2.6 Deposit of tax in Government account
As per Section 200 of the IT Act, the person responsible for ducting tax from payment made to an employee is also required to deposit the tax so deducted in Government account within the prescribed time and in the manner prescribed vide Rule 30. Vide I.T. 6th Amendment Rules 2010 (notification dt. 31/5/2010 the 1100 Rule 30 has been amended and the following is now provided for deductions made w.e.f. 1.4.2010 :
2.6.1 Time limit for deposit
1. Where deduction is made by or on behalf of the Government, without the production of challan, the
payment has to be made on the day of tax deduction itself.
2. In other cases of deposition by the Government vide a challan, the payment has to be made within seven days (7 days) of the last day of the month in which the deduction is made or income-tax is due under section 192(1A).
3. In case of a deductor other than Government, the payment is to be made before 30th day of April where income or amount is credited or paid in the month of March.
4. In other cases of deduction by non-government deductors, payment has to be made within seven days from the end of month in which deduction is made or Income-tax is due under sub-section 1-A of Sec. 192.
5. However, vide Rule 30(B), the Assessing Officer can, in special cases with the prior approval of joint Commissioner of Income Tax, allow payment of TDS quarterly, i.e. by 7th of July for the quarter ending 30th of June, by 7th of October for the quarter ending 30th September, by 7th of January for the quarter ending 30th of December and by 30th of April for the quarter ending 31st of March.
2.6.2 Place of deposit of tax
Tax has to be deposited to the credit of the Central Government in any of the branches of RBI, SBI or any authorised bank. The payment can be made either in cheque or cash or draft drawn on local banks. In case of payment made by cheque, the date of encashment of the cheque will be the date of payment of tax
(Circular No.141 dt.23-7-1974).
It has been clarified vide circular No.306 dt.19-6-1961 that payment of tax deducted at source should be made at the place where the DDO/the person responsible for TDS is required to file annual/periodical statement of TDS.
2.6.3 Challan of Payment
Where a deduction is made by or on behalf of the Government, the amount is to be credited in the manner specified above without the use of challan (See Rule 30). In case of other deductors, the deposition of TDS is to be made vide challan No.ITNS 281. The deductor must ensure that the details like employer’s name and address, PAN, TAN, the Assessing Officer having jurisdiction, the amount of tax and surcharge and cess, the date of payment, the salary from which TDS has been done and the tax which is being
paid, are correctly filled. Where TDS is credited to Government account through book adjustments, care should be taken by the DDOs to ensure that the correct amount of income tax is reflected therein.
2.6.4 Electronic payment of taxes
An optional scheme of electronic payment of taxes for income-tax was introduced in 2004. However with a view to expand the scope of electronic payment of taxes, the scheme of electronic payment of taxes has been made mandatory (vide notification No. 34/2008 dt. 13.3.2008 of CBDT) for the following categories
of tax-payers (referred in rule 125(1)).
(i) All corporate assessees;
(ii) All assessees (other than company) to whom provisions of section 44AB of the Income Tax Act are applicable.
2. The scheme of mandatory electronic payment of taxes for income-tax payers is to be made applicable from 1st April, 2008 and shall also be applicable to payment of taxes to Government account where tax has been deducted at source.
2.7 Issue of T.D.S. Certificate
2.7.1 Every person deducting tax at source is required as per Section 203 to furnish a certificate to the payee to the effect that tax has been deducted along with certain other particulars. This certificate is usually called the TDS certificate. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. In case of employees receiving salary income including pension, the certificate has to be issued in form No.16. The certificate is to be issued in the deductor’s own stationery. However, there is no obligation to issue TDS certificate in case of tax at source is not deducted /deductible by virtue of claims of exemptions/ deductions.
• Vide Income-tax (6th Amendment) Rules 2010, a new Form No. 16 has been notified which will be applicable for tax deductions after 1/4/2010
2.7.2 Time limit for issue of TDS certificate
Subsequent to the Income-tax(6th amendment) for deduction made after 1/4/2010, such a certificate is now to be issued by 31stMay of the Financial Year(F.Y.) immediately following the F.Y.in which income was paid and tax deducted. For deductions madeprior to 1/4/2010 the Form 16 was to be issued by the 30th of April.
In case of employment by more than one employer, Form 16pertaining to the respective period of employment may be issuedby each employer or the employee may his option report the income
and deduction to the last employer and Form 16 may be issued bythe last employer.
2.7.3 Statement of deduction of tax-Form 26AS
As per section 203AA the prescribed income-tax authority or the person authorized by the such authority (as referred in section200(3)) is required to deliver to the person from whose income the tax has tax has been deducted/paid a statement of deduction of taxin the prescribed form. Such statement as per rule 31AB is to befurnished in form no 26AS by the 31st July following the FinancialYear during which the taxes were deducted/paid (also referNotification no. 928 E dt. 30.6.2005 of CBDT)
2.7.4 Furnishing of details of perquisites and profits in lieu of salary
As per section 192(2C) every person responsible for payingany income chargeable under the head salaries, shall furnish to theemployee a statement giving correct and complete particulars ofperquisites or profits in lieu of salary, provided to him and the valuethereof in :- [Relevant rule 264 (2)(b)]
(a) Relevant columns provided in Form No. 16, if the amount of salary paid or payable to the employee is not more than onelakh and eighty thousand rupees, or
(b) In Form No. 12BA :- if the amount of salary paid or payable to the employee is more than one lakh and eighy thousand rupees
(as per notification no. S.O. 1062 dt. 04.10.2002 proforma for Form 12BA has been provided).
Where the employer has paid any tax on non-monetary perquisite on behalf of the employee as provided in section 192(1A), then he must furnish to the employee concerned a certificate to the effect that tax has been paid to the Central Government and specify the amount so paid, the rate at which tax has been paid and other particulars in the amended Form 16.
2.7.5 Issue of duplicate certificate
Where the original TDS certificate is lost, the employee can approach the employer for issue of a duplicate TDS certificate. The employer may issue a duplicate certificate on a plain paper giving the necessary details as contained in Form No. 16 (Relevant Rule-31(4)). However such a certificate has to be certified as duplicate by the deductor. Further the assessing officer before giving credit of the tax on basis of duplicate certificate is required to get payment certified from the assessing officer concerned and also
obtain an indemnity bond from the assessee employee.
2.7.6 Credit of the tax where TDS is by book adjustments
In case of deduction of tax at source by any department of the Central Government, payment of the same to the credit of the Income Tax Department by means of book adjustments is permitted. In such a case, in the certificate of TDS (Form No. 16) issued to the employee the DDO must specify that credit of TDS has been afforded to the Income tax department by book adjustment and also the date of such book adjustment. Where the aforesaid details have been given in TDS certificate, the assessing officer should
accept them and give credit of the TDS in the personal assessment of the employee. In such cases, the TDS certificate should not be rejected by the assessing officer if they do not contain details like Challan No. or date of payment in Government account. However, the assessing officer is free to verify the genuineness of such certificate by corresponding with the DDO's of Central Government department. The DDOs are bound to offer facility of examination of their payment to Central Government (Circular No. 749 dt. 27-12-1996).
2.7.7 Issue of TDS certificates by way of digital signatures
As per circular No. 2/2007 dt. 21.5.2007, the deductors may at their option, in respect of the tax to be deducted at source from income chargeable under the head Salaries, use their digital signatures to authenticate the certificates of deduction of tax at source in form No.16. However the deductors will have to ensure the following;
(a) that TDS certificates in Form No. 16 bearing digital signatures have a control No. with log to be maintained by the employer (deductor).
(b) the deductor is to ensure that its TAN, PAN of the employee, Book Indentification Number/Challan Identification No. are correctly mentioned in such Form No. 16 issued with digital signatures.
(c) that once the certificates are digitally signed, the contents of the certificates are not amenable to change by anyone.
The income-tax authorities are required treat such certificate with digital signatures as a certificate issued in accordance with rule 31 of the income-tax Rules, 1962. (Circular No. 2/2007, dated 21.5.2007).
RETURN/STATEMENTS OF T.D.S.
2.8 Return of TDS
A return of TDS is a comprehensive statement containing details of salary paid and taxes deducted thereon from the employees along with other prescribed details. Earlier, every deductor, for deductions made prior to 01.04.2005 was required as per the provisions of Section 206 (read with Rule 36A and 37) to prepare and deliver an annual return of tax deducted at source in form no. 24. Such a return was to be prepared and signed by the following –
(a) the DDO or the prescribed officer in case of a government office;
(b) the principal officer in the case of every company;
(c) the managing partner/ partners in the case of a firm;
(d) managing trustee in the case of trust;
(e) Karta in the case of HUF;
(f) prescribed person in the case of a local authority/public body/association.
However w.e.f. 01.04.2006 there is no requirement to file annual returns and instead Quarterly
statements of T.D.S. are to be submitted in form 24Q by the deductors specified above. The quarterly statement of the last quarter in form 24Q as amended by notification no. 119 dated 12.05.2006, S.O. 704(E), shall be treated as annual return of T.D.S.
2.8.1 Quarterly statement of TDS
As per sec.200(3), every person responsible for deducting tax, is required to file statements of TDS for such period and in such form as may be prescribed. Further it is to be delivered to the specified Income-tax authority within a prescribed time. As per Rule 31A(1) such statements have to be furnished
quarterly i.e for the quarter ending on 30th June, 30th September, 31st December & 31st March in each financial year which is to be delivered to the prescribed Income-tax authority [Director General of Income tax (System)] or the persons authorized by such authority [M/s National Securities Depositories Ltd. (NSDL)]. This statement is to be filed in Form No.-24Q (relevant rule 31A). It must be furnished on or before the 15th July, the 15th October and the 15th January in respect of the first three quarters of the
financial year and on or before the 15th June following the last quarter of the financial year (also refer Notification no. 928(E) dt. 30.6.2005 of CBDT). However vide I.T. (6th Amendment Rules, 2010) the date of filing of statement for last quarter has been changed to 15th of May immediately follwing the financial year. With respect to the quarterly statements of TDS, the following points are noteworthy : -
• Every deductor is required to file the quarterly statement of TDS in form No. 24Q for each quarter as per the dates specified above.
• The statement may be furnished in any of the following manners namely :
(a) Paper form
(b) Electronically in accordance with procedures, formats and standards specified under rule 31(A)(5) along with verification of the statement in form 27A.
• In case of the following :
(a) Every Government deductor
(b) Corporate deductor
(c) The deductor is a person required to get his accounts audited under sec. 44 AB in the immediately preceding financial year or
(d) The number of deductee's records in a statement for any quarter of the financial year is twenty or more; such quarterly statements are to be delivered electronically on computer media (3.5" 1.44 MB floppy diskette or CD-Rom of 650 MB capacity). The statement in computer media is to be prepared as per data structure provided by the e-filing Administrator (DGIT Systems) designated by the Board for purposes of e-TDS Scheme : 2003. Further, a declaration in Form 27A is also to be submitted in paper format. Quarterly statements are also to be filed by such deductors in electronic format with the e-TDS
Intermediary at any of the TIN Facilitation Centres, particulars of which are available at www.incometaxindia.gov.in and at http://tin.nsdl.com.
• A person other than a deductor specified above may at his option deliver the quarterly statements electronically in computer media as provided above. However, it is not mandatory for it to do so.
• The quarterly statements are to be furnished in accordance with the provisions of rule 37A and rule 37B.
• It is mandatory for the deductor to quote the following in quarterly statements
(a) TAN
(b) PAN of the deductor
(c) PAN of all the deductees
(d) Particulars of tax paid to the Central Government including Book Identification Number or Challan
Identification Number as the case may be.
However where the deduction has been made by or on behalf of the Government, PAN shall not be required to be quoted in the quarterly statement.
• For a statement of tax deducted at source to be furnished for TDS done before 1/4/2010, the provisions of Rule 31A and 37A before their amendment(by I.T. 6th Amendment Rules 2010), will be applicable.
2.8.2 Processing of statements of Tax deducted at source:
The Finance (No.2) Act of 2009 has introduced a new section 200A which provides for processing of the statements of tax deducted at source which have been furnished by the deductor. Such processing has to be done by the Income-tax Department in the manner specified and it is to compute any arithmetical error, incorrrect claim in the statements, payment of interests, sum payable by or refundable to the deductor. An
intimation of such processing is to be sent on or before the expiry of on one year from the end of financial year in which the statement is filed.
The relevant provisions of section 200A as follows;
(1) Where a statement of tax deduction at source has been made by a person deducting any sum (hereafter referred in this section as deductor) under section 200, such statement shall be processed in the following manner, namely -
(a) The sums deductible under this Chapter shall be computed after making the following adjustments,
namely:-
(i) any arithmetical error in the statement; or
(ii) an incorrect claim, apparent from any
information in the statement;
(b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the
statements;
(c) the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment
of amount computed under clause(b) against any amount paid under section 200 and section 201,
any amount paid otherwise by way of tax or interest;
(d) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined
to be payable by, or the amount of refund due to him under clause(c); and
(e) the amount of refund due to the deductor in pursuance of the determination under clause(c)
shall be granted to the deductor;
Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. Explanation- For the purpose of this sub-section, "an
incorrect claim apparent from any information in the statement" shall mean a claim, on the basis of an entry, in the statement-
(i) of an item, which is inconsistent with another entry of the same or some other item in such statement;
(ii) in respect of rate of deduction of tax at source, where such rate is not in accordance with the
provisions of this Act.
(2) For the purpose of processing of statements under subsection(1) the Board may make a scheme for centralized processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said sub-section.
TAX DEDUCTION AND COLLECTION ACCOUNT NUMBER
2.9 Introduction: T.A.N. or tax deduction and collection account number is a unique number alloted to the deductor collector of tax at source for the purpose of identification of every deductor.
2.9.1 Who shall apply for TAN: Every person deducting tax at source is required as per Section 203(A) to apply to the assessing officer for allotment of TAN. The application has to be made in duplicate in form 49B (Rule 114A). Such application has to be either furnished to the Assesssing Officer (AO) specifically assigned the function of allotment of TAN by the CCIT/CIT or in any other case to the AO having jurisdiction to assess the applicant.
2.9.2 Responsibility to quote TAN: Section 203(A)(2) casts a statutory responsibility on the deductor to quote TAN in the following places once it has been alloted :-
(i) In all challans for the payment of any sum in accordance with the provisions of Section 200
(ii) In all certificates issued pertaining to deduction of tax in accordance with the provisions of Section 203
(iii) In all statements submitted in accordance with the provisions of sub section (3) of section 200 (quarterly statements).
(iv) In all returns filed pertaining to deduction of tax at source in accordance with the provisions of Section 206.
(v) In all other documents pertaining to such transactions as may be prescribed in the interest of revenue.
2.9.3 QUOTING OF PAN BY EMPLOYER/DEDUCTOR –
The deductor of tax at source is required as per section 139A(5B) to quote the PAN of the person from
whose income TDS has been done in ;
(a) Statement furnished u/s 192(2C) (statement of particulars of profit in lieu of salary)
(b) Certificate furnished u/s 203 (TDS Certificate)
(c) Return of TDS prepared & delivered u/s 206.
(d) Quarterly statements submitted in accordance with theprovisions of sub section (3) of section 200 (quarterly statements)
It is pertinent to note that for quarter ending 30.9.2007 and thereafter form No. 24Q with less than 90% of correct PAN data will not be accepted and penal consequences under the I.T. Act will follow (circular No. 8/2007 dated 15/12/2007). Further this limit has been enhanced to 95% for and from the
quarter ending 31.3.2008.
2.9.4 Requirement to furnish Permanent Account Number.
The Finance Act, 2010 has introduced sec. 206AA(w.e.f. 1/4/2010) requiring the deductee to quote his PAN,failing which, tax at a higher rate shall be deducted. It provides the following :
(1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or amount, on which tax is deductible under Chapter XVIIB(hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax(hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely-
(i) at the rate specified in the relevant provision of this Act; or
(ii) at the rate or rates in force; or
(iii) at the rate of twenty per cent.
(2) No declaration under sub-section (1A) or sub-section (1C) of section 197A shall be valid unless the person furnishes his Permanent Account Number in such declaration.
(3) In case any declaration becomes invalid under sub-section (2), the deductor shall deduct the tax at source in accordance with provisions of sub-section(1).
(4) No certificate under section 197 shall be granted unless the application made under that section contains the Permanent Account Number of the applicant.
(5) The deductee shall furnish his Permanent Accont Number to the deductor and both shall indicate the same in all the correspondence, bills vouchers and other documents which are sent to each other.
(6) Where the Permanent Account Number provided to the deductors is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his Permanent Account Number to the deductor and the provisions of sub-section(1) shall apply accordingly.
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