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As per Income tax act 194C, TDS is not required to be deducted on payments made to transporter If PAN number has been provided to the deductor.

Further as per Section 197 of Income tax act Assessing officer can issue a nil rate Certificate to parties under specified section on application of form 13 with prescribed details and if such parties produce “nil” rate certificate to deductor, deductor is not required to deduct TDS. So in both the cases tax deduction is nil.

Third type of nil transaction is “where amount paid is less than cut-off amount given in respective section.”

In all the three cases above TIN-NSDL has provided tags in E-TDS return.

1. To incorporate nil rate transporter entries in E-TDS return by inserting a tag “T” in remarks in 26Q.

2. To incorporate nil rate entries due to sec 197 tag “B” is to be shown in remarks column in 26Q.

3. Now TIN-NSDL has also provided tag “Y” to incorporate entries of nil deduction where amount is less than cut-off amount.

Now the question is, whether one should file return as suggested by TIN-NSDL or there is legal binding on us to report such entries. The answer is given below

As per Income tax act Section 200 quarterly return is required to be filed where TDS has been deducted. Means if TDS is not been deducted then no need to file the return.

But Income tax rules 31A has been amended to incorporate first two type of entries in quarterly returns from 01.04.2011.

As per rules amended vide notification no.16/2011 dated 29/03/2011.

(b) In rule 31A, in sub rule (4), after clause (IV), the following clauses shall be inserted, namely:-

“(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.”

So after this amendment we have to report following two types of entries in quarterly return (26Q) compulsory.

1. Nil TDS on payment to transporter.

2. Nil TDS due to nil certificates issued by AO u/s 197 to party.

But Act/rules have not been amended to incorporate third type of entries.

So let me know how many your clients are strictly complying with this statutory requirement.


Ganesh Babu K from Bangalore

Click here to download this in word file along with notification.


Published by

Ganeshbabu K
(Audit and Tax Advisory)
Category Income Tax   Report

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