TDS Deduction Guide for Housing Society Treasurer

On registration of a Cooperative Housing Society, the Society gets the status of a legal entity. Under the Income Tax Act, 1961, a Cooperative Housing Society is a taxable entity. It is mandatory for legal entities to file Tax Deducted at Source (TDS) return and Income Tax returns thus, it is also obligatory for all housing societies to deduct and file TDS Deducted.

What is Tax Deducted at Source (TDS)?

TDS is a certain percentage of the Payment which is deducted at the time of payment made to the party, who may be a contractor or a professional. TDS is deducted after considering the amount of payment made in his / her favor 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.

Here, how you can deduct the TDS in the Neighbium system.

How to Enable TDS

• • Go to Accounts and choose Accounts Settings.
  • Set the TAN number
  • That’s it! TDS is enabled and you can deduct taxes on purchases/expenses.

How to add Vendors and set TDS Deductee type

• • Go to the directory  and click on Vendor Tab
  • Click on the Add icon to add a vendor or you can open the existing vendor.
  • Set the TDS Deductee Type as Individual, HUF, or Others
  • Click on the save icon to save the vendor.

Types of TDS comes under housing societies

• • Usually, societies deduct TDS on security service, lift maintenance charges, on fees of contractors and professionals. The rates prescribed for TDS are
  • Under Section 194 C (Payment to Contractors – Category 1) – TDS to be deducted at 1% to individual / personal/ HUF if a single contract is more than Rs. 30000 or in case the total payment in the financial year is more than Rs. 1,00,000/.
  • Under Section 194 C (Payment to Contractors – Category 2) – TDS to be deducted at 2% to company / firm / partnership if single contract is more than Rs. 30,000/- or in case the total payment in the financial year is more than Rs. 1,00,000/-.
  • Under Section 194 J (Payment to Professionals / Technical Services) – TDS to be deducted at 10% if the payment is more than Rs. 30,000/ A simple way to find if the Contractor is Individual / Company – Carefully read the PAN, if the contractor is individual then the forth letter is ‘P’ or ‘H. H’ stands for HUF. (Deduct 1% TDS) the contractor is a firm/company/contractor then the forth letter is F. ‘F’ stands for the firm. (Deduct 2% TDS) It is advisable to deduct 2% TDS if the forth letter is different from than specified above.

How to make an expense entry with Neighbium?

• Go to Accounts and select  Action Tab
• Click on All Purchases and Expenses
• Select the purchase invoice summary to make the Vendor payment.
• Here, you will see the Deduction of TDS along with the vendor amount.
• On the Payment Details section, click on the “Click here to add payment”.
• Select Payment Mode and Make the Payment.

How to make entry of TDS paid to the government?

• Go to Accounts Select Action Tab.
• Click on Paid TDS
• Set the TDS Ledger on the debit Side and Cash/Bank ledger on the credit side.
• Fill in the Amount and narration
• Press the Save Button
• That’s it! Journal entry has been automatically generated by the system

TDS Reports – Following reports are introduced to view TDS data:

• Purchase & Expenses Report: This report shows all the expenses made during the selected period along with TDS deducted for different types of expenses made by the society management team.
• TDS Ledgers Report: This report shows the individual taxes deducted for corresponding sections such as total TDS deducted under section 194 C or 194 J etc.

FAQ

• My Vendor is not ready to pay TDS. What should I do?

A (deductor) citizen, who is liable to make any other person’s (deductee) payments of the stated nature, shall deduct tax at source and return it to the Central Government’s accounts. If the vendor refuses to pay TDS, then in that case Company/ Society Paid TDS to Govt. on behalf of Deductee. And request Deductee to refund the amount paid by them by submitting the TDS Certificate.

• My Vendor is saying not to deduct TDS as they are exempted. What should I do?

You may ask the individual responsible for TDS not to deduct tax on such income if you have your gross revenue well below the basic exception cap. You have two choices for doing the same thing:

• Submit a lower rate, or Zero rate, a certificate to be obtained to the assessing officer under whose competence you fall under Form 13.
• Submit in Form 15G/15H a declaration indicating that your income is below the key exemption cap for the financial year and tax is deductible at source. The certificate is expected to be presented every year and a failure to apply will lead to a tax deduction.

Please note that Form 15G for individuals and Form 15H for seniors can be provided by appraisals only while Form 13 can be submitted to the ASSESSING OFFICER to be approved to deduct taxes at the lower or Zero rate by any entity i.e. individual, a partner company, company, etc.

• My Vendor is asking for a TDS certificate? What should I do?
  The declaration can be downloaded from the revenue tax website. This statement is related to your PAN and includes information about all TDS employers and others (for example, banks, etc). After logging into your account on the income tax e-filing site you can find the link to download Form 26AS from TRACES. Form 16/16A for the TDS certificate:
  Type 16/16A is a payroll deduction certificate issued by the employer on behalf of its workers at source and deducted by the tax. These certificates contain TDS/TCS information for different deductors and deductors transactions. These certificates must be given to taxpayers.
  Logs to the TRACES Deductor.
  Go to Register for Downloads.
  Choose the 16/16A combination.
  Enter the information and click on go.

• What is the due date of filing TDS?
  A business that has deducted TDS must schedule and file quarterly returns within 15 days of the end, except the fourth quarter. The deadline for TDS filing is –

1.  31″ of July for the quarter of April to June.
2.  31″ of October for the quarter of July to September.
3.  31″ of January for the quarter of October to December.
4.  31″ of May for the quarter January to March.

A taxpayer may be issued a recognition form, i.e. (Form 16 A) by the individual withdrawing from the TDS. It is proof of the payment of and deposits with the Government of the necessary taxes. This certificate contains the specifics of the invoice, billing, and payment details, the date of tax deduction, and the date of submission of the credit. A tax credit or if any) reimbursement of the return of the income tax must be given on the TDS certificate.

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