{"count":19,"next":"https://www.wraptax.com/blog/tag/Income%20Tax?page=2","previous":null,"results":[{"title":"From 1961 to 2025: Navigating the New Era of Indian TDS Compliance","summary":"The Income-tax Act, 2025:\r\nConverts section-based TDS to Table-based system (Clause 393)\r\nRationalises thresholds\r\nRetains majority rates\r\nClarifies TDS vs TCS hierarchy\r\nIntroduces structural simplification","content":"

Introduction: The Great Tax Migration

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For over six decades, the Income-tax Act, 1961 served as the primary bedrock of Indian fiscal regulation. However, decades of incremental amendments, combined with the explosive growth of a complex digital economy, eventually necessitated a significant structural overhaul. This transition, brought about by the Finance Act, 2025, represents a modernization of the existing framework—a migration from a legacy system toward a streamlined, data-driven compliance environment.

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For tax professionals and financial controllers, the most immediate challenge of this "Great Migration" is the retirement of familiar compliance landmarks. The long-standing numbering system for Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) forms is being overhauled, replaced by a logical 138–144 series. As a strategist, it is essential to look beyond the surface level of these renumberings to understand the consolidated architecture that now governs reporting.

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TDS Comparison

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Old Income-tax Act, 1961 vs Income-tax Act, 2025

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(Clause 393 – Table Based Framework)

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As we all know, the Income-tax Act, 2025 removes the earlier section-wise TDS structure (like 194C, 194J, 194H etc.) and consolidates all deduction provisions into:

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Clause 393 – TDS (Table Driven Structure)
\r\nClause 394 – TCS (Table Driven Structure)

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Each nature of payment is now governed through a Table Serial Number (Sl. No.), instead of separate sections.

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Below is the perfected comparison.

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1. Salary

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 192)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Salary Entry)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

Basic exemption slab

\r\n\t\t\t		\r\n\t\t\t

Basic exemption slab

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

As per slab

\r\n\t\t\t		\r\n\t\t\t

As per slab

\r\n\t\t\t
\r\n\t\t\t

Timing

\r\n\t\t\t		\r\n\t\t\t

At time of payment

\r\n\t\t\t		\r\n\t\t\t

Same

\r\n\t\t\t
\r\n\r\n

✔ No structural change except codification shift.

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\r\n\r\n

2. Interest on Securities

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 193)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table Sl. No. 5)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹5,000 (listed securities – certain cases)

\r\n\t\t\t		\r\n\t\t\t

Same

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

Rates in Force

\r\n\t\t\t
\r\n\r\n

✔ “Rates in Force” concept introduced in place of fixed % in certain cases.

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\r\n\r\n

3. Dividend

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table Sl. No. 1)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹5,000

\r\n\t\t\t		\r\n\t\t\t

₹10,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\r\n

✔ Threshold enhanced.

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\r\n\r\n

4. Interest (Other than Securities)

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194A)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold (General)

\r\n\t\t\t		\r\n\t\t\t

₹5,000

\r\n\t\t\t		\r\n\t\t\t

₹5,000

\r\n\t\t\t
\r\n\t\t\t

Bank / PO

\r\n\t\t\t		\r\n\t\t\t

₹40,000

\r\n\t\t\t		\r\n\t\t\t

₹40,000

\r\n\t\t\t
\r\n\t\t\t

Senior Citizens

\r\n\t\t\t		\r\n\t\t\t

₹50,000

\r\n\t\t\t		\r\n\t\t\t

₹50,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\r\n

✔ Threshold retained.

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\r\n\r\n

5. Contractor Payments

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194C)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Single Contract

\r\n\t\t\t		\r\n\t\t\t

₹30,000

\r\n\t\t\t		\r\n\t\t\t

₹30,000

\r\n\t\t\t
\r\n\t\t\t

Aggregate

\r\n\t\t\t		\r\n\t\t\t

₹1,00,000

\r\n\t\t\t		\r\n\t\t\t

₹1,00,000

\r\n\t\t\t
\r\n\t\t\t

Rate – Individual/HUF

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t
\r\n\t\t\t

Rate – Others

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t
\r\n\r\n

✔ No change except structural.

\r\n\r\n
 
\r\n\r\n

6. Commission / Brokerage

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194H)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹15,000

\r\n\t\t\t		\r\n\t\t\t

₹20,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

5%

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t
\r\n\r\n

✔ Major rationalisation.

\r\n\r\n
 
\r\n\r\n

7. Professional / Technical Services

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194J)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹30,000

\r\n\t\t\t		\r\n\t\t\t

₹50,000

\r\n\t\t\t
\r\n\t\t\t

Rate – Technical

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t
\r\n\t\t\t

Rate – Professional

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\t\t\t

Director Fees

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\r\n

✔ Threshold increased.

\r\n\r\n
 
\r\n\r\n

8. Rent

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194I)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹2,40,000 (annual)

\r\n\t\t\t		\r\n\t\t\t

₹50,000 per month

\r\n\t\t\t
\r\n\t\t\t

Plant & Machinery

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t
\r\n\t\t\t

Land/Building

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\r\n

✔ Monthly alignment introduced.

\r\n\r\n
 
\r\n\r\n

9. Purchase of Immovable Property

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194IA)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹50 Lakh

\r\n\t\t\t		\r\n\t\t\t

₹50 Lakh

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t
\r\n\r\n

✔ No change.

\r\n\r\n
 
\r\n\r\n

10. Purchase of Goods

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194Q)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table Sl. No. 8(ii))

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹50 Lakh

\r\n\t\t\t		\r\n\t\t\t

₹50 Lakh

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

0.1%

\r\n\t\t\t		\r\n\t\t\t

0.1%

\r\n\t\t\t
\r\n\r\n

✔ TDS overrides TCS (Clause 394).

\r\n\r\n
 
\r\n\r\n

11. E-Commerce Operator

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194O)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table Sl. No. 8(v))

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹5 Lakh (Individual/HUF)

\r\n\t\t\t		\r\n\t\t\t

₹5 Lakh

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

0.1%

\r\n\t\t\t		\r\n\t\t\t

0.1%

\r\n\t\t\t
\r\n\r\n

✔ No change.

\r\n\r\n
 
\r\n\r\n

12. Virtual Digital Assets

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194S)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹10,000 / ₹50,000

\r\n\t\t\t		\r\n\t\t\t

Same

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t		\r\n\t\t\t

1%

\r\n\t\t\t
\r\n\r\n

✔ No change.

\r\n\r\n
 
\r\n\r\n

13. Benefits / Perquisites

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194R)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹20,000

\r\n\t\t\t		\r\n\t\t\t

₹20,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\r\n

✔ No change.

\r\n\r\n
 
\r\n\r\n

14. Cash Withdrawal

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194N)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹1 Crore

\r\n\t\t\t		\r\n\t\t\t

₹1 Crore

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t		 
\r\n\t\t\t

Non-filers

\r\n\t\t\t		\r\n\t\t\t

2% / 5%

\r\n\t\t\t		 
\r\n\r\n

✔ Retained.

\r\n\r\n
 
\r\n\r\n

15. Lottery / Online Gaming

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194B / 194BA)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹10,000

\r\n\t\t\t		\r\n\t\t\t

₹10,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

30%

\r\n\t\t\t		\r\n\t\t\t

30%

\r\n\t\t\t
\r\n\r\n

✔ No change.

\r\n\r\n
 
\r\n\r\n

16. Insurance Commission

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 194D)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

₹15,000

\r\n\t\t\t		\r\n\t\t\t

₹20,000

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

5%

\r\n\t\t\t		\r\n\t\t\t

5%

\r\n\t\t\t
\r\n\r\n

✔ Threshold aligned.

\r\n\r\n
 
\r\n\r\n

17. Non-Resident Payments

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Particular

\r\n\t\t\t		\r\n\t\t\t

Old Act (Sec 195)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 – Table)

\r\n\t\t\t
\r\n\t\t\t

Threshold

\r\n\t\t\t		\r\n\t\t\t

No minimum

\r\n\t\t\t		\r\n\t\t\t

No minimum

\r\n\t\t\t
\r\n\t\t\t

Rate

\r\n\t\t\t		\r\n\t\t\t

Rates in Force

\r\n\t\t\t		\r\n\t\t\t

Rates in Force

\r\n\t\t\t
\r\n\r\n

✔ No structural change.

\r\n\r\n
 
\r\n\r\n

18. PAN Not Furnished

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Old Act (Sec 206AA)

\r\n\t\t\t		\r\n\t\t\t

New Act (Clause 393 + Compliance Clause)

\r\n\t\t\t
\r\n\t\t\t

20% or applicable rate

\r\n\t\t\t		\r\n\t\t\t

20% or applicable rate

\r\n\t\t\t
\r\n\r\n
\r\n
\r\n\r\n

 Compliance Mechanics (Same in Substance)

\r\n\r\n\r\n\r\n
 
\r\n\r\n
 
\r\n\r\n

 

","created_at":"2026-02-20T15:34:35.956251+05:30","updated_at":"2026-02-21T14:41:02.219341+05:30","slug":"from-1961-to-2025-navigating-the-new-era-of-indian","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/thumbnail_final.png","keywords":"TDSComparison\r\nIncomeTax\r\nUpdates\r\nTDS\r\nBLOG","tags":[{"id":7,"name":"Updates"},{"id":5,"name":"Income Tax"},{"id":16,"name":"TDS"}],"catagory":[{"id":5,"name":"Updates"},{"id":6,"name":"Income Tax"}],"author":{"id":413,"name":"PRATHAM GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/WhatsApp_Image_2025-10-15_at_11.21.49_AMedited.jpeg","qualification":"CA Finalist","bio":"Income Tax | GST | International Taxation Matters"}},{"title":"🚨 NFRA Penalizes Audit Firm & Engagement Partner for Gross Audit Lapses","summary":"NFRA penalized auditors for gross negligence, documentation failures, and SA non-compliance.","content":"

Order No. 019/2024 dated 05.07.2024

\r\n\r\n

National Financial Reporting Authority (NFRA), India’s independent regulator for auditing and accounting matters, issued Order No. 019/2024 on 5th July 2024 under Section 132(4) of the Companies Act, 2013, penalizing:

\r\n\r\n\r\n\r\n

for serious professional misconduct in the statutory audit of Vikas Proppant and Granite Limited for FY 2020-21.

\r\n\r\n

The action was initiated after information was received from Securities and Exchange Board of India (SEBI) highlighting accounting irregularities and audit failures.

\r\n\r\n

📌 Background of the Case

\r\n\r\n

NFRA’s investigation revealed that despite multiple red flags in the financial statements, the Engagement Partner issued an unmodified audit opinion.

\r\n\r\n

The regulator found widespread non-compliance with:

\r\n\r\n\r\n\r\n

NFRA categorized the failures across critical audit areas, reflecting gross negligence and lack of due diligence expected in audits of Public Interest Entities (PIEs).

\r\n\r\n

🔎 Key Audit Lapses Identified

\r\n\r\n

1️Failure in Audit Planning (SA 300 & SA 315)

\r\n\r\n\r\n\r\n

NFRA reiterated that absence of documentation equals absence of compliance.

\r\n\r\n

2️Failure to Verify Opening Balances (SA 510)

\r\n\r\n\r\n\r\n

The EP admitted that opening balances were not verified.

\r\n\r\n

3️Failure to Determine Materiality (SA 320)

\r\n\r\n\r\n\r\n

This reflects foundational audit failure.

\r\n\r\n

4️Non-Provisioning of Expected Credit Loss (Ind AS 109)

\r\n\r\n\r\n\r\n

Receivables were more than seven times annual sales.

\r\n\r\n

No ECL provisioning was made.
\r\nNo audit testing performed.
\r\nNo qualification in audit report.

\r\n\r\n

NFRA held that auditors cannot rely on management’s absence of policy to justify non-provisioning.

\r\n\r\n

5️Failure to Assess Going Concern (SA 570)

\r\n\r\n

Red flags included:

\r\n\r\n\r\n\r\n

Yet no going concern evaluation documentation existed.

\r\n\r\n

6️Improper Audit of Related Party Transactions (SA 550)

\r\n\r\n

Key alarming figures:

\r\n\r\n\r\n\r\n

Despite this:

\r\n\r\n\r\n\r\n

Yet the auditor certified compliance.

\r\n\r\n

7️Non-Charging of Depreciation (Ind AS 16 & 116)

\r\n\r\n\r\n\r\n

Ind AS 16 clearly states depreciation does not cease merely because an asset is idle.

\r\n\r\n

8️Failure to Assemble Audit File (SA 230 & SQC 1)

\r\n\r\n\r\n\r\n

Audit documentation is the backbone of defensible audit quality.

\r\n\r\n

9️⃣Critical Lapse: Failure to Obtain External Confirmations (SA 505)

\r\n\r\n

One of the most serious lapses noted was non-compliance with SA 505 – External Confirmations.

\r\n\r\n

The company had:

\r\n\r\n\r\n\r\n

However:

\r\n\r\n\r\n\r\n

NFRA clearly held that obtaining sufficient and appropriate audit evidence is the auditor’s responsibility, not management’s.

\r\n\r\n

💡 Practical Perspective: Leveraging Technology for SA 505 Compliance

\r\n\r\n

In today’s regulatory environment, manual balance confirmations create operational inefficiencies and documentation gaps.

\r\n\r\n

Digital confirmation platforms now enable:

\r\n\r\n\r\n\r\n

For example, tools like WrapTax Bulk Confirmation Tool help auditors comply with SA 505 effectively by digitizing and securing the confirmation process.

\r\n\r\n

🔗 You can explore the tool here:
\r\n👉 https://www.wraptax.com/bulkconfirmation

\r\n\r\n

Such technology solutions assist in:

\r\n\r\n\r\n\r\n

In light of NFRA’s strict stance, technology-backed confirmations are no longer optional — they are becoming a practical necessity.

\r\n\r\n

⚖️ Professional Misconduct Established

\r\n\r\n

NFRA held the Engagement Partner guilty under multiple clauses of the Chartered Accountants Act, 1949, including:

\r\n\r\n\r\n\r\n

The Audit Firm was also held liable for systemic failure in quality control mechanisms.

\r\n\r\n

💰 Penalty & Sanctions

\r\n\r\n

Under Section 132(4)(c) of the Companies Act, 2013:

\r\n\r\n

✔ Monetary Penalty

\r\n\r\n\r\n\r\n

✔ Debarment

\r\n\r\n\r\n\r\n

The order becomes effective 30 days from issuance.

\r\n\r\n

📊 Key Takeaways for Tax & Audit Professionals

\r\n\r\n

As professionals, this order reinforces critical principles:

\r\n\r\n

🔹 Documentation is Non-Negotiable

\r\n\r\n

Verbal explanations cannot replace audit evidence.

\r\n\r\n

🔹 Professional Skepticism is Mandatory

\r\n\r\n

Receivables disproportionate to sales demand investigation.

\r\n\r\n

🔹 Ind AS Compliance Must Be Independently Evaluated

\r\n\r\n

Idle assets still require depreciation.

\r\n\r\n

🔹 External Confirmations Must Be Obtained

\r\n\r\n

SA 505 compliance cannot be delegated to management.

\r\n\r\n

🔹 Quality Control is a Firm-Level Responsibility

\r\n\r\n

Firms must ensure robust engagement supervision and EQCR appointment.

\r\n\r\n

🏛 Final Thoughts

\r\n\r\n

This order by NFRA is a strong reminder that statutory audit is a public trust function, not a routine compliance activity.

\r\n\r\n

Failure to comply with Standards on Auditing, Ind AS, and statutory requirements will attract regulatory scrutiny and sanctions.

\r\n\r\n

For Chartered Accountants and audit firms, the message is clear:

\r\n\r\n

Audit quality, documentation, independence, and scepticism are not optional — they are the foundation of the profession.

","created_at":"2026-02-20T12:50:56.515139+05:30","updated_at":"2026-02-20T12:53:27.727621+05:30","slug":"nfra-penalizes-audit-firm-engagement-partner-for-g","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/22552cce-8acf-4ada-b749-2f7757cc1e05.png","keywords":"NFRA Order 019/2024\r\nAudit Negligence\r\nSA 505 External Confirmation\r\nInd AS Non-Compliance\r\nProfessional Misconduct Penalty","tags":[{"id":7,"name":"Updates"},{"id":5,"name":"Income Tax"},{"id":4,"name":"High Court"},{"id":8,"name":"SA505"},{"id":9,"name":"External Confirmation"},{"id":18,"name":"Accounts Receivable"},{"id":20,"name":"Accounts Payable"},{"id":25,"name":"CASE STUDY"}],"catagory":[{"id":2,"name":"Case Study"},{"id":5,"name":"Updates"},{"id":6,"name":"Income Tax"},{"id":7,"name":"SA505"},{"id":8,"name":"External Confirmation"}],"author":{"id":411,"name":"VASHU GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/4a469bc6-4bd0-43a2-86fb-aca525fa55d0.jpg","qualification":"CA Finalist","bio":"Finance & Taxation Enthusiast"}},{"title":"ICAI Disciplinary Case PR-117/2018: Why 'Impractical' Is Not a Valid Defense Under SA 505","summary":"The ICAI disciplinary case PR-117/2018 sends a strong message to auditors: ‘Impractical’ is not a valid defense under SA 505 when balances are material.\r\nIn the case, a statutory auditor failed to obtain external confirmations for debtors representing 22% of the balance sheet. The argument that it was impractical and against client policy was rejected. The auditor was held guilty of professional misconduct.\r\nThe takeaway is clear — material items require sufficient appropriate audit evidence. External confirmations cannot be ignored simply because they are difficult.\r\nAudit firms must adopt structured, technology-driven processes to manage confirmations efficiently and protect themselves from regulatory risk.","content":"

“Impractical” Is Not a Defence: A Hard Lesson from ICAI’s Disciplinary Case (PR-117/2018)

\r\n\r\n

Let’s be honest. Every auditor has faced this situation at least once — you’re auditing a company with hundreds (sometimes thousands) of debtors. The balances are material. You know SA 505 expects you to obtain direct confirmations. But practically? It feels impossible.

\r\n\r\n

Emails bounce. Letters come back. Clients say they have a policy against sharing confirmations. And somewhere in the back of your mind, you think — internal ledgers are matching… maybe that’s enough.

\r\n\r\n
\r\n

The ICAI disciplinary case PR-117/2018 makes one thing absolutely clear: it’s not enough.

\r\n
\r\n\r\n

Where Things Went Wrong?

\r\n\r\n

A statutory auditor failed to obtain external confirmations for material debtors (22% of the balance sheet). The defense was that the client’s policy did not permit it and the volume made it impractical. The Disciplinary Committee rejected this outright and held the auditor guilty of professional misconduct.

\r\n\r\n

The message was simple —

\r\n\r\n
\r\n

If an item is material, you must obtain sufficient appropriate audit evidence. Practical difficulty is not an excuse.

\r\n
\r\n\r\n

Why This Matters

\r\n\r\n

This case is not about one auditor. It reflects a common struggle — deadlines, resistance from clients, low response rates, and stretched teams. But standards are clear: external evidence is more reliable than internal records.

\r\n\r\n

If balances are material, reliance only on internal ledgers is a professional risk.

\r\n\r\n
\r\n

The Real Issue: Process, Not Intent

\r\n
\r\n\r\n

The problem is logistical. Sending hundreds of emails manually, tracking responses in Excel, following up repeatedly — it’s exhausting. But responsibility does not reduce because the task is difficult.

\r\n\r\n

The WrapTax Way: Turning Compliance Into Confidence

\r\n\r\n

Let’s be practical. The problem isn’t that auditors don’t want to comply with SA 505. The real issue is the sheer operational burden of managing confirmations manually.

\r\n\r\n

This is exactly where WrapTax changes the game.

\r\n\r\n

Instead of sending scattered emails and tracking responses in Excel sheets, WrapTax digitizes the entire balance confirmation lifecycle:

\r\n\r\n\r\n\r\n

What does this mean for you as an auditor?

\r\n\r\n

It means:

\r\n\r\n\r\n\r\n
\r\n

In today’s regulatory environment, documentation is not just compliance — it is protection.

\r\n
\r\n\r\n

Client policy will not save you.
\r\nImpracticality will not save you.
\r\nVolume will not save you.

\r\n\r\n

But a structured, technology-backed confirmation process can.

\r\n\r\n

When you adopt WrapTax, you’re not just automating a task — you’re strengthening your audit file. You’re building a clear trail of independent evidence. You’re showing that you exercised professional skepticism and due diligence.

\r\n\r\n

And before signing any audit report, you can confidently ask yourself:

\r\n\r\n
\r\n

If this file goes before a disciplinary committee, am I comfortable defending my procedures?

\r\n
\r\n\r\n

With the right system in place, the answer becomes much easier.

\r\n\r\n
 
\r\n\r\n

 

","created_at":"2026-02-19T12:21:50.120255+05:30","updated_at":"2026-02-19T12:29:57.900921+05:30","slug":"icai-disciplinary-case-pr-1172018-why-impractical-","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/Untitled_design.jpg","keywords":"#DigitalBalanceConfirmation\r\n#ExternalConfirmation\r\n#ICAI\r\n#CaseStudy\r\n#WrapTax","tags":[{"id":5,"name":"Income Tax"},{"id":24,"name":"ICAI"},{"id":25,"name":"CASE STUDY"}],"catagory":[{"id":2,"name":"Case Study"},{"id":7,"name":"SA505"},{"id":8,"name":"External Confirmation"},{"id":11,"name":"Block Chain"}],"author":{"id":413,"name":"PRATHAM GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/WhatsApp_Image_2025-10-15_at_11.21.49_AMedited.jpeg","qualification":"CA Finalist","bio":"Income Tax | GST | International Taxation Matters"}},{"title":"Beyond the Ledger: India’s New Tax Audit is an Infrastructure Mandate","summary":"India’s proposed Form No. 26 shifts tax compliance from mere financial auditing to a mandatory requirement for maintaining localized, daily-updated data servers within Indian borders.","content":"

The proposed shift from Forms 3CA/CD to Form No. 26 under the Income-tax Act, 2025, represents a fundamental pivot in Indian regulation. The government is moving beyond financial accuracy toward digital sovereignty.

\r\n\r\n

For Tax Year 2026–27, the question is no longer just "Are your books accurate?" but "Where do your servers live?"

\r\n\r\n

The Structural Shift

\r\n\r\n

The Draft Rules introduce two "infrastructure-level" compliance triggers that move tax out of the finance department and into the server room:

\r\n\r\n
    \r\n\t
  1. Server IP & Location Disclosure: Auditors must now disclose the physical IP address and the country where your cloud servers reside.
    2. \r\n\t
  2. The "Physically in India" Mandate: Under Draft Rule 46(8), electronic books of account must be maintained on servers physically located within India, with data updated daily.
    3. \r\n
\r\n\r\n

Why This is a Board-Level Issue

\r\n\r\n

This isn't just a change in paperwork; it’s a challenge to global IT architecture.

\r\n\r\n\r\n\r\n

The New Compliance Checklist

\r\n\r\n\r\n\r\n

Bottom Line

\r\n\r\n

Form No. 26 transforms the tax audit into an instrument of technological accountability. In the era of data localization, your digital footprint is now a tax liability.

","created_at":"2026-02-17T16:29:40.070988+05:30","updated_at":"2026-02-17T16:35:01.718576+05:30","slug":"beyond-the-ledger-indias-new-tax-audit-is-an-infra","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/3db8eb53-de20-4df7-990c-fa7f7fddce57.jfif","keywords":"Localization\r\nSovereignty\r\nInfrastructure\r\nTraceability","tags":[{"id":7,"name":"Updates"},{"id":5,"name":"Income Tax"},{"id":22,"name":"3CA/3CD"},{"id":23,"name":"Form No. 26"}],"catagory":[{"id":5,"name":"Updates"},{"id":6,"name":"Income Tax"},{"id":12,"name":"Tax Audit"}],"author":{"id":559,"name":"MAYANK GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/WhatsApp_Image_2026-01-05_at_11.45.24.jpeg","qualification":"CA Finalist","bio":"Income Tax | GST | International Taxation Matters"}},{"title":"TDS Deducted but Not Reflected in Form 26AS? Here’s What You Should Do","summary":"Many taxpayers face TDS mismatches when deducted tax does not appear in Form 26AS, causing delays, refund issues, or notices. TDS credit is allowed only if reflected in 26AS. Check AIS/26AS, coordinate with the deductor for correction, avoid incorrect claims, and file or revise returns after TDS updates.","content":"

Many taxpayers face a common problem while filing their Income Tax Return (ITR) Tax Deducted at Source (TDS) has been deducted from income but does not appear in Form 26AS. If not handled correctly, this issue can delay return filing, block refunds or even trigger tax demand notices. 
\r\nUnderstanding the reason and following the correct steps can help you avoid unnecessary stress during tax season.
\r\nWhat is Form 26AS?
\r\nForm 26AS is a tax credit statement that shows:
\r\n• TDS deducted by employers, banks, clients, etc.
\r\n• TCS collected
\r\nOnly TDS reflected in Form 26AS is allowed as credit while filing the Income Tax Return (ITR).

\r\n\r\n

Reasons Why TDS Is Not Reflected in Form 26AS

\r\n\r\n

1. Deductor has not filed TDS return
\r\n2. Incorrect PAN mentioned by deductor
\r\n3. TDS return filed but not processed
\r\n4. Timing difference, especially for March quarter

\r\n\r\n

What to Do If TDS Is Not Reflected in 26AS?

\r\n\r\n

Step 1: Check Form 26AS and AIS (Annual Information Statement) carefully

\r\n\r\n

●    Log in to the Income Tax Portal
\r\n●    Verify Form 26AS and Annual Information Statement (AIS)
\r\n●    Match the TDS amount with Form 16
\r\n(Form 16 is a TDS certificate issued by an employer to a salaried employee, showing salary paid and tax deducted during a financial year.)

\r\n\r\n

Step 2: Contact the deductor and request correction or revised TDS return

\r\n\r\n

Ask the deductor to:
\r\n●    File or revise the TDS return
\r\n●    Correct PAN or challan details
\r\n●    Share the revised Form 16 

\r\n\r\n

Step 3: Do not claim TDS not appearing in 26AS

\r\n\r\n

Claiming TDS that is not appearing in Form 26AS can result in:
\r\n●    Processing mismatch
\r\n●    Tax demand notice under Section 143(1)
\r\n●    Delay in refund

\r\n\r\n

Step 4: File return without TDS if deadline is near and revise later

\r\n\r\n

If return filing deadline is near:
\r\n●    File the return without claiming the missing TDS
\r\n●    Pay tax (if required) to avoid interest
\r\nOnce TDS reflects, you can:
\r\n●    File a Revised Return under Section 139(5)

\r\n\r\n


\r\nStep 5: Follow up until TDS reflects

\r\n\r\n

After correction:
\r\n●    Wait 7–15 days
\r\n●    Recheck Form 26AS
\r\n●    Then revise return if needed

\r\n\r\n


\r\nKey Takeaways
\r\n•     TDS credit allowed only if reflected in Form 26AS
\r\n•     Deductor is responsible for corrections
\r\n•     Revised return is safest option after correction
\r\n 

","created_at":"2026-01-14T13:00:24.172053+05:30","updated_at":"2026-01-28T12:41:12.593454+05:30","slug":"tds-deducted-but-not-reflected-in-form-26as-heres-","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/TDS_not_reflected_in_26AS.png","keywords":"Form 26AS, TDS mismatch, TDS not reflected, Income Tax Return (ITR), AIS, Form 16, TDS credit, revised return, Section 139(5), Section 143(1), tax refund delay, deductor correction, PAN error, TDS return filing","tags":[{"id":5,"name":"Income Tax"},{"id":14,"name":"salary"},{"id":16,"name":"TDS"}],"catagory":[{"id":6,"name":"Income Tax"}],"author":{"id":559,"name":"MAYANK GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/WhatsApp_Image_2026-01-05_at_11.45.24.jpeg","qualification":"CA Finalist","bio":"Income Tax | GST | International Taxation Matters"}},{"title":"What Is Form 16 and Why Is It Important?","summary":"Form 16 is a vital document for salaried employees, issued by employers as proof of salary income and TDS deducted. It consists of Part A (TDS and employer-employee details) and Part B (salary breakup and tax calculation). Form 16 is essential for accurate ITR filing, income proof, tax planning, and avoiding tax notices.","content":"

Form 16 is one of the most important documents for salaried employees in India. If you earn a salary and your employer deducts Tax Deducted at Source (TDS), Form 16 acts as official proof of both your income and the tax paid on your behalf. Understanding Form 16 is essential for accurate Income Tax Return (ITR) filing and to avoid unnecessary notices from the Income Tax Department.

\r\n\r\n

What Is Form 16?

\r\n\r\n

Form 16 is a certificate issued by an employer to an employee under Section 203 of the Income Tax Act, 1961. It certifies the salary paid and the TDS deducted during a financial year.

\r\n\r\n

Employers are required to issue Form 16 on or before 15th June following the end of the financial year.

\r\n\r\n

Parts of Form 16

\r\n\r\n

Form 16 consists of two parts: Part A and Part B.

\r\n\r\n

1. Form 16 – Part A

\r\n\r\n

Part A contains employer and employee details, such as:

\r\n\r\n\r\n\r\n

This part is generated from the TRACES portal and reflects the TDS deposited with the government.

\r\n\r\n

2. Form 16 – Part B

\r\n\r\n

Part B provides a detailed breakup of salary and tax computation, including:

\r\n\r\n\r\n\r\n

Part B is prepared by the employer and helps the employee understand how the final tax liability has been calculated.

\r\n\r\n

Why Is Form 16 Important?

\r\n\r\n

1. Mandatory for Filing Income Tax Return

\r\n\r\n

For salaried individuals, Form 16 is the primary document used while filing an Income Tax Return (ITR). It helps ensure accurate reporting of salary income and TDS, reducing errors during filing.

\r\n\r\n

2. Proof of Income

\r\n\r\n

Form 16 is widely accepted as valid income proof for:

\r\n\r\n\r\n\r\n

3. Helps Avoid Income Tax Notices

\r\n\r\n

Cross verifying Form 16 with:

\r\n\r\n\r\n\r\n

helps ensure there is no mismatch in income or TDS details. This significantly reduces the risk of receiving notices from the Income Tax Department.

\r\n\r\n

4. Useful for Tax Planning

\r\n\r\n

Form 16 provides a clear view of:

\r\n\r\n\r\n\r\n

This makes it easier to plan taxes more efficiently for future financial years.

\r\n\r\n

5. Easy Verification of TDS

\r\n\r\n

Form 16 allows employees to verify whether their employer has correctly deducted and deposited TDS with the government, ensuring transparency and compliance.

","created_at":"2026-01-08T12:06:47.112958+05:30","updated_at":"2026-01-08T12:14:47.343263+05:30","slug":"what-is-form-16-and-why-is-it-important","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/Picture1.png","keywords":"Form 16, Form 16 meaning, Form 16 for salaried employees, Form 16 income tax, Form 16 TDS certificate, salary TDS Form 16","tags":[{"id":5,"name":"Income Tax"},{"id":14,"name":"salary"},{"id":15,"name":"form16"}],"catagory":[{"id":6,"name":"Income Tax"}],"author":{"id":559,"name":"MAYANK GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/WhatsApp_Image_2026-01-05_at_11.45.24.jpeg","qualification":"CA Finalist","bio":"Income Tax | GST | International Taxation Matters"}},{"title":"Singapore DTAA and Mauritius DTAA: Capital Gains Taxation, LOB Clause & GAAR Explained","summary":"Until 31 March 2017, capital gains under India–Singapore and India–Mauritius DTAAs were residence-based and exempt in India. Post-amendment, taxation shifted to source-based, with grandfathering and concessional rates subject to stringent LOB conditions. GAAR can override treaty benefits where arrangements lack commercial substance.","content":"

Till 31 March 2017, both the India–Singapore DTAA and India–Mauritius DTAA followed a residence based taxation model for capital gains arising from the sale of shares. This made Singapore and Mauritius highly preferred investment routes for foreign investors investing into India.

\r\n\r\n

Pre-Amendment to DTAA

\r\n\r\n

Under the earlier regime, if a tax resident of Singapore or Mauritius sold shares of an Indian company, the capital gains were not taxable in India.

\r\n\r\n

Although a Limitation of Benefits (LOB) clause existed, its scope was extremely limited. The clause applied only to Article 1 of the Protocol, covering assets other than those specified under Articles 13(1) to 13(3) of the main DTAA. Since shares were covered under Article 13, the LOB clause did not practically restrict share sale transactions.

\r\n\r\n

Post-Amendment to DTAA

\r\n\r\n

In 2017, the Governments of both countries further amended few provisions by way of Protocol. The amendments are:

\r\n\r\n

(i) Taxation of Capital Gains on shares – Shift of residence based taxation to source based taxation. Consequently, capital gains arising on or after April 1, 2017 from alienation of shares of a company shall be subject to tax in the country of source for the company (i.e. COS). The aforementioned change is subject to the following qualifications:

\r\n\r\n

(ii) Shares acquired prior to 1 April 2017 are grandfathered and gains on sale of these shares are taxable only in COR.

\r\n\r\n

(iii) A sunset clause for investments acquired between 1 April 2017 to 31 March 2019. The tax on gains so arrived on alienation of these shares would be restricted at 50% of the existing tax rates as per the domestic tax laws.

\r\n\r\n

(iv) However, the benefits above in (ii) and (iii) will be applicable subject to the revised Limitation of Benefit (LOB) clause as per Article 24A (India–Singapore DTAA) / Article 27A (India–Mauritius DTAA).

\r\n\r\n

Revised LOB Clause – India–Singapore DTAA

\r\n\r\n

As per the revised Article 24A of the India–Singapore DTAA, a Singapore tax resident would not be entitled to the Capital Gains tax benefit if:

\r\n\r\n
    \r\n\t
  1. Its affairs are arranged with the primary purpose of taking advantage of the benefits provided under the Singapore Treaty.
    2. \r\n
\r\n\r\n

“Affairs” has not been defined. Generally, it can be considered as transactions and arrangements of the person. Thus, if a UK resident forms a company in Singapore with the purpose of taking advantage of Capital Gain exemption, the benefit may be denied (Affairs Test).

\r\n\r\n

(b) It is a shell / conduit company. This is an independent test, not related to the first test of Affairs.

\r\n\r\n

A shell/conduit company is defined to mean any legal entity falling within the definition of resident with negligible or nil business operations or with no real and continuous business activities carried out in Singapore.

\r\n\r\n

The LOB clause provides that in order for a Singapore entity not to be deemed as a shell/conduit company (thereby making such entity eligible to claim the Capital Gains tax benefit), such entity would have to either:

\r\n\r\n

(a) be listed on a recognized stock exchange in Singapore, or

\r\n\r\n

(b) incur total annual expenditure of SGD 200,000 on operations in Singapore in the 12 months (earlier, 24 months) immediately preceding the date on which the gains arise (Expenditure Test).

\r\n\r\n

This is in line with the earlier LOB except that earlier LOB clause under the 2005 Protocol required expenditure of SGD 200,000 on operations in Singapore in the 24 months immediately preceding the alienation of shares instead of 12 months.

\r\n\r\n

This test applies to any legal entity and not just a company.

\r\n\r\n

Interpretation Issues and Practical Challenges:

\r\n\r\n

What is the meaning of operations in Singapore has not been explained. One has to consider a normal meaning. If the company spends on office rent, salaries and other costs in Singapore, it will be clearly expenses for Singapore operations.

\r\n\r\n

The expenditure has to be incurred over a period of 12 months immediately preceding the month in which the capital gain arises. Thus, the period is not a financial year, but a block of 12 months “immediately preceding” the date of Capital Gains.
\r\nFor example, if the capital gain is earned on 15th October 2018, the block of 12 months has to be considered as 15th October 2017 till 14th October 2018.

\r\n\r\n

It is debatable if new companies, which have not completed at least 12 months of operations, will be eligible for relief.

\r\n\r\n

It is a general understanding that if the Singapore company incurs expenditure of SGD 2,00,000 on operations in Singapore, then the DTAA should apply. However, is that sufficient?

\r\n\r\n

As discussed earlier, clause (1) provides for the test based on affairs of the person. The explanation at the end of Article 3 of the Protocol provides that the case of entities not having bona fide business shall be covered by Article 3.1. Thus, the company may not be a shell company if it satisfies the tests laid down in clauses (2) to (4) of Article 1. Still, it could be considered as a company whose affairs are arranged to take advantage of the Capital Gain tax relief.

\r\n\r\n

One may argue that it is necessary to split the LOB tests minutely. The interpretation of the DTAA should be broader and not technical. That, however, is for the courts to decide.

\r\n\r\n

Enabling Language for GAAR:

\r\n\r\n

Explicit language allows treaty provisions to be overridden by domestic anti avoidance measures such as the General Anti Avoidance Rule (GAAR), which came into effect from April 1, 2017.

\r\n\r\n

The 2017 Protocol has inserted Article 28A to the Singapore Treaty which reads:

\r\n\r\n

“This Agreement shall not prevent a Contracting State from applying its domestic law and measures concerning the prevention of tax avoidance or tax evasion”

\r\n\r\n

The language of the newly inserted Article 28A makes it clear that the Indian government seeks to apply GAAR even to situations where a specific anti avoidance provision (such as an LOB clause) may already exist in a tax treaty.

\r\n\r\n

Under the GAAR, tax authorities may exercise wide powers (including denial of treaty benefits) if the main purpose of an arrangement is to obtain a tax benefit and if the arrangement satisfies one or more of the following:
\r\n(a) non-arm's length dealings;
\r\n(b) misuse or abuse of the provisions of the domestic income tax provisions;
\r\n(c) lack of commercial substance; and
\r\n(d) arrangement similar to that employed for non-bonafide purposes.

","created_at":"2026-01-05T12:18:20.741895+05:30","updated_at":"2026-01-08T12:08:54.404607+05:30","slug":"singapore-dtaa-and-mauritius-dtaa-capital-gains-ta","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/Picture3.png","keywords":"India–Singapore DTAA, India–Mauritius DTAA, Capital Gains Tax on Shares, DTAA Amendment 2017, Source Based Taxation, Grandfathering of Investments, Limitation of Benefits (LOB) Clause, Shell / Conduit Company, Expenditure Test SGD 200,000, GAAR applicability, Treaty Override, Tax Avoidance, Foreign Investment in India, Capital Gains Exemption, International Taxation India","tags":[{"id":5,"name":"Income Tax"},{"id":12,"name":"DTAA"},{"id":13,"name":"International Taxation"}],"catagory":[{"id":6,"name":"Income Tax"}],"author":{"id":559,"name":"MAYANK GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/WhatsApp_Image_2026-01-05_at_11.45.24.jpeg","qualification":"CA Finalist","bio":"Income Tax | GST | International Taxation Matters"}},{"title":"TDS: The Silent Business Killer You’re Ignoring","summary":"Even small delays or errors in TDS compliance can trigger a chain reaction of high-interest outflows, daily late filing fees, and the \"disallowance of expenses\" that inflates your taxable income. To protect your business from becoming a cautionary tale, entrepreneurs must prioritize monthly discipline, PAN verification, and automated accounting over last-minute manual tracking.","content":"

The Cost of a Tiny Oversight: A TDS Cautionary Tale

\r\n\r\n

Imagine Arjun, a diligent entrepreneur running a thriving tech startup. Business was booming, and he had just moved into a sleek new office. To celebrate, he paid his interior decorator a final installment of ₹5,00,000. He knew about Tax Deducted at Source (TDS) compliance, so he dutifully withheld 10% and issued a cheque for the balance.

\r\n\r\n

Six months later, Arjun received a notice from the Income Tax Department of India. To his horror, he was not just being asked for the tax amount, he was being hit with interest on late TDS deposit, a penalty for delayed TDS return filing and a disallowance of expense under the Income Tax Act. Because of a simple delay in depositing that withheld amount, Arjun’s ₹50,000 statutory deduction turned into a ₹2,00,000 compliance nightmare.

\r\n\r\n

Arjun’s story is common. In the world of Indian taxation, TDS is often viewed as a “pass through” responsibility but the TDS compliance burden for businesses is heavy. Let’s explore the most common pitfalls and how you can shield your business from them.

\r\n\r\n

Common TDS Mistakes That Could Cost You Dearly

\r\n\r\n

1. Incorrect Rate of Deduction

\r\n\r\n

Applying the wrong rate is perhaps the most frequent error. Rates vary significantly based on the nature of the payment and the status of the deductee (Individual v/s Company).

\r\n\r\n\r\n\r\n

2. Failure to Verify PAN (The 20% Penalty)

\r\n\r\n

Under Section 206AA, if the person you are paying does not provide a valid PAN, you must deduct TDS at 20% (or the applicable rate, whichever is higher).

\r\n\r\n

The Trap: Relying on a vendor’s promise to "send the PAN tomorrow."

\r\n\r\n

The Solution: Never process a payment without a verified PAN on record.

\r\n\r\n

3. Delays in Deposit and Filing

\r\n\r\n

The government expects their cut by the 7th of the following month (except for March, which is April 30th).

\r\n\r\n

The Trap: Thinking the deadline is for filing the return, not depositing the TDS.

\r\n\r\n

The Solution: Set automated calendar reminders for the 5th of every month to ensure you have a two day buffer for bank processing.

\r\n\r\n

The "Heavy Hitters": Key Sections to Remember

\r\n\r\n

Understanding the specific sections helps in categorizing expenses correctly.

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Section

\r\n\t\t\t		\r\n\t\t\t

Nature of Payment

\r\n\t\t\t		\r\n\t\t\t

Standard Rate

\r\n\t\t\t
\r\n\t\t\t

192

\r\n\t\t\t		\r\n\t\t\t

Salaries

\r\n\t\t\t		\r\n\t\t\t

Average Rate of Tax

\r\n\t\t\t
\r\n\t\t\t

194C

\r\n\t\t\t		\r\n\t\t\t

Payments to Contractors

\r\n\t\t\t		\r\n\t\t\t

1% (Ind/HUF), 2% (Others)

\r\n\t\t\t
\r\n\t\t\t

194J

\r\n\t\t\t		\r\n\t\t\t

Professional/Technical Fees

\r\n\t\t\t		\r\n\t\t\t

10% (2% for certain cases)

\r\n\t\t\t
\r\n\t\t\t

194I

\r\n\t\t\t		\r\n\t\t\t

Rent (Land/Building)

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\t\t\t

194H

\r\n\t\t\t		\r\n\t\t\t

Commission or Brokerage

\r\n\t\t\t		\r\n\t\t\t

5%

\r\n\t\t\t
\r\n\r\n

The Sting: Penalties and Interests

\r\n\r\n

The Income Tax Department doesn't take kindly to "oops" moments. Here is what happens when things go wrong:

\r\n\r\n

\"\"A. Interest on Defaults (Section 201A)

\r\n\r\n\r\n\r\n

Note: Even a one day delay counts as a full month for interest calculation.

\r\n\r\n

B. Late Filing Fees (Section 234E)

\r\n\r\n

If you fail to file your quarterly TDS return (Form 24Q, 26Q, etc.) by the deadline, you are liable to pay ₹200 per day for every day the failure continues. This fee is capped at the total amount of TDS.

\r\n\r\n

C. The "Disallowance" Nightmare {Section 40(a)(ia)}

\r\n\r\n

This is the hidden killer. If you fail to deduct or pay TDS on an expense, 30% of that entire expense is disallowed for tax purposes. This means you pay income tax on money you already spent!

\r\n\r\n

How to Stay Compliant: A Proactive Checklist

\r\n\r\n

To avoid becoming the next "Arjun," implement these three pillars of TDS management:

\r\n\r\n
    \r\n\t
  1. Automate Your Accounting: Use software that automatically flags TDS thresholds. For instance, once a contractor’s total payments exceed ₹1,00,000 in a year, the system should force a deduction.
    2. \r\n\t
  2. Quarterly Reconciliation: Don't wait for the year end. Reconcile your books with your Form 26AS/AIS and the TRACES portal every quarter to spot mismatches early.
    3. \r\n\t
  3. Collect Form 15G/15H Early: If a payee claims they are below the taxable limit, ensure you have their valid 15G/15H form before making the payment. You cannot apply these retroactively.
    4. \r\n
\r\n\r\n

Conclusion

\r\n\r\n

TDS compliance is not just about paying taxes, it’s about safeguarding your business cash flow, audit health and legal standing. With structured documentation, timely deposits  and disciplined monitoring, TDS can shift from a compliance risk to a routine process.

\r\n\r\n

Remember: In the eyes of the Tax Man, “I forgot” is the most expensive sentence in the English language.

","created_at":"2025-12-30T13:48:38.784437+05:30","updated_at":"2025-12-30T13:52:32.425727+05:30","slug":"tds-the-silent-business-killer-youre-ignoring","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/Image_52525.png","keywords":"Interest on late TDS deposit calculation\r\n\r\nSection 201A interest rates 2025\r\n\r\nPenalty for late filing of TDS return Section 234E\r\n\r\nWhat is disallowance of expenses under Section 40(a)(ia)?\r\n\r\nCost of non-compliance with TDS rules","tags":[{"id":5,"name":"Income Tax"}],"catagory":[{"id":6,"name":"Income Tax"}],"author":{"id":411,"name":"VASHU GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/4a469bc6-4bd0-43a2-86fb-aca525fa55d0.jpg","qualification":"CA Finalist","bio":"Finance & Taxation Enthusiast"}},{"title":"Difference Between TDS and TCS – A Complete Guide Under Income Tax Act","summary":"While both TDS and TCS are mechanisms for early tax collection under the Income Tax Act, TDS is deducted by the payer from an expense (like salary or professional fees), whereas TCS is collected by the seller from the buyer during the sale of specific goods (like luxury cars or scrap). Essentially, TDS applies when you make a payment, while TCS applies when you receive a payment for specified high-value or regulated transactions.","content":"

Picture this: you step into a premium car showroom to purchase a luxury car costing more than ₹10 lakh. While checking the final invoice, you notice an additional tax amount added to the vehicle price under the Income Tax Act.

\r\n\r\n

Now switch scenarios. You have completed a project for a corporate client and are expecting your professional fee. When the payment hits your bank account, you find that a portion of the amount has already been deducted as TDS.

\r\n\r\n

What is happening in these two situations?

\r\n\r\n

In the first case, as the buyer of the car, tax has been collected from you at the point of sale. This is known as Tax Collected at Source (TCS), where the seller collects tax from the buyer because the buyer becomes the source of income for the seller.

\r\n\r\n

In the second case, as a service provider or consultant, tax has been deducted before payment is made to you. This is Tax Deducted at Source (TDS), where your client deducts tax and pays you the balance amount.

\r\n\r\n

TDS and TCS are key direct tax collection mechanisms under the Indian Income Tax system, designed to ensure early and efficient tax collection. TDS applies to specific payments once prescribed limits are crossed, whereas TCS applies to specified sales transactions, where tax is collected from the buyer at the time of sale.

\r\n\r\n

Since both involve tax being charged “at source,” many taxpayers often confuse TDS vs TCS. Understanding the difference is crucial for accurate compliance, claiming correct tax credit and smooth income tax return filing.

\r\n\r\n

Let’s take a closer look at how TDS and TCS differ and how they impact taxpayers

\r\n\r\n

What is TDS (Tax Deducted at Source)?

\r\n\r\n

TDS is a tax deducted by the payer at the time of making certain payments such as salary, rent, professional fees, interest, commission, etc. The deducted amount is deposited with the Income Tax Department on behalf of the payee.

\r\n\r\n

\"\"Key Features of TDS

\r\n\r\n\r\n\r\n

Some common TDS rates:

\r\n\r\n\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\t\r\n\t\t\r\n\t\r\n
\r\n\t\t\t

Section

\r\n\t\t\t		\r\n\t\t\t

Nature of Payment (Threshold Limit)

\r\n\t\t\t		\r\n\t\t\t

TDS Rate

\r\n\t\t\t
\r\n\t\t\t

192

\r\n\t\t\t		\r\n\t\t\t

Salary – if total income exceeds basic exemption limit

\r\n\t\t\t		\r\n\t\t\t

As per income tax slab rates

\r\n\t\t\t
\r\n\t\t\t

193

\r\n\t\t\t		\r\n\t\t\t

Interest on Securities – exceeds ₹10,000 in a year

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\t\t\t

194I

\r\n\t\t\t		\r\n\t\t\t

Rent (Land / Building / Furniture) – exceeds ₹6,00,000 in a year

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\t\t\t

194I

\r\n\t\t\t		\r\n\t\t\t

Rent (Plant & Machinery) – exceeds ₹6,00,000 in a year

\r\n\t\t\t		\r\n\t\t\t

2%

\r\n\t\t\t
\r\n\t\t\t

194J

\r\n\t\t\t		\r\n\t\t\t

Professional or Technical Fees – exceeds ₹50,000 in a year

\r\n\t\t\t		\r\n\t\t\t

10%

\r\n\t\t\t
\r\n\t\t\t

194B

\r\n\t\t\t		\r\n\t\t\t

Lottery / Game show / Crossword puzzle winnings – exceeds ₹10,000 in a year

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30%

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194Q

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Purchase of Goods – buyer turnover > ₹10 crore and purchases exceed ₹50 lakh in a year

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0.1%

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What is TCS (Tax Collected at Source)?

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TCS is a tax collected by the seller from the buyer at the time of sale of specified goods or services. The seller collects tax in addition to the sale price and deposits it with the Government.

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Key Features of TCS

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\"\"Some common TCS rates:

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Section

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Nature of Transaction (Threshold Limit)

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TCS Rate

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206C(1)

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Sale of scrap – no minimum limit

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1%

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206C(1F)

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Sale of motor vehicle – value exceeds ₹10 lakh

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1%

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206C(1H)

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Sale of goods – seller turnover > ₹10 crore and sales exceed ₹50 lakh in a year

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0.1%

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206C(1G)

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Foreign remittance under LRS – exceeds ₹7 lakh

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5%

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206C(1G)

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Overseas tour package – no threshold

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5%

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","created_at":"2025-12-30T12:57:45.773978+05:30","updated_at":"2025-12-30T13:01:02.614585+05:30","slug":"difference-between-tds-and-tcs-a-complete-guide-un","image":"https://wraptaxmedia.s3.amazonaws.com/blog_images/image101.png","keywords":"Difference between TDS and TCS in simple terms\r\n\r\nTDS vs TCS comparison table 2025\r\n\r\nWhen to apply TDS or TCS on a transaction\r\n\r\nIs TCS applicable if TDS is already deducted?\r\n\r\nTDS vs TCS examples for small businesses","tags":[{"id":5,"name":"Income Tax"}],"catagory":[{"id":6,"name":"Income Tax"}],"author":{"id":559,"name":"MAYANK GUPTA","photo":"https://wraptaxmedia.s3.amazonaws.com/author_photos/WhatsApp_Image_2026-01-05_at_11.45.24.jpeg","qualification":"CA Finalist","bio":"Income Tax | GST | International Taxation Matters"}}]}