New TDS Procedures
Study Circle Meeting
Bangalore Branch of SIRC of ICAI
18th June 2009
Introduction:
Parliament has the power to make laws with
respect to income tax. This power extends
making of laws with respect to collection of
income tax. Parliament has delegated the
rule making power to CBDT. Power to make
rules also extends to power to amend the
rules or to make new rules. Accordingly,
CBDT has amended rules dealing with
deduction and collection of tax at source.
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Introduction..
Broadly, the amendments carried out relate to;
1. Rule 30 dealing with time and mode of payment of TDS to
Government account.
2. Rule 31 dealing with certificate of TDS.
3. Rule 31A dealing with Quarterly Statements of deduction
of tax.
4. Rule 37BA dealing with credit for tax deducted at source.
5. Rule 37BB dealing with TDS under section 195.
6. Rule 37CA dealing with time and mode of payment of
TCS.
7. Rule 37D dealing with certificate of TCS.
Let us try to understand these rules by way of a question and answer
session.
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Q .What is the reason for bringing about the
amendments regarding TDS and TCS ?
A.The Act has been amended to provide for a
scheme of centralized processing of the
Returns. (143(1A). This is intended to
expeditiously determine the tax payable or the
amount refundable under Section 143(1).
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Q . What is centralized processing of return?
A. Income tax returns, wherever filed, will be
processed in one centre, irrespective of the
place where it is filed and the jurisdiction AO.
In other words, it is a location neutral and
jurisdiction-neutral processing.
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Q . What is meant by “processing of return”?
A. Processing of return means ;
a)
Computation of total income or loss after making adjustments for
arithmetical errors and incorrect claims apparent in the return;
b)
Determination of tax and interest;
c)
Determination of sum payable or the amount refundable to the
assessee;after adjusting the TDS, TCS, advance tax, self
assessment tax, etc. (pre-paid taxes).
d)
Preparation of an intimation specifying the sum payable or
refundable.
e)
Granting of refund due to the assessee. (section 143(1).
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Q . Where is the Central Processing Centre (or
CPC) situated?
A. It is situated in Electronic City, Bangalore.
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Q . What is the essential requirement of a
Centralized Processing Scheme?
A. The essential requirement of Centralized
Processing Scheme is the integrity of database;
integrity refers to correctness, completeness and
wholeness. Database refers to the information
relating to the assessee, tax deducted at source,
tax collected at source, advance tax and self
assessment tax.
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Q . What are the essential features of a CPC?
A. No interface with the tax payer and
automated jurisdiction-less processing.
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Q . What are the safeguards (security measures)
adopted by the department to give credit for TDS
/ TCS?
A. Credit will be given to the deductee only if all the
following 3 conditions are satisfied;
a) amount has been deposited by the deductor / collector
through internet banking facility.
b) information relating to the deductee has been furnished
by the deductor / collector in form No. 17 (remittance
challan and
c) claim of the deductee / collectee in the income tax
return matches with the information furnished by the
deductor / collector.
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Q. How does the department verify the
advance tax and self assessment tax?
A. By cross verifying the claim made by the
assessee with the Challan Identification (BSR
+ date + sl. No.) number and the PAN.
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Q. Is there any change in the procedure for
remitting advance tax and self assessment
tax?
A. No.
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Q. Is there any change in the challan used for
remitting advance tax and self assessment
tax?
A. No. The existing challan no. 280 will
continue.
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Q. What were the pitfalls in the existing system
of giving credit for TDS and TCS?
A. The existing system is manually operated.
Volume of TDS and TCS transactions are
large. Therefore, 100% verification was not
possible.
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Q. How the drawbacks of the existing system
are sought to be addressed?
A. By adopting an information technology driven
risk management system. Under this
process, department verifies 100% of the
transactions relating to tax payments, TDS
and TCS.
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Q. Why the present system of quoting PAN for
giving credits for TDS and TCS is considered
inadequate?
A. Quoting of PAN is deficient or inadequate.
Numerous mistakes are made in quoting
PAN. Therefore, it is not possible to match
the claim made by the deductee asseee with
TDS information furnished by the deductor.
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Q. How this is sought to be set right?
A. By allotting a Unique Transaction Identification
number (UTN).
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Q. What is UTN?
A. It is a number assigned by NSDL for each
TDS file.
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Q. What are the peculiarities when the Central
Government is the deductor?
A. They do not make payment of TDS amount
to banks. They do it through book transfer.
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Q. What are the pecularities when the State
Government is the deductor?
A. In the case of State governments, the
Accountant General makes the consolidated
TDS payment to RBI.
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Q. What are the changes brought about in the
new system in relation to the government
departments?
A. In the new system, even the Central and
State Governments are required to deposit
the TDS and TCS amount with the bank.
Also, they are required to file the statements
and returns (TDS/TCS) like other deductors.
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Q. Under the new system what are the due
dates for paying the TDS/TCS?
A. In general, it is one week from the end of the
month in which deduction or collection is
made.
If the crediting is done on the last day of the
accounting period, it is within two months
from the end of the month in which the
amount is so credited (Rule 30 and 37CA)
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Q. How the payment of TDS / TCS is to be
made?
A. TDS/TCS amounts are required to be
remitted only by electronic remittance
irrespective of the deductor.
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Q. Which are the banks which will accept
electronic remittance of TDS?
A. RBI, SBI, Associates of SBI, Allahabad Bank,
Axis Bank, etc.
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Q. How does one remit the TDS /TCS amount
electronically?
A. 1. Open a net banking account in any of the
following banks.
i.
ii.
iii.
iv.
v.
vi.
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Allahabad Bank
Axis Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
additional bank list in next slide
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22….list of banks
vii. Corporation Bank
xvii. State Bank of Hyderabad
viii. Dena Bank
xviii.State Bank of India
ix. HDFC Bank
xix. State Bank of Indore
x. ICICI Bank
xx. State Bank of Mysore
xxi. State Bank of Patiala
xi. IDBI Bank
xxii. State Bank of Saurashtra
xii. Indian Bank
xxiii.State Bank of Travancore
xiii. Indian Overseas Bank
xxiv.Syndicate Bank
xiv. Oriental Bank of
Commerce
xv. Punjab National Bank
xvi. State Bank of Bikaner &
Jaipur
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xxv. Union Bank of India
xxvi.Vijaya Bank
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22…..electronic remittance process..
2. Go to website http://incometaxindia.gov.in, click on ‘pay’
taxes on-line’.
3. Select the relevant challan (i.e., Challan No. 17).
4. Enter PAN / TAN as applicable. There will be an online
check on the validity of the PAN / TAN entered.
5. Give deductee wise details (name of deductee /
collectee, PAN of deductee / collectee and amount of
TDS / TCS).
6. On submission of data entered, a confirmation screen will
be displayed. After confirmation, it will be directed to
the net-banking site of the bank.
……contd
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22…..electronic remittance process..
7. The taxpayer will login to the net-banking site with the
user id / password provided by the bank for net-banking
purpose and enter payment details at the bank site.
8. On successful payment, a challan counterfoil will be
displayed containing CIN, payment details and bank
name through which e-payment has been made. This
counterfoil is proof of payment being made. The
Challan Identification Number (CIN) on this counterfoil
should be quoted in the Return/statement of TDS/TCS.
9. Print the counterfoil and also save it in the computer if
required.
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Q. How does Form 17 look like?
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Q. Is it necessary to use different challans for
TDS made under different sections?
A. No. One can make consolidated payment
under one form No. 17. The system has
been changed from being section centric to
deductee centric.
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Q. What happens when the TDS / TCS amount
is successfully remitted and the PAN, Name
and TDS amount information is uploaded?
A. The TIN system will assign a unique
transaction number (UTN) to every deduction
record.
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Q. What is a deduction record?
A. The record containing the PAN and name of
the deductee and the amount of TDS / TCS
remitted in his name.
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Q. How will the deductor know the UTNs?
A. NSDL will e-mail the UTN file to the
deductor’s e-mail address.
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Q. Can the deductor download the UTN file
from NSDL?
A. Yes, NSDL will create a facility for the
deductor to download the UTN file.
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Q. Why does the deductor require UTN?
A. The deductor is required to mention the UTN
in the TDS / TCS certificates.
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Q. Can the deductee find out the UTN?
A. Yes, NSDL will create a facility to view the
UTN by the deductee.
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Q. Why does deductee need UTN?
A. Deductee is required to mention the UTN in
his return of income.
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Q. What happens if the deductee does not
mention the UTN in his return of income?
A. The deductee will not be given credit for the
TDS / TCS while processing his return.
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Q. What is TDS and TCS compliance
statement?
A. It is a statement in form 24C prepared in
accordance with rule 31A(1)(a).
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Q. How does form 24C look like?
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Q. Who has to furnish Form 24C?
A. Every person (including Central Government
and State Government) who has obtained
Tax deduction account number or Tax
Collection account number is required to
furnish form 24C.
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Q. Is a person having TAN, but not deducting
any tax at source or collecting tax at source
required to furnish 24C?
A. Yes, Even if such person has not made any
payment liable to TDS, he has to furnish 24C.
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Q. What is the frequency of furnishing form
24C?
A. From 24C is required to be furnished every
quarter.
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Q. What are the due dates for furnishing form
24C?
A.
i.
ii.
iii.
iv.
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24C for April to June by 15th July.
24C for July to September by 15th October.
24C for October to December by 15th January.
24C for January to March by 15th June.
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Q. Whether 24C can be filed in paper form?
A. No. 24C can be furnished only in electronic
form that too by uploading it to TIN.
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Q. Where does one upload form 24C?
A. at http:// www.incometaxindiaefiling.gov.in
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Q. What are the consequences of not filing
form 24C?
A. Penalty prescribed under section 272 A (Rs.
100/day) can be levied.
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Q. Is there any change in the TDS certificate
format?
A. Yes. Both form Nos. 16 and form 16A have
been modified.
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Q. What are the modification in the TDS
certificates?
A. TDS certificates have been modified to
include details of UTNs.
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Q. How does the new form 16 look like?
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Q. How does the new form 16A look like?
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Q. Is there any changes made in the quarterly
statements in form 24Q, 26Q, 27Q and
27EQ?
A. Yes. These quarterly statements have been
modified to include the UTNs.
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Q. Is there any change in the due dates for
furnishing of the above quarterly statement?
A. Yes. Earlier, they were required to be
furnished on quarterly basis. Now, it is
sufficient if such statements are furnished
before 15th June following the financial year.
Thus, these quarterly returns have become
annual returns.
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Q. Can the information relating to the full year
be given in one return?
A. No. They have to be given quarter-wise.
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Q. When do the changes made to TDS and
TCS provisions become applicable?
A. Changes are made through amending rules
30, 31, 31A and 31AA. These will come into
force from 1st July, 2009.
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Q. What method of uploading is to be adopted for
uploading the basic information about the deductee i.e.,
name, PAN and the amount of TDS/TCS in form No. 17?
A. One can adopt the screen based uploading or alternatively
the file based uploading.
Screen based uploading means uploading electronically
filled in challan without any attachment.
File based uploading means uploading the electronic
challan in form no. 17 with an attachment of a file
containing the basic information. As per form 17, where
number of records exceed 10 then, there is a requirement
to give the information in a separate file and attach it to
form no. 17.
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Q. The new system is stated to be effective from
1st April, 2009, whereas, the details of the new
system is made available only now. What
happens to the TDS already remitted?
A. The scheme provides that TDS made up to 31st
May shall be paid using the old challan in form
281. However, the scheme also provides that in
respect of such payments, the deductor shall fill
up form no. 17 and upload the same between
1st July, 2009 to 15th July, 2009.
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Q. What is the purpose of filing form no. 17 all over
again?
A. The unique transaction number can be
generated for a TDS only if form no. 17 is filed.
Therefore, in order to enable the deductee to
claim credit of the TDS / TCS, it is necessary
that form 17 is uploaded in respect of TDS made
up to 31st May, 2009.
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Q. What happens if the TDS is made before 31st
May, 2009 but, it is still pending remittance?
Should the deductor pay the amount using the
old form 281 or new form no. 17?
A. Since uploading of form no. 17 is mandatory
even if form 281 is filled it would make sense to
remit the amount only by using form no. 17.
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Q. Is it required to file form no. 17 separately in
respect of each payment of TDS made prior to
31st May, 2009 or can one form no. 17 be
uploaded using an attachment file containing the
basic information?
A. It is sufficient if one electronic form no. 17 is
filed for all the TDS / TCS made during the
period from 1st April, 2009 till 31st May, 2009.
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Q. Whether the amount of TDS / TCS can be split into
smaller amounts and deposited at different points of
time; for eg; if the TDS is Rs. 1 lakh can it be split into 4
payments of Rs. 25,000 each and deposited through
separate challans in form no. 17 at 4 different times?
A.Yes. This facility is available and the deductor is entitled
to do the same. However, in such cases, there will be 4
different UTNs that will be generated and which are
required to be mentioned in the TDS certificates by the
deductor and in the return of income by the deductee.
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Q. It is mandatory to mention the UTN in the return of income to get credit for
TDS / TCS. The deductor has already remitted the TDS / TCS during the
regime when UTN was not there. Under these circumstances, how does
the assessee quote UTNs in his returns of income?
A. Based on the quarterly returns like form no. 24Q, form no. 26Q, form no.
27Q, etc., NSDL will assign UTN for every TDS and TCS transaction
records in the financial years 2007-08 and 2008-09. Thereafter, NSDL will
mail the UTN file to the deductor. The deductor is expected to forward the
UTN details to the deductee. In addition, the deductor can also download
the UTN file from the NSDL website and thereafter, he can forward the UTN
to the deductee. However, if the deductor has not yet issued TDS
certificates, he can incorporate the UTN in the TDS / TCS certificates and
forward it to the deductee. There will also be a facility where under the
deductee can independently view the UTNs relating to him. The deductee
i.e., the assessee claiming credit for the TDS / TCS can utilize any of the
above facilities and obtain the UTNs and quote the same in his return of
income.
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Q. What happens if TDS certificates have already
been issued before the announcement of the
new scheme in the old form no. 16 and form no.
16A?
A. In such cases, the deductor is expected to
obtain the UTN from NSDL either by mail or by
downloading and forward the same to the
deductee.
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Q. Is there any extension of time given for issuing
TDS certificates for 2008-09 in new form?
A. If the deductor chooses to issue TDS/TCS
certificates in the new form i.e., form no. 16,
form no. 16A and form no. 27D, he can issue it
before 30th June, 2009.
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Q. Are there any changes with regard to time of payment of
TDS?
A. Yes. Now there is a new scheme under which TDS
payment can be made once in a quarter instead of
paying it before 7th of the month following the month in
which TDS is made. The details of the scheme is
provided in rule 30(2). It is applicable in respect of TDS
from salaries, TDS from interest, TDS from insurance
commission and TDS from commissioner brokerage.
One can pay the amount quarterly as above after
obtaining permission from the AO, who can grant the
permission only after obtaining prior approval of Joint
Commissioner.
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Q. Is similar facility available for tax collection
at source?
A. No. The above scheme is available only for
TDS.
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Q. Are there any changes made in the
procedure for deducting tax at source in
respect of payments made to non-residents?
A. Yes. The earlier procedure of obtaining a
certificate from the Chartered Accountant in
the form prescribed in Circular No. 10/2002
and also the format of the undertaking
mentioned in the same circular have been
replaced with form no. 15CB and 15CA.
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Q. How does 15CA look like?
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Q. How does 15CB look like?
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Q. What is the procedure to be followed before
remitting the amount to the non-residents?
A. The remitter should first obtain the certificate from a
Chartered Accountant in form 15CB and on that basis,
deduct the tax at source and furnish form 15CA
electronically to the website designated by the income
tax department. A signed print out of such uploaded
form 15CA should be submitted to the authorized dealer
prior to making the foreign remittance.
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Q. What is the procedure to be adopted in case
income is received by one person but, it is
assessable in the hands of another person?
A. The person receiving the income should file a
declaration with the person responsible for paying
the income giving the name, PAN number, etc., of
the person in whose name the income will be
assessed. On that basis, the person responsible
for paying the income shall mention the name of
the other person in form no. 17 (challan uploaded
to the TIN) and accordingly, credit for the amount
of TDS will be given to the other person in whose
hands the income will be assessed.
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Q. What is the mechanism for claiming credit
for the TDS which is made in respect of an
income which is assessable over a number of
years?
A. Rule 37BA(3) provides for proportionate
credit for the TDS amount proportionate to
the income assessed for each assessment
year.
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and Now
LET US MOVE TO
NEW INCOME TAX RETURNS
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