-6-2015 in case of payment of Transport Freight as a single transaction of more than Rs.30,000/- or of more than Rs. 75,000/- in a year then TDS will have to be deducted @ 1% and in case of recipient being firm or a company then TDS @ 2% will have to be made. If the recipient owns 10 or less Goods Carriage then he can give a declaration to this effect then TDS will not be deducted even if payment exceeds the threshold of Rs.30000 / Rs.75000. So a self declaration from truck owners can be obtained for non deduction of TDS.

5)        W.e.f. 1-6-15 if any payment is made by any person to a non-resident, (not being a company) or to a foreign company, any sum whether or not chargeable to Income tax shall furnish Form No. 15CA & 15CB. Earlier only income chargeable to income tax in India had to be reported only but now all payments are covered.

           If such information is not furnished or the information furnished is inaccurate then U/s 271-I penalty of Rs. 1 Lakh may be imposed. This is also likely to be forming part of regular reporting items in Income Tax Returns henceforth so to escape from this provision will be difficult. However payments for Imports in regular course of Business are not covered here.

6)        If the payment is made to a person (including non resident) whose receipts are subject to TDS shall  mandatory furnish his PAN to the deductor (even though the deductee files a declaration in form no. 15G or 15H) otherwise the deductor shall deduct the TDS at higher of the following rates the applicable rate prescribed in the Act or 20%.

So practically now it will be advisable for all to have a PAN.

Service Tax

Effective from 01.06.2015, Service Tax to be charged @ 14%. In case of Abated Rates, following rates are applicable:

  • GTA Transports - 4.20%
  • Builder- Res- 3.5%
  • Builder-Comm- 4.2%
  • Civil Contractor with Mat - 5.6% 
  • Erectionc with Material- 5.6% 
  • Repair / Maintenance of Building or goods - 9.80%
  • Lodging - 8.40% 
  • Restaurant - 5.60% 
  • Catering - 8.40%
  • Hall with Catering - 9.80% 
  • Vehicle Rent - 5.60%