Effective Date

• FVU 3.71 will be mandatory w.e.f  May 26,2013
• This means on or before May 25, 2013, statements can be filed with either FVU version 3.6 or FVU version 3.71
• Effective May 26,2013 version 3.71 can only  be used for all statements pertaining to FY 2010-11 onward.

 Changes:

 Form 24Q : TDS on salaries

• 80CCG : Investment in Rajiv Gandhi Equity Savings Scheme. This has been incorporated in Form 24Q , Q4 statement. This is effective FY 2012-13 onward.
• 80CCF : Investment in approved infrastructure bonds. Quoting deduction under section 80CCF has been restricted to FY 2010-11 and 2011-12, as deduction under this section is not available from FY 2012-13 onward.

Form 27EQ : Tax Collection at Source

• 206CK : Collection at source on cash case of Bullion and Jewellery
• Such transactions are to be shown in Form 27EQ
• PAN compliance validation of 85% pertaining to deductees of section code 206CK has been relaxed.

TDS @ 1% on transfer of immovable property- Sec. 194-IA

• The Finance Bill has introduced a new section 194-IA providing for TDS @ 1% to be deducted by transferee. This is applicable for sale of immovable property ( other than agricultural land ) where consideration is Rs. 50 Lacs and above.
• The amendment now exempts transferee from the obligation to obtain TAN, which is otherwise mandatory for all deductors
• With this change, we should also now expect procedural changes related to
  • Payment of TDS without TAN
  • Issuance of TDS certificate and filing of eTDS statement in the absence of TAN

 TDS @ 5% on interest on rupee denominated bonds – Section 194LD

• The amendment has introduced a new section : 194LD
• This new section is applicable on interest payable on rupee denominated bonds issued by Govt. or an  Indian company
• Such interest is payable between 01-06-2013 to 31-05-2015
• Such interest is payable to FII or Qualified Foreign Investor
• The rate of TDS will be 5%
• For such transactions, provisions of Section 195/196D will not be applicable

No penal rate of TDS for transactions covered under section 194LC

• Section 194LC covers the following payments made to a non resident person or a foreign provided such payment are taxable in India for the payee.
  • Interest except Interest on securities.
  • Other sum except salaries.
• The amendment in Section 206AA provides that even if deductee does not have a PAN, tax under section 194LC will be deducted at prescribed rate of 5% and penal rate of 20% will not be applicable

Gold coins covered under Tax Collection at Source

• Effective July 2012 TCS is applicable , if sale consideration of bullion exceeds Rs. 2 lac and part or full consideration is paid in cash. However sale of gold coins weighing 1o grams or less were not considered for the purpose this limit of 2 Lacs
• The amendment now makes  even sale of gold coins or other articles weighing 10 grams or less will be subject of provisions of tax collection at source, effective June 1, 2013

New Form 16

• Revised Form 16 has been notified vide Notification 11/2013 dated 19.02.2013
• Form 16 has two distinct parts
  • Part A : contains details of tax deduction and deposit
  • Part B : contains details of salary and total income
• Form 16 has to be issued on or before May 31, 2013 in respect of Financial Year 2012-13

Procedure for Issuance

• Form 16A , TDS in respect of other than salaries is to be issued quarterly only by downloading the same from TRACES web site. ( Circular 01/2012)
• There was no such requirement in respect of Form 16
• Now vide Circular 04/2013, a deductor is required to issue
  • Part A of Form 16 by downloading the same from TRACES web site
  • Part B of Form 16 is to be issued by deductor manually
• Form 16 generated from TRACES will contain unique TDS Certificate Number
• Form 16 by Govt. deductors, who make TDS payment by book entry , is also to be issued by generating and downloading from TRACES

Authentication of Form 16

• Form 16 must be signed manually or using digital signature

Analysis

• Issuing Form 16 will be a challenge for deductors for FY 2012-13, as this involves two distinct parts being issued from two different sources
• Part A will have to be generated and downloaded from TRACES. Part B will have to be prepared manually or using a third party software.
• The deductee should not feel that two different parts are being given
• Software vendors will have to provide utility to merge two Parts created in PDF formats  to make it easier for deductors to issue Form 16

There is no change in tax rate or slabs. However surcharge has been proposed as follows

TDS Rates

There is no change in rates of TDS

Surcharge and cess is to be considered while deducting tax at source in respect of

• payment to non-residents and non-domestic companies
• payment of salaries

Raising of limit of eligible premium on insurance policies- Sec, 80C

Currently deduction under section 80C in respect of premium paid on life insurance policy is allowable only if such premium does not exceed 10% of sum assured.This limit of 10% is increased to 15% in respect of life insurance policy of a person

• with disability as referred in section 80U or
• with disease as specified in section 80DDB
• Such policy is issued on or after 01-04-2013

Contribution to health schemes – Sec. 80D

Central Government can specify health schemes , contribution to which will be eligible for deduction under section 80D

Rebate of Rs. 2000 on individuals having total income upto Rs. 5 Lac- Sec 87A

An individual having taxable income of upto Rs. 5 Lac , can claim rebate under section 87A of actual amount tax subject to maximum of Rs. 2000

Additional deduction for interest on new home loan- Sec 80EE

A new deduction under section 80EE is proposed as follows:

•  An individual buying residential house for the first time and taking loan from any financial institution can claim this deduction
• Conditions to be fulfilled :

1. The loan must be sanctioned between 1st April 2013 and 31st March 2014.
2. The loan amount should not exceed Rs. 25 Lacs
3. The value of residential house does not exceed 40 Lacs
4. Individual does not own any residential house on the date of sanction of loan

• Amount of deduction is limited to Rs. 1 Lac and is to be allowed only during Assessment year 2014-15. However, if the interest amount is less than 1 lac during AY 2014-15, the balance amount can be claimed during Assessment Year 2015-16
• This deduction is in addition to deduction of Rs. 1.50 Lacs available in respect of interest payment on home loans.

Expansion in scope for Rajeev Gandhi Equity Saving  Scheme- Sec. 80CCG

The scope of scheme is proposed to be expanded from Assessment Year 2014-15  to

•  include investment in equity oriented mutual funds
•  extend deduction to three consecutive assessment years as against one assessment year at present
•  raise threshold from 10 Lac to 12 Lac as gross total income to be eligible to claim this deduction

Donation to National Children’s Fund- Sec 80G

Donations made to National Children’s Fund will be eligible for 100% deduction. This is being increased from 50% applicable as present

TDS @ 1% on transfer of immovable property- Sec. 194-IA

• A new section 194-IA is proposed to provide that
  •  every transferee,
  •  at the time of making payment or crediting of any sum as consideration which is Rs. 50 Lacs and above
  •  for transfer of immovable property (other than agricultural land)
  •  to a resident transferor,
  •  shall deduct tax @ 1% of such sum

• This provision is effective 1st June 2013
• This is applicable even to Individuals/ HUFs not covered under tax audit u/s 44AB
• The purchaser will have to apply for TAN, deposit tax and file TDS statements

Furnishing of TDS Statement under digital signature

• Amendment in Rule 31A provides  for submission of TDS return electronically under digital signature. It also states furnishing of statement alongwith verification of statement in Form 27A  OR Verification through electronic process.
• Currently a very large percentage of TDS statements are filed by visiting TIN facilitation centres and carrying TDS statement in a CD/Pen drive alongwith a signed Form 27A.
• NSDL , has also provided for submission of return online under digital signature , but this requires prior registration.
• We have to wait for new guidelines for online submission under digital signature or verification through electronic process.

Form 26A for Certificate from accountant under section 201

• Under certain conditions, a deductor shall not be deemed to be assessee in default for non deduction of tax at source. One of the conditions is that such deductor will have to produce a certificate from accountant .
• Form 26A has been prescribed for this purpose.
• Director General of Income-tax (System) will specify the procedure , format and standards for furnishing of Form 26A
• We have to wait for new guidelines for submission and verification of Form 26A

New Form 26B for Claim for refund

• If any excess TDS is deposited, the claim for refund now can be filed by the deductor in newly inserted Form 26B.
• This form will have to be submitted electronically under digital signatures.
• Director General of Income-tax (System) will specify the procedure , format and standards for furnishing of Form 26B

Submission of certain details of amounts paid without deduction of tax at source

• Notification 56/2012 dated 31-12-2012 had provided for no deduction of tax at source for certain payments made to banks.
• The amended Rule provides for submission of details of such payments in TDS Statement.
• We have to wait for changes in data structure to be notified by NSDL.

Change in Forms

Changes have been notified in

• TDS/TCS Certificate :  Forms 16,16A,27D
• TDS Statements : Forms 24Q,26Q,27Q and 27EQ
• Declarations for payments without TDS/TCS : Form 15G, 15H, 27C 

We have to wait for changes in data structure to be notified by NSDL to give effect to this change. Detailed analysis of these changes will be discussed in a separate blog.

It is presumed that you have already registered on TRACES web site. If not , please read http://blog.ffcs.in/2012/12/27/traces-deductor-registration-and-login/

When will Form 16A file be available?

• Form 16A text file will be available only after you have submitted regular statement in Form 26Q/27Q and the same has been processed at TDS CPC
• Form 16A files are available from FY 2007-08 onwards

Steps to download Form 16A file

1. Login with your UserId and Password
2. In the main menu ,click Downloads->Form 16A
3. You can either download file for all PANs or for selected PANs. For all PANs ,you need to select FY and Quarter. For Selected PANs, you have to select PANs from the given list.
4. Validation Screen will appear. Enter validation details. This will also generate an authentication code.
5. Details of authorized signatory will be picked up from “profile” and displayed
6. Click Submit
7. File will be available in Download->Requested Downloads

Downloading Form 16A text File

• Click Download->Requested Downloads
• Search option 1 is Request Number . Search Option 2 is Request Date.  Enter requisite details and click “View All”
• All requests will be displayed. Click on the desired row
• Download file either thru HTTP Download or thru Download Manager. HTTP Download is for smaller files while Download Manager is useful for large files and has the capability of resuming download in case of interruption

Entering Validation details

• Enter Token Number for the Form type displayed on the screen. For this you must have acknowledgement copy ready
• Non-Government Deductors must enter Challan Identification Details . The details must pertain to the selected FY, Quarter and Form
• Amount must be entered in 2 decimal places.
• Government deductors must enter BIN details
• Enter any three PAN and Amounts from the CIN/ BIN details. If the number of PANs in the given CIN/BIN is less than three, then enter all such details i.e. one or two
• Click Proceed. An authentication code will be generated
• If for some reason , you need to submit request for download again , you will not be asked to enter validation details again. In such case, you can simply enter “authentication code” and proceed.

Downloading PDF Generator

• Download PDF Generator from Quick Links under Deductor Tab
• If your download is not complete or hangs, try again
• The downloaded file is a zip file. Unzip it and Run. This will install the utility
• Run the Utility
• Please make sure that you have the latest version of PDF generator. As of writing this blog, the version is 1.1. dated Jan 18, 2013

Printing/ Generating Form 16A PDF files

• After you have downloaded PDF Generator and Form 16A text file, run PDF Geneator
• Select Form 16A text file in zip format. Do not unzip it
• Enter TAN as password
• Select Folder where Form 16A PDFs will be saved
• Select Digital Signature file, if you want to digitally sign your Form 16A
• Click Proceed
• Separate PDF will be generated for each PAN in the selected folder

Frequently Asked Questions

Q : While entering Validation details for downloading Form 16A text file, I am getting “invalid details”

A : Unfortunately , TRACES is not giving exact cause of error. The possible causes can be:

• You are entering amount without decimal places
• You have entered incorrect CIN details
• You have entered correct CIN details, but they do not pertain to the given FY, Quarter and Form
• You have entered incorrect PAN/Amount details
• You have entered correct PAN/Amount details, but they do not pertain to given CIN

Q : I am not able to download PDF Generator. It interrupts or gives error messages “Download interrupted”

A :  The only solution is to try again or try on a PC having better internet connectivity

Q : While generating Form 16A PDF file thru PDF Generator, I am getting message “input file is tempered”

A :  Download Form 16A file has a checksum and you may have tried to open it in notepad and edited it. Download again and do not edit anything in the file.

             Crunchy Numbers

• 19,000 people fit into the new Barclays Center to see Jay-Z perform. This blog was viewed about 160,000 times in 2012. If it were a concert at the Barclays Center, it would take about 8 sold-out performances for that many people to see it.In 2012,
• there were 12 new posts, growing the total archive of this blog to 39 posts

• The busiest day of the year was December 27th with 1,809 views. The most popular post that day was TRACES : new TDS web interface from Income-tax Dept..

Attractions in 2012

These are the posts that got the most views in 2012.

1. Form 16 : To be downloaded from NSDL Web Site ? 9 comments May 2012
2. TDS Default Notices : How to avoid Interest Defaults 47 comments August 2011
3. eTDS filing 2012-13 Q1 : FVU 3.5 and new penal provisions 4 comments July 2012
4. Lost TAN Registration Number ? Re-Register 6 comments December 2011
5. TRACES : new TDS web interface from Income-tax Dept. 84 comments December 2012

Comments

Most commented on post in 2012 was TRACES : new TDS web interface from Income-tax Dept.

These were your 5 most active commenters:

1. N. Gopala 19 comments
2. K GANESH NAYAK 11 comments
3. Anand Dhyani 5 comments
4. SUNDARAM.V.V 5 comments
5. Adv sameerkumar 5 comments

Many thanks to each one of you and all other commenters , who made this blog interactive and useful for the visitors

We look forward to serving you again in 2013! Happy New Year!

Registration Process for a new User

The five steps required for registration are described below

Step 1

• Enter TAN for which registration is required
• Enter either Token Number or TAN Registration Number (TRN). Token Number is  the receipt number of an accepted regular statement filed on or after 01-04-2010.  TRN is what was provided by TIN web site earlier during TAN registration on that site

Step 2

• In case Token Number is entered in Step 1 , then you will have to provide  File Hash Value or SAM Hash Value. Both are 20 digit number
• First 14 characters will be displayed in the text box. You need to complete it by inputting remaining 6 digits

Step 3

• In this step the following need to be updated
  • PAN of deductor,
  • Category
  • designation of authorized person
  • Address
  • Email and Phone numbers
• If PAN is available in TAN database, it will be displayed, else it needs to be updated
• Name and Father’s Name of Authorised person will be auto populated based on PAN and Date of Birth of authorized person entered in the provided text boxes
• Address will be populated from TAN database, but can be modified .
• Email and Phone numbers will be stored in TRACES database only.  Apart from regular email ID and mobile number, an alternate email ID and mobile number is also to be updated
• Any modification in the address etc. will be only stored in TRACES and for permanent change of details , deductor need to request the same on TIN web site

Step 4

• In this step, enter a UserID of your choice. Click on “Check Availability” to see if it is available
• Enter password of your choice

Step 5

• A confirmation screen will show the values entered by you. You can edit if anything is incorrect else click Confirm
• On clicking Confirm, the process of registration will be over.

Registration Process for a User already registered on NSDL TIN Site

• A user already registered with NSDL TIN site is a migrated user
• Such users will have to first time login with user ID and password as used on TIN web site
• After successful login a few additional details which are not migrated will have to be updated

 Activation

• Both new user and migrated user will have to activate the account
• Activation email will be sent at the email Id given during registration. An activation code will also be sent through sms on the registered mobile number
• The email will contain a link for activation and activation code. Click on the link
• An activation screen will appear and you need to enter User ID and activation code as sent through email and sms.
• On correct submission of values “Activation Successful” message will appear
• The activation must be done within 24 hours of registration.  If not then you will have to register all over again

Login

• Once activation is successful, you can login anytime with your  user Id and password

Precautions

For a smooth and hassle free registration , it is necessary to

• provide correct email ID and mobile number
• activate within 24 hours

TRACES will integrate the following components

• Tax information Network
• Automated TDS Challan Matching
• TDS Defaults Processing
• IVR/ Call Centre
• Web Portal

New Web Portal :  https://www.tdscpc.gov.in

The new portal has been created using latest technology to enhance swift interaction between the deductor, deductee, income-tax department and CPC. The following features are/ will be  available to deductors and deductees

• Dashboard giving summary of Deductors account
• Online registration of TAN
• Online filing of TDS Statements
• Online corrections of TDS  statements
• Default Resolution
• View Form 26AS
• Download Form 16/16A/Consolidated TDS File
• Grievance registration and resolution

Not all of the above features have been activated so far

NSDL web site V/s TRACES web Site : Current Status

Currently several online services are provided to deductors and deductees on TIN  site by NSDL.  The following table presents various services at both the sites

Registration at TRACES

• Users who have already registered at NSDL TIN site, need not register again on TRACES. Their registration details are migrated and they can login at TRACES with their NSDL-TIN login details
• Fresh registrations on NSDL site have been stopped
• New registrations can be done at TRACES site and online help is available under the FAQ link

It appears; gradually TRACES will become the only site for deductors and deductees. As more features appear and existing features understood, we will keep sharing the information with you

Effective Date

• FVU version 3.6 will be mandatory w.e.f October 16, 2012.
• Upto October 15, 2012 FVU version 3.5 and FVU version 3.6 will be applicable.
• This means for Q2 of FY 2012-13, both FVU 3.5 and FVU 3.6 will be accepted, if filed on or before October 15, 2012.

Challan File is now mandatory during validation

• Upto FVU version 3.5 , challan file ( with extension .csi ) was optional.  With version 3.6 , this file will be mandatory while validating eTDS file
• The challan file can be downloaded from TIN web site under the link Challan Status Enquiry
• This file will be required only if TDS is deposited through challans. Hence, Govt. deductors who do not use challan for depositing TDS will not be required to provide challan file during validation
• Challan file is required for validating regular statements. For correction statements , it is required only when a new challan is added or existing challan is updated

Changes in Form 24Q : TDS on Salaries

• For Q4 Salary details are to be provided in Form 24Q.
• The exemption limit for senior citizens above age 80 is different from senior citizens above 60 years and upto 80 years.
• A separate flag is now to be given for such senior citizens , appropriately termed as “Super Senior Citizens”

• This categorization is applicable from FY 2011-12 onwards. However, since the eTDS Statements for Q4 2011-12 have already been filed upto May 31, 2012, this requirements may be applicable for those filing delayed statement or filing correction statement

Changes in Form 26Q : TDS on other Payments

• TDS not deducted on software purchases in terms of Notification 21/2012 is now to be reported separately.
• Above notification exempts a deductor from making deduction of tax at source, if software ( without any modifications ) is acquired in a subsequent transfer and tax has been deducted on previous transfer of software. For more details please read   http://blog.ffcs.in/2012/08/14/tds-on-purchase-of-standard-software/
• For this purpose flag “S” is to be mentioned in the field “Reason for NIL/ Lower deduction” for transactions pertaining to section 194J
• This requirement is applicable from FY 2012-13 onwards only

Changes in Form 27Q : Payment to Non – Residents

• TDS not deducted on software purchases in terms of Notification 21/2012 is now to be reported separately.
• Above notification exempts a deductor from making deduction of tax at source, if software ( without any modifications ) is acquired in a subsequent transfer and tax has been deducted on previous transfer of software. For more details please read   http://blog.ffcs.in/2012/08/14/tds-on-purchase-of-standard-software/
• For this purpose flag “S” is to be mentioned in the field “Reason for NIL/ Lower deduction” for transactions pertaining to section 195
• This requirement is applicable from FY 2012-13 onwards only
• Two additional codes are introduced for the following sections

Changes in Form 27EQ : Tax Collection at Source

• The following additional codes are prescribed