How to make and submit Error Free TDS Returns ?

Healthy Practices for Error-Free TDS Returns

• Healthy practices for error – free TDS returns has been given below: 
• Deduction/ Collection of Tax at Correct Rates.
• Timely Deposit of Tax Deducted at Source.
• Accurate Reporting of data related to tax deductions/ collections made.
• Submission of TDS Statements within the due dates.
• Verification and Issuance of TDS Certificates within time.
• CPC (TDS) is now sending “Intermediate Default Communication” for PAN Errors and Short Payments, which can be corrected during the interim period of a week of filing TDS Statements, before CPC (TDS) proceeds with computing Defaults for the relevant statement.
• User-friendly Online Correction facility can be used for Correction of Deductees, Tagging Unmatched Challans and Payment of Fees/ Interest. (Please navigate to Defaults tab to locate Request for Correction from the drop-down menu. For any assistance, please refer to the e-tutorial available on TRACES).
• Aggregated TDS Compliance Report assists the PAN of the Deductor to administer TDS Defaults for associated TANs and to take appropriate action.
• The Deductor’s Dashboard provides you all necessary information to assist you in “Compliance Self-Assessment” and to take appropriate action.
• Non-filing Self-declaration can be made by navigating to Statements / Payments menu and submit details under Declaration for Non-Filing of Statements.
• PAN Verification and Consolidated TAN – PAN File facility on TRACES can be used for verifying the deductees.
• The Conso Files and Justification Reports downloaded from TRACES help you to identify errors in submission of revised Quarterly TDS Statements.

Given below are some dos and don’t for filing of TDS returns:

Dos

• Ensure that TDS return is filed with same TAN against which TDS payment has been made.
• Ensure that correct challan particulars including CIN and amount is mentioned.
• Correct PAN of the deductee is mentioned.
• Correct section is quoted against each deductee record.
• Tax is deducted at correct rate for each deductee record.
• File correction statement as soon as discrepancy is noticed.
• Issue TDS certificate downloaded from TRACES website.

Dont’s

• Don’t file late returns as it affects deductee tax credit.
• Don’t quote incorrect TAN vis-à-vis TDS payments.

Source: TDS Man

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Putting TDS provisions for recurring deposits to work

TDS on recurring deposits makes investors either submit the exemption forms if there is no taxable income. In case of TDS on RD, they may have to revisit their tax calculations and accordingly pay tax

The provisions for the applicability of the tax deduction at source (TDS) for recurring deposits are now into the implementation phase. This means that there is one additional area where the tax payer has to focus their attention. Since there was no tax deduction at source earlier there was no tax implication for any investment made into this area at this initial stage but this will now change. There are several steps that need to be taken so that the individual is in tune with the changed circumstances. Here is a closer look at what needs to be done and the manner in which this can be accomplished.

Change

The change that the union budget 2015 has brought about is that there would be the coverage of recurring deposits in the list of instruments that would be subject to the tax deduction at source. This would mean that if an investor has an income in excess of Rs 10,000 from recurring deposits then this would suffer the same kind of TDS that they would experience when they have fixed deposits. This would mean that at the time of redemption of the investment there would be a lower amount that would come to the investor because the TDS would reduce the amount as compared to earlier when the entire figure would be received by the investor. The main point to remember here is to give the PAN to the bank otherwise the rate of the deduction will be higher.

This does not change the overall nature of taxation for the interest on fixed deposit as these remain taxable which was also the case earlier. So for investors this move will actually ensure that a part of their payment is actually made through the TDS route and hence they would have a reduced liability in terms of payment of advance or self assessment tax. 

Form 15G/15H

Investors who do not have any taxable income and hence would not want any tax to be deducted from the amount that they earn on the recurring deposits would have to ensure that they submit the required forms to the bank. This would have to be done immediately otherwise the deduction would start as the income is earned. This is significant as there is a time element for the submission of the forms and the investor should focus attention to this area if they need to ensure that there is no deduction that they actually face. Senior citizens would need to be especially alert because they are most likely to be covered under these kind of conditions.

Annual update

For a long period of time many investors actually did not pay much attention to the recurring deposit investments that they actually made. This was because they thought that there is not much to do in terms of the tax impact. This often led to a situation wherein the income that was earned from the recurring deposits never made it to the income tax returns at the end of the financial year. This is something that needs to be avoided as it shows that some of the income that is actually taxable is not being shown properly. 

Now this would need special attention as there is likely to be both income as well as tax deduction that would present. Not claiming the tax deduction would lead to a loss of benefit while the non inclusion of the income would mean that the right picture is not being shows in the tax returns. Interest on recurring deposits is taxable and hence has to be included in the calculations as such. Both these aspects would need the attention of the investors and hence this would have to be the focus area and it would need work at the end of every financial year which in a way is a good thing as it ensures that nothing is missed out.

Source: Money Control

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TDS is compulsory on withdrawal of premature Provident Funds w.e.f. 01.06.2015

Provident fund withdrawals before five years of completion of service will now attract income tax ranging between 10 per cent and 34.608 per cent.

A new provision in the Finance Act, 2015 that becomes effective from June 1 has mandated that premature withdrawals of retirement savings that exceed Rs 30,000 before completion of five years of service will be subject to tax deducted at source.

Tax would be deducted at the rate of 10 per cent if the subscriber provides the PAN number but the levy would go as high as the maximum marginal rate of 34.608 per cent if the subscriber does not provide his PAN number at the time of withdrawal.

The Employees Provident Fund Organisation (EPFO) is understood to be discussing the issue with the finance ministry to reconsider the issue but it has issued a notification and detailed guidelines to field offices on tax deduction.

“Income Tax shall be deducted at source… if at the time of payment of the accumulated PF balance is more than or equal to Rs 30,000, with service less than five years,” Sanjay Kumar, financial adviser said in a missive.

Exemption from TDS would be given to senior citizens and subscribers with no taxable income, provided they submit the required forms, the EPFO has said, adding that in these cases too tax would be levied if the amount withdrawn exceeds Rs 2,50,000 and Rs 3 lakh, respectively.

However, workers whose service has been terminated due to his ill health, contraction or discontinuance of business of employer or other cause beyond the control of the member will also be exempt from paying TDS on such premature withdrawals.

TDS would also not be levied on transfer of retirement savings from one account of the member to another.

Source: www.tdsman.com

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Things to note before you deduct TDS from 1st June.

Amendments.. Amendments in our Indian Tax Laws… these days we encounter it very frequently. Till the time we understand the law properly… law changes. Though coping up with the amendments is very difficult but now, it has become an integral part of our tax life.   images

Throughout the financial year, we come across various amendments. It is to note that occasionally we even miss out few either due to unawareness or due to misunderstanding of its effective date. Sometimes we desire these amendments and sometimes we are forcefully made to desire it.

Till now, you must be aware of new service tax rate getting effective from 1st June, 2015. Today, we are here, again to lay out some amendments that will be effective from 1st June, 2015. These are related to TDS/ TCS.

Things to note before you deduct TDS from 1st June:
1. Section 192- TDS from Salary
   The employer has to obtain evidence or proof or particulars of prescribed claims (including claim for set-off of loss) in such manner and form prescribed.

2. Section 192A- TDS from amount paid from Recognized Provident Fund
   The trustees of the Employees’ Provident Fund authorized to make payment of accumulated balance due to employees shall deduct tax @10 per cent. No tax shall be deducted where aggregate amount of such payment due to payee is less that Rs. 30,000.
   Note: Form No. 15G/15H available for non deduction. Deduct tax at the Marginal Rate if no PAN furnished.

3. TDS from interest (other than interest on securities)–Section 194A- TDS from Recurring deposit-TDS from deposit in cooperative Banks- Interest from all branches of a Bank is to be considered to check cut off amount of Rs 10000.

4. Section 194C- TDS on payment to contractor or sub-contractor

Till 31st May- If recipient is a transport operator and he furnishes PAN to the deductor then TDS is not to be deducted. Such deductors will be required to intimate PAN details to the Income tax Department in the prescribed format.

From 1st June- Only transport operators who owns ten or less goods carriages at any time during the financial year is allowed for such exemption. Transport operator has to furnish a declaration to this effect to the person paying him to get such exemption.

5. Section 203A- Obtaining/quoting tax deduction and collection account number (TAN) relaxed for certain notified persons.

6. Section 206CB- Processing of TCS statements on the same lines as TDS statements.

7. Sections 194DA and 197A- Self-declaration in the prescribed Form No. 15G/15H made applicable.

8. Section 194LD- Concessional rate of tax on Interest on certain bonds and Government securities earned by FIIs is proposed to be extended up to 30th June 2017.

9. Sections 195 and 271- The obligation to furnish Form 15CA (also Form 15CB) will have to be complied with.

If the person required to furnish information under Section 195 fails to furnish such information or furnishes inaccurate information then penalty of Rs. 100000 shall b levied.

Thorough up these amendments as these are effective from 1st June, 2015.

Source: www.taxmantra.com

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Inappropriate Usage of Digital Signature Certificates (DSC) for availing services of TRACES

As per the records of Centralized Processing Cell (TDS), it has been observed that Online Corrections have been submitted by you on TRACES by using Digital Signature Certificate. However, there are no Registered Digital Signature Certificates (DSC) available currently in your profile.

Immediate Attention:

• The Centralized Processing Cell (TDS) has provisioned for use of Digital Signature Certificate (DSC) on its web-portal TRACES for availing various services offered by the portal. As per Section 204 read with Section 200 of the Income Tax Act, 1961 and other relevant provisions for deduction of tax "Authorized Person" is referred to as "Person Responsible".
• TRACES has provided facility for Admin to facilitate authorized Sub-users to carry out activities on TRACES and submit to the Admin user. The Admin user has the rights to approve the activities using the DSC.
• For availing above services, only the DSC of the "Person Responsible", as appearing in the "Profile" of the Deductor on TRACES, should be used.

However, the system log evidences that:

• The PAN of the Authorized Person was changed to a PAN belonging to a person other than the Authorized Person 
• The DSC of such person has been used to submit Online Corrections and 
• After completing the transaction, the PAN has later been reverted back to that of the Person Responsible, which does not have a DSC. 
• Digital Signature means authentication of any TDS electronic record. It keeps record of the person who is availing the facility. Use of Digital Signature should be made with due caution. Sharing of DSC by any person would also be liable for consequences. In accordance with the Information Technology Act, 2000, every subscriber is require to retain control of the private key corresponding to the public key listed in his Digital Signature Certificate to prevent its disclosure. 
• It is therefore, advised to refrain from using the Digital Signature of any person other than the Authorized Person appointed by the deductor, for carrying out any activity on TRACES.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

Source: Traces

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Pay Due TDS on or before 31th March-2015, IT Department requests Companies.

The tax office is exploring all avenues to mop up revenue collection before March 31. In an unusual development, hundreds of companies have received letters from the income-tax department, "requesting" them to deposit the amount from tax deductions before the financial year closes — as against the normal practice of companies depositing the tax deducted at source (TDS) by the seventh of next month. 

"I have never seen the department writing letters to collect TDS before March 31. Given the tight liquidity position, companies would prefer paying TDS by April 7 which is the deadline," said a senior Mumbai-based chartered accountant. 

"In the past, our clients may have received phone calls. But this year, the department has not only written letters but in many cases has even asked companies to depute senior officials to appear before the department on a specified date and time," said the chartered accountant. 

One such letter to a mid-sized company reads like this: "The Department of income tax, as you are aware, plays an important role in collection of revenue for the purpose of targeted rate of National Growth. As a part of this Target, the charge of CCIT TDS Mumbai has been allotted a target of Rs 66,945 crores. With the prevailing rate of growth of the "Economy", the achievement of this target becomes very challenging.....This letter is issued with a request that necessary arrangements may please be made at your end so that tax deductions arising or accruing in the month of March 2015 are duly deposited before 31.03.2015." 

"This may not be technically illegal as it is not a notice, but a request," said another tax professional, "but it's strange and somewhat high-handed." 

TDS is applicable on salary, interest, professional fees, rent, contract value, brokerage and all payments to NRIs. A company deducting tax from salaries on 30th of a month is allowed to enjoy liquidity for a week before it deposits the amount by the 7th of the following month. According to tax circles, one of the reasons for the shortfall is a circular issued by Central Board of Direct Taxes, allowing the deduction of TDS only on the principal value of a service (excluding the service tax). (For instance, if the service fee is Rs 1 lakh, assesses were allowed to pay TDS on Rs 1 lakh instead of paying it onRs 1,12,360 which includes the service tax amount.) 

"Since close to Rs 70,000 crore is collected from Mumbai, there is a shortfall due to the change in TDS computation. This is one of the reasons besides slow business and poor earnings of companies," said a tax official. 

Still, some of the industry officials believe that the shortfall in direct tax target may not be too large. As against Rs 2 lakh crore collected in the last two months of FY14, the department has to raise aroundRs 2.35 lakh crore this fiscal. The revised estimate for direct tax collection in the Budget is Rs 7.05 lakh crore (as against a budget estimate of Rs 7.35 lakh crore). Total collection between April '14 and January '15 has been Rs 4.7 lakh crore. 

Source: www.economictimes.indiatimes.com

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Substantial Reduction in TDS Deposited during Financial Year 2014 - CPC (TDS)

CPC (TDS) has issued a follow up communication to all deductors regarding substantial reduction in the amount of Tax Deposited during the period April 1 to August 31, 2014  as compared with the corresponding period in Financial Year 2013.

The issued communication has been given below:

Dear Deductor (TAN: ),

As per the records of the Centralized Processing Cell (TDS), it has been observed that there is substantial reduction in the amount of Tax Deposited during the period April 1 to August 31, 2014 as compared with the corresponding period in Financial Year 2013.

It may be possible that either the Tax may not have been deducted at source at appropriate rates or the Tax deducted may not have been deposited, within stipulated time. In such case, this may lead to Short / Late Deduction and /or Short / Late Payment Defaults.

Please make note of the following important information:

• Please note the provisions of section 200(1) of the Income Tax Act, 1961; in this regard:

Duty of Person deducting Tax:

• Any person deducting any sum in accordance with [the foregoing provisions of this Chapter] shall pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs.
• Any person being an employer, referred to in sub-section (1A) of section 192 shall pay, within the prescribed time, the tax to the    credit of the Central Government or as the Board directs.
• Any person deducting any sum on or after the 1st day of April, 2005 in accordance with the foregoing provisions of this Chapter or, as the case may be, any person being an employer referred to in sub-section (1A) of section 192 shall, after paying the tax deducted to the credit of the Central Government within the prescribed time,[prepare such statements for such period as may be prescribed] and deliver or cause to be delivered to the prescribed income-tax authority or the person authorized by such authority such statement in such form and verified in such manner and setting forth such particulars and within such time as may be prescribed.

• If the tax is not paid in accordance with the provisions of the Act, it may attract penal Interest u/s 201(1A) and 220(2) of the Act.
• Any such interest paid above will not be considered as deductible expense under the provision of section 43(ia) of the Act.

Actions to be taken:

• If any amount needs to be deducted and/ or deposited, immediate action may be taken at the earliest.
• Please inform us with the reason for “No Tax Deposited” at info@tdscpc.gov.in.

For any assistance, call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

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CPC (TDS) reminder for filing, where TDS has been paid, however, Quarterly TDS Statements are not filed.

As per the records of the Centralized Processing Cell (TDS), you have made payments for Tax Deducted, however, no TDS Statements have been filed for any Quarter in FY 2013-14 as yet. In this regard, your urgent attention is invited to relevant CBDT Circulars and provisions of the Income Tax Act, mandating filing of TDS Statements and Issuance of TDS Certificates downloaded from TRACES.

If you are not required to submit the relevant statement, you are requested to submit a declaration by taking appropriate action as suggested under "Action to be taken" in this communication. Otherwise, your urgent attention is invited to relevant CBDT Circulars and provisions of the Income Tax Act, mandating filing of TDS Statements and Issuance of TDS Certificates downloaded from TRACES.

1. Mandatory filing of TDS Statements:

Please refer to the provisions of section 200(3) of the Income Tax Act, 1961 read with Rule 31A, which reads as follows:

Every person responsible for deduction of tax under Chapter XVII-B, shall, in accordance with the provisions of sub-section (3) of section 200, deliver, or cause to be delivered, the following quarterly statements to the Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems), namely:

• Statement of deduction of tax under section 192 in Form No. 24Q;
  

• Statement of deduction of tax under sections 193 to 196D in-
   • Form No. 27Q in respect of the deductee who is a non-resident not being a company or a foreign company or resident but not ordinarily resident; and
   • Form No. 26Q in respect of all other deductees.
  

It is, therefore, advised to file the applicable TDS Statements at the earliest to comply with the above provisions.

2. Implications of Non/ Late filing of TDS Statements:

• For Deductors: In case of late filing of TDS Statements, a fee shall be levied on the deductor u/s 234E of the IT Act which reads as under:
   • Where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues

• For Tax payers: Non/ Late filing of TDS statements results into the TDS Credit not being available to the deductees. They, therefore, will not be able to claim the credit for tax already deducted from the payments made to them. Please note that TDS Certificates will not be available until the TDS Statements are duly filed.

3. Actions to be taken:

• Please file the relevant TDS Statement without any further delay.

• If you are not required to file the same, please submit a declaration for Non-filing on TRACES. For this purpose, you can login to TRACES, navigate to "Statements/ Payments" menu and submit details under "Declaration for Non-Filing of Statements".

• Issue TDS certificates after generating and downloading the same from TRACES. TDS Certificates downloaded only from TRACES Portal will be valid.

For any assistance, you can also write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

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Income tax department to act tough with non-filers.

NEW DELHI: The income tax department is urging its officials to step up prosecution of "wilful" evaders and non-filers as part of a strategy to plug loopholes and ensure much-needed revenues for the government which is battling an economic slowdown.

The department is also revamping its approach to search and survey operations. Officials are being asked to focus on detection of undisclosed income and assets by working diligently on the evidence gathered and also accessing additional information. The category of non-filers is a key one for tapping unpaid taxes and the department has met with success after launching a drive to detect non-filers of tax returns.

The focus should shift to launching successful prosecution in appropriate cases instead of concentrating only on disclosure of additional income and making recommendations to the assessing officers. A new policy on the issue is expected to be unveiled shortly.

However, the department is making sure that search and seizure operations are handled with utmost care to avoid any controversies. While search and seizure operations are intended to be used "judiciously", there is an overwhelming view that it's an effective deterrence tool against tax evasion and for improving compliance.

However, the officials say that the objectives of cutting down evasion and improving compliance would be achieved when search and seizure actions are followed through with "civil and criminal proceedings, levy of due interest and penalties and prosecution of tax evaders expeditiously".

The Narendra Modi government has promised to transform the image of the tax department and has urged the field officers to ensure that they follow a non-adversarial approach to collecting taxes. Finance minister Arun Jaitley has also asked the officers to deal sternly with tax evaders.

A review by the department of the search and seizure operations has thrown up startling results which has triggered the reworking of strategy by the top officials. According to a tax department discussion document, it is "...necessary to focus on creating effective deterrence in such cases through proper assessments, penalty and prosecution. There is an urgent need to cut down inordinate delays at every level and introducing a system which does not allow shifting of responsibility between the officers conducting the search and those completing the assessments and subsequent actions".

Source: www.timesofindia.indiatimes.com

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Latest Amendments in Budget-2014 which effects on TDS Compliance u/s. 40(a(ia))

There are Three major amendments in Budget-2014 effected on TDS Compliances u/s. 40(a(ia)) regarding disallowances to 30% of the amount of expenditure claimed.  These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years means these amendments are applicable in Financial year 2014-15 onwards which is as under:

The disallowance under section 40(a)(ia) of the Act shall be restricted to 30% of the amount of expenditure claimed.

Existing provisions: The existing provisions of section 40(a)(i) of the Act provide that certain payments such as interest, royalty and fee for technical services made to a residents shall not be allowed as deduction for computing business income if tax on such payments was not deducted, or after deduction, was not paid within the time prescribed under section 200(1) of the Act. As mentioned above, in case of non-deduction or non-payment of tax deducted at source (TDS) from certain payments made to residents, the entire amount of expenditure on which tax was deductible is disallowed under section 40(a)(ia) for the purposes of computing income under the head “Profits and gains of business or profession”.

The disallowance of whole of the amount of expenditure results into undue hardship.

Proposal: In order to reduce the hardship, it is proposed that in case of non-deduction or non-payment of TDS on payments made to residents as specified in section 40(a)(ia) of the Act, the disallowance shall be restricted to 30% of the amount of expenditure claimed.

Disallowance under section 40(a)(ia) of the Act shall extend to all expenditure on which tax is deductible under Chapter XVII-B of the Act.

Existing provisions: Existing provisions of section 40(a)(i) of the Act provides that certain payments such as interest, commission,brokerage, rent, royalty fee for technical services and contract payment made to a resident shall not be allowed as deduction for computing business income if tax on such payments was not deducted, or after deduction, was not paid within the time specified under the said section. Chapter XVII-B of the Act mandates deduction of tax from certain other payments such as salary, directors fee, which are currently not specified under section 40(a)(ia) of the Act. The payments on which tax is deductible under Chapter XVII-B but not specified under section 40(a)(ia) of the Act may also be claimed as expenditure for the purposes of computation of income under the head “Profits and gains from business or profession”.

Proposal: Section 40(a)(ia) has proved to be an effective tool for ensuring compliance of TDS provisions by the payers. Therefore, in order to improve the TDS compliance in respect of payments to residents which are currently not specified in section 40(a)(ia), it is proposed that the disallowance under section 40(a)(ia) of the Act shall extend to all expenditure on which tax is deductible under Chapter XVII-B of the Act.

These amendments will take effect from 1st April, 2015 and will, accordingly, apply in relation to the assessment year 2015-16 and subsequent years.

Non-payment of tax from payments made to non-residents, extended time limit of payment up to the date of filing of return of income under section 139(1) allowed

Existing provision: The existing provisions of section 40(a)(i) of the Act provide that certain payments such as interest, royalty and fee for technical services made to a non-resident shall not be allowed as deduction for computing business income if tax on such payments was not deducted, or after deduction, was not paid within the time prescribed under section 200(1) of the Act. The Act contains similar provisions for disallowance of business expenditure in respect of certain payments made to the residents.

Under section 40(a)(ia) of the Act, in case of payments made to resident, the deductor is allowed to claim deduction for payments as expenditure in the previous year of payment, if tax is deducted during the previous year and the same is paid on or before the due date specified for filing of return of income under section 139(1) of the Act. However, in case of disallowance for non-payment of tax from payments made to non-residents, this extended time limit of payment up to the date of filing of return of income under section 139(1) is not available.

Proposal: In order to provide similar extended time limit for payment of tax deducted from payments made to non-residents, it is proposed that the deductor shall be allowed to claim deduction for payments made to non-residents in the previous year of payment, if tax is deducted during the previous year and the same is paid on or before the due date specified for filing of return under section 139(1) of the Act.

Text of Amendments

In section 40 of the Income-tax Act, in clause (a), with effect from the 1st day of April, 2015,—

(a) in sub-clause (i),—

(I) for the portion beginning with the words “during the previous year” and ending with the words, brackets and figures “sub-section (1) of section 200”, the words, brackets and figures “on or before the due date specified in sub-section (1) of section 139” shall be substituted;

(II) for the proviso, the following proviso shall be substituted, namely:—

    “Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted during the previous year but paid after the due date specified in sub-section (1) of section 139, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid.”;

(b) in sub-clause (ia),—

(I) for the portion beginning with the words “any interest, commission or brokerage” and ending with the words and brackets “for carrying out any work (including supply of labour for carrying out any work)”, the words “thirty per cent. of any sum payable to a resident” shall be substituted;

(II) in the first proviso, after the words, brackets and figures “sub-section (1) of section 139,”,the words “thirty per cent. of” shall be inserted.

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CPC (TDS) has relased a new feature "Agregated TDS Compliance" at Organization’s PAN level.

CPC (TDS) has issued a letter to all deductors with information regarding the release of new feature “Aggregated TDS Compliance” at Organization’s PAN level.

The letter produced is here as under:

Date of communication: 03/05/2014

Dear Deductor,

In our endeavor to facilitate improved TDS administration, CPC (TDS) feels glad to provide you with the feature of “Aggregated TDS Compliance” at PAN level for all TANs associated with the referenced PAN. Following are additional details related to the new feature.

What is meant by Organization’s PAN:

The above indicates the PAN of an entity, having more than one TANs of its branches, associated with the referenced PAN. This will be the PAN of the Central Office, Headquarter etc., as may be appropriate. The said PAN must review the “Aggregated TDS Compliance” report on a regular basis to improve TDS compliance at Organization level.

What does the new feature offer:

• The above stated PAN can view TDS performance for all of its respective TANs by logging into TRACES as a Taxpayer.

• The Defaults generated for all the TANs can be viewed by using the feature. The following type of Defaults for the branches can be viewed:

1. Total Default
2. Short Payment Default
3. Short Deduction Default
4. Interest on Payment Default u/s 201
5. Interest on Deduction Default u/s 201
6. Late Filing Fee u/s 234E
7. Interest u/s 220(2)
8. PAN Errors

The respective TANs with Defaults in their TDS Statements can be pursued to get the above resolved by taking following actions:

1. Carrying out necessary corrections in the records reported in the TDS statements,
2. Paying the outstanding demand and
3. Submitting the Correction Statements at the earliest.

• The respective TANs with Defaults in their TDS Statements can be pursued to get the above resolved by taking following actions:
• The feature thus provides for a summary of Defaults, which assists in effective TDS administration, monitoring, control and compliance at Organization level.
• The feature will be extremely useful for the purpose of complying with the provisions of Section 40(a)(ia) of the Income Tax Act, 1961 by the concerned entity,  to ensure that correct information is disclosed in paragraph 27A/B of the Tax Audit Report (Form 3CD) u/s 44AB of the Act.

How to use the feature:

• You are requested to Log in to TRACES as a Taxpayer, using your credentials.
• Navigate to Aggregated TDS Compliance menu on the webpage.
• Choose the views according to Financial Year (Download Option 1) or Default Type (Download Option 2) from the drop down lists.
• PDF or html views are available for the entity having less than 25 TANs. For larger number of TANs, a download request needs to be submitted.
• Submit the Request to generate a Request Number.
• The submitted request will be made “Available” in MS Excel format, under “Requested Downloads” in the “Download” menu. The reports will usually be made available within four hours of submission.
• The report will be “Not Available” if there are No Defaults or there are statements yet to be processed. If you believe that either of the two is not true, the same can be reported to CPC (TDS).
• The feature provides for the above information for Financial Year 2007-08 onwards.

The steps to use the functionality are easy and convenient, however, e-Tutorials for the above release will shortly be made available on the portal. You can reach out to us on contactus@tdscpc.gov.in or call our toll-free number 1800 103 0344 for any assistance.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

Notes:

1. Please maintain updated email address and Contact Number on TRACES to receive regular periodic updates and guidelines from TRACES.
2. Please refer to our FAQs and e-tutorials for detailed screen-driven assistance, before seeking further help.

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Important notes on TDS Default.

Token Number column displays the token number of the regular statement and last two processed correction statements
 

Order Passed Date column displays the order passed dates of the intimation pertaining to the token numbers displayed
 

If there are more than two correction statements processed for the selected FY, Quarter and Form Type then token numbers of the last two statements in the processing order will be displayed
 

Count of Correction Statement(s) is for the FY, Quarter and Form Type selected by user
 

If there are no correction statements for the FY, Quarter and Form Type selected by user, then '0' will be displayed for Count of Correction Statement(s)
 

Default Amount, Amount Reported As 'Interest / Others' Claimed in the Statement and Payable for demand type short deduction will be displayed as 'NA' (not applicable) for Q1, Q2, Q3 of Form Type 24Q as short deduction is calculated at end of Q4
 

If a type of Default is not applicable for the statement, then 'NA' will be displayed for Default Amount or Amount reported as 'Interest / Others' Claimed in the Statement or Payable in Default Summary Details table
 

Total Demand is the sum of Payable amount for all defaults pertaining to the statement
 

Net Payable (Rounded-Off) amount is the rounded-off value of the 'Total Payable Amount'
 

Default Amount, Amount reported as 'Interest / Others' Claimed in the Statement and Payable are as per latest statement processed for the selected FY, Quarter & Form Type
 

Count of Deductees Without PAN and Deductees With Invalid PAN are as per latest statement processed for the selected FY, Quarter & Form Type
 

If there are no Deductees Without PAN or Deductees With Invalid PAN as per latest statement processed for the selected FY, Quarter & Form Type, then '0' will be displayed in respective columns
 

Short Payment – Reason for Short Payment default:

• Challan / Transfer Voucher details (CIN / BIN, Amount and/or TAN), Mismatch of OLTAS / G-OLTAS data with statement data.
• Insufficient Challan / Transfer Voucher balance (Claimed amount in the statement against the CIN / BIN > balance available in OLTAS / G-OLTAS for a CIN / BIN).
• Difference between TDS deducted and TDS deposited in the deductee rows.

Short Deduction – Reason for Short Deduction default:

• Invalid PAN and TDS have not been deducted as per the prescribed rate u/s 206AA (E.g., PAN-AAAA12345A mentioned in the statement is not valid)
• (a) No certificate issued from ITD, but deductor has claimed lower rate in statement  (b) Validity of the certificate has expired.
• Other reasons (Threshold, Tax Rate, etc.)

Interest on Short Payment:

• Interest on Short Payment is a provisional interest because interest on Short Payment has to reduce when deductor pays / files the correction statement to reduce the Short Payment amount and then 'Interest on Late Payment' shall be appropriately calculated till the date of actual payment.

Interest on late payment

• Interest on Late Payment will be calculated on the amount which has been paid after due date from the date of deduction till the date of deposit.

Additional Late Payment interest against the processing of latest correction

• Additional Late Payment interest = (Amount of late payment interest after processing the latest correction) minus (Amount calculated based on previous statement)

Interest on Short Deduction

• Interest on Short Deduction is a provisional interest because interest on Short Deduction has to reduce when deductor deducts / files the correction statement to reduce the Short Deduction amount and then 'Interest on Late Deduction' shall be appropriately calculated till the date of actual date of deduction.
• In case of salary, Short deduction will be calculated only when deductor files Annexure-II in Q4.

Interest on Late Deduction

• Interest on Late Deduction will be calculated on the amount which has been deducted after due date from the date of payment / credit to the payee till the date of deduction.

Additional Late Deduction interest against the processing of latest correction

• Additional late deduction interest = (Amount of late deduction interest after processing the latest correction) minus (Amount calculated based on previous statement).

Late Filing Levy

• Late Filing levy has been calculated u/s 243E @ Rs.200/- per day from the due date of filing the statement till the date of filing of Regular Statement (from Q2 of FY 2012-13 onwards). Amount of Late Filing levy will be restricted to total amount of TDS deducted as per TDS statement.

Additional Late Filing levy against the processing of latest correction

• Additional Late filing Levy = (Late Filing levy after processing of correction statement) minus (Late Filing levy communicated earlier in intimation)
• Levy amount will be restricted to TDS deducted amount.
• As TDS deducted for Regular Statement was reported as ` 2000.00, hence Late Filing levy was also restricted to ` 2000.00. Later on deductor has filed correction statement and Total TDS Deducted increased to ` 3500.00. Hence, ` 3 000.00 (Actual Late Filing Levy) - ` 2000.00 (Late Filing levy) = ` 1 000.00 (Additional Late Filing Levy)

Interest u/s 220(2)

• Interest u/s 220(2) will be chargeable in case demand is paid after expiry of 30 days from the date of 'Order Passed Date'. Assessee will be liable to pay simple interest @ 1% for every month or part of the month, commencing from the date immediately following the due date of demand order and ending with the day on which the demand has been paid.

Source: www.caclubindia.com

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No TDS on deposits doesn't mean these are tax-free

Are you receiving emails or telephone calls from banks advising you to invest in recurring deposits because there is no tax deducted at source (TDS) in this case? Remember, such investments aren’t tax-free.

No TDS merely means the bank will pay you the entire interest amount without forwarding the tax on it to the government. However, the fixed deposit holder will have to include this interest income in her/his total income and pay tax on this, according to her/his tax bracket.

“There is a common misconception if there is no TDS, it is tax-free. But whether it is recurring deposit, post-office deposits, national savings certificates, or any other savings, if there is no TDS, the interest income is taxed. The only difference between these and fixed deposits is the bank or post office will not deduct tax at source,” says Sanjeev Gokhale, a chartered accountant.

Banks offer the same rate of interest on fixed deposits and recurring deposits. For fixed deposits, you invest the money in a lump sum, while in the case of recurring deposits, you invest once every month. This instrument is encouraged as a way of instilling discipline among investors.

The difference is in the case of fixed deposits. If the interest exceeds Rs 10,000 in a financial year, the bank will deduct 10 per cent tax before crediting the interest to the account. However, this is not the only tax the deposit holder is liable to pay. “This is another common misconception. Many people think they have to pay the remaining 20 per cent tax while filing tax returns. Or, he/she can also pay through advance tax,” Gokhale says.

A few months ago, it was reported the income tax department had issued notices to several people who had not filed returns. Among them were those who had received interest income of more than Rs 50,000. If you receive such a notice, you will have to pay the tax, as well as interest for the delay. The interest is one per cent a month from the last date of filing returns (July 1). The penalty for not filing returns is also charged at the same rate.

So, whether you invest in fixed deposits, recurring deposits or tax-saver post office schemes, remember to include the interest income while filing tax returns. The only case in which you don’t have to pay income tax on fixed deposits is if you have no other source of income and your income is below the threshold taxable limit. For this, you have to file Form 15G, stating you have no taxable income. Senior citizens have to file Form 15H. In many cases, senior citizens feel if they have done this, they are not liable to pay tax. But if you have two or three fixed deposits in separate banks and you submit a Form 15G or 15H in all the banks, you will have to pay tax if the total interest from all the fixed deposits exceeds the taxable income limit, says chartered accountant Arvind Rao.

“Since last year, while submitting Form 15G, deposit holders have to state the deposits they have with other banks. So, banks have to report two types of interests—one on which TDS has been deducted and the other on which it hasn’t,” he says.

Source: www.business-standard.com

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TDS Deduction on Mobile Tower Rent comes u/s. 194-I not u/s. 194C

Income Tax Department had clarify that the renting of mobile tower would attract lower TDS Deductions u/s. 194-I and not u/s. 194C on the grount of Receipts from provision of passive infrastructure services to the mobile operators amount to renting and would attract lower TDS deduction under section 194-I and not under section 194C.

Facts:

1. The petitioner, Indus Towers Ltd., provided passive infrastructure services to the mobile operators ('customers'), which, inter-alia, included, tower, shelter, diesel generator sets, batteries, air conditioners, etc.
2. It applied for issue of a lower deduction certificate at rate of 0.5% on its project receipts under Sec. 194C of the IT Act, but AO issued lower deduction certificate at rate of 2.5% under Sec. 194-I of the IT Act.
3. Writ was filed to challenge the revisionary order of CIT who affirmed the decision of AO.

Issue

• The issue before the High Court was whether the activity, i.e., provision of passive infrastructure services by petitioner to the mobile operator would constitute renting within the extended definition under Explanation to Section 194-I or whether the activity was service without any element of hiring or letting out of premises?

Held:

• It was the 'operative intention of the parties' which had to be ascertained to decide whether the arrangement amounted to a lease or a mere license as decided by the Supreme Court in case of Rajbir Kaur v. S. Chokesiri and Co., AIR 1988 SC 1845.
• As per the service agreement between assessee and the customers it was found that, although the access to infrastructure was given to the mobile operators, yet the possession and control of the property were with the petitioner.
• The dominant intention in these transactions – between petitioner and its customers – was the use of the equipment or plant or machinery. Therefore, the submission of the petitioner that the transaction was not 'renting'and would be covered under Section 194C, was incorrect.
• Equally, the revenue's contention that the transaction was one where the parties intended the renting of land (because of the right to access being given to the customer) was also incorrect. The underlying object of the arrangement or agreement was the use of the machinery, plant or equipment, i.e., the passive infrastructure.
• The 'operative intention' here was the use of the equipment. The use of the premises was only incidental.
• Therefore, the provision of passive infrastructure services to the mobile operators amounted to 'rent' for use of the machinery, plant or equipment.
• So, it was concluded that tax deduction be made at the rate of 2%, as prescribed under section 194-I for the use of any machinery, plant or equipment.

Source: www.taxmann.com

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Deductor Not responsible for non-mention PAN of Deductee in TDS Certificate.

As per Income Tax rulings regarding issuing of Form-16, or 16A Deductors are not responsble for non-mention of payee’s PAN in it. In the other words we can say if the TDS Deductee or Taxpayee not provided his PAN befor issuing Form-16, or 16A there is no penalty on deductor for non-mention payee's PAN in there.

The following points are clarify the same -

• If payee doesn't furnish his PAN to deductor as required by section 139A(5A), deductor can't be penalized under section 139A(5B) read with section 223B(1) for not mentioning payee's PAN in TDS certificate issued to payee in Form 16A.
• Where there is nothing on record to show that contractors to whom certain amounts were paid by asssessee after deducting TDS under section 194C/194J had intimated their PANs to assessee (deductor) as required by section 139A(5A), penalty can't be imposed on assessee (deductor) under section 272B(1) for non-mention of the PANs of the contractors(payees) in Form 16A TDS certificates issued to them.
• Default by contractors (payees) in furnishing their PANs to assessee (deductor) as per the requirements of section 139A(5A) is "sufficient cause" within the meaning of section 273B for deductor's contravention of section 139A(5B) ( failing to mention PANs of payee-contractors on their TDS certificates in Form 16A issued to payee-contractors). In view of this sufficient cause, no penalty imposable.

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New TDS e-Tutorial

TDS is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payment to the other person and deducted amount is remitted to the Government account. It is similar to "pay as you earn" scheme also known as Withholding Tax in many other countries, one of the countries is USA. The concept of TDS envisages the principle of "pay as you earn". It facilitates sharing of responsibility of tax collection between the deductor and the tax administration. It ensures regular inflow of cash resources to the Government. It acts as a powerful instrument to prevent tax evasion as well as expands the tax net.

Who shall deduct tax at source?
Every person responsible for making payment of nature covered by TDS provisions of Income Tax Act shall be responsible to deduct tax.

However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and HUF, only if the turnover or professional receipt exceeds sum of Rs. 40 lakh or Rs. 10 lakh respectively (the limits will be Rs.60 Lakh or Rs. 15 Lakh respectively w.e.f. 01.07.2010) in previous year, he is required to deduct tax at source.

These persons are mainly:

• Principal Officer of a company for TDS purpose including the employer in case of private employment or an employee making payment on behalf of the employer.
• DDO (Drawing & Disbursing Officer), In case of Govt. Office any officer designated as such.
• In the case of "interest on securities" other than payments made by or on behalf of the Central govt. or the State Government, it is the local authority, corporation or company, including the Principal Officer thereof.

Such person is called Deductor while the person from whom the tax is deducted is called Deductee.

Tax must be deducted at the time of payment in cash or cheque or credit to the payee's account whichever is earlier. Credit to payable account or suspense account is also considered to be credit to payee's account and TDS must be made at the time of such credit.

Download New TDS e-Tutorial

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Issue of TDS Certificate in Form No.16A downloaded from TIN

TDS certificate in Form No.16 is to be issued annually whereas TDS certificate in Form No.16A is to be issued quarterly

Currently, a deductor has an option to authenticate TDS certificate in Form No.16 by using a digital signature. However, no such option of using a digital signature is available to a deductor for issuing TDS certificate in Form No.16A and it, therefore, needs to be authenticated by a manual signature. The Central Board of Direct Taxes (the Board) has received representations to allow the option of using digital signature for authentication of TDS certificate in Form No.16A as issuance of TDS certificate in Form No.16A by manual signature is very time consuming, specially for deductors who are required to issue a large number of TDS certificates.

The Department has already enabled the online viewing of Form No.26AS by deductees which contains TDS details of the deductee based on the TDS statement (e-TDS statement)filed electronically by the deductor. Ideally, there should not be any mismatch between the figures reported in TDS

certificate in Form No. 16A issued by the deductor and figures contained in Form No.26AS which has been generated on the basis of e-TDS statement filed by the deductor. However, it has been found that in some cases the figures contained in Form No.26AS are different from the figures reported in Form No.16A. The gaps in Form No.26AS and TDS certificate in Form No. 16A arise mainly on account of wrong data entry by the deductor or non-filing of e-TDS statement by the deductor. As at present, the activity of issuance of Form No.16A is distinct and independent of filing of e-TDS statement, the chances of mismatch between TDS certificate in Form No.16A and Form No.26AS cannot be completely ruled out. To overcome the challenge of mismatch a common link has now been created between the TDS certificate in Form No.16A and Form No.26AS through a facility in the Tax Information Network website (TIN Website) which will enable a deductor to download TDS certificate in Form No.16A from the TIN Website based on the figures reported in e-TDS statement filed by him. As both Form No.16A and Form No.26AS will be generated on the basis of figures reported by the deductor in the e-TDS statement filed, the likelihood of mismatch between Form No.16A and Form No.26AS will be completely eliminated.

Read more Circulars and Notifications regarding issuing of Form-16A

Circular Date	Circular Number	Description
13-May-2011	03 / 2011	Issuance of TDS Certificates in Form 16A downloaded from TIN website and option to authenticate the same by way of digital signature – Circular under Section 119 of the Income Tax Act, 1961
09-Apr-2012	01 / 2012	Issuance of TDS Certificates in Form 16A downloaded from TIN website – Circular under Section 119 of the Income Tax Act, 1961
17-Apr-2013	04 / 2013	Issuance of certificate for Tax Deducted At Source in Form 16 in accordance with the provisions of Section 203 of the Income Tax Act, 1961, read with Rule 31 of the of the Income Tax Rules, 1962

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What are the situations to TDS deduction or Non-deduction at lower rate?

Non deduction or deduction at lower rate in certain situations

No Tax has to be deducted for the payment made to Government, RBI, Corporation whose income is exempt from tax or mutual fund specified u/sec. 10(23D). Also in case where deductee produces a non deduction certificate or lower deduction certificate u/sec. 197 of the Income Tax Act 1961.

Self declaration in Forms 15G and 15H can be filed by the deductee if his income doesn't exceed the amount chargeable to tax. This self declaration can be filed for dividends, interest and mutual fund income only. In these cases no tax has to be deducted. However the tax deductor is required to furnish copies of this self declaration to the concerned CCIT or CIT as per the rules.

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Trace e-TDS Return Consolidated File Password.

This is the first experience with new TDS portal to download consolidated file of e-TDS Return (Q1,Q2,Q3,Q4) from www.tdscpc.gov.in but, can't download without Password. It means this file is fully protected. This is new portal for only TDS/e-TDS or TCS/e-TCS.  Before this portal TIN-NSDL is working on consolidated file which is directly download from www.tin-nsdl.com.  The 15 Digits Token number of the original receipt is the passward for this file.  But it is very difficulat to extract "ZIP" File because this file will be be extracted with the help of   password  as TAN_request number.    For Example if your TAN number is  MUMR03066R  and request number is  1083 (available under download link at tdscpc.gov.in), your password will be as given below :-

password    =   MUMR03066R_1083

After all working you may now able to submit correction e-TDS return.

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TDS on Payment of Contractors and sub-Contractors.

SECTION 194C OF THE INCOME-TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE - PAYMENTS TO CONTRACTORS & SUB-CONTRACTORS - DEDUCTION OF TAX AT SOURCE ON PAYMENT OF GAS TRANSPORTATION CHARGES BY THE PURCHASER OF NATURAL GAS TO THE SELLER OF GAS

Circular No. 9/2012 [F. No. 275/11/2012-IT(B)], dated 17-10-2012

Representations have been received from various sections of the Industry on the difficulties faced in the matter of Tax Deduction at Source on Gas Transportation Charges paid by the purchasers of Natural gas to the sellers of gas.

2. The Hon'ble Gujarat High Court in the case of CIT (TDS) v. Krishak Bharati Cooperative Limited in Tax Appeal No. 618 of 2010 vide order dated 12-7-2011, has held that the question as to whether payment of Gas Transportation Charges by the purchasers of Natural gas to the Gas Distribution Companies is covered under the provision of Chapter XVII-B of Income-tax Act, 1961 (the Act) or not, can be ascertained only on the basis of the terms of agreement between the Gas Distributing Company and the purchaser of the Natural gas. In the operative part of the order, the Hon'ble Court says that in the facts of the abovementioned case, the agreement is for purchase and sale of gas. Transportation of gas is only a part of the entire sale transaction. Laying down the pipeline and supplying gas through such pipeline were the steps taken in furtherance of such a contract. There was a clear understanding of the parties that the ownership of gas would pass on to the buyer at the delivery point which clearly shows that transport of gas by the seller was a step towards execution of contract for sale of gas and there was no contract for carriage of goods. The Court added that Transportation of gas was only in furtherance of contract for sale of gas. The Hon'ble High Court then decided that in such a case the supply of gas is under a 'contract for sale' and not under a 'works contract' as envisaged under section 194C of the Act and hence in such a case TDS provisions are not applicable.

3. The matter has been examined by the Board. The main stakeholders in this Industry are the - Owners/Sellers of the gas (which could be a Gas Distribution Company); Transporters of gas (which could be the Owners/Sellers of the gas or a third party/parties) and the purchasers/ end-users of the gas. The Owner/Seller of the gas may transfer the ownership of the gas to the purchaser either at the point of delivery at the premises of the purchaser or at any intermediate point.

4. It is clarified that in case the Owner/Seller of the gas sells as well as transports the gas to the purchaser till the point of delivery, where the ownership of gas to the purchaser is simultaneously transferred, the manner of raising the sale bill (whether the transportation charges are embedded in the cost of gas or shown separately) does not alter the basic nature of such contract which remains essentially a 'contract for sale' and not a 'works contract' as envisaged in section 194C of the Act. Hence in such circumstances, provisions of Chapter XVII-B of the Act are not applicable on the component of Gas Transportation Charges paid by the purchaser to the Owner/Seller of the gas. The use of different modes of transportation of gas by Owner/Seller will not alter the position.

5. It is needless to mention that transportation charges paid to a third party transporter of gas, either by the Owner/Seller of the gas or purchaser of the gas or any other person, shall continue to be governed by the appropriate provisions of the Act and TDS shall be deductible on such payment to the third party at the applicable rates.

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