The
Finance Bill 2018 has been passed by the Lok
Sabha on March 14, 2018. We have already highlighted in detail the
implications of this Bill in our earlier Blog Post of 2nd February
2018
In
this Blog post we are very briefly re-highlighting the changes in a very simplified (non
technical) manner.
Dis-allowance of Expenditure Exceeding
Rs. 10,000/- in cash
Payment
made by a charitable trust or institution exceeding Rs. 10,000 in cash will not
be considered as the application of income and the same will be taxable. Thus
whether you are paying the sweeper his/her wages or buying bulk stationary from
your local vendor, please make sure that if the amount exceeds Rs. 10,000/- it
is not paid by cash.
Mandatory Requirement of TDS
At
present there are no checks on whether trusts or charitable institutions follow
the provisions of deduction of tax at source of the Income tax Act. This has
led to lack of an audit trail for verification of application of income.
Non-deduction
of tax at source will now attract dis-allowance in terms of application of
income in the hands of the charitable trust or institution.
In
other words, it is now mandatory for charitable trusts and institutions to
deduct TDS as per provisions of Chapter XVII-B of the Act in order to claim any expense
as “application of Income”, failing which the same will be taxable.
Mandatory Requirement of obtaining PAN
Section
139A has been amended requiring every trustee, author, founder, chief executive
officer, principal officer or office-bearer or any person competent to act on
behalf of a trust which enters into a financial transaction of an amount
aggregating to two lakh and fifty thousand rupees or more in a financial year to
obtain Permanent Account Number (PAN)
This
is done in order to use PAN as Unique Entity Number (UEN) for non-individual
entities (like trusts) and to link the financial transactions with the natural persons.
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