INTRODUCTION
01 Under the Income-tax Act, every person making payment or crediting income of specified types to another person is required to deduct a specific proportion of amount payable/creditable at the time of making payment or giving credit, whichever is earlier and deposit the sum so deducted. [Refer further to para 53.4]. Every such person shall have to apply to the Assessing Officer for allotment of a tax deduction account number (TAN) under section 203A.
PROCEDURE FOR OBTAINING TAX DEDUCTION ACCOUNT NUMBER (TAN)
02 All organisations which are required to deduct tax at source are required to obtain TAN from the assessing officer by making an application for the allotment of TAN in Form 49B. It may be noted that the function of allotment of TAN is centralised at the headquarters of the Chief Commissioner in the metropolitan cities of Chennai, Mumbai, Calcutta, Delhi, Ahmedabad, Bangalore, Hyderabad and Pune. For other places, the function is decentralised with various assessing officers.
MANDATORY NATURE OF PROVISIONS
03 Under Income-Tax Law, it is mandatory to apply and obtain TAN if an organisation is liable to deduct tax at source on certain payments which are discussed in the following paras and the organisation deducting tax is required to quote the TAN in the following documents :
(i) all challans while depositing the tax so deducted.
(ii) all certificates issued against the tax deducted.
(iii) all returns furnished in respect of tax deducted at source.
(iv) all other documents pertaining to such transaction as may be prescribed.
TYPES OF PAYMENTS REQUIRING TAX DEDUCTION AT SOURCE
04 Section 200 of the Act specifies a list of payments which require deduction of tax at source. From the viewpoint of Voluntary Organisations, the following are the important payments, in respect of which tax must be deducted at source :
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* 15% if the payee is an individual or HUF.
** Till 30-9-2004 no deduction need be made from sum credited/paid in pursuance of any contract the consideration for which does not exceed Rs.20,000. 10% Surcharge will be applicableif payments exceeds Rs. 10,00,000 in case of individual and HUF and Rs. 1,00,00,000 for partnership & companies.
From 1-10-2004 tax shall be deducted at source where the amount credited / paid to a contractor / sub-contractor exceeds Rs. 20,000 in a single payment or Rs. 50,000 in the aggregate during the financial year.
DEPOSIT OF TAX DEDUCTED AT SOURCE
05 The tax deducted at source is required to be deposited to the credit of the Central Government within the stipulated time limit. Such deposit can be made in various specified nationalised banks with the help of TAN challans available with Income-tax Department. Whenever a TDS is deposited one should not forget to quote the TAN on challan.
06 The time limit for depositing the amount of TDS is as under :
(i) for salaries-within one week from the end of the month in which deduction has been made.
(ii) for other payments-within one week from the end of the month in which deduction has been made.
However, where the amount is credited on the last day of the year, the tax amount can be deposited within 2 months from the date, except in case of TDS on salary.
ISSUE OF CERTIFICATE
07 Under section 203 the organisation deducting TDS is required to issue a certificate to the person from whose income, tax has been deducted. This certificate will enable the person to claim credit for such tax deducted in his/her return of income. Organisations can prepare the certificate in their own stationery but in the prescribed form. The prescribed form is Form No.16 for deduction of tax from salary, for all other cases it is Form No. 16A. Form 12BA is a statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof.
RETURNS TO BE FURNISHED BY THE ORGANISATION
08 All organisations responsible for deduction of tax at source are required to submit to the prescribed income tax authority ; a return(s) within a stipulated period after the end of the financial year. The relevant return form and the month by which it should be filed are as under :
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INTEREST, PENALTIES & PUNISHMENT
09 Failure to deduct income-tax at source on various payments as discussed may attract interest, penalty and even severe punishment.
- If an organisation does not deduct tax or deducts tax but does not deposit the same then interest @ 1% per month would be levied on the tax not deducted or not paid as the case may be, under section 201(1A).
- The Income Tax Department may also levy penalties to the extent of the amount of tax not deducted in cases of failure to deduct tax, under section 271C.
- If the tax is deducted but not deposited in favour of the Central Government as per the provisions of the Income-Tax Act, then the principal officer can be punished with imprisonment for a period of 3 month to 7 years with fine.
- If the returns required to be furnished under section 206 are not filed then a penalty of Rs. 100 per day may be imposed for each day of default, under section 272A. However, the assessing officer shall give an opportunity of being heard before imposing the penalty under this section.
INTRODUCTION
01 Under the Income-tax Act, every person making payment or crediting income of specified types to another person is required to deduct a specific proportion of amount payable/creditable at the time of making payment or giving credit, whichever is earlier and deposit the sum so deducted. [Refer further to para 53.4]. Every such person shall have to apply to the Assessing Officer for allotment of a tax deduction account number (TAN) under section 203A.
PROCEDURE FOR OBTAINING TAX DEDUCTION ACCOUNT NUMBER (TAN)
02 All organisations which are required to deduct tax at source are required to obtain TAN from the assessing officer by making an application for the allotment of TAN in Form 49B. It may be noted that the function of allotment of TAN is centralised at the headquarters of the Chief Commissioner in the metropolitan cities of Chennai, Mumbai, Calcutta, Delhi, Ahmedabad, Bangalore, Hyderabad and Pune. For other places, the function is decentralised with various assessing officers.
MANDATORY NATURE OF PROVISIONS
03 Under Income-Tax Law, it is mandatory to apply and obtain TAN if an organisation is liable to deduct tax at source on certain payments which are discussed in the following paras and the organisation deducting tax is required to quote the TAN in the following documents :
(i) all challans while depositing the tax so deducted.
(ii) all certificates issued against the tax deducted.
(iii) all returns furnished in respect of tax deducted at source.
(iv) all other documents pertaining to such transaction as may be prescribed.
TYPES OF PAYMENTS REQUIRING TAX DEDUCTION AT SOURCE
04 Section 200 of the Act specifies a list of payments which require deduction of tax at source. From the viewpoint of Voluntary Organisations, the following are the important payments, in respect of which tax must be deducted at source :
|
||||||||||||||||||||
|
* 15% if the payee is an individual or HUF.
** Till 30-9-2004 no deduction need be made from sum credited/paid in pursuance of any contract the consideration for which does not exceed Rs.20,000. 10% Surcharge will be applicableif payments exceeds Rs. 10,00,000 in case of individual and HUF and Rs. 1,00,00,000 for partnership & companies.
From 1-10-2004 tax shall be deducted at source where the amount credited / paid to a contractor / sub-contractor exceeds Rs. 20,000 in a single payment or Rs. 50,000 in the aggregate during the financial year.
DEPOSIT OF TAX DEDUCTED AT SOURCE
05 The tax deducted at source is required to be deposited to the credit of the Central Government within the stipulated time limit. Such deposit can be made in various specified nationalised banks with the help of TAN challans available with Income-tax Department. Whenever a TDS is deposited one should not forget to quote the TAN on challan.
06 The time limit for depositing the amount of TDS is as under :
(i) for salaries-within one week from the end of the month in which deduction has been made.
(ii) for other payments-within one week from the end of the month in which deduction has been made.
However, where the amount is credited on the last day of the year, the tax amount can be deposited within 2 months from the date, except in case of TDS on salary.
ISSUE OF CERTIFICATE
07 Under section 203 the organisation deducting TDS is required to issue a certificate to the person from whose income, tax has been deducted. This certificate will enable the person to claim credit for such tax deducted in his/her return of income. Organisations can prepare the certificate in their own stationery but in the prescribed form. The prescribed form is Form No.16 for deduction of tax from salary, for all other cases it is Form No. 16A. Form 12BA is a statement showing particulars of perquisites, other fringe benefits or amenities and profits in lieu of salary with value thereof.
RETURNS TO BE FURNISHED BY THE ORGANISATION
08 All organisations responsible for deduction of tax at source are required to submit to the prescribed income tax authority ; a return(s) within a stipulated period after the end of the financial year. The relevant return form and the month by which it should be filed are as under :
|
||||||
|
INTEREST, PENALTIES & PUNISHMENT
09 Failure to deduct income-tax at source on various payments as discussed may attract interest, penalty and even severe punishment.
- If an organisation does not deduct tax or deducts tax but does not deposit the same then interest @ 1% per month would be levied on the tax not deducted or not paid as the case may be, under section 201(1A).
- The Income Tax Department may also levy penalties to the extent of the amount of tax not deducted in cases of failure to deduct tax, under section 271C.
- If the tax is deducted but not deposited in favour of the Central Government as per the provisions of the Income-Tax Act, then the principal officer can be punished with imprisonment for a period of 3 month to 7 years with fine.
- If the returns required to be furnished under section 206 are not filed then a penalty of Rs. 100 per day may be imposed for each day of default, under section 272A. However, the assessing officer shall give an opportunity of being heard before imposing the penalty under this section.
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