TAX DEDUCTION AT SOURCE (TDS )

TAX DEDUCTION AT SOURCE (TDS)

PROVISIONS & PRACTICE28th May 2009

OBJECTIVES OF TDS

Regular inflow of revenue for Government

Checking of tax evasionWidening of tax base

NATURE OF PAYMENTS

S.192Salary

S.193Int.-Sec.

S.194Dividend

S.194AOther Int.

194BLot/CW

194BBHorse race.

194CContract

194DIns. Com.

194ENR Sports

194EENSS

194FMF/UTI

194GCom.Lot.

194HCom/Brok

194IRent

194JProf/Tec.

194K,194LAUnits/C.Acq

PERSONS RESPONSIBLE FOR PAYING-1

ALL persons (Except individuals & HUF in

certain cases)

PERSON RESPONSIBLE FOR PAYING-2

SMALL TIME BUSINESSMAN/ PROFESSIONAL?

W.E.F. 01.06.2002, Individuals and HUFs have to deduct tax at source if turnover exceeds Rs.40 lacs (business), Rs.10 lacs (profession) for payments u/s.194A, 194C, 194H, 194I & 194J.

SPECIFIED PAYEE All persons for specific payments except – a) Quantum of payment/ liability in the

financial year is less than the prescribed limit. b) Certificate issued by A.O. u/s.197 c) the payee has furnished the declaration

in form 15G/15H In case of Non Resident all the payments if

the payment is an income under the Income-tax Act read with DTAA.

DEDUCTION OF TAX Tax is to be deducted at the time of credit or at

the time of payment whichever is earlier, at the prescribed rate

On salary, Tax is deducted on the amount payable at the average rate computed on the income tax rates in force and estimated income.

For payments other than salary, Tax is deducted at a rate prescribed in the statue.

Tax rated are enhanced by Surcharge and Education Cess wherever applicable.

DEPOSIT OF TAX-1 In case of salary –

Within one week from the end of the month in which tax is deducted.

DEPOSIT OF TAX-2

In case of payments other than salary- Within ONE WEEK from the end of the

month.

Payments credited or paid on 31st March (last date of Accounting Year), within two months.

DEPOSIT OF TAX-3

Quarterly Payments in Special Cases

15th June, 15th Sept., 15th Dec., 15th Mar.

Prior approval of JCIT.

TAN The person responsible for deducting tax at

source has to apply for TAN in Form No. 49B within one month from the end of the month in which tax is deducted for the first time.

The TAN should be quoted in all challans, TDS Certificates, Quarterly Returns, statements and correspondence.

SALARIES - Section 192

Under this head tax to be deducted on the payments made by the employer to employees under an contract/ agreement wherein employer and employee relationship is established

Salaries contd... Tax is to be deducted at the time of payment of salaries Deduction of income tax from the amount payable is based on

average rate of Income-tax. Average rate of Income-tax is computed on the basis of the rates

in force for the financial year in which the payment is made, on the estimated income of the assessee for that financial year.

From new employees joined during the year, a copy of Form 16 issued by previous employer or a certificate on Form 12B, giving salary income and tax deducted, has to be obtained.

Tax is to be deducted on the aggregate of salary i.e.salary from previous employer plus salary from existing employer after giving the credit for tax deducted by the previous employer.

Salaries contd... The computation of estimated income is based upon:

Estimated salary to be given to the employee in the financial year

Salary received by him from previous employer- if the employee has not submitted the form 16/ form 12B then it has to be presumed that the same rate of salary which present employer is paying is paid by the previous employer.

Allowing the deductions for the investments/ payments made by him which are allowable under chapter VIA (except donation) & section 10, initially on the basis of declaration and at the end of the year on the basis of proofs.

Allowing the set off of the loss (interest payment only) under “Income from House Property” if used by the employee under self occupied only, on the basis of a Statement from the lender.

Tax so deducted should be deposited by the 7 days of succeeding month.

Salaries contd...

Tax Rates in force presently: Income Rate upto Rs. 1,50,000 Nil

Next Rs.1,50,000 10 % Next Rs.2,00,000 20 %

Balance 30 % Surcharge 10% of tax payable if taxable income exceeds Rs. 10 lacs Edu. & H. Edu. Cess 3% on Tax+ Surcharge

Salaries contd...Deduction under Chapter VIA :*Under Section 80CInvestments in NSC, NSS, LIC Premium, ULIP, PF, PPF, Tuition Fee etc. including repayment of housing loan Maximum limit - Rs. 1,00,000In case of LIC, premium should not exceed 20% of sum assured.Tuition fee is maximum up to 2 child

Salaries contd... Deduction under Chapter VIA Continued

Under Section 80DMedical Insurance Premium for Self, Spouse, dependent

Children up to Maximum of Rs. 15,000/-.Additional deduction of Rs. 15,000/- if premium is paid for

policy of Parents and if parents are Senior Citizen, than deduction limit is Rs. 20,000/-.

Payment should not be made in cash. Deduction u/s 80DD

Expenditure for Medical treatment of dependent person with disability – Rs. 50,000/- subject to condition that certificate in form 10-IA as specified in rule 11A along with copy of certificate issued by Medical Authority to furnished.Deduction is Rs. 75,000/- if there is several disability.

Salaries contd...Deduction u/s 80E

Interest paid on account of pursuing higher education for self, spouse and children up to eight assessment years starting from the year from which interest is paid by the employee.

Deduction u/s 80G

Only donations made to Prime Minister/ Chief Minister Relief. Donation or similar notified donations are allowed.

For the other donations deduction is to be claimed by the employees in his income-tax return. Employer can not allow for the purpose of deduction of tax at source from salary payment .

Salaries contd... CBDT is issuing a circular every year

prescribing the method of tax deduction at source. The same may be referred for clarification.

PAN should be obtained from every employee whose income is subject to TDS.

To safeguard the company from any short deduction/non deduction, a declaration has to be taken from employee in advance.

*****

Interest on Securities - Section 193

Tax is to be deducted at the time of payment of interest on securities [viz. Debentures issued by the company] or credit to the account of the payee (whichever is earlier)

@ 10% in case of individuals/HUFs and 20% in case of companies [plus surcharge @ 10% on tax wherever applicable plus education cess on tax & surcharge]

Exceptions- if interest payable to an individual on debenture in a year is less than Rs. 2,500/- and interest is paid by an account payee cheque- If an individual furnishes a declaration in Form No. 15G or 15H (if deductee is senior citizen)

Interest on Securities - contd...

In other cases, the payee furnishes a certificate issued by his Assessing officer either for nil TDS or TDS at a lower rate

A copy of Form No. 15G/15H is to be submitted to Chief Commissioner or Commissioner of Income-tax on or before seven days of the next month following the month in which the said declaration is received.

Tax is to be deposited with the Central Govt. by 7th of next month.

In case of year end provisions, tax may be deposited within two months from the close of accounting/financial year.

Other Interest - Section 194A Tax is to be deducted at the time of payment of interest

or credit to the account of the payee (whichever is earlier) @ 10% in case of individuals/HUFs and 20% in case of

companies [plus surcharge @ 10% on tax wherever applicable plus education cess on tax & surcharge]

Exceptions- if interest payable in a year is less than Rs. 5,000/- - If an individual furnishes a declaration in Form No.

15G/15H- In other cases, the payee furnishes a certificate

issued by his Assessing officer either for nil TDS orTDS at a lower rate

Other Interest - contd...

Exceptions contd... In case interest payable to -

- a banking company - any co-operative society engaged in the business of

banking- any financial corporation established under a Central/State or Provincial Act - LIC / UTI - any company or co-operative society engaged in the business of insurance- other notified institutions,association or body

Other Interest - contd...Exceptions contd… In case of interest payable by -

- a firm to its partner- a co-operative society to its members or to other co- operative society- interest on notified deposit scheme framed by Central Govt. - banks on deposits [other than time deposits]- by agricultural credit society, primary credit society, co- op. land mortgage bank, co-op. land dev. bank on deposits- by Central Government

Other Interest - contd...

A copy of Form No. 15G/15H is to be submitted to Chief Commissioner or Commissioner of Income-tax on or before seven days of the next month following the month in which the said declaration is received.

Tax is to be deposited with the Central Govt. by 7th of next month

In case of year end provisions, tax may be deposited within two months from the close of accounting/financial year i.e. by 31st May.

Other Interest - contd...Some legal decision on TDS

on interest 1 Where loan is taken by the director/employee but the

entries are routed through Company, the company is liable to deduct at source {Century Building Industries Pvt. Ltd (SC) (293 ITR 194)}

2. Where at the time of making the provisions the payee of interest is not known the provision of section 194A will not attract {IDBI (ITAT, Mumbai) (107 ITD 45)}

Payment to Contractors - Sec 194C Tax is to be deducted at the time of payment to be made

for work contracts or credit to the account of the payee (whichever is earlier)

Income Tax is to be deducted at source @ 1% on Advertising contracts and @2% on any other contracts on the amount paid/credited. In the case of sub-contracts, the main contractor should deduct tax at source @1% on the amount paid/credited to the subcontractor.

ExceptionsThe value of each contract is less than Rs. 20,000/- and the total contracts/ payments to the contractor in a year is less than Rs. 50,000/-.

Payment to Contractors - contd...

Contractor furnishes lower/ Nil rate certificate issued by his Assessing officer

Provisions of Section 194C are applicable only where the contract is either a “contract for carrying out any work” or a “contract for supply of labour for works contract”. Hence, these provisions are not applicable for payments made under the contract of sale of goods.


Contract u/s 194C includes: Work contracts, service contract, transport contracts,

catering contracts

Contract for couriers for carrying documents, letters etc.

Contracts for supply of labour for carrying out any work

Maintenance contracts including supply of spares

Contracts for supply of printed material as per prescribed specifications.

Transport contracts- each GR is a separate contract unless until a specific contract is executed.

Payment to Contractors - contd... Advertising contracts include : * Advertisement contracts with

- advertising agencies- Print & electronic media.

* Advertisement in Souvenir, magazines etc.* Contract for display of hoardings, banners etc.


In case of year end provisioning, the time limit for depositing the tax is two months from the close of accounting year.


Issues clarified by CBDT vide circular no-715 & others and by various court

1. Income-tax is to be deducted on the amount of payment/credit and not on the income part of the amount.

2. The Income-tax has to be deducted on payment or booking of expenses which ever is earlier.

3. The purchase of Air ticket from Airlines or travel agents are out of purview of section 194C

4. Hiring of chartered aircraft for carriage of passengers or goods falls under the purview of section 194C..

Payment to Contractors - contd...5. Advertising contracts- Only contracts of client with

advertising agency are covered, Contracts of advertising agencies with media (includes both print and electronic media) are out of purview.

6. Adjustment of advance payment- No tax has to be deducted at the time of adjustment against the bills if the tax has been deducted at the time of payment.

7. Consolidated bill for advertising and artwork from advertising agencies – Income-tax is to be deducted @ 1% from the gross bill.

8. The contract for putting up a hoarding is an advertising contract.


9. Contract for providing the space for hoarding is covered under section 194I not 194C.

10. Contract for sponsorship for debates, seminars and other functions held in colleges, schools and associations with a view to earn publicity through display of banners, etc., put up by the organizers, are advertisement contracts under section 194C will apply.

11. Contract from Clearing and Forwarding agents are covered under section 194C.

12. Serving food in a restaurant in the normal course of business of the restaurant is not covered under section 194C.


13. Contracts with recruitment agencies are covered under section 194J not in section 194C.

14. Contract for supply of article or thing as per prescribed specifications are contract for sale. (Reebok India Co 306 ITR 124).

15. Contract for supply along with fabrication, erection, installation, maintenance are covered by Section 194C. However if the service used is covered under technical services then Section 194J is applicable.

16. Section 194C is applicable on the total amount of bill which includes reimbursement of expenses also. [Circular No.715 dt.8-8-1995].


17. Section 194C not applicable with respect to bill which pertains to reimbursement of expenses

18. Contract for storage in cold storages/ ware houses where customer is not having any right to use any demarcated space/place or the machinery of the cold storage are not covered under section 194-I. However, on the basis of contractual arrangement between the customers and cold storage owners section 194-C are applicable [Circular No.1/2008 dt.10-1-2008].

Commission & Brokerage - Sec. 194H

Tax @ 10% plus surcharge plus Education cess: Sec 194H covers the services not being the

professional services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing not being securities.

Tax is to be deducted at the time of payment or credit, whichever is earlier.

Commission to C&F Agents are covered u/s 194H.

Commission & Brokerage - contd...

Exceptions- Total payment in a year does not exceed Rs. 2,500/- - Certificate issued by Assessing officer for nil/ lower deduction of Income-tax.


For making the provisions at close of accounting year, the time limit for depositing the tax is two months from the close of accounting year.

Section 194H is applicable only where contract is having Principal-Agent relationship.

Commission & Brokerage - contd...

Issues clarified by CBDT and by various court1. Adjustment of commission/ brokerage from remittance

made by the agent/consignee to the principal are covered u/s 194H Hence the principal/consignor is required to remit TDS to the credit of the central government within the prescribed time either by grossing up or by collecting from the agent.

2. Distributor incentive, early payment discount and bond expenses does not constitute commission. (Foster India Pvt. Ltd Vs. ITO (2008) (117 TTJ 346 Pune)

Rent - Section 194-I

Payment or booking Rent is subject to deduction of tax U/s 194I.

Rent includes and payment under any lease, sub-lease, tenancy or any other agreement or arrangement for use of any land or building (including factory building) together with furniture, fittings and land appurtenant thereto whether or not such building is owned by the payee.

The rates for deductions are 10% for the use of machinery or plant or equipment 15% in case of payment to individuals/HUF/Firm 20% in case of companies [plus surcharge plus EC]

Rent - contd...

Exceptions- the aggregate rent in a year to a party does not

exceed Rs. 1,20,000/-- The payee furnishes a certificate issued by his Assessing officer for lower rate of tax.

In case of joint owners, limit of Rs. 1,20,000/- will apply to each of the co-owners subject to share is definite in lease agreement and separate cheques are being issued to them.


Rent - contd...

Issues clarified by CBDT and by various court

1. Deducted of income-tax is from the actual payment. No consideration of notional income with respect to interest free deposit given to the landlord.

2. Income-tax is to be deducted from advance rent/ deposit which is adjustable against future rent. However there is no need to deduct the tax from the deposit which is refundable.

3. Non-refundable deposits are also subject to TDS

Rent - contd...4. Warehousing charges are subject to TDS

under section 194-I

5. Payment to hotels for rooms hired• for the earmarked rooms for a specified rate

and specified period- construed as accommodation made available on regular basis and subject to TDS.

• Room or set of rooms are not earmarked, but the hotel has a legal obligation to provide such types of rooms during the currency of the agreement are also subject to TDS.

Rent - contd...

6. Payment to hotels for rooms hired where corporate employers, tour operators and travel agents enter into agreements with hotels with a view to merely fix the room tariffs of hotel rooms for their executives/guests/customers. Such agreements, usually entered into for lower tariff rates, are in the nature of rate-contract agreements. There is no obligation on the part of the hotel to provide a room or specified set of rooms. The occupancy in such cases would be occasional or casual. Hence, mere rate contracts would not attract TDS under section 194-I.

7. Where municipal taxes, ground rent etc. are borne by the tenant, no tax will be deducted on such sum since the basis for tax deduction at source under section 194-I is “income by way of rent”. National Panasonic India (P) Ltd. v CIT(TDS) [2005] 3 SOT 16 (Delhi).

Rent - contd...

8.Circular no-4/2008 dated 28.04.2008 clarifies that service tax paid by tenant does not partake the nature of “Income” of the landlord and therefore not subject to TDS.

The clarification of non deduction of Income-tax on payment of service tax portion is applicable only on rent. For other payments CBDT has issued an instruction no- F.No-275/1/2006-IT(B) dated 21/7/2006, wherein it was clarified that TDS to be deducted on Service tax portion also in view of circular no-715.

Fee for Professional or Technical Services - Section 194-J

Income-tax deduction rate is 10% [plus surcharge plus EC] from the payment of fees for Professional or managerial or consultancy or Technical services.

Tax is to be deducted at the time of payment of fee or credit to the account of the payee, whichever is earlier.

“Professional Services” include:- services rendered by a person in the course of carrying

on the profession of Legal, medical, engineering, architectural, accountancy, technical consultancy, advertising interior decoration or such other profession as notified u/s 44AA.

Technical services means the technical servies as in explanation 2 to clause (vii) of sub section (1) of sec 9.

Fee for Professional or Technical Services - contd…

Explanation[2] states that “fees for technical services” means any consideration (including any lump sum consideration) for the rendering of any managerial, technical or consultancy services (including the provision of services of technical or other personnel) but does not include consideration for any construction, assembly, mining or like project undertaken by the recipient or consideration which would be income of the recipient chargeable under the head “Salaries”.]


Following payments are also be covered :- Payments to share registrar Payments to recruitment agency payments to hospital for rendering medical services

The tax is to be deducted from gross amount of the bill if it includes reimbursement for actual expenses also.

On a separate bill for reimbursement of actual

expenses incurred, no tax is to be deducted


Exceptions Aggregate fee in a year to a party

does not exceed Rs. 20,000/- Payee furnishes a certificate issued by

Assessing officer either for nil TDS or TDS at a lower rate


In case of year end provisioning, the time limit for depositing the tax is two months from the close of accounting year

Payments to Non Residents - Section 195

Income-tax at source is deductible from payment of :- Interest- Royalty- Fees for technical, managerial consultancy etc.- any other payment

Tax is to be deducted at the prescribed rates or the rates specified in Double Taxation Avoidance Agreements with the respective countries whichever is lower.

For remittance of payment a NOC is to be obtained from the Assessing Officer.

Payment to Non-residents - contd…

Tax is to be deducted at the time of payment or credit to the account of the payee (whichever is earlier).


In case of year end provisioning, the time limit for depositing the tax is two months from the close of accounting year.

EXEMPTIONS FROM TDS

No deduction of Income-tax at source is required to be made in case of sums payable to -• Government• Reserve bank of India• Corporations established by or under a Central Act

which is under any law, exempt from income tax on its income

* Mutual Funds registered under SEBI Act.* Mutual Funds set up by a public sector bank or a public

financial institution or authorised by RBI

Compulsory quoting of PAN W.e.f 1st June, 2001, quoting of PAN is compulsory on -

• TDS Certificates• TDS Returns• Statement of perquisites to employees u/s 192(2C)

Provision is not applicable to persons furnishing Form

15G/15H.

We have to obtain PAN from all payees and to quote the same on above documents, in the absence of the PAN neither company is succeeded in filing the TDS return/ deposit the payment nor the payee will get the TDS credit.

FILING OF RETURN

All TDS returns have to be filed before due dates prescribed.

For companies and Government deductors, e-TDS returns are compulsory.

FILING OF QUARTERLY STATEMENTS - 1

W.E.F. 01.04.2005, the person responsible for paying tax at source, shall after depositing the TDS, prepare and file Quarterly Statement with the TINFCs appointed by NSDL

Sr.No.

Form No.

Description Section Rule

1 24Q TDS on Salaries paid 192 31A

2 26Q TDS on Other Payments 193, 194, 194A, 194BB, 194C, 194D, 194EE, 194F, 194G, 194H, 194I, 194J, 194L

31A

3 26QA Payments of Interest without deducting tax at

source

206A 31AC

4 27Q TDS on Payment to Non Resident

195 31A

5 27EQ TCS on Scraps 206C 31AA

FORMS PRESCRIBED

FILING OF QUARTERLY STATEMENTS

When to file the

Quarterly Statements

Q.E. Due Date

30th June 15th July

30th Sept. 15th Oct.

31st December

15th January

31st March 15th June

QUOTING PAN / TAN

The person responsible for making TDS and preparing quarterly statements shall quote :

In case of Deductor’s :1. PAN & TAN2. PAN not required if TDS is made by or on behalf of the

Government

In case of Deductees’ :1. PAN2. 85% of PAN is required to be quoted in case of TDS other

than TDS on salary & NRI and in case of salary, 95% of PAN is required to be quoted.

Furnishing of Quarterly e-TDS Statements

Modes for furnishing Returns

TIN- FACILITATION CENTRE

WEB-BASED FACILITY

INSTRUCTIONS for filing through TIN-Facilitation Centre Media : Each quarterly e-TDS statement (Form 24Q, 26Q

and 26QA) should be in a separate CD/Floppy. Form 27A : Each quarterly e-TDS statement is accompanied by

a duly filled and signed (by an authorized signatory) Form 27A in physical form (With Deductor’s Seal).

No. of Media : Each quarterly e-TDS statement is in one CD/Floppy, it should not be roll across multiple floppies.

File Size: In case the size of quarterly e-TDS statement exceeds the capacity of one floppy then it needs to be furnished in a CD.

Compression : Quarterly e-TDS statement should be compressed, if required, only by using Winzip 8.1 or ZipItFast 3.0 (or higher version) compression utility to ensure quick and smooth acceptance of the file.

Labling : Label mentioning TAN, name of deductor, period to which statement pertains (quarter and F.Y.) and Form no. (24Q, 26Q or 26QA) to be affixed on each CD/floppy for the purpose of identification.

Overwriting / Striking through : There is no overwriting/striking on Form 27A. If there is any, then the same should be ratified by an authorized signatory.

No bank challan or copy of TDS certificate or physical copies of certificates or no/low deduction of TDS is required to be furnished along with the statements.

In case deductor does not have a TAN, it should first obtain the same by applying for one, using the latest Form 49B through any TIN-FC or through online web-based facility provided by NSDL (www.tin-nsdl.com). (Statement shall not be accepted if TAN is not quoted).

Verification of TAN: TAN details (name, address, etc.,) of the deductor as provided in the quarterly e-TDS statement should be same as in the TAN database maintained by ITD. If they are different the deductor shall submit a TAN change request application to update the ITD TAN database or a copy of the acknowledgment of TAN change request already submitted.

Branches / DDOs : Each branch or Drawing and Disbursement Officer (DDO) of a deductor furnishing separate quarterly e-TDS statement should furnish the quarterly e-TDS statement quoting separate TAN issued to each branch/DDO respectively.

The quarterly e-TDS statement has to be successfully passed through the latest version of the FVU.

Cross-Verification : Control totals, TAN and name mentioned in the quarterly e-TDS statement match with those mentioned on Form 27A.

CD/floppy is virus free.

http://www.tin-nsdl.com/

ISSUANCE OF TDS CERTIFICATES

Nature of Payment Form No.

Salaries 16

InterestContractsCommission & Brokerage Professional/Technical feeRentPayments to Non-residents

16A

Issuance of TDS certificates - contd... Consolidated TDS Certificate :

On the request of Payee, a consolidated TDS Certificate may be issued for the entire year within one month from end of the year.

Statement of Perquisites :A statement of perquisites or profits in lieu of salary is to be furnished to employees u/s 192(2C) in form 12BA

Consequences of defaults Failure to deduct tax at source - Interest @ 1% p.m. u/s 201(1A) from the date of deduction till actual payment - Penalty u/s 221 - 100% of tax not deducted - Penalty u/s 271C - 100% of tax not deducted

Failure to pay after deducting tax - Interest @ 1% p.m. u/s 201(1A) from the date of deduction till actual payment - Penalty u/s 221 - 100% of tax not deducted - Prosecution u/s 276B - 3 months to 7 years imprisonment & fine

Consequences of defaults Disallowance of expenses u/s 40(a)(i)/(ia)/(iii)

Apart from penalty for failure to deduct tax at source or after deduction failure to deposit the same in Govt. account in time, the expenditure on which Income-tax is not deducted is not allowed as deduction under the head PGBP.

Deposit to Govt Account in time meansA) In case where the tax was deducted during the last month

of previous year- on or before the due date of filing of return.B) In any other case, on or before the last day of the previous year.The said expenditure will be allowed as deduction in the year in which it was actually paid

Consequences of defaults - contd….

Failure to quote PAN on TDS certificates/Returns - Penalty u/s 272(A)(1) - Rs. 10,000 for each default

Failure to issue TDS Certificate in time Failure to issue Statement of Perquisites in time Failure to file TDS Returns in time Failure to file Form 15H /15G with CIT in time - Penalty u/s 272(A)(2) - Rs. 100 per day of default

[ penalty cannot exceed the amount of TDS] Failure to obtain Tax Deduction Account Number in

time - Penalty u/s 272BB - Rs. 10,000

NEW PROVISIONS OF TDS/TCS

Major Changes in New TDS Provisions (Applicable from 1st July 2009)

Mandatory E-Payment of TDS/TCS- By all deductor- Using Internet banking facility or debit/credit card facility- By using new Challan no-17Challan No-17 instead of old challan no-281- Single Challan for all payment- E-mail & Mobile no required- Deductee detail such as PAN, Name & TDS amount is

required to upload- No facility to revised deductee detail in challan- Validation of PAN is alert by the department- Unique Transaction No (UTN) is given by the department

for each deduction which is to be shown in e-TDS returns/Income Tax return/certificates.

Major Changes in New TDS Provisions --- Cont…..

New Compliance Statement – Form 24C- Single form for all section- E-Filing Quarterly - No paper documents like form 27A- File even if no deduction but having TAN- No provision for revision of statement.- Breakup of section wise expenditure each month

Quarterly TDS/TCS Statements 24Q, 26Q etc- No change except UTN to be quoted- Filed to be annually instead of quarterly i.e by

15th June of the next year.- Not clear, whether to be filed for F.Y 2008-09

Major Changes in New TDS Provisions – Cont…

Revised TDS/TCS certificates ( Form 16/16A/27D)- Form 16AA abolished- Demat of TDS certificates from 01-04-2010 - Single TDS certificate for non salary payments.- Address of deductor or deductee is not required- Not required to mention acknowledgement number & date for

filing of E-TDS return.- No detail of deposit of tax- PAN of deductor is not required- UTN to be shown- No need for individual entries in form 16A/27D- No mention of period- TDS certificate for March 31 to be issued with in 7 days of

deposit of tax - Standard deduction re-introduced in form 16- Section 80C, 80CCC & 80DD not asked separately in 16

1. (1) These rules may be called the Income-tax (8th Amendment) Rules,2009.

(2) They shall come into force on the 1st day of April,2009.2. In the Income tax Rules,1962,- For rules 30, 31, 31A AND 31AA, the following rules shall

be substituted ,namely:- “Time and mode of payment to Government account of

tax deducted at source or tax paid under Chapter XVII B “

30. (1) All sums deducted in accordance with the provisions of Chapter XVII-B shall be paid to the credit of the Central Government-

(a) Within two months from the end of the month in which the amount is credited by the tax payer to the account of the payee if the crediting is on the date up to which the accounts of the payer are made; and

(b) In any other case , within one week from the end of the month in which the-

i. deduction is made ; or ii. Income-tax is due under sub-section 1(A) of section

192.

(2) The person responsible for making deduction, or payment of tax, under Chapter XVII –B shall, within the time specified in sub-rule (1), or sub-rule-(2),-

(a) Electronically furnish an income tax challan in form No. 17; and

(b) Pay the amount so deducted to the credit of the Central Government by electronically remitting it into the reserve bank of India, State Bank of India or any authorized bank.For the purposes of this rule, the amount shall be construed as electronically remitted to the Reserve bank of India or of any authorized bank, if the amount is remitted by way of – Internet banking facility of the Reserve Bank of India or of the State Bank of India or of any authorized bank; or

(a) Credit or debit card

31A.(1) Every person who has been allotted a tax deduction and collection account number under section 203 A shall deliver, or cause to be delivered the following quarterly statements; namely :-(a) The TDS compliance Statement in Form No. 24 C ;(b) The quarterly statement of deduction of tax under section 192 in

Form No. 24 Q(c) The quarterly statement of deduction of Tax under sections 193 to

196 D in (i) Form No. 27 Q in respect of the deductee other than a company,

being a non resident or resident but not ordinarily resident, or the deductee being a foreign company.

(ii) Form no. 26 Q in respect of all other deductees; and

(d) The Quarterly Statement for collection of tax under section 206C in Form No. 27EQ.

(2) Every person , who is required to deliver, under sub-rule (1), the statements referred to therein, shall deliver , such statements electronically to the director general of Income Tax (Systems) or the person authorized by director general of Income Tax (Systems) .

(3) The Statement in Form No. 24C referred to in sub-rule (1), shall be delivered ,on or before the 15th July, the 15th October , the 15th January in respect of the first three quarters of the financial year ,respectively , and on or before the 15th June following the last quarter of the financial year.

(4) The Statement in Form No. 24 Q , Form No.26 Q , Form No.27 Q & from Form No. 27EQ referred to in Sub-rule(1) , shall be delivered ,or caused to be delivered ,on or before the 15th June following the financial year.

OBLIGATION ON THE DEDUCTOR Deduct TDS at the time of payment/credit If there is any ambiguity about deduction of tax on

particular payment than pl. take advice from competent professional to avoid litigation.

Make summary of TDS & 24C monthly in computer as per required format

Deposit TDS by next 7th

File form 24C every quarter. Prepare form 24Q/26Q/27Q/27EQ every quarter. File form 24Q/26Q/27Q/27EQ annually. Issue TDS certificates monthly/annually Reconciliation of Form 17, 24C, 24Q, 26Q, 27Q, 27EQ

with figure in books of accounts

THANK YOU

Documents

TAX DEDUCTION AT SOURCE (TDS )