Employee with income upto 5 Lacs ? No need to file IT Return for AY 2012-13
CBDT has issued Notification 9/2012 dated Feb 17,2012 which will come as a big relief for employees.
Exemption from filing IT Return
- Exemption is available for employees having income from
- Salaries
- Interest from Saving Bank Account upto Rs. 10,000
- Exemption is available if Total Income does not exceed Rs. 5 Lacs ( Total Income means Gross Total Income Less Deductions under Chapter VI A)
Conditions
This exemption is not blanket and the following conditions must be fulfilled before this exemption is available
- Employee must report his PAN to employer
- Employee must report his income from interest on savings bank account to employer
- Employee has received Form 16 from his employer
- Total tax liability of employee has bee paid off by employer by way of TDS and employer has deposited TDS with central government
- Employee has no refund claim
- Employee has received salary only from one employer
- Employee has not received any Notice from income tax department for filing of income-tax return
Analysis
- Though welcome step, it might not benefit many employees.
- Most of the employees have investment in Fixed Deposits, Debentures, Post Office Saving Schemes and they will earn some interest from these investments. Such employees are not exempt from filing IT Return.
- Again ,several employees take home loan and submit details of interest on home loan to employers, who factor it while deducting TDS. Such employees are also not exempt from filing IT return as the interest paid on home loan has to be shown under “Income from house property”
- Any employee who has earned short term or long term capital gains will also not be exempt from filing IT return
FVU Version 3.3 : Effective Feb 1, 2012
NSDL has released File Validation Utility Version 3.3. The new features of the same are being described in this blog.
What is effective date of FVU 3.3
- FVU 3.3 is effective from Feb 1, 2012
- For Quarter III eTDS filing, both FVU version 3.3 and FVU Version 3.2 can be used.
- Fast Facts recommends filing of Q3 eTDS Statements with FVU Version 3.2 only
Encryption of files
- Files validated with FVU will be encrypted .
- Both regular and correction files will be encrypted.
Regular Statement : Penal Rate Deductee Records
- If deductee record flag contains “C” to indicate penal rate and rate of deduction of less than 20%, a warning will be generated by FVU 3.3 which will contain details of such inconsistent deductee records.
- Change applicable for FY 2010-11 onwards.
Regular Statements : Govt Deductors to quote BIN
- Book Identification Number ( BIN) is applicable only in respect of Government deductors
- BIN can be obtained from
- the respective Pay and Account Office (PAO) / District Treasure Office (DTO)
- TIN Web site by logging into TAN Account
- BIN Consists of
- Seven digit 24G receipt number (provided on successful acceptance of Form 24G statement at TIN central system)
- Five digit DDO serial no. (provided for each DDO transaction in Form 24G statement)
- Date of deposit of Tax
- Government deductors will have to mention the BIN in regular eTDS statements
- Change applicable for FY 2010-11 onwards.
Correction Statements : Deductee records with Flag “C”
- Deductee records with flag “C” indicate deduction at penal rate of 20% in case of deductees not having valid PAN.
- Several deductors filed regular eTDS Statement containing valid PANs and Flag “C”. FVU 3.2 does not allow editing of deductee records with flag “C”
- FVU 3.3 will now allow editing of such records for all fields except the flag “C”
- Change applicable for FY 2010-11 onwards.
Correction Statement : Import of Consolidated FVU
- In order to avoid rejection of correction statement, FVU 3.3 will require consolidated FVU file to be imported before validating correction statement
- Correction statement will also contain Hash Value as per consolidated FVU file – which is used for preparation of correction statement.
- Change applicable for all financial years
FVU 2.131 for FY upto 2009-10
- For validating regular / correction statements pertaining to period upto FY 2009-10 , FVU 2.131 has to be used
- This will be effective Feb 1, 2012
- Correction statements will require import of consolidated fvu file and a hash value will be inserted in output files
- All files validated will be encrypted.
Not issued Form 16A in time ? You may get a reminder from DIT
TDS certificate in Form 16A are to be issued for all deductions other than salary on quarterly basis. The due date of issuing Form 16A is within 15 days of the due date of filing eTDS statement.
Income-tax department has also mandated corporates and banks to issue such certificates only after downloading Form 16A files from TIN web site.
Tracking Downloads
It has been observed that income-tax department is tracking all downloads of form 16A . Those who have not made request for Form 16A are being sent reminder letters by the “Directorate of Income-tax Systems” . The reminder letter states…
It is noticed that you have not downloaded Form No 16A for Quarter ended Sep 2011 from the TIN Central System till 31/10/2011. Since, issue of TDS certificate in Form No 16A by downloading from TIN web site has been made mandatory from 1.4.2011 for corporate and banks , and only these are valid certificates, you are advised to download the same from the TIN web site ….”
Erroneous Reminders ?
Several deductors who are neither corporate nor banks have also received such reminders. This is possible if their status is not updated in TAN database , or erroneous generation of letters by income-tax department.
What should be the response
If deduductor is a bank or corporate, it must immediately submit request for downloading Form 16A thru TAN login and after downloading issue the same to deductees.
For other deductors, though it is not mandatory to download Form 16A from TIN web site, nevertheless they have to issue Form 16A within due date. They can also download Form 16A from TIN web site at their option and issue the same to deductees.
Also if the status of TAN on TIN web site is not correct, TAN rectification form must be submitted.
Lost TAN Registration Number ? Re-Register
TIN web site provides for registration of TAN. This is necessary to download consolidated fvu and Form 16A files.
Many a times, users forget TAN registration details.
In our earlier blog TAN Registration Number : What to do if it is forgotten or lost, we had given a procedure to get a new registration number. This procedure has been now simplified thru a procedure or re-registration.
Re-registration
On re-registration, a new 12 digit TAN registration no. will be generated and the same needs to be used for future reference,
Earlier TAN registration number provided on TAN registration will no more be valid, subsequent to re-registration.
Re-registration Process
Procedure for activating TAN Account
Further, the procedure for activating the TAN account on registration/ re-registration has been changed as below:
- On registration/ re-registration, an e-mail containing link will be sent to registered e-mail ID (s)
- User will be required to click on the link for activating the TAN account. This link is sent for verifying the validity of e-mail ID.
- On clicking the link, user will be prompted to provide TAN and corresponding 12 digit TAN registration number.
- If the TAN & TAN registration number matches, then TAN account will be activated within 24 hours.
- TAN account will be active if at least one of the e-mail ID is verified.
- TAN account will not be activated, If the user does not click link or does not provide respective TAN and TAN registration number.
- If user has provided two e-mail ID (s) on registration/ re-registration then the TAN account will be activated, even if the user clicks on the link (as mentioned above) sent at any one of the registered e-mail ID.
- On activation of TAN account an e-mail containing the user ID in password protected PDF file will be sent to registered e-mail ID (s). On receipt of this e-mail, user can login to TAN account.
Existing Registered Users
- Existing registered user will remain active i.e., it will be considered their e-mail ID (s) is verified.
Update Profile
Functionality for updating the TAN registration details vide ‘Update profile’ has been changed as below:
- Subsequent to registration/ re-registration if the user updates the e-mail ID and other TAN registration details vide ‘Update profile’ (i.e., by logging to TAN account) then a link for verifying the e-mail ID will be sent to registered (updated) e-mail ID (s).
- If the user has updated all the verified e-mail ID (s) then the TAN account will be deactivated and the link for verifying the e-mail ID will be sent at the updated registered e-mail ID (s).
- On update of e-mail ID vide “Update profile” if the user attempts to login to TAN account without clicking on the link sent for verification of e-mail ID, then the same will be allowed and menus as below will be provided on login:
- Bulk upload of Form 15CA records
- Update profile
- Procedure for activating the TAN account will be same as mentioned above.
- Under ‘Update Profile’, if the user updates details other than the e-mail, then there will be verification for e-mail ID.
eTDS Correction : Changes effective November 2011
Some of the common reasons why eTDS correction statements are rejected by TIN are :
- If a valid PAN is changed more than once, it is rejected at the TIN.
- PAN though structurally valid but not found in ITD is rejected at the TIN
- If amount deposited is allocated to deductees over two or more quarters and the amount of such allocation exceeds deposit amount
In all the above scenarios the FVU file will be created successfully but the same will be rejected at the TIN central system.
Changes in consolidated statement data structure
To avoid the above types of rejections, NSDL has made changes in the consolidated statement data structure. They are listed below :
- Deductee PAN valid flag : If the PAN is not found in Income Tax Database (ITD) then “N” will be provided under this field
- PAN update counter : If the counter is 2 then no modification of PAN is allowed
- Pending balance : For matched Challan, pending balance is the Challan amount above which the deductor cannot utilize TDS deductions
Fast Facts has incorporated the above changes in its #1 eTDS Correction utility and version 2.95 can be downloaded for the same.
With above changes, the probability of eTDS correction statements getting rejected at TIN will be further minimized.
Amendement in TDS rules effective Nov. 2011
CBDT has issued Notification 57/2011 on October 24, 2011 amending Rule 31A and Rule 37BA
Effective Date:
The amendment shall come into force on the 1st day of November, 2011
Rule 31A : The rule specifies due date for filing of eTDS statement.
The due dates have been changed for Government Deductors
Due date for Govt. Deductors
Qtr Ending Earlier Due Date Changed Due Date
30th June 15th July 31st July
30th September 15th October 31st October
31st December 15th January 31st January
31st March 15th May 15th May
Since effective date of amendment is 1st November ,amended due dates for Govt. Deductors will apply from 3rd Qtr onwards.
Due date for other than Govt Deductors – No Change
Qtr Ending Due Date
30th June 15th July
30th September 15th October
31st December 15th January
31st March 15th May
Particulars of transactions with no deduction
- Earlier there was requirement to submit details of all payments / credits where no deduction was made in view of certificate of no deduction issued by the income-tax officer
- Additionally, now details of payments/ credit where no deduction was made in view of submission of self declaration under section 197A for no deduction of tax under the following sections :
-
- Section 193 interest on securities ,
- Section 194A – interest other than interest on securities,
- Section 194EE – Payment of NSS deposit,
- Section 194 Dividend
- Self declaration is given by senior citizens in From 15H and in Form 15G by others
- The existing data structure for submission of eTDS statement already lists above requirement in Annexure 6
Code B : In case of no deduction on account of declaration under section 197A. Allowed only for section 194, 194A, 194EE and 193
Hence, the provision to submit such details were existing even at present. The amended rule has now made it mandatory to provide such details
Rule 37BA : This rule provides for credit of tax deducted at source.
Sub rule (2) provided for cases where credit for tax was to be given to a person other than deductee.
The amended sub rule has now removed specific mention of cases with the words “where under any provision of the Act”
TAN Registration Number : What to do if it is forgotten or lost
What is a TAN Registration Number( TRN)
- TIN web site provides for registration of TAN by deductor , which is necessary , among other things, for downloading consolidated fvu file, Form 16A text file.
- When a deductor applies for TAN Registration online , a confirmatory email is sent giving 12 digit TAN Registration Number. Example :
“The TAN has been successfully registered on 31th October, 2009. Your registration number is T20098776DAC”
Where is TAN Registration Number needed
- TRN is required to be quoted in all correspondence with NSDL
- The following files are emailed by NSDL / available for download are password protected and the password is TRN
- Reset password
- Form 16A
Hence if TRN is lost, it is not possible to access downloaded Form 16A files
What is the procedure to retrieve TRN
- A written request on the letter head has to be sent to NSDL mentioning name of Deductor, TAN and requesting for retrieving TRN
- The letter should be signed by ‘Managing Director’ or ‘Chief Financial Officer’ or authorized signatory in the organization along with name and designation and should be preferably digitally signed
- If the letter is not digitally signed then one the following support documents will have to be provided
- Board resolution certifying the authorized person list, which includes the name of the authorized person.
- If name of the person is not present in the board resolution then supporting documents from ROC website mentioning name of the authorized person, Power of attorney or any other legal document authorizing the person to sign documents on behalf of the entity
- An undertaking on the letter head owning responsibility in case of misuse of login. Format of the undertaking is given at the end of this post
- Latest copy of Provisional Receipt Number
After receipt of above documents, the TRN will be emailed to the deductor.
Error in challan : New mechanism for correction
Deposit of TDS can be made either electronically or by a physical challan. e-Payment of tax is mandatory for companies and others covered under mandatory tax audit. Several times, while depositing tax, errors may creep in. To rectify these errors, income-tax department has issued new guidelines effective 01-09-2011.
This new mechanism allows Banks to correct physical challans only.For correction in electronic challan, request will have to be made to Assessing Officer.
Correction in Physical Challans
What fields can be corrected by bank
- Assessment Year
- Major Head Code
- Minor Head Code
- TAN/PAN
- Total Amount
- Nature of payment (TDS Codes)
What is the time frame for correction request ?
- Request for correction has to be made within 7 days of deposit of challan for correction in PAN, TAN and Assessment Year
- For Major head, minor head and nature of payment, request can be made within 3 months of deposit of challan.
What is the remedy available after time frame is over ?
- After lapse of time frame, request can be made to the Assessing Officer.
What is the time frame given to bank to carry out correction?
- After receipt of request, bank must carry out the correction within 7 days
What are other conditions for correction ?
- Correction in name is not allowed
- Any combination of correction of Minor Head and Assessment Year together is not allowed
- PAN/TAN correction will be allowed only when the name in the challan
matches with the name as per the new PAN/TAN. - The change of amount will be permitted only on the condition that the
amount so corrected is not different from the amount actually received by the bank and credited to Govt. Account. - For a single challan, correction is allowed only once. However, where 1st
correction request is made only for amount, a 2nd correction request will be allowed for correction in other fields. - There will be no partial acceptance of change correction request, i.e. either all the requested changes will be allowed, if they pass the validation, or no change will be allowed, if any one of the requested changes fails the validation test.
What is the procedure for requesting correction ?
- The tax-payer has to submit the request form for correction (in duplicate) to the concerned bank branch.
- The tax-payer has to attach copy of original challan counterfoil.
- In case of correction desired for challans in Form 280, 282, 283, the copy of PAN card is required to be attached.
- In case of correction desired for payments made by a tax-payer (other than an individual), the original authorization with seal of the non-individual taxpayer is required to be attached with the request form.
- A separate request form is to be submitted for each challan.
Correction in Electronic Challans
- For correction in electronic challans and for correction after the time period for application to bank lapses, a written request in prescribed format has to be made to the Assessing Officer
- Assessing Officer has power to rectify the error , in bona fide cases, to enable credit of tax to assessee
What is form of application to bank ?
income-tax department has given a format in which application can be made to the bank. The form is given in pdf format below
TDS Default Notices : How to avoid Interest Defaults
Each e-TDS statement is processed by TIN and defaults are put on web site for deductors to rectify.
In this article, we will examine what is default on account of interest and how it can be avoided
When is interest payable ?
As per income-tax , interest is payable under the following two circumstances
- Tax is not deducted , when it was deductible
- Tax once deducted, is not paid on or before due date
When tax is to be deducted
| At the time of credit or payment, whichever is earlier |
| 193- Interest on securities |
| 194A- Interest Other than “Interest on securities” |
| 194C- Payment to contractors / sub contractors |
| 194D – Insurance commission |
| 194H – Commission or Brokerage |
| 194G- Commission on sale of lottery tickets |
| 194I- Rent |
| 194J- Professional or technical fees |
| Before making payment or distribution |
| 194- Dividend |
| At the time of payment |
| 192- Salaries |
| 194B- Winning from lotteries / crossword puzzles |
| 194BB Winnings from horse races |
| 194EE – Payment from National Saving Scheme |
| 194F Payment for repurchase of units by UTI / mutual funds |
| 194LA: Payment of compensation on acquisition of certain immovable property |
What is the Due date of deposit of TDS ?
- All the TDS deductions made during a month are to be paid on or before7th of the next month. Example : All deductions made during April ,must be paid on or before May 7th, 2010.In case 7th of the month happens to be a Sunday or a bank holiday, then the payment can be made on the next business day.
- Beginning FY 2010-11 ,for deductions made during the month of March, payment must be made on or before 30th April.
What is the rate of interest ?
W.e.f 01-07-2010
- From the date when TDS was deductible till date of actual deduction,rate of interest is 1% p.m.
- For delayed deposit, from date of deduction till actual date of payment, rate of interest is 1.5% p.m
Prior to 01-07-2010
- From FY 2006-07 onwards for delayed deposit, from date of deduction till actual date of payment, rate of interest is 1.0% p.m
What is the due date of payment of interest ?
Interest must be calculated and paid before filing of eTDS statement of the quarter.
| Quarter 1 | Jul-15 |
| Quarter 2 | Oct-15 |
| Quarter 3 | Jan-15 |
| Quarter 4 | May-15 |
How is interest to be calculated ?
- Interest is to be calculated for every month or part of a month comprised
in a period, any fraction of a month shall be deemed to be a full month - The amount of tax, penalty or other sum in respect of which such interest
is to be calculated shall be rounded off to the nearest multiple of one
hundred rupees and for this purpose any fraction of one hundred rupees
shall be ignored and the amount so rounded off shall be deemed to be the
amount in respect of which the interest is to be calculated.
Of course, those using TdsPac software from Fast Facts need not worry. Automatic and accurate calculation of interest is available in single click.
Example of Interest Calculation
| Date Of Payment | Date of Deduction | Due Date | Date of Deposit | Delayed Deposit | Delayed Deduction | ||
| Months | Rate | Months | Rate | ||||
| 05/04/2010 | 05/04/2010 | 07/05/2010 | 09/05/2010 | 2 | 1% | - | - |
| 10/04/2010 | 10/04/2010 | 07/05/2010 | 09/05/2010 | 1 | 1% | - | - |
| 02/07/2010 | 04/08/2010 | 07/09/2010 | 07/09/2010 | - | - | 2 | 1% |
| 02/07/2010 | 04/08/2010 | 07/09/2010 | 15/09/2010 | 2 | 1.50% | 2 | 1% |
Avoiding Interest Default
To avoid interest default
- Deduct tax at source in time
- Deposit TDS by due date
- In case of delayed deduction / deposit ,calculate interest and deposit the same
- Show such interest properly in eTDS statement
Rectifying Interest Default
- You may download default notices after logging into your TAN account.
- Default Notice is a plain excel sheet without any password protection
- If there is any default on account of non-payment or short payment of interest, you need to pay up the same
- After paying , you have to file correction statement by including the interest payment challan.
Processing of eTDS Statement Begins
Income tax department has started processing of each and every eTDS statement in terms of section 200A. If there is any default, the same is available in the TIN web site.
How to view the defaults
- Visit www.tin-nsdl.com
- Login->TAN
- Click “Default”
- You will be able to view a table containing Financial Year, Form No, Quarter and a link to download file containing defaults
File format
- If the number of records is small, the file is in Excel format and without any password
- If the number of records is very large, the file is ^ delimited text file and a format is given.
Various defaults
- The file contains three type of defaults
- Short Deduction
- Short Payment
- Late Payments
- Each of the above is discussed in details
Analysis done by Fast Facts
Fast Facts team has done detailed analysis of several notices and the findings are given below for the benefit of our readers.
Late Payment Cases
- For each deductee record, date of deduction is displayed
- Due Date is worked out based on Provision and Non-Provision transactions
- Late Payment interest amount is calculated as per provisions of income-tax Act and Rules
- There is a column “Interest on Late Payment of Interest” , which is not filled. Possibly in future , this will also be calculated and shown
- If any amount of Interest is paid thru challans, the same is deducted from total interest and remaining amount is shown
Short Deduction Cases
- Short deduction = Amount deductible as per Tax Rate Flag Less Amount deducted
- For a deduction record “Tax Rate Flag” is shown as follows
“P” – Tax deducted at prescribed rate as per Income Tax Act
“L” – Tax deducted at lower rate as specified in the return. For sections having sub-sections, tax rate basis is assumed to be “L”
“H” – Higher Rate
- Based on “Tax Rate Flag”, amount deductible as calculated is shown
- Amount deducted is subtracted from amount deductible to show “Short Deduction Amount”
| Date of payment | PAN of the deductee | Section code | Tax rate flag ** | Amount paid | Amount deductible (A) | Amount deducted (B) | Short deduction amount (C) |
| 28-Jul-08 | 194J | P | 19950.00 | 2054.85 | 2009.00 | 45.85 | |
| 10-JUL-10 | BDDPS2497R | 194J | H | 6000.00 | 1200.00 | 600.00 | 600.00 |
Above two cases are explained in detail
- In the first case, Amount deductible is worked out by applying applicable rate of 10.3% on Rs. 19950 = 2054.85. Actual amount deducted is Rs. 2009. Hence there is a short deduction of Rs. 45.85.
- In the second case, everything appears to be correct. But the PAN given is not found in the income-tax database. This is reflected in “Tax Rate Flag” – H. Hence a penal rate of 20% is applied to Amount paid to arrive at amount deductible.
- Fast Facts team also found that such cases where PAN is not found in income-tax database, Form 16A is also not issued by the TIN system.
Short Payment
- These are simple cases, where amount deposited is less than amount deducted
In a separate article , Fast Facts Bulletin will explain what corrective actions are to be taken in response to the defaults and what precautions to be taken to avoid generation of such default notices.
