All you want to know about TDS

1
All you want to know about TDS

• Team Professional Times

2
Objectives behind TDS
Pay as you Earn
Regular Cash Inflow
Avoid Evasion
Shift the Responsibility
Widening of Tax Base
3
TAN Registration

• Visit tin-nsdl.com
• Click Online TAN Registration at home page
• Furnish Details of Deductor/Collector
• Furnish Contact Details of Deductor/Collector
• Mention details of any regular e-TDS / TCS
  quarterly statement accepted in TIN on or after
  April 01, 2008.
• Select the user ID and password for operating TAN
  account.
• Select security question and corresponding
  answer.
• Click Submit.

4
TAN Registration

• On successful registration of TAN online, a 12
  digit alpha numeric registration number will
  generated.
• After successful registration, TAN account is
  activated within three hours.
• User ID (as created by user) is e-mailed on the
  e-mail ID registered at TIN.
• Password for login would be the same which you
  have mentioned while creating your TAN
  Registration Account.
• Log in page can be accessed under the menu
  login at home page under the option TAN
  Account or click on https//onlineservices.tin.ns
  dl.com/TIN/JSP/security/TanLogin.jsp

5
How to download Form 16A from TIN

• Background
• As per Income Tax Department (ITD) circular no.
  03/2011 dated May 13, 2011 Companies and Banks
  are required to issue Form 16A from TIN to their
  deductees for deductions made from April 1, 2011
  (F.Y. 2011-12).
• Form 16A is available to registered TANs at TIN
  w.e.f F.Y. 2010-11.
• Form 16A can be requested from TIN by all
  category of deductors (example Individual, Firm,
  HUF, Company, Government, etc.)
• Procedure
• Login to TAN Account at TIN website by entering
  your user ID, password TAN.
• Log in page can be accessed under the menu
  login at home page under the option TAN
  Account .
• After login , request for Form 16A file by
  clicking on Form 16A file request option.
• Mention Financial year Quarter for which form
  16A is required.

6
How to download Form 16A from TIN

• Procedure contd.
• Enter updated verification details such as,
• a) Challan / Voucher No. of any one Challan as
  reported in the TDS statement for that quarter.
• b) Provide details of any three distinct
  deductee records (valid PAN and corresponding
  deducted amount) present in the TDS/TCS
  statement.
• Request for Form 16A can be placed either for all
  PANs or
• for a single PAN for which statement has been
  filed in the quarter.
• (Now one can request Form 16A for 10 PANs at a
  time).
• On selecting the option for Form 16A for
  Individual PAN, deductor needs to fill in the PAN
  of the deductee for which Form 16A is required.
• After successful verification, request number is
  generated and the Form 16A Text file in
  compressed format (.zip) is e-mailed to the user
  within 48 hours on the e-mail ID provided at the
  time of TAN registration.
• If Form 16A file is greater than 2 MB after
  zipping, then the Form 16A zip files will be sent
  in multiple files of 2 MB.
• In order to convert the text file into PDF, user
  has to download PDF Converter Utility from the
  TAN account.

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How to download Form 16A from TIN

• Procedure contd.
• After downloading the Utility, double click on
  Start_Form16A_Utility.bat to operate the Form
  16A PDF Converter Utility.
• Extract Zip file containing Form 16A data in text
  form by using WinZip version 9.0 and above,
  WinRaR version 3.90 and above and 7-Zip version
  4.65 and above.
• Extract zip file by providing the TAN
  registration number.
• Open the Form 16A PDF converter utility by
  double clicking the file PDF Converter
  Utility.jar.
• Click on Browse button of Form 16A Input File
  Name with Path and provide path of Form 16A text
  files.
• Option to digitally sign or manually sign Form
  16A is available.
• Procedure to generate Form 16A PDF File with
  Digital Signature
• Browse and select Input file Form 16A text file
  received from TIN website.
• Browse and select Output file path to generate
  Form 16A PDF file.
• Browse and select DSC to digitally sign Form 16A
  PDF.
• Enter Password of DSC.

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How to download Form 16A from TIN

• Procedure contd.
• Provide details of responsible person to be
  printed on Form 16A.
• Click to generate PDF.
• Form 16A PDF will be generated in a folder.
• Nomenclature of the folder TAN_Form16A_FY_Quarter
  _date of PDF conversion.
• For example AGRA10001E_FORM16A_2011-12_Q1_20-06
  -2011
• Form 16A PDF will be generated PANwise.
• Nomenclature of PDF PAN_Form16A_2011-12_Quarter.p
  df
• For example AAACA1924F_FORM16A_2011-12_Q1.pdf
• Form 16A file is generated for valid PANs only.
• For deductee records with invalid PANs or PAN
  which are not present in the Income Tax
  Department database, PDF will not be generated.

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How to download Form 16A from TIN

• Procedure contd.
• Form 16A from TIN will contain the following
  details
• Six digit unique Form 16A certificate number
• TAN of Deductor
• PAN of the deductee
• Name and Address of Deductor and Deductee
• Name of Commissioner of Income Tax (TDS)
• Assessment Year and Period (quarter)
• Nature of payment wise details of amount
  paid/credited
• Name and address of TAN and PAN will be as per
  data available in ITD database
• Status of Booking
• Summary of tax deducted at source in respect of
  deductee
• Details of tax deducted and deposited through
  challans
• Details of tax deducted and deposited through
  transfer voucher
• Last Updated date till which details of Form
  16A is updated
• Verification and responsible person details

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Request for consolidated TDS/TCS File

• Login to the TAN login account with the
  registered user id, password and TAN request
  for consolidated e-TDS/TCS statement.
• Users can request for consolidated e-TDS/ TCS
  statements from F.Y. 2005-06 onwards, earlier it
  was available from F.Y. 2007-08 onwards.
• Consolidated TDS/ TCS files can be requested only
  for TDS/TCS statements accepted at TIN central
  system.
• Please check status of TDS/TCS statement at the
  TIN website under Quarterly Statement Status
  view.
• Enter details of accepted regular statement 15
  digit PRN/token, Form No., Quarter Financial
  Year.

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Request for consolidated TDS/TCS File contd.

• Enter updated verification details such as,
• a) Challan / Voucher No. of any one Challan as
  reported in the TDS statement for that quarter.
• b) Provide details of any three distinct
  deductee records (valid PAN and corresponding
  deducted amount) present in the TDS/TCS
  statement.
• After successful verification, request number is
  generated and the consolidated TDS/TCS statement
  is e-mailed to the user within 24 hours on the
  e-mail ID (s) provided at the time of TAN
  registration.
• There is also an option to Download / View Status
  of Consolidated TDS/TCS File.
• TDS/TCS file is available for download maximum
  for a period of thirty days (earlier it was
  available for 7 days).
• You can also check the status of the request for
  consolidated file for which request is placed
  either by entering the Reference No. or the
  period between which request is raised.

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IMPORTANT TERMINOLOGIES TYPE OF STATEMENTS

• Receipt Number To be quoted on Form 16/16A.
  Applicable for statements pertaining to FY
  2010-11 and onwards.
• Provisional Receipt Number Referred as Token
  Number w.e.f FY 2010-11 and onwards.
• Statement Type (Transaction Type)  
• Regular (Original) First statement furnished by
  a TAN for a quarter for a form.  
• Correction (C1) Type of correction statement
  which can update deductor details (excluding
  TAN). 
• Correction (C2) Type of correction statement
  which can update deductor (excluding TAN) and/or
  challan details. 
• Correction (C3) Type of correction statement
  which can update deductor (excluding TAN) and/or
  challan and/or deductee details.  
• Correction (C4) Addition/Deletion of Salary
  detail records (Applicable only for 24Q Q4). 

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IMPORTANT TERMINOLOGIES TYPE OF
STATEMENTS contd.

• Correction (C5) Type of correction statement
  which can update PAN of deductee.  
• Correction (C9) Type of correction statement
  which can add a challan and its underlying
  deductees.  
• Correction (Y) Type of correction statement to
  cancel the regular statement (only in case of TAN
  change).  
• Status of Quarterly Statements  
• Accepted by TIN Indicates the statement has been
  received by the TIN central system but the
  challans within the statement may or may not have
  been matched.  
• Partially accepted by TIN This status will be
  displayed only for C5 correction, if some
  deductee records are rejected.  

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Dos Dont's for filing TDS Returns

• Dos
• Ensure that correct challan particulars including
  CIN and amount is mentioned.
• Correct PAN of the deductee is mentioned.
• Correct section is quoted against each deductee
  record.
• Correct rate is quoted against each deductee
  record.
• File correction statement as soon as discrepancy
  is noticed
• Retain the original FVU file to enable future
  corrections
• Make use of free of charge RPU provided through
  TIN-NSDL.com
• Download details of challan from challan status
  enquiry (TAN based view) from TIN-NSDL.com

15
Dos Dont's for filing TDS Returns contd.

• Always verify status of TDS returns from
  TIN-NSDL.COM to ascertain the discrepancy, if
  any, and/or whether your TDS return stands
  accepted or rejected by the system.
• Mention the details of Transporter in your Return
  and maintain the records of Transporter and
  obtain a copy of their PAN card.
• Use challan type 281 for deposit of TDS/TCS
  amount.
• Quote correct TAN, full name, address and current
  A.Y. on each challan.
• Use separate challan for different nature of
  payments quoting correct nature of payment code
  and also for different type of deductee.
• Ensure that the bank has mentioned CIN (Challan
  Identification Number) on the counter
  foil. Verify CIN details uploaded by the bank to
  TIN i.e., 5 digit challan serial no., BSR code of
  7 digit and date.
• Insist on computerized receipts from the bank
• E- payment of TDS is recommended. (As in case of
  lost challan Duplicate copy can be easily printed
  from bank website by loging in with your ID and
  password)

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Dos Don'ts for filing TDS Returns contd.

• Don'ts
• Don't file late returns as it affects deductee
  tax credit.
• Don't quote incorrect TAN vis-à-vis TDS payments.
  
• Do not late deposit TDS as it attracts penal
  interest (Raised from 1 to 1.5 per annum w.e.f.
  01.07.2010) as well as penalty us/ 221.
• Don't quote wrong TAN or use PAN in place of TAN
  or vice versa.
• Don't use a single challan for corporate and
  non-corporate deductees.
• If one has multiple TANs, use one TAN
  only consistently and surrender the others.
• Don't use preprinted challans without verifying
  TAN/PAN.
• Each branch/division of an entity will have a
  separate TAN if it is filing separate TDS/TCS
  returns.  However, there will be only one PAN for
  a legal entity.
• Do not make mistake in indicating the Assessment
  Year in the challan.

17
FAQs relating to Preparation of Correction
Statement

• How many times can I furnish a correction TDS/TCS
  statement?
• A correction TDS/TCS statement can be furnished
  multiple times to incorporate changes in the
  regular TDS/TCS statement whereas a regular
  TDS/TCS statement will be accepted at the TIN
  central system only once.
• What are the important points to be kept in mind
  while preparing correction statement more than
  once on the same regular statement?
• You have to kept in mind, the following points
  while preparing correction statement more than
  once on the same regular statement
• 1. The TDS/TCS statement on which correction is
  to be prepared should be updated with details as
  per all previous corrections.2.
  Modifications/addition/deletion in correction
  statements accepted at the TIN central system
  only should be considered.

18
FAQs relating to Preparation of Correction
Statement
contd.

• How many times can I update PAN of a
  deductee/transacting party?
• Structurally valid PAN of a deductee in the
  regular statement can be updated to another
  structurally valid PAN only once.
• When does a statement get Partially Accepted?
• A correction statement containing updates in PAN
  of deductee/employee may get Partially Accepted.
  This is possible when the PAN in the any of the
  records being updated by you in the correction
  statement is invalid, i.e. PAN not present in PAN
  Master Database. In such a scenario, the said
  record gets rejected resulting in partial
  acceptance of the statement.

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FAQs relating to Preparation of Correction
Statement
contd.

• Which Provisional Receipt Number / Token Number
  should I quote while preparing correction
  statement more than once on the same regular
  statement?
• There are two fields for Provisional Receipt
  Number (PRN) / Token Number in a correction
  statement as under
• a. Original Provisional Receipt Number / Token
  Number PRN of the regular statement should be
  mentioned in this field.b. Previous Provisional
  Receipt Number / Token Number PRN of the last
  accepted correction statement should be mentioned
  in this field. In case the value in this field is
  incorrectly mentioned, the statement will get
  rejected at TIN central system for the reason
  Either Previous Provisional Receipt No. provided
  is incorrect or combination of Original
  Provisional Receipt Number / Token Number and
  Previous Provisional Receipt Number / Token
  Number is not in sequence

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Precautions

• Before uploading any Income Tax Return
• a) Reconcile the same with Form 26AS. It will
  help you, not only in claiming the correct TDS,
  but it shall also assist you in declaring true
  correct Income of the Assessee.
• b) Reconcile the Profit Loss Account with
  Quarterly Statement of TDS. Major Expenditure
  heads which should be reconciled are as follows

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Precautions contd.
Job Labour Charges. Advertisement.
Packing forwarding. Freight Cartage.
Audit Fees. Rent/ Hire Charges.
Commission Brokerage. Printing Stationery.
Interest paid. Repair maintenance/AMC .
House Keeping Charges. Postage Courier.
Staff Recruitment. Software Expenses.
EDP Expenses/ Computer Maintenance. Legal Professional Charges.
22
Recent Circulars Notifications

• CIRCULAR NO.07/2011Dated Sept. 27, 2011
• Amendment to Circular No.7/2007 regarding
  Procedure for refund of tax deducted at source
  under section 195 to the person deducting tax.
• Circular No.7/2007 dated 23.10.2007 lays down
  the procedure for refund of tax deducted at
  source under section 195 of the Income Tax Act,
  1961 to the person deducting tax at source from
  the payment to a non-resident.
• The above circular does not cover a situation
  where the tax is deducted at a rate prescribed in
  the relevant DTAA which is higher than the rate
  prescribed in the Income Tax Act, hence there is
  a possibility that in such cases excess tax is
  deducted relying on the provisions of the
  relevant DTAA. Since in these cases, the resident
  deductor is put to genuine hardship, the Board
  has decided that the provisions of Circular
  No.7/2007 dated 23.10.2007 shall also apply to
  those cases where deduction of tax at a higher
  rate under the relevant DTAA has been made while
  a lower rate is prescribed under the domestic law.

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Recent Circulars Notifications contd.

• CIRCULAR NO. 03 /2011dated the 13th May, 2011
• Issuance of TDS Certificates in Form No. 16A
  downloaded from TIN Website and option to
  authenticate the same by way of digital signature
  
• For deduction of tax at source made on or after
  01/04/2011
• Mandatory for all companies including Banking
  Companies Cooperative banks, to issue TDS
  certificates in Form No.16A generated through TIN
  central system and which is downloaded from the
  TIN Website with a unique TDS certificate number.
• For all other deductors , it is still optional
  to issue TDS certificates in Form No.16A
  generated through TIN central system and which is
  downloaded from the TIN Website with a unique TDS
  certificate number.
• The deductor, issuing TDS certificates in Form
  No.16A by downloading from the TIN Website shall
  authenticate such TDS certificate by either using
  digital signature or manual signature.
• Other deductors who do not issue the TDS
  Certificate in Form No.16A by downloading from
  the TIN Website shall continue to authenticate
  TDS certificate in From No.16A by manual
  signature only.

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Recent Circulars Notifications contd.

• CIRCULAR NO. 05/2011 dated 16.08.2011
• Master circular of TDS on Salaries
• Dhamaka inclusion
• Further if annual rent paid by the employee
  exceeds Rs 1,80,000 per annum, it is mandatory
  for the employee to report PAN of the landlord to
  the employer. In case the landlord does not have
  a PAN, a declaration to this effect from the
  landlord along with the name and address of the
  landlord should be filed by the employee.

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DECLARATION REGARDING PERMANENT ACCOUNT NUMBER

• I,.(name of the landlord),
  r/o. s/o do hereby confirm
  that I have given on rent property
  no..to Mr/Ms (name of the
  tenant)..s/d/w/o..
  r/o. on a monthly rent of Rs
  w.e.f
• I, further confirm that I do not hold any
  Permanent account Number (PAN) issued by the
  Income tax Department.
• The above information is true and correct to the
  best of my knowledge and I shall be personally
  responsible and liable if the same is found to be
  incorrect. Further I shall immediately furnish
  the PAN if obtained by me subsequent to the
  signing of this declaration.
• Signature
• Name and Address
• Nature of ID its no.
• Place
• Date

26
Recent Circulars Notifications contd.

• Income Tax Eighth Amendment Rules dated
  24/10/2011
• Any person other than deductee can claim TDS
  credit if he is shown as deductee in TDS Returns
  as per declaration of deductee. Rule
  37BA(2)(i).
• It is now mandatory to show in TDS returns,
  particulars of deductee to whom amount has been
  paid without deduction of Tax due to submission
  of Form 15G or Form 15H.Rule 31A(4)(vii).
• Due date for filing of TDS returns of first three
  quarters, by Government Deductors has been
  extended by a fortnight. Now the due date is 31st
  July, 31st October 31st January for Qtr 1, 2
  3 respectively. Rule 31A(2).

27
SOME JUDICIAL PRONOUNCEMENTS

• Vipul Medcorp TPA Pvt Ltd Ors v. CBDT (Delhi
  High Court) (202 Taxman 463) .
• - Third Party Administrators (TPAs) to deduct
  TDS u/s. 194J while making payment to hospital,
  No penalty u/s. 271C for non deduction of TDS on
  TPAs.
• The High Court held that tax has to be deducted
  under Section 194J of the Act if the payment is
  made to a resident person towards fees for
  professional services. Further, the nature of
  payment in the hands of the payee/recipient is
  relevant and that determines whether tax needs to
  be deducted or not. Section 194J of the Act does
  not specify that the payer must have availed and
  taken benefit of the professional services.
  Therefore, it is not relevant whether the payer
  or a third person has availed of the professional
  services. The High Court relying on the decision
  of Dedicated Health Care Services TPA (India)
  Private Limited held that tax needs to be
  deducted on payments made to the recipient for
  rendering services in course of carrying on
  medical profession or other professions. It is
  immaterial whether the recipient is an
  individual, firm or an artificial person. The
  words in the course of carrying on as appearing
  in Explanation (a) to Section 194J of the Act do
  not mean that the person who renders service must
  be a professional.

28
SOME JUDICIAL PRONOUNCEMENTS contd.

• Sec 40(a)(ia)
• The Kolkatta ITAT bench in Dy. CIT vs. S. K.
  Tekriwal has held that there would be no s.
  40(a)(ia) disallowance for short-deduction of
  TDS default.
• Sec 194J
• The Mumbai High Court in CIT vs. Kotak
  Securities Ltd. has held that Transaction
  charges paid to BSE is fees for technical
  services and TDS is deductible u/s 194-J.
• Hindustan Coca cola Beverages P. Ltd 163 Taxman
  355(SC)
• The Supreme Court relying on Circular No.
  275/201/95-IT(B) dated 29-1-1997 agreed with the
  deductor that once the deductee has paid the
  taxes, the Department cannot once again recover
  the tax from the deductor.
• Madhumilan Syntex Ltd 290 ITR 199
• Held that a delayed payment of tax deducted at
  source constitutes offence u/s 276B and hence
  liable to prosecution

29
Some Public Utility Measures

• Status of Quarterly TDS-TCS Statement now
  available by SMS
• NSDL has started sending SMS for each quarterly
  TDS/TCS statement processed at TIN. You just need
  to quote correct latest mobile number in the
  quarterly TDS/TCS statement. Status as below is
  provided in the SMS
• Accepted This status is provided if the
  statement is accepted by TIN.
• Rejected This status is provided if the
  statement is rejected by TIN.
• Partially accepted This status is provided if
  the statement is partially accepted by TIN.
• Complete details can we viewed under the
  quarterly statement status view available at TIN
  website

30
Some Public Utility Measures contd.

• Banks to send TDS Certificates to account holders
  
• AT a recent conference of Banking Ombudsman held
  in RBI, it was decided, among others, that-
• Banks should issue tax deduction at source (TDS)
  certificates duly completed in all respects to
  the account holders and dispatch it to their
  mailing address.
• New at NSDL website
• Now single verification in TAN login in a session
  for requesting consolidated TDS Return, Form 16A.
• Download is now available from F.Y. 2005-06
  onwards is now available for 30 days.
• Now Request for Form 16A can be made for 10 PANs
  at a time.

31
TDS Mantra

• Whenever in doubt,
• err on
• Revenue side.

32
DISCLAIMER

• Every effort has been made to avoid any error or
  omission in making this presentation. In spite of
  this, some lapse or error may creep in. Members
  are advised to cross check the relevant
  provisions of law government notifications
  before relying upon this presentation. Presenter
  carry no responsibility whatsoever for any
  inadvertent Lapse.

33

• THANK YOU