Let’s understand TDS (Tax Deducted at Source) liability on Co-operative Society or Public Charitable Trusts under Income Tax Act, 1961.
FOR CO-OPERATIVE SOCIETY
An association of persons (AOP) or a body of individuals (BOI), whether incorporated or not, is treated as a ‘Person’ under section 2(31) of the Income-tax Act, 1961. Hence, AOP or BOI is treated as a separate entity for the purpose of assessment under the Income-tax Act.
Here it is important to note that an AOP or BOI shall be deemed to be a person, whether or not, they were formed or established or incorporated with the object of deriving income, profits or gains.
FOR CHARITABLE TRUST/ORGANISATIONS/NGO/NPO:
A Charitable Trust/Organisation is a separate ‘Person’ under section 2(31) of the Income Tax Act, 1961.
Hence, Charitable Trust is treated as a separate entity for the purpose of assessment under the Income-tax Act.
As per provisions of Income Tax Act, 1961 vide Amendments to Finance Act from time to time, a person (Deductor) who is liable to make payment of specified nature (Like Salary, Payment to Contractor, Payment of Professional Fees, Rent, etc.) to any other person (Deductee) shall deduct tax at source (TDS) and remit the same into the account of the Central Government.
Therefore, from the above provisions of the Income Tax Act, it can be interpreted as there is Liability to Deduct TDS for Co-operative Societies and Charitable Trust/Organisations/NGO/NPO and remit the same into the Account of the Central Government.
EXCEPT:
- TDS need not to be deducted to whom Audit under section 44AB (TAX AUDIT) is NOT applicable.
- Those whose Income is Below MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO TAX (BASIC EXEMPTION LIMIT)
- Those who have obtained Certificate under section 197 of Income Tax Act from Assessing Officer for Lower or No deduction of Tax, and has provided the same to Deductor of Tax at Source.
Note: As per Amendment in Finance Act, it is Now Mandatory for Deductor (Payer of Rent) to Deduct TDS from Rent amount to be paid is More than INR.50,000 per month or part thereof to Deductee (Receiver of Rent) even if Audit under section 44AB (TAX AUDIT) is Not applicable.
Duties of Tax Deductor At Source:
- Apply for a TAN number for a Tax deduction if not applied earlier.
- Deduct Tax at Correct rate and Deposit in Government Account as per provisions of Section 200.
- Issue Certificate of Tax Deduction at Source to Deductee (Payee) under section 203.
- File Prescribed Return/Quarterly Statement.
- Reply to any Default Notice/Assessment from Department.
Conclusion:
Co-operative Societies or Public Charitable Trusts being treated as separate “Persons” are liable to deduct TDS under Income Tax Act in their respective sections.
If you still have doubts that How to Deduct TDS as a Charitable Trust or Co-operative Society then Consult us.
