New TDS Procedures

1. New TDS Procedures Study Circle Meeting Bangalore Branch of SIRC of ICAI 18th June 2009

2. Introduction: Parliament has the power to make laws with respect to income tax. This power extends making of laws with respect to collection of income tax. Parliament has delegated the rule making power to CBDT. Power to make rules also extends to power to amend the rules or to make new rules. Accordingly, CBDT has amended rules dealing with deduction and collection of tax at source. Vishnu Ram & Co.

3. Introduction.. • Broadly, the amendments carried out relate to; • Rule 30 dealing with time and mode of payment of TDS to Government account. • Rule 31 dealing with certificate of TDS. • Rule 31A dealing with Quarterly Statements of deduction of tax. • Rule 37BA dealing with credit for tax deducted at source. • Rule 37BB dealing with TDS under section 195. • Rule 37CA dealing with time and mode of payment of TCS. • Rule 37D dealing with certificate of TCS. • Let us try to understand these rules by way of a question and answer session. Vishnu Ram & Co.

4. 1 Q .What is the reason for bringing about the amendments regarding TDS and TCS ? A.The Act has been amended to provide for a scheme of centralized processing of the Returns. (143(1A). This is intended to expeditiously determine the tax payable or the amount refundable under Section 143(1). Vishnu Ram & Co.

5. 2 Q . What is centralized processing of return? A. Income tax returns, wherever filed, will be processed in one centre, irrespective of the place where it is filed and the jurisdiction AO. In other words, it is a location neutral and jurisdiction-neutral processing. Vishnu Ram & Co.

6. 3 Q . What is meant by “processing of return”? A. Processing of return means ; • Computation of total income or loss after making adjustments for arithmetical errors and incorrect claims apparent in the return; • Determination of tax and interest; • Determination of sum payable or the amount refundable to the assessee;after adjusting the TDS, TCS, advance tax, self assessment tax, etc. (pre-paid taxes). • Preparation of an intimation specifying the sum payable or refundable. • Granting of refund due to the assessee. (section 143(1). Vishnu Ram & Co.

7. 4 Q . Where is the Central Processing Centre (or CPC) situated? A. It is situated in Electronic City, Bangalore. Vishnu Ram & Co.

8. 5 Q . What is the essential requirement of a Centralized Processing Scheme? A. The essential requirement of Centralized Processing Scheme is the integrity of database; integrity refers to correctness, completeness and wholeness. Database refers to the information relating to the assessee, tax deducted at source, tax collected at source, advance tax and self assessment tax. Vishnu Ram & Co.

9. 6 Q . What are the essential features of a CPC? A. No interface with the tax payer and automated jurisdiction-less processing. Vishnu Ram & Co.

10. 7 Q . What are the safeguards (security measures) adopted by the department to give credit for TDS / TCS? A. Credit will be given to the deductee only if all the following 3 conditions are satisfied; • amount has been deposited by the deductor / collector through internet banking facility. • information relating to the deductee has been furnished by the deductor / collector in form No. 17 (remittance challan and • claim of the deductee / collectee in the income tax return matches with the information furnished by the deductor / collector. Vishnu Ram & Co.

11. 8 Q. How does the department verify the advance tax and self assessment tax? A. By cross verifying the claim made by the assessee with the Challan Identification (BSR + date + sl. No.) number and the PAN. Vishnu Ram & Co.

12. 9 Q. Is there any change in the procedure for remitting advance tax and self assessment tax? A. No. Vishnu Ram & Co.

13. 10 Q. Is there any change in the challan used for remitting advance tax and self assessment tax? A. No. The existing challan no. 280 will continue. Vishnu Ram & Co.

14. 11 Q. What were the pitfalls in the existing system of giving credit for TDS and TCS? A. The existing system is manually operated. Volume of TDS and TCS transactions are large. Therefore, 100% verification was not possible. Vishnu Ram & Co.

15. 12 Q. How the drawbacks of the existing system are sought to be addressed? A. By adopting an information technology driven risk management system. Under this process, department verifies 100% of the transactions relating to tax payments, TDS and TCS. Vishnu Ram & Co.

16. 13 Q. Why the present system of quoting PAN for giving credits for TDS and TCS is considered inadequate? A. Quoting of PAN is deficient or inadequate. Numerous mistakes are made in quoting PAN. Therefore, it is not possible to match the claim made by the deductee asseee with TDS information furnished by the deductor. Vishnu Ram & Co.

17. 14 Q. How this is sought to be set right? A. By allotting a Unique Transaction Identification number (UTN). Vishnu Ram & Co.

18. 15 Q. What is UTN? A. It is a number assigned by NSDL for each TDS file. Vishnu Ram & Co.

19. 16 Q. What are the peculiarities when the Central Government is the deductor? A. They do not make payment of TDS amount to banks. They do it through book transfer. Vishnu Ram & Co.

20. 17 Q. What are the pecularities when the State Government is the deductor? A. In the case of State governments, the Accountant General makes the consolidated TDS payment to RBI. Vishnu Ram & Co.

21. 18 Q. What are the changes brought about in the new system in relation to the government departments? A. In the new system, even the Central and State Governments are required to deposit the TDS and TCS amount with the bank. Also, they are required to file the statements and returns (TDS/TCS) like other deductors. Vishnu Ram & Co.

22. 19 Q. Under the new system what are the due dates for paying the TDS/TCS? A. In general, it is one week from the end of the month in which deduction or collection is made. If the crediting is done on the last day of the accounting period, it is within two months from the end of the month in which the amount is so credited (Rule 30 and 37CA) Vishnu Ram & Co.

23. 20 Q. How the payment of TDS / TCS is to be made? A. TDS/TCS amounts are required to be remitted only by electronic remittance irrespective of the deductor. Vishnu Ram & Co.

24. 21 Q. Which are the banks which will accept electronic remittance of TDS? A. RBI, SBI, Associates of SBI, Allahabad Bank, Axis Bank, etc. Vishnu Ram & Co.

25. 22 Q. How does one remit the TDS /TCS amount electronically? A. 1. Open a net banking account in any of the following banks. • Allahabad Bank • Axis Bank • Bank of Baroda • Bank of India • Bank of Maharashtra • Canara Bank additional bank list in next slide Vishnu Ram & Co.

26. Corporation Bank Dena Bank HDFC Bank ICICI Bank IDBI Bank Indian Bank Indian Overseas Bank Oriental Bank of Commerce Punjab National Bank State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India State Bank of Indore State Bank of Mysore State Bank of Patiala State Bank of Saurashtra State Bank of Travancore Syndicate Bank Union Bank of India Vijaya Bank 22….list of banks Vishnu Ram & Co.

27. 22…..electronic remittance process.. 2. Go to website http://incometaxindia.gov.in, click on ‘pay’ taxes on-line’. 3. Select the relevant challan (i.e., Challan No. 17). 4. Enter PAN / TAN as applicable. There will be an online check on the validity of the PAN / TAN entered. 5. Give deductee wise details (name of deductee / collectee, PAN of deductee / collectee and amount of TDS / TCS). 6. On submission of data entered, a confirmation screen will be displayed. After confirmation, it will be directed to the net-banking site of the bank. ……contd Vishnu Ram & Co.

28. 22…..electronic remittance process.. 7. The taxpayer will login to the net-banking site with the user id / password provided by the bank for net-banking purpose and enter payment details at the bank site. 8. On successful payment, a challan counterfoil will be displayed containing CIN, payment details and bank name through which e-payment has been made. This counterfoil is proof of payment being made. The Challan Identification Number (CIN) on this counterfoil should be quoted in the Return/statement of TDS/TCS. 9. Print the counterfoil and also save it in the computer if required. Vishnu Ram & Co.

29. 23 Q. How does Form 17 look like? Vishnu Ram & Co.

30. 24 Q. Is it necessary to use different challans for TDS made under different sections? A. No. One can make consolidated payment under one form No. 17. The system has been changed from being section centric to deductee centric. Vishnu Ram & Co.

31. 25 A. The TIN system will assign a unique transaction number (UTN) to every deduction record. Q. What happens when the TDS / TCS amount is successfully remitted and the PAN, Name and TDS amount information is uploaded? Vishnu Ram & Co.

32. 26 A. The record containing the PAN and name of the deductee and the amount of TDS / TCS remitted in his name. Q. What is a deduction record? Vishnu Ram & Co.

33. 27 A. NSDL will e-mail the UTN file to the deductor’s e-mail address. Q. How will the deductor know the UTNs? Vishnu Ram & Co.

34. 28 A. Yes, NSDL will create a facility for the deductor to download the UTN file. Q. Can the deductor download the UTN file from NSDL? Vishnu Ram & Co.

35. 29 A. The deductor is required to mention the UTN in the TDS / TCS certificates. Q. Why does the deductor require UTN? Vishnu Ram & Co.

36. 30 A. Yes, NSDL will create a facility to view the UTN by the deductee. Q. Can the deductee find out the UTN? Vishnu Ram & Co.

37. 31 A. Deductee is required to mention the UTN in his return of income. Q. Why does deductee need UTN? Vishnu Ram & Co.

38. 32 A. The deductee will not be given credit for the TDS / TCS while processing his return. Q. What happens if the deductee does not mention the UTN in his return of income? Vishnu Ram & Co.

39. 33 A. It is a statement in form 24C prepared in accordance with rule 31A(1)(a). Q. What is TDS and TCS compliance statement? Vishnu Ram & Co.

40. 34 Q. How does form 24C look like? Vishnu Ram & Co.

41. 35 Q. Who has to furnish Form 24C? A. Every person (including Central Government and State Government) who has obtained Tax deduction account number or Tax Collection account number is required to furnish form 24C. Vishnu Ram & Co.

42. 36 Q. Is a person having TAN, but not deducting any tax at source or collecting tax at source required to furnish 24C? A. Yes, Even if such person has not made any payment liable to TDS, he has to furnish 24C. Vishnu Ram & Co.

43. 37 A. From 24C is required to be furnished every quarter. Q. What is the frequency of furnishing form 24C? Vishnu Ram & Co.

44. 38 Q. What are the due dates for furnishing form 24C? A. • 24C for April to June by 15th July. • 24C for July to September by 15th October. • 24C for October to December by 15th January. • 24C for January to March by 15th June. Vishnu Ram & Co.

45. 39 A. No. 24C can be furnished only in electronic form that too by uploading it to TIN. Q. Whether 24C can be filed in paper form? Vishnu Ram & Co.

46. 40 A. at http:// www.incometaxindiaefiling.gov.in Q. Where does one upload form 24C? Vishnu Ram & Co.

47. 41 A. Penalty prescribed under section 272 A (Rs. 100/day) can be levied. Q. What are the consequences of not filing form 24C? Vishnu Ram & Co.

48. 42 A. Yes. Both form Nos. 16 and form 16A have been modified. Q. Is there any change in the TDS certificate format? Vishnu Ram & Co.

49. 43 A. TDS certificates have been modified to include details of UTNs. Q. What are the modification in the TDS certificates? Vishnu Ram & Co.

50. 44 Q. How does the new form 16 look like? Vishnu Ram & Co.