Dr.

Shakuntala Misra National Rehabilitation University

ASSIGNMENT ON

“LAW OF TAXATION”

PROJECT ON

“Advance Payment, TCS, TDS and Returns”

Submitted to:- Submitted By:-

MR.SAGEER
AHMAD SHIVANI SINGH
Faculty of law, DSMNRU

B.com LLB (Hons.)

7th Semester

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 ACKNOWLEDGEMENT

We feel ourself highly elated, as it gives us tremendous pleasure to come out with work
on the topic
Advance payment, TCS, TDS and returns.We started this project two weeks ago on its
completion We feel that we have not only successfully completed it but also earned an
invaluable learning experience. First of all we express our sincere gratitude to our
teacher Mr.Sageer Ahmad sir who enlightened us with such a wonderful and elucidating
research topic. Without her, we think we would have accomplished only a fraction of
what we eventually did. We thank her for putting her trust in us and giving us a
project topic such as this and for having the faith on us to deliver. Her sincere and
honest approach have always inspired us and pulled us back on track whenever we
went off-track. Ma’am , thank you for an opportunity to help us grow.  Next we
express our humble gratitude to our parents for their constant motivation and selfless
support. We bow our head to the almighty for being ever graceful to me.

Thanking you!

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 TABLE OF CONTENTS

 Introduction
 Breaking down advance payment
 TCS
 History of TCS
 Present condition of TCS
 TDS
 Rule related to TDS
 Conclusion
 Bibliography

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 INTRODUCTION
An advance payment is a type of payment that is made ahead of its normal schedule,
such as paying for a good or service before you actually receive the good or service.
Advance payments are sometimes required by sellers as protection against non-
payment, or to cover the seller's out-of-pocket costs for supplying the service or
product.
As the name suggests, it refers to paying a part of your yearly taxes in advance.
Advancetax is the income tax payable if your tax liability exceeds Rs 10,000 in afinancial
year. Advance tax should be paid in the year in which the income is received. Hence, it is
also known as the 'pay-as-you-earn' scheme. Advance tax is applicable when an
individual has sources of income other than his/her salary. For instance, if one is earning
through capital gains, interest on investments, lottery, house property or business, the
concept becomes relevant. Any rebate due fetches you an interest of 0.5 per cent every
month, or, six per cent annually, as in the case of an income tax refund. However, if you
don't pay the advance tax on time, you'll be charged one per cent every month, or, 12
per cent a year.

PROCEDURE OF FILING ADVANCE TAX-

 If you are salaried, you need not pay advance tax as your employer deducts tax
at source (TDS). However, you still need to file it if you have other sources of
income, increasing your liability to more than Rs 10,000. Professionals (self-
employed) and businessmen will have to pay taxes in advance as, given their
business income, the liability can be huge. The same goes for companies and
corporates.

 Advance tax or self-assessment taxes have to be paid on the 15th of September,

December and March, in instalments of 30 per cent, 30 per cent and 40 per cent,

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 respectively, for non-corporates. Corporates need to pay it on the 15th of June,
September, December and March. While employers deduct TDS on salaries,
advance tax is paid on income that has not been subjected to TDS.

 You can pay advance tax using the tax payment challan at the bank branches
empanelled with the Income Tax (I-T) department. It can be deposited with the
Reserve Bank of India, State Bank of India, ICICI Bank, HDFC Bank, Indian
Overseas Bank, Indian Bank, and other authorised banks. There are 926 branches
in India that can accept advance tax payments. You could also pay it online
through the I-T department or the National Securities Depository site.

BREAKING DOWN 'Advance Payment'

Advance payments can refer to one of two situations. First, advance payments can apply
to any sum of money provided prior to the contractually agreed upon due date. Second,
advance payments can refer to any required payment that is due prior to the receipt of
the requested goods or services.
Some everyday examples of advance payments are prepaid cellphones, as they require
payment for the services that will be used by the customer in the future. Advance
payment of this nature is required, as the service will not otherwise be provided.
Anotherexample applies to those eligible U.S. taxpayers who received advance
payments through the Premium Tax Credit, offered as part of the Affordable Care Act. In
this situation, the financial assistance due to the taxpayer is provided to the selected
insurer in advance of the actual due date for the credit.Voluntary advance payment, or
prepaying, can apply to any debt or obligation that is paid prior to it being required,
such as making payments on upcoming rent or utilities before they are contractually
due.

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 THE ADVANCE PAYMENTS TO SUPPLIERS
In the corporate world, companies often have to make advance payments to suppliers
when their orders are large enough to be potentially burdensome to the producer,
should the buyer decide to back out of the deal before delivery. This can assist
producers who do not have enough capital to buy the materials needed to produce a
large order, as they can use part of the advance payment to pay for the product they
will be creating. It can also be used as an assurance that a certain amount of revenue
will be brought in by producing the large order.If a corporation is required to make an
advance payment, it is recorded as a prepaid expense on the balance sheet under the
accrual accounting method.

ADVANCE PAYMENT GUARANTEES-

An advance payment guarantee serves as a form of insurance, assuring the buyer that,
should the seller fail to meet the agreed upon obligation of good or services, the
advance payment amount will be refunded to the buyer. This protection allows the
buyer to consider a contract void if the seller fails to perform, reaffirming the buyer's
rights to the initial funds paid.

MEANING OF TCS
Tata Consultancy Services Limited (TCS) is an Indian multinational information
technology (IT) service, consulting and business solutions company Headquartered in
Mumbai, Maharashtra. It is a subsidiary of the Tata Group and operates in 46 countries.
TCS is one of the largest Indian companies by market capitalization ($80 billion).TCS is
now placed among the most valuable IT services brands worldwide.TCS alone generates
70% dividends of its parent company, Tata Sons. In 2015, TCS is ranked 64th overall in
the Forbes World's Most Innovative Companies ranking, making it both the highest-
ranked IT services company and the top Indian company. It is the world's 9th largest IT
services provider by revenue. As of December 2015, it is ranked 10th on the Fortune

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India 500 list.
On 12 January 2017, N.Chandrashekaran was elevated as the chairman for Tata Son

CERTIFICATE OF TCS

Form 27D is a certificate needs to be submitted in the within 7 days’ time from the last
date of the month in which that tax had been collected by the people or individual who
is collecting TCS. In the period that ends on September 30 and March 31 for a financial
year, there are more than one certificates to be issued for a buyer for TCS, a
consolidated certificate can be issued within a month from the last day of the period.
This certificate has to be requested from the buyer. In case if the TCS certificate is lost
by the individual then in charge officer for the collection of TCS source can issue a
duplicate certificatethat can be printed and attested on plain paper, along with required
details as mentioned in the Form 27D.

TCS Exemptions
There are two types of exemptions that include lower rated TCS and total exemption for
tax collected at source:

TCS at Lower Rate

With the help of Form No.13, a buyer can apply to the Assessing Officer for collecting
the tax at source at a lower rate to the condition that the Assessing Officer is convinced
that the total income of the buyer justifies for a lower rate. The Officer may as well issue
a certificate, that has the rate of TCS specified with the lower rate applied.

Total Tax Exemption

This is the declaration by the buyer in form No. 27C which has to be made for the total
exemption for paying TCS. In this declaration, it has to be specified and prove that the
goods that have been declared are planned for the purposes of processingand

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manufacturing of the goods and not trading purposes. The person or entity collecting
the tax also has to be given a duplicate copy of the declaration form, after which the
collector has to submit the declaration form to the appropriate authorities within a
week of the following day.

Classification of Seller for TCS

These are the following people and organisations under tax collected at source; a seller
is defined as any of the following

1. Central Government
2. State Government
3. Local Authority
4. Statutory Corporation or Authority
5. Company
6. Partnership Firms
7. Co-operative Society

Under the Section 44AB if any Individual or a Hindu Undivided Family (HUF) who has
total sales or gross receiptsthat exceed the specified monetary restricts as mentioned in
the last year.

Classification of Buyer for TCS

A buyer is an individual who obtains goods or even the right of receiving goods at a sale,
tender, auction or other modes.These are the following people and organisations who
are exempted from the classification as buyers for TCS.
1. Public Sector Entities or Companies
2. Central Government
3. State Government
4. Embassy of High Commission

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 1. Consulate and other Trade Representation of a Foreign Nation
2. Clubs such as sports clubs and social clubs

Goods and Transactions Classified under TCS

The following are considered for collecting tax at source:
1. Liquor of alcoholic nature for human consumption including IMFL(Indian Made
Foreign Liquor)
2. Timber wood obtained from a forest that has been leased
3. Tendu Leaves
4. Timber wood by any other mode than leased
5. A forest produce other than Tendu leaves and timber
6. Scrap
7. Toll Plaza, Parking lot ticket, Quarrying, and Mining
8. Minerals that include lignite or coal or iron ore
9. Bullion that exceeds over Rs. 2 lakhs/ Jewellery that exceeds over Rs. 5 lakhs

HISTORY OF TCS

TCS Limited was founded in 1968 by a division of Tata Sons Limited. Its early contracts
included punched card services to sister company TISCO (now Tata Steel), working on an
Inter-Branch Reconciliation System for the Central Bank of India, and providing bureau
services to Unit Trust of India.In 1975, TCS delivered an electronic depository and
trading system called SECOM for the Swiss company SIS Sega Inter Settle(deutsch); it
also developed System X for the Canadian Depository System and automated the
Johannesburg Stock Exchange. It associated with a Swiss partner, TKS Teknosoft, which
it later acquired.
In 1980, TCS established India's first dedicated software research and development
centre, the Tata Research Development and Design Centre (TRDDC) in Pune. In 1981, it
established India's first client-dedicated offshore development centre, set up for clients

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Tandem. TCS later (1993) partnered with Canada-based software factory Integrity
Software Corp, which TCS later acquired.
In anticipation of the Y2K bug and the launch of a unified European currency (Euro), Tata
Consultancy Services created the factory model for Y2K conversion and developed
software tools which automated the conversion process and enabled third-party
developer and client implementation.

2000 to present
On 25 August 2004, TCS became a Publicly Listed Company.
In 2005, TCS became the first India-based IT services company to enter the
bioinformatics market. In 2006, it designed an ERP system for the Indian Railway
Catering and Tourism Corporation. By 2008, its e-business activities were generating
over US$500 million in annual revenues.TCS entered the small and medium enterprises
market for the first time in 2011, with cloud-based offerings. On the last trading day of
2011, it overtook RIL to achieve the highest market capitalisation of any India-based
company. In the 2011/12 fiscal year, TCS achieved annual revenues of over US$10billion
for the first time.In May 2013, TCS was awarded a six-year contract worth over1100
crores to provide services to the Indian Department of Posts. In 2013, the firm moved
from the 13thposition to 10th position in the League of top 10 global IT services
companies and in July 2014, it became the first Indian company with over Rs 5 lakh
crore market capitalization.In Jan 2015, TCS ends RIL's 23-year run as most profitable
firm. In Jan 2017, the company announced a partnership with Aurus, Inc., a global leader
in innovative payments technology, to deliver payment solutions for retailers using TCS
OmniStore, a first of its kind unified store commerce platform.

TDS
Introduced by Income Tax Department, where person responsible for making specified
payments such as salary, commission, professional fees, interest, rent, etc. is liable to
deduct a certain percentage of tax before making payment in full to the receiver of the

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payment. As the name suggests, the concept of TDS is to deduct tax at its source. Let us
take an example of TDS assuming the nature of payment is professional fees on which
specified rate is 10%.

What is TDS Certificate?

TDS certificates are issued by the deductor (the person who is deducting tax) to the
deductee (the person from whose payment the tax is deducted). There are mainly two
types of TDS certificates issued by the deductor.
Form 16: which is issued by the employer to the employee incorporating details of tax
deducted by the employer throughout the year, and
Form 16A: which is issued in all cases other than salary.
For example, Mr. Gupta is working as a salaried employee at a company and tax is
deducted on his salary @ 15%. The company shall provide Mr. Gupta with a Form 16
describing particulars in detail regarding the amount of salary paid and tax deducted on
the same.However, had Mr. Gupta been working as a professional and received
professional fees from an organization which is subject to TDS, then he will be provided
Form 16A for the same.What is the minimum salary one should have for TDS to be
deducted by the employer?If after comprehensive calculation of allowable allowances,
taxable perquisites and deductions under chapter VI-A, income from salary head
exceeds a sum of basic exemption limit, then tax has to be deducted by the employer @
15% on the amount over and above the basic exemption limit. For example, the salary
of Mr. A arrives at Rs 2,80,000/- assuming that all the allowances, perquisites, and
deductions have been taken into consideration, tax @ 15% on Rs 30000/- (2,80,000 –
2,50,000) shall be deducted by the employer.Hence, provisions of TDS shall attract only
if minimum salary is above the basic exemption limit.

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How to calculate TDS?
Numerous transactions are covered under the purview of TDS sections and calculation
of TDS can be tricky in some sections. Here, we shall discuss some examples of different
sections to make the calculation clear.
Example 1:
Under the section, 194A tax is to be deducted on payment of interest other than
interest on securities. However, no tax is required to be deducted if amount of such
interest paid or credited or is likely to be paid or credited does not exceed Rs 10,000/- in
case ofbanking company, co-operative society engaged in the business of banking and
post office deposits and Rs 5,000/- in any other case in a financial year. Also, note that
no tax is to be deducted on savings account interest.
Scenario 1: Suppose interest paid or credited or is likely to be paid or credited by a
banking company to a person in a financial year is Rs 9,000/-, then no tax is required to
be deducted as the amount has not exceeded the cap of Rs 10,000/-.
Scenario 2: Say interest paid or credited or is likely to be paid or credited by a banking
company to a person in a financial year is Rs 12,000/-, then tax is required to be
deducted on the whole amount of Rs 12,000/- @ 10% i.e. TDS of Rs 1200/-. Please note
that Rs 10,000/- is a cap just for fixing responsibility of banking company for TDS and is
not an exemption limit i.e. tax is to be deducted from the whole amount of Rs 12,000/-
as soon as the amount exceeds the cap amount of 10,000/-
Similar examples are relevant for other interest, except in those cases the cap amount
shall be Rs 5,000/- instead of Rs 10,000/-.

What are the due dates for TDS?

Payment of TDS each month and filing of quarterly return of TDS are 2 separate
processes and due dates for these processes are different. The due dates for the
payment of the deducted TDS are on or before 7th of next month. It mena, if the
deductor has deducted tax from payments in month of November, then he has to pay
the TDS on or before 7th of December. Key point to note here is that the due dates are

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same for all type of assesses whether its Salaried case or non-salaried case.
These due dates are applicable to all non-Government assesses and also to Government
assessees who deposit tax with Challan as specified by income tax department. If the
challans are not used to make payment of TDS by government assesses, then the due
date for payment of TDS will be the same day on which the amount is deducted.

What are penalty provisions for non-deduction of TDS?

There are several instances where interest, fees, and penalty are levied on non-
compliance of TDS provisions. The same are discussed here step by step:

Consequences of non-deduction of TDS

If a person who was responsible for deducting tax at source fails to do so, then the
ASSESSING OFFICER has powers to disallow whole of such expenditure for ascertaining
taxable profits. For example, ABC Limited paid a commission of Rs 2,00,000/- during the
year to a single person and omitted to deduct tax on the same, then the Assessing
Officer has powers to disallow deduction whole of such expenses while ascertaining
taxable profits.

Late deduction of TDS

Tax is to be deducted at the time of payment/credit getting due or payment whichever
is earlier. In the terms of income tax, even a single day is counted as a month for the
purpose of calculating interest. In cases of late deduction of tax, interest @ 1% per
month of the TDS amount subject to maximum amount of TDS is levied. For example,
ABC company was supposed to deduct tax of Rs 20000/- on 15th July but instead the
same was deducted by the company on 1st August. In this case interest of Rs 200/-
(@1% for one month) is required to be paid by the assessee.

Late payment of TDS

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Tax is to be deducted and paid to the credit of government on every 7th day of the
succeeding month in which the tax has been deducted, otherwise, interest @ 1.5% per
month of TDS amount subject to maximum amount of TDS is levied. For example,
ABCLtd was supposed to deposit TDS of Rs 20000/- deducted in the month of April by
7th of May but fails to deposit the same on time and actually deposited the same in the
following month. In this case interest of Rs. 300/- (@ 1.5% for one month) is required to
paid by the assessee.

Late filing of return of TDS

TDS returns are required to be filed in the last month of following quarter i.e. 31st July,
31st October, 31st January and in the case of March it is 31st May. Fees under section
234E are levied @ Rs 200/- per day subject to maximum amount of TDS until the return
is filed. Example, M/s ABC, a partnership deducted and paid a total TDS of Rs 40000/- in
the first quarter of FY and was supposed to file its TDS return by 31st July but filed its
return on 31st August. Total fees of Rs 6200 (200/- per day for 31 says) shall be paid
before filing of return.
Penalty for late filing of TDS return
Assessing officer may direct a person who fails to file the statement of TDS within due
date to pay penalty minimum of Rs. 10,000 which may extend to Rs.1,00,000. The
penalty under this section is in addition to the penalty u/s 234E and also cover the cases
of incorrect filing of TDS return.

How to apply for TDS refund?

There is this major misconception that refund of excess TDS is different from income tax
refund and is called as TDS refund. However, the fact is that there is only one kind of
return which you claim while filing your annual income tax return. Nowadays, it is
compulsory to quote bank account details such as account number and IFSC code while
filing of return and non-entering of such details will not generate a valid .xml file. In case
if someone has deducted more tax than he should have deducted, then income tax

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refund will arise which can be claimed upon the filing of your annual income tax return.

What are TDS rules?

There are certain rules set out by the tax authorities in regard to TDS, that if complied
properly you will not end up paying penalty, interest, and fees.

Tax deduction rules: Tax is required to be deducted at the time of payment getting due
or actual payment whichever is earlier. Delay in deduction of tax will attract interest @
1% per month until the tax is deducted.
TDS payment rules: Every person is required to pay the tax deducted to the credit of
government by the 7th day of the following month. Non-payment or late payment of
TDS will attract interest @ 1.5% per month until the tax has not been deposited.
TDS return filing rules: TDS returns are required to be filed timely on the 31st day of
July, October, January, and May during a financial year. Non-filing or filing of return after
the due date will attract fees under section 234E @ Rs 200/- per day until the return is
filed. However, this amount shall not exceed the amount of tax.

CONCLUSION
The Government has tried to achieve the objective of social welfare by providing
various incentives for education, health, housing, savings, pension schemes,
donations, senior citizens and women assessees, and generating employment etc.
These incentives are appreciable as these are related with the basic necessities of
a common man. However, in case of some incentives the monetary ceiling seems
to be illogical or very low as it has not been revised since a long time e.g. medical
expenses, interest on self occupied housing loan, saving schemes. Certain
Rationalization and Simplification Measures have been taken during the study
period such as lowering income tax rates in case of all the assessees, introducing
standard deduction at the rate of 30 per cent of net annual value in case of let
out house property, providing depreciation on intangible assets etc. The Government

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has tried to achieve all round economic objectives by providing incentives for
infrastructure development, balanced regional growth, scientific research and
development, capital market and exemption of agricultural income. Widening of
tax base has remained one of the main objectives of tax policy during the study
period. The Government has adopted certain measures towards this direction. The
main measures are introduction of mandatory Permanent Account Number, Annual
Information Return, E-filing of income tax return, Online tax accounting system,
Dividend distribution tax and widening the scope of TDS. Further, certain measures
were introduced and withdrawn during the study period such as compulsory filing
of return based on certain economic criteria, Banking Cash Transaction Tax (BCTT)
and Fringe Benefit Tax (FBT). Moreover, standard deduction for salaried class and
deduction in relation to interest income on specified deposits were withdrawn
during the study period. Revenue from personal income tax as well as corporate
tax increased during the study period. Tax to GDP ratio and buoyancy coefficient
in case of personal income tax as well as corporate tax showed an upward trend.
Further, the absolute number of personal assessees and corporate assessees
increased but the rate of increase in number of personal assessees having more
than 10 lakh income remained lower as compared to other categories. Moreover,
the share of direct taxes as a percentage of total tax revenue of central
Government increased, while the share of indirect taxes declined during the study
period. This can be considered as a positive development on the assumption that
direct taxes are more equitable in impact and propoor as compared to indirect
taxes. Maharashtra and Delhi remained best performing states in terms of share
in total income tax revenue and income tax to SDP ratio. Whereas, the states of
Bihar & Jharkhand, J & K and Himachal Pradesh experienced the lowest average
income tax to SDP ratio and made the lowest contribution towards total income
tax revenue as compared to other states during the study period.

BIBLIOGRAPHY

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WEBSITE

 www.investopedia.org
 www.profitbooks.net
 www.en.m.wikipedia.org
 www.shodhganga.inflibnet.ac.in

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