TDS (Tax Deducted at Source) is a tool used by government to curb the possible evasion of tax by collecting tax(fully or partially) at the source of income generation itself rather than at a later date.
E.g.: Mr. A provides services to Mr. B for which Mr. B makes the payment to Mr. A. However, while making the payment TDS needs to be deducted and net amount to be paid to Mr. A and the deducted amount are to be remitted to government. Mr. B referred to as deductor and Mr. A referred to as deductee in this example.
TDS needs to be applied with different rates for different types of payments. However, in order to provide more funds at the disposal of the taxpayers for dealing with the economic situation arising out of COVID-19 pandemic, the rates of TDS for non-salaries payments have been reduced by 25% for the period from 14th May, 2020 to 31st March, 2021. TDS for salaries has not changed. Changes in rates are tabulated below:
Provident Fund is a mandatory retirement savings scheme held by the government to which employees and employers shall contribute minimum prescribed percentage of wages. It enables employees to access as a lump sum amount at the time of retirement. It also allows the employees to withdraw before the retirement but with certain restrictions.
On a lighter note, provident funds are low-risk investment avenues that helps to accumulate and grow the money easily.
Statutory PF contribution of both employer and employee reduced to 10% each from existing 12% each for all establishments covered by EPFO for next 3 months. However, this amendment shall not apply to employer’s contribution by Central and State PSU’s, persons covered in Pradhan Mantri Garib Kalyan Package (PMGKP).
Due date for all income-tax return for FY 2019-20 will be extended from July 31 2020 and 31 October 31, 2020 to November 30, 2020 and tax audit from September 30, 2020 to 31st October 2020,” Finance Minister Nirmala Sitharaman said during a press briefing.
It is a relief especially for individual tax payers they were left only with one month (prior to above update) to file their returns after the extension of deadline for receiving Form 16 till June 30,2020.
Audit refers to independent examination of records of a company to provide an opinion which builds the confidence in the stake holders of the company.
Each organisation might need to undergo different types of audits under various legal and regulatory norms. Of which, applicability of Tax, Statutory and GST audits are covered below:
Tax audit is applicable based on the turnover. Turnover limits for entities carrying on business or profession are provided in the below table:
Note: Persons carrying on business or profession having turnover within the prescribed limit are eligible to opt for presumptive taxation (can avoid tax audit). However, certain scenarios are provided below: