TDS certificate in Form 16 has two parts

• Part A which contains details of tax deducted and deposited by the employer
• Part B which contains details of income of the employee and tax thereon alongwith annexure containing tax deposit details

Form 16 on TIN Web Site

Part A  and Annexure  of Part B of Form 16 can be downloaded From TIN from F. Y. 2011-12 onwards.  However Part B of Form 16 will have to be issued by the employer

Is it mandatory to download Form16 from TIN Web Site

Income tax department has not issued any circular in this respect. Only Form 16A is to be compulsorily issued by downloading the same from TIN Web site

Hence it is optional for deductors to download Form 16 Part A from TIN Web site, but it will be a good practice as employees will clearly know the credit of TDS amount

Form 16A for Financial Year 2012-13

• CBDT  has issued Circular 01/2012 in respect of issue of Form 16A for FY 2012-13.
• Every deductor has to now issue Form 16A which are generated through TIN system and downloaded from TIN web site.
• This is applicable even to Government deductors who deposit TDS in the central government account through book entry.

Form 16A for Financial Year 2011-12

• CBDT had issued Circular 03/2011 on May 13, 2011   
• For the following categories of deductors,  it is mandatory to download Form 16A from TIN Web Site and issue such downloaded certificates to deductees : Companies , Banks and  Co-operative society engaged in banking business
• For other deductors, it is optional to download Form 16A from TIN Web site

Procedure for downloading Form 16A from TIN-Web site

This procedure is already explained in our previous blog .

http://blog.ffcs.in/2011/05/27/how-to-download-form-16a-from-tin-web-site/

April 9, 2012

Welcome to Thomson Reuters

We are delighted to announce that the tax software business of Fast Facts is now part of Thomson Reuters, the world’s leading provider of intelligent information for businesses and professionals. As a valued Fast Facts customer, we wanted to share this news with you personally.  As a result of this exciting development, Thomson Reuters South Asia Private Limited has assumed and will carry out the rights and obligations of Fast Facts under those agreements (from the date of acquisition) that have been transferred to Thomson Reuters South Asia Private Limited under the acquisition.

 Thomson Reuters plans to invest further in the development of Fast Facts’ tax products and integrate them into their current tax and accounting product offerings. This is a tremendous opportunity for you as a customer as we will have the ability to create a comprehensive corporate tax software solution for the Indian market. We will keep you informed as these plans unfold.

Most importantly, we want to assure you that the quality of service you have come to expect from Fast Facts will continue to be our priority going forward. Your services and support will remain unchanged. The same Fast Facts tax solutions you’ve relied on will continue to be available to you. For support, please continue to contact your current representative.

We look forward to expanding our relationship with you in the future. To learn more about Thomson Reuters, visit our website at www.thomsonreuters.com.

Sincerely,

Dinesh Kumar Tejwani                                                                                     Charlotte Rushton
Founder and Managing Director                                                                 SVP & Managing Director, Asia-Pacific
Fast Facts                                                                                                              Tax & Accounting business of Thomson Reuters

        Summary of provisions related to TDS/TCS

• No tax deduction on interest on securities upto Rs. 5000
• Payment to independent directors covered under section 194J and tax to be deducted @ 10%
• Threshold limit increased from Rs. 1 Lac to 2 Lac for compensation towards compulsory acquisition of immovable property
• New provision for deducting tax at source @ 1% on sale of immovable property
• Senior citizens of age 60 or above can now file Form 15H and claim non deduction of tax at source
• For non deduction, no default if deductee provides proof of taxes paid
• Intimation issued after processing of TDS return will be deemed to be Notice of Demand
• Penalty for non filing or incorrect filing of TDS  statements
• Time limit for passing order for failure to deduct tax increased from 4 years to 6 years
• Tax collection at source on sale of jewellery in cash in excess of Rs. 2 Lac

       Section wise details

Section 193 : Interest on securities : Effective  July 1 , 2012

• Existing provisions provide for threshold limit of Rs. 2500 in respect of interest payable to resident individuals on listed debentures of a listed company and for unlisted debentures there is no threshold
• Amended provision now prescribes a limit of Rs. 5000 in respect of interest payable to resident individuals or HUF for listed or unlisted debentures issued by a public company. For this purpose the payment of interest must be made by an account payee cheque

Section 194J : TDS on fees for professional or technical services : Effective  July 1 , 2012

• The amendment has included payments made to independent directors ( whether by way of fees or professional services or whatever name ) @ 10% of gross payments.
• If the remuneration to director is already subject to TDS under section 192 ( salaries ), then the above provision will not apply

Section 194LA : TDS on compensation on acquisition of immovable property : Effective  July 1 , 2012

• Existing provision prescribe a threshold limit of 1 Lac
• The amendment seeks to increase threshold limit to 2 Lac

194LAA : TDs on payment on transfer of immovable property : Effective Oct 1, 2012

• This new proposed section covers consideration for transfer of immovable property , other than agricultural land
• The deduction has to be made at the time of credit or payment , whichever is earlier
• TDS is required @ 1% of consideration
• Threshold limit for deduction is 50 Lacs for property situated in specified urban areas and 20 lacs in other areas
• Consideration will be actual amount OR value assessed by stamp authorities
• The property document will not be registered unless proof of TDS deposit is attached
• This TDS deduction will not be subject to other provisions like quoting TAN,  submitting eTDS statement , issuing Form 16A. A separate one page form will be prescribed which needs to be submitted to registration authorities

Section 197A :  Non Deduction in certain cases

• Form 15H for claiming of certain amount without deduction of tax at source can be now submitted by a person 60 or above years of age.

Sec. 201 – Consequences of Failure to Deduct or Pay

Increase in time limit  :Effective April 1, 2010

• If a person required to deduct tax at source, does not deduct or after deducting does not deposit the amount, is deemed to be an assessee in default.
• For this purpose an order is to be passed by the Assessing Officer under section 201
• This time limit currently is 4 years from the end of financial year in which payment is made or credit given. The amendment now seeks to increase this period to 6 years and is effective April 1, 2010

Not assessee in default : Effective July 1, 2012

• A person will not be deemed to be assesse in default for failing to deduct tax at source if deductee
  • has furnished income tax return
  • has considered such sum ( on which tax was not deducted at source ) in computing total income
  • has paid tax due on income shown in the return
  • furnishes a certificate to this effect from an accountant
• The deductor however will be liable to pay interest from the date such amount was deductible to the date of furnishing of return by deductee

206C Collection of tax at source : Effective July 1, 2012

• A new sub section (1D) is proposed. A seller who receives any amount in cash as consideration of sale of jewellery  or bullion , will be required to collect tax at source @ 1 % of sale consideration. The threshold for this provision is Rs. 2 Lac
• Sale of minerals like coal, lignite or iron ore will also be subject to tax collection at source @ 1%

Sec  271H – Penalty for Default in Furnishing Statements

• A new section 271H provides for penalty from Rs. 10,000 to Rs. 1 Lac where
  • Deductor fails to file eTDS statements in time
  • Furnishes incorrect information in eTDS statements

Sec 234 – Fee for Default in Furnishing Statements

 Failure to file eTDS statements in time will now entail a penalty of Rs. 200 per day ( instead of Rs. 100 per day )

• No penalty will be levied for delay if TDS statements are filed within 1 year of prescribed due date after payment of tax and interest on delayed deposit

Intimation after processing of TDS Statements  :Effective July 1, 2012

• ·         Intimation generated after processing of TDS statement will be treated a  Notice of Demand u/s 156 ,Rectifiable order u/s 154 and  Appealable order u/s 24A

Provisions pertaining to Non Resident Indians

Section 194E : TDS on payment to non-resident sportsmen or Sports Association : Effective  July 1 , 2012

• Existing provisions provide for TDS @ 10% of gross receipts of non-resident sportsmen or sports association

• Amended provisions not provide for TDS @ 20% of gross receipt of non-resident sportsmen , sports association OR entertainer

Sec. 194-LC – TDS on Interest from Specified Indian Companies : Effective July 1, 2012

• This new section prescribes TDS @ 5% in respect of interest paid by specified companies to non-residents in respect of foreign currency loans

• The borrowing must be made between July 1, 2012 to July 1, 2015 and approved by Central Govt

• The specified companies are those which are engaged in:   Construction of dam ,Operation of aircraft ,  Manufacture or production of fertilizers ,Construction of Port including inland port ,Construction of road, tall road or bridges.Generation, distribution or transmission of power ,Construction of ships in shipyard ,Developing and building affordable housing projects referred to in Section 35AD (8)(c)(vii).

Sec. 195 – TDS on Payments to Non-Residents

• The tds on interest payment covered under this section will not include interest covered under section 194LB and 194LC

• The obligation to deduct tax under this section will apply to residents or non-residents. Even if a non-resident does not have a place of business or any other presence in India. This explanation is retrospective with effect fron 1^st April 1962

• The  Board can issue Notification to specify a class of persons or cases where person responsible for making payment to a non-resident can make application to Assessing Office to determine sum chargeable to tax. This amendment will be effective July 1, 2012

Exemption from filing IT Return

• Exemption is available for employees having income from

1. Salaries
2. 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

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.

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.

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.

1. If a valid PAN  is changed more than once, it is rejected at the TIN.
2. PAN though structurally valid but not found in ITD is rejected at the TIN
3. 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.

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

30^th June                              15^th July                              31^st July

30^th September                 15^th October                       31^st October

31^st December                   15^th January                        31^st January

31^st March                           15^th May                               15^th 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

30^th June                              15^th July

30^th September                 15^th October

31^st December                   15^th January

31^st March                           15^th 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”