Home » Posts tagged 'Tax Deducted at Source'

Tag Archives: Tax Deducted at Source

File Validation Utility (FVU) 4.2 and 2.138 – Applicable from 26th April 2014

It’s the start of Tax compliance Season  and as with the last 3 quarters, there is a new FVU. NSDL came out with the latest  utility on 25th April 2014 late evening

FVU Applicability

Date Applicable from FVU Version
From 26th April 2014 4.2 & 2.138
Till  25th April 2014 4.1 & 2.137

Through the new FVU  the following changes/validations have been brought in place:

NIL Returns

Applicable Forms – 24Q

  • A Deductor would now be able to file NIL returns for all years
  • Since FVU 4.0, there was a lot of confusion on the filing on NIL returns
  • It’s still not clear whether NIL returns need to submitted for other Forms

Unique Acknowledgement Number (UAN)

Applicable Forms – 27Q

  • UAN refers to the acknowledgement received on successful filing of Form 15CA
  • The new utility now allows a User to key in alphanumeric values from 12 to 15 characters

Validation in the absence of Deductee’s PAN

Applicable Forms – 24Q

  • It’s well understood that, in case a Deductee doesn’t have a PAN, TDS needs to be deducted at higher of 20% or applicable rate.
  • This point was not being checked till the previous FVU filings.
  • Henceforth, the new Utility would now be validating this feature (i.e – If a Deductee does not have a PAN, and if the TDS deducted amount is less than 20%, the FVU would show an error

* Points expressed here are the Author’s interpretation. This cannot substitute Expert advice

File Validation Utility (FVU) 4.1 and 2.137 – Applicable from 04th January 2014

NSDL came out with a new FVU late evening yesterday 02nd January 2014

FVU Applicability

Date Applicable from FVU Version
From 04th Jan 2014 4.1 & 2.137
Till  03rd Jan 2014 4.1 & 2.137 and 4.0 & 2.136

Points introduced in the new version are:

Deletion of Deductee Record

Applicable Forms – 24Q, 26Q, 27Q, 27EQ

  • Deletion of Deductee’s records (in Correction Return) is no longer permitted.
  • Till the prior FVU versions Deductee records could be deleted, while filing the Correction Return.
  • Henceforth a Deductor would be required to modify the particular Deductee  details in the Correction return and enter zero against the following fields:
    • Amount of payment
    • Amount of Deduction
    • Amount of Deposit
    • Rate of Deduction
    • Date of Deduction should be blank

Form 27A

  • Form 27A is used for providing summarized information with the Statement of Tax deduction/Tax Collection at source.
  • Now on, the Form 27A would be auto generated on creation of the .fvu file
  • The new Form27A also contains a barcode (refer file attached)

27A

Date of Tax Deduction and/or Tax Collection

Applicable Forms – 24Q, 26Q, 27Q, 27EQ

  • Going ahead transactions, on which tax is deducted prior to the filing period, cannot be included in the TDS return.
  • Ex – In the Dec 2013 quarter, a Deductor cannot include a TDS deduction entry prior to 01st October 2013
  • Earlier there were no restrictions and one could declare transaction related to previous quarter in the subsequent filing quarters
  • Now on, a Deductor is required to file a Correction return, if they have any (such) transaction relating to previous filing periods.

Challan/Transfer Voucher validation

Applicable Forms – 24Q, 26Q, 27Q, 27EQ

  • Challan amount should be more than or equal to total of Tax deducted, interest payments, late filing fees and other amounts.
  • i.e – No challan can be submitted with a short payment
  • Ex –  Assume a scenario as below:
TDS Amount 10,000
Interest  5,000
Other Amount  4,000
Fees  1,000
TOTAL 20,000
  •  In this case, the Challan amount has to be more than/equal to Rs. 20,000

* Points expressed here are the Author’s interpretation. This cannot substitute Expert advice

File Validation Utility (FVU) 4.0 and 2.136 – Applicable from 01st October 2013

NSDL came out with FVU version 4.0 and 2.136  on 25th September 2013.

FVU Applicability

Date Applicable from FVU Version
From 01st Oct 2013 4.0 & 2.136
Till 30th Sept 2013 4.0 & 2.136 and3.9 & 2.135

 

 

Points added/introduced in the new version are:

Nil Challan/ transfer vouchers

Applicable Forms – 24Q, 26Q,27Q, 27EQ

  • In case of Nil Challan/ transfer vouchers, it’s now mandatory to update reasons for such non deduction
  • Along with entering all the other transaction details one now needs to, also, update either of the following flags “A/B/S/T/Y/Z” in the ‘Reason for Non deduction/Lower deduction’ field
  • It needs to be seen how one treats a situation where there are no transactions in a quarter.

Section 194LD

Applicable Forms –27Q

  • As per Section 194LD, introduced in the Finance Bill 2013, TDS @ 5% needs to be deducted on interest payments for Rupee denominated bonds issued by the Government of India or any other Indian company.
  • TDS would be applicable on all such interest payments made from 01st June 2013 till 31st May 2015
  • These payments are made to Qualified Foreign Investors (QFI) and/or Foreign Institutional Investors (FII)

Section 194LC

Applicable Forms –27Q

  • Section 194LC covers following payments made to non residents
    • Interest (other than interest on securities) and
    • Other payments except for salary
  • Now onwards only an Indian Company or it’s Branch, may deduct TDS under this section
  • Earlier this Section was open to use by all Deductors. Ex – Company, AOP, BOI etc
  • It’s still not clear on how Deductors (apart from Company or Branch) deal with payments under this Section

Section 194LC (Correction Statement)

Applicable Forms –27Q

  • Pursuant to the change in this FVU, Correction Statement may be filed, only, if there are any changes in the existing Challan or Deductee or in case a new challan has been paid.
  • Under the ‘Correction Type’ field, Deductor may only use
    • C2 – Correction in Deductor and/or Challan details
    • C3 – Change in Deductor, challan, and/or Deductee details
    • C9 – Additional Challan payments
  • This change is applicable from 2012-2013 onwards

Provisional Receipt Number (PRN)

Applicable Forms –24Q,26Q,27Q,27EQ

  • It is now mandatory to mention the PRN for all Regular statements
  • PRN from the last filed Regular Statement (for the same Form) needs to be quoted
  • Ex – In case a Deductor is filing Form 24Q for quarter ending June 2013, he has to mention the PRN from previous period, would henceforth be required to mention their PRN

Date of Challan Deposit

Applicable Forms –24Q, 26Q, 27Q, 27EQ

  • Surplus challan payments, from the immediate previous financial year (FY), may now be adjusted against current year dues. Eg – While filing returns for FY 2013-2014, one can use the surplus from the previous FY 2012-2013
  • Surplus arising from any year prior to the previous FY cannot be entered
  • A Deductor would now be allowed to enter details of surplus payments made in the previous FY
  • Excess payments from previous FY occurring on account of Book entry adjustments, would not be allowed

FVU 3.8 : Key changes effective July 2013

NSDL has released FVU version 3.8 effective July 1,2013. There are some important changes in the data structure of eTDS statement. Several new fields have been added,  few fields removed effective FY 2013-14 .

Major changes and data structure amendments are explained in this blog.

Challan Amount Allocation

  • Till now Section code was mentioned in the Challan sheet and deductee sheet only had reference of the challan. Hence all dedcutee records pertaining to a particular challan number were considered belonging to section code of the challan.
  • This posed problem for deductors who had combined two or more sections while depositing challans. While a workaround to take care of this situation was available, it was difficult for deductors to comprehend and put into practice.
  • Now there is no need to mention Section Code in the challan sheet and the same has been shifted to deductee sheet.
  • This means that a challan amount deposited can be allocated to deductees belonging to different section codes. The only restriction being those sections must be valid for that particular form. Hence a section code pertaining to Form 27Q cannot be mentioned in Form 26Q

Income and Tax deducted by Previous Employers in Salary Details

One of the main deficiency in data structure so far no place to mention tax deducted by previous employer. This was a cause of confusion for employers as they were supposed to consider tax deducted by previous employer while computing tax deductible , but no place to mention the same in eTDS Statement. This has been addressed now by incorporating the following fields in Q4 Form 24Q

  • Reported Taxable Amount on which tax is deducted by previous employer(S)
  • Reported amount of Tax deducted at source by previous employer(s)/deductor(s)

Discontinuation of “Y” type correction.

  • So far a regular statement filed can be cancelled by filing a Y type of correction statement.
  • This is being discontinued now. Hence a regular statement once filed cannot be cancelled

Discontinuation of quarterly TDS/TCS statements (regular and correction) pertaining to FY 2005-06 and 2006-07.

  • Currently there was no time limit for filing regular or correction statements.
  • Now no regular statement  or correction statement for FY 2005-06 and 2006-07 can be filed.
  • This means a deductor can still file regular and correction statements for past 6 years i.e  2008-09 to 2012-13

Other Changes : Common across all forms

 Deductors Details

Additional details to be provided

  • TAN Registration Number
  • Alternate Phone number and email ID of deductor
  • Alternate Phone number and email ID of Responsible Person
  • Accounts Office Identification Number in case of Governement Deductors

Challan Details

  • The following fields are not to be mentioned starting Financial Year 2013-14
    • Section Code
    • Cheque / DD Number
  • Total amount deposited as per challan has to be in rupee, no paise allowed
  • A new field for entering  fee paid in terms of Section 234E is introduced. Applicable for FY 2012-13 onwards
  • A new field for entering Minor head of challan . Valid for FY 2013-14 onwards and mandatory

Deductee Details

  • A new field to enter “Deductee Reference Number “ where PAN is not available
  • Book Entry / Cash indicator is to be given only upto FY 2012-13
  • Section Code is to be mentioned for each deductee starting FY 2013-14
  • Certificate Number issued by the AO under section 197 for non-deduction / lower deduction is to be mentioned

Other Changes : Form Specific

Form 24Q : Salary Details

New fields added

  • Taxable Amount on which tax is deducted by the current employer
  • Reported Taxable Amount on which tax is deducted by previous employer(S)
  • Total Amount of tax deducted at source by the current employer for the whole year [aggregate of the amount in column 323 of Annexure I for all the four quarters in respect of each employee]
  • Reported amount of Tax deducted at source by previous employer(s)/deductor(s) (income in respect of which included in computing total taxable income in column 344)
  • Whether tax deducted at Higher rate due to non furnishing of PAN by deductee

Section code changes

Nature of Payment Section Section code to be used in the return
Payments made to Govt. employees other than Union Govt. employees 192 92A
Payments made to employees other than Govt. employees 192 92B
Payments made to Union Govt. employees.Applicable from for statement pertaining to FY 2013-14 onwards. 192 92C

Form 26Q

Bifurcation to be given in respect of deduction under section 194I

Nature of Payment Section Section code to be used in the return
Payments in respect of use of any machinery or plant or equipment; 194I ( a) 41A
Payments in respect of use of any land or building 194I ( b) 41B
  • Reason for lower/Nil Deduction : In case of no deduction on account of payment under section 197A (1F), applicable from FY 2013-14 onwards, ‘Z’ is to be mentioned.

Form 27Q : Deductee Details

New fields introduced

  • if TDS Rate is as per income-tax Act or DTAA :  Enter A : If TDS rate is as per Income Tax Act   or B : If TDS rate is as per DTAA
  •  Nature of remittance as per given 66 codes
  •  Country to which remittance made as per given 286 codes
  •  Unique Acknowledgement Number of Form 15CA , if available

Form 27EQ : Deductee Details

If there is non collection in terms  section 206c(1A) , update  flag ‘B’ in the field “Reason for lower/non-deduction”

Notification 11/2013 : Amendment in TDS Rules

CBDT has issued Notification No 11/2013 dated 19-2-2013 , which  is being explained and analysed in this blog.

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.

TRACES : new TDS web interface from Income-tax Dept.

TRACES stands for TDS Reconciliation Analysis and Correction Enabling System and has been set up by TDS Centralised Processing Cell of the income-tax department.

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

1

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

Budget 2012 and TDS Provisions

        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 1st 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

Follow

Get every new post delivered to your Inbox.

Join 1,614 other followers