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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”

Section 194-IA : TDS on sale of immovable property : Compliance procedure

The Finance Bill 2013 has introduced a new section 194-IA providing for TDS @ 1% to be deducted by purchaser. In case valid PAN of seller is not available , tax deduction will be at higher rate of 20%.

This is applicable w.e.f  June 01, 2013  for sale of immovable property ( other than agricultural land ) where consideration is Rs. 50 Lacs and above. The purchaser is exempt from the obligation to obtain TAN, which is otherwise mandatory for all deductors.

CBDT has issued Notification No. 39/2013 on 31st May 2013 amending rules to simplify procedure for complying with provisions of this new section.

TDS-194-IA

Deposit of tax

Any tax deducted under section 194-IA will be

  • Deposited within 7 days from the end of month in which tax was deducted
  • Deposited by way of Challan-cums-statement in Form 26QB
  • Deposited electronically into RBI/SBI or any authorized bank. Director General of income-tax (Systems) will specify formats , standards and procedure for such electronic remittance

TDS Certificate

  • TDS Certificate in respect deduction under section 194-IA will be issued by deductor in Form No 16B
  • Form 16B has to be issued within 15 days from the due date of depositing tax
  • Form 16B will have to be downloaded from income tax web portal

Mandatory Electronic Payment

  • NSDL site has already provided a new link “TDS on sale of Property” under ePayment of Taxes to electronically deposit such TDS
  • It is mandatory to provide PAN of both transferor and transferee
  • Complete address of transferor and transferee is to be given
  • About property , complete address,  value consideration ,date of agreement  and whether payment made in lump sum or installment is also to be provided in the online form

Electronic Payment by deductors not having net-banking facility

  • Since Section 194-IA transactions will be one off and deductor may not have net-banking facility, an alternate has been provided.
  • The deductor has to fill the information online and then opt for e-tax payment on subsequent date option.
  • On completing the form, an acknowledgement will be generated.
  • The deductor can then visit a bank branch for payment, provide the acknowledgment number.
  • Bank will use TIN web site to retrieve payment information based on the acknowledgement number and then proceed to make electronic payment

What if there is an error in providing PAN details

  • Deductor must be very careful in filling up PAN details.
  • In case wrong PAN is entered, there is no facility of correcting the same online. The only option available is to approach the Assessing Officer or TDS-CPC

FVU 3.71 : Key Changes Effective May 2013

File validation utility 3.71 has been released on May 7,2013

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.

Finance Bill 2013 Amendments : TDS Provisions

Finance Bill 2013 was passed by Lok Sabha on 30-04-2013. The following amendments ( in respect of TDS/TCS Provisions ) were carried out to the original Finance Bill presented on Feb 28,2013

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

Form 16 Part A to be downloaded from TRACES portal

Income-tax department has issued Circular No 04/2013 dated April 17, 2013 in respect of Form 16.

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

Budget 2013 and TDS Provisions

Tax Rate and Slabs

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

Description

Existing Surcharge

Proposed Surcharge

Domestic Company having income exceeding 1 crore but not exceeding 10 crore

5%

5%

Domestic Company having income  exceeding 10 crore

5%

10%

Non-Domestic Company having income exceeding 1 crore but not exceeding 10 crore

2%

2%

Non-Domestic Company having income  exceeding 10 crore

2%

5%

Others having income exceeding Rs. 1 Crore

NIL

10%

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

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.