TDS Changes in Mutual Fund Dividend (194K) Update in Tally’s New Release 6.6.1

TDS Changes in Mutual Fund Dividend

In this post, we are going to see what is TDS (Tax Deducted at Source)? And the Updates provided by Tally solutions in their latest Release 6.6.1

TDS is tax deducted at source so this concept is termed as a buyer end activity.

Any company or individual (deductor) making a payment to other entity (deductee) then the deductor has to deduct the tax at the source if the payment crosses the threshold limit. The deducted tax amount to be paid to the Government by the deducted.

 

Now let’s go the updates in Tally.ERP9 Release 6.6.1 regarding TDS.

In Earlier release till 6.6, the Rate of TDS if PAN not available were mentioned in Statutory Feature under Set/alter TDS details.

This Rate of TDS for no PAN available option has been provided in TDS Nature of Payment creation screen in F12 Configuration: Allow no PAN Tax Rate: Yes/No, on enabling it the screen appears like below

Another Update on TDS is Rate for other deductee type has been set by default in TDS Nature of Payment creation screen. In earlier release, we have to set the option “Allow rate details for others” to yes in F12 Configuration screen

Now in latest release 6.6.1, there is a separate field for Rate for individuals /HUF with PAN & without PAN and also Rate for other deductee type with PAN & without PAN. This makes to user to mention the TDS Tax Rate in each deductee Type in the Nature of payment creation screen itself.

The Details option (Alt+L) screen appears as below in Rel 6.6.1

Tax History

Another update was new nature of payment under section 194K was included. 

TDS on payments : New nature of payment under section 194K

As per a Budget 2020 tax proposal, dividends distributed by mutual funds attract 10% tax deduction at source (TDS) from financial year 2020-21. Dividends are also proposed to be made taxable in the hands of the recipient.

Budget 2020 has proposed to withhold taxes on income distributed by mutual funds to its unit holders.

The new provisions introduced by Budget 2020 has shifted the burden of payment of tax on dividend income from the distribution company to the recipient of such dividend income.

As per Section 194K, any person responsible for paying an income to a resident with respect to:

  • Units of a Mutual Fund as per Section 10(23D)
  • Units from the Administrator
  • Units from a specified company

at the time of credit of such income to the unit holder’s account exceeding Rs 5000 or at the time of making payment, whichever is earlier, shall deduct TDS @10%. If the payee does not provide the PAN, TDS shall be deducted at the rate of 20%.

Exception applies for Income from Capital Gains on the sale of Mutual Funds.

This New Nature of Payment “Income From Specified Mutual Funds”  is now included in Tally’s Latest Release 6.6.1

194K New Nature of Payment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

These are all the updates given regarding TDS in Tally’s Release 6.6.1.

For Further information, please check this blog continuously.

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