It is Mandatory to file “NIL” TDS Return(s) with effect from 1st April 2011 1. As per Sub-Section 6 of Section 194C of Income Tax Act, 1961, TDS is not required to be deducted on payments made to Transporter(S) if Permanent Account Number (PAN) is provided by the transporter to the deductor. 2. Further as per Section 197 of Income Tax Act, 1961, the Assessing Officer can issue a NIL (rate) deduction certificate(s) to parties under specified section(s) on submission of application in Form 13 with prescribed details. If such parties submit the "NIL" (rate) deduction certificate to deductor, the deductor is not required to deduct TDS from such parties. 3. Further if the amount paid by the deductor to the party(ies) is less than the threshold (ceiling) amount referred to in respective section(s), then there is no requirement to deduct tax (TDS) by the deductor from such party(ies). (For example : Section 194C stipulates a threshold limit of single payment of Rs.30,000/- and aggregate payment of Rs.75,000/- during a financial year. In respect of Section 194J the threshold limit is Rs.30,000/-) In all the above cases tax deduction (TDS) is NIL. Pursuant to Sub-section 3 of Section 200 of Income Tax Act, 1961, statement of deduction of tax (TDS return) is required to be filed where tax (TDS) has been deducted. It means that if no tax (TDS) is deducted, then no need to file the return. This situation has been altered with effect from 1st April 2011. The Income Tax Rules 31A has been amended by the department to incorporate first two type of transactions (as specified above) in the quarterly returns. This is with effect from 1st April 2011. Sub-clause (v) and (vi) of Clause 4 of amended Rule 31A is provided below for ready reference (v) furnish particulars of amount paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax under section 197 by the Assessing Officer of the payee; (vi) furnish particulars of amount paid or credited on which tax was not deducted in view of the compliance of provisions of sub-section (6) of section 194C by the payee. In view of the above amendment we have to compulsorily report the following two type of transactions in the quarterly tds return(s) (Form 26Q), which is effective from 1st April 2011. 1. Transactions with Transporters where no tax (TDS) has been deducted in pursuance of sub-section 6 of Section 194C of the Income Tax Act, 1961. 2. Transactions with parties where no tax (TDS) has been deducted due to submission of “NIL” (rate) deduction certificate by the party / deductee to the deductor. (Note : This certificate shall be issued under Sec 197 by Assessing Officer of the Party / Deductee and to be submitted to the deductor for non-deduction of tax) NOTE : It shall be noted that the Act or Rules has not been amended to incorporate or report in the quarterly tds returns, transactions with parties who are covered under Point No.3 (refer above) from whom no tax has been deducted which is due to ceiling / threshold limits.
The following type of transactions shall come under the purview of reporting a. Transaction with a Transporter for an amount of Rs.40,000/- (single bill payment) will come under the purview of Section 194C. If the transporter provides a valid PAN then there is no requirement to deduct tax at source as the same is exempted under sub-section 6 of Section 194C. However this transaction has to be reported to NSDL (E-TDS return administrator) in the quarterly ETDS returns. b. Transaction(s) with a Transporter wherein the aggregate payment of Rs.75,000/- is crossed or likely to cross during the financial year has to be reported to NSDL (E-TDS return administrator) in the quarterly ETDS returns. c. Transaction(s) with parties who submits “Nil” deduction certificate issued by his / their AO has to be reported to NSDL (E-TDS return administrator) in the quarterly ETDS returns. How to report such transactions in the quarterly E-TDS Returns The deductor has to create ZERO VALUE CHALLAN in their e-tds return and have to disclose the deductee details in the annexure against that zero value challan. For all the “three type transactions” mentioned above, NSDL has provided “TAGS” to be used by the deductor in their etds quarterly return. To disclose NIL rate Transporter transactions in e-tds returns the deductor has to flag down the TAG “T” in Column No.428 of the Annexure to the Return in Form 26Q (Column No.428 is a drop down menu). To disclose NIL rate transactions with parties who had submitted “Nil” deduction certificates from the AO, the deductor has to flag down the TAG “B” in Column No.428 of the Annexure to the Return in Form 26Q (Column No.428 is a drop down menu). NSDL has also provided a Tag "Y" to disclose / incorporate entries of Nil deduction where amount is less than threshold limits.