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TDS/TCS AMENDMENT

NISHIT A. DOSHI 
on 16 June 2009

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NEW TDS RULES & REGULATIONS - ABSTRACT

Form No. 24C.

It is mandatory for all TAN holders to furnish this form irrespective of whether any payment liable to TDS has been made or not. This form shall be furnished 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. This e-form No. 24C has to be furnished at http://incometaxindiaefiling.gov.in.  The first quarter in respect of which Form 24C is required to be furnished is the quarter ending on 30th June, 2009.

 

QUARTERLY RETURNS ARE NOW ANNUAL RETURNS

The quarterly returns of TDS and TCS hitherto required to be filed in Form No. 24Q, Form No. 26Q, Form No. 27Q and Form No. 27EQ shall now be required to be filed for all quarters on or before the 15th June following the Financial Year. Effectively, the quarterly returns have now been replaced by an annual return.

 

USE OF OLD CHALLAN NO.281 FOR TDS/TCS EFFECTED UPTO 31-05-2009

The above new system will be effective for all tax deducted at source or tax collected at source on or after the 1st April, 2009.  However, any TDS  or TCS effected on or after the 1st April, 2009 but not later than 31st May, 2009 shall continue to be paid to the credit of the Central Government by using the old challan form.  The TDS or TCS effected on or after the 1st June, 2009 shall be required to be paid electronically by electronically furnishing income tax challan in Form No. 17.

 

FILLING UP OF FORM NO.17 IN RESPECT OF TRANSACTION DURING 01-04-2009 TO 31-05-2009 & FURNISHING THE SAME UPTO 15-07-2009

Where the payment of TDS or TCS effected on or after the 1st April, 2009 but not later than 31st May, 2009 is paid to the credit of the Central Government by using the old challan form, the deductor / collector shall, nevertheless, be required to fill up Form No.17 in respect of such payments any time between 1st July, 2009 to 15th July, 2009.  Therefore, the deductors/collectors are advised to prepare the schedule relating to details of TDS / TCS from deductees in Form No.17 in advance (in an excel sheet) and be in a state of preparedness to file the same by 15th July, 2009 so that the UTNs relating to TDS / TCS transactions carried out in the month of April and May can be generated / obtained for onward transmission to the deductees.   

 

UTN MANDATORY TO FILE ITRs FOR A.Y.2009-10

.       The return of income in Form No. ITR-1 to Form No.ITR-8 for Assessment Year 2009-10 have been notified which requires, amongst other, the quoting of the relevant UTN for every TDS or TCS claim made by the assessee. Therefore, the credit for any TDS or TCS claim will be allowed, amongst others, if the assessee quotes the relevant UTN for every TDS and TCS claim and the said UTN matches with the UTN in the database of the Income Tax Department. With a view to enabling the processing of returns relating to Financial Year 2007-08 (Assessment Year 2008-09) and enabling the assessee to receive the UTN for TDS and TCS transactions in the Financial Year 2008-09 (relevant for Assessment Year 2009-10), the following procedure shall be followed: -

(a)        National Securities Depository Limited (NSDL) shall assign an UTN for every TDS and TCS transaction records in Financial Years 2007-08 and 2008-09, reported in the quarterly returns received by it.

(b)        NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.

(c)        Upon receipt of the UTN, the deductor will inform the UTN to the deductee. In cases where the UTNs are available to the deductor before the issue of the TDS/TCS certificate to the deductee, the deductor will indicate the UTNs on the certificate. However, if the UTNs are not available to the deductor before the issue of TDS/TCS certificate, the deductor shall, subsequently, send a consolidated statement of all TDS/TCS transactions indicating the UTNs.

(d)        NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. As a result, even if the UTNs are not received by the deductee from the deductor, they can be directly obtained from the NSDL database and quoted while making claims of TDS and TCS in the return of income.

 

FORM NO.16 & 16A& 27D (NEW & OLD FORMATS)

TDS certificates were hitherto required to be issued in Form 16 or Form 16A as the case may be.  Similarly, TCS certificates were issued in Form 27D.  These forms have been substituted by the new Form 16, Form 16A and Form 27D with effect from the 1st day of April, 2009.   In the new Forms, it is mandatory for the deductor/collector to quote, inter-alia, the UTN. Therefore, where the certificate is required to be issued in respect of deduction or collection made before the 1st April, 2009, the deductor/collector may adopt any of the following course of action:-

(a)        The deductor/collector may issue certificate of deduction or collection in the Form 16, Form 16A or Form 27D, as the case may be, as it existed prior to 1st April, 2009 and  send a consolidated statement of UTNs to the deductee/buyer/lessee etc., as soon as the same is received by him; or

(b)        The deductor/collector may issue certificate of deduction or collection in the new Form 16, Form 16A or Form 27D, as the case may be.

 

TIMINGS FOR ISSUING FORM NO.16, 16A & 27D

.       Rule 31 of the Income Tax Rules, as it existed prior to its substitution, provides that, in general, the TDS certificates in Form 16 and Form 16A should be issued within one month from the end of the month in which the deduction is made.  Similarly, Rule 37D, as it existed prior to its substitution, provides that, in general, the TCS certificates in Form 27D should be issued within one month from the end of the month in which the collection is made.  Therefore, if the deductor/collector chooses to adopt the course specified in item (b) of para 13 above, the TDS/TCS certificate may be issued beyond the stipulated period of one month but not later than 30th June, 2009

 

ILLUSTRATIVE CASE ON FORM NO. 24C

In this Schedule in column (3), for example, against section 194A in column (1), the TAN holder is required to furnish the total amount of interest paid during the month. Let us assume that this total amount is Rs. 1 crore.  In column (4) of the corresponding entry, the deductor is required to furnish the total amount on which TDS was liable or eligible to be deducted out of Rs. 1 crore.   As is well known, no TDS is required to be deducted if the interest payment is less than Rs.  10,000. If the total of the amounts of interest payment/credit less than Rs. 10,000 is Rs. 30 lakhs, then the deductor must report in column (4) an amount of Rs. 70 lakhs (Rs. 1 crore – Rs. 30 lakhs).  In column (5), the deductor has to report that the total amount on which tax was deducted at prescribed rate out of the amount reported in column (4).  In the instant case the rate of tax to be deducted at source is 11.33 percent (including surcharge and education cess).  However, in many instances the recipients of interest exceeding the threshold limit of Rs. 10,000/- would either furnish certificate for non deduction of tax or deduction at a lower rate than the prescribed rate.  Let us assume that the amount of interest paid to such recipients is Rs. 15 lakhs.  Therefore, the amount of interest payment liable to TDS at the prescribed rate would be Rs. 55 lakhs (Rs. 70 lakhs – Rs. 15 lakhs), which is required to be reported in column (5).  Since the prescribed rate is 11.33%, and the amount of interest liable to TDS at the prescribed rate is Rs. 55 lakhs, the amount of TDS on such payment is Rs. 6,23,150/-.  This amount is required to be reported in column (6).  In column (7), the deductor is required to report the amount of Rs. 15 lakh i.e., the amount of interest payment liable to TDS at less than the prescribed rate.  Let us assume that the TDS at ‘nil’ or lower rate on the amount of Rs. 15 lakh is Rs. 50,000/-.  This amount would be required to be reported in column (8).  The total amount of TDS of Rs. 6,73,150/- (Rs. 6,23,150 + Rs. 50,000) is required to be reported in column (9).  The above example is reproduced below in the tabular form as would appear in Form 24C:-

Section

Nature of payment

Total Expense or Capital outgo under the section

Total Amount on which

TDS / TCS was liable or eligible to

be deducted  or collected out of (3)

Total Amount

on which tax was deducted or collected

at prescribed rate

out of (4)

Amount of

tax deducted or collected

on (5)

Total Amount on which tax was deducted or collected at less than prescribed rate out of (6)

Amount of

tax deducted or collected

on (7)

Total

 Amount

=(6) + (8)

(1)

(2)

(3)

(4)

(5)

(6)

(7)

(8)

(9)

194A

Interest other than interest on securities

1,00,00,000

70,00,000

55,00,000

6,23,150

15,00,000

50,000

6,73,150

 

NIL TDS/TCS RETURN

Form 24C is required to be furnished by all TAN holders irrespective of whether a TDS/TCS transaction has been effected during the quarter or not.  In the event of the column (3) of the Schedules in From 24C is zero for all nature of payments, the deductor/collector should specify in the section on filing status in Form 24C that it is a case of ‘Nil Return’ and it would not be necessary to fill in the Schedules. 

 

WITH REGARDS,

C.A.NISHIT DOSHI




Category Income Tax
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