| New Rules for TDS and TCS payment and information reporting system introduced |
| The Finance Act,
2008 inserted a new sub-section (1A) in section
143 of the IT Act empowering the Central Board of Direct Taxes (the ‘Board’) to make a scheme for centralized processing of returns for expeditiously determining the tax payable by, or the refund due to, the assessee. Such processing of returns would envisage no interface with the taxpayer and would be required to be done in an automated jurisdiction-less manner. In pursuant of this scheme, the Board has decided that, henceforth, claim for TDS and tax collection at source (‘TCS’) shall be allowed only if: |
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| The amount has been deposited by the deductor / collector; |
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| The information relating to the deductee has been furnished by the deductor / collector; and |
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| The claim matches the information furnished by the deductor / collector. |
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| The following are some of the salient features of the new TDS and TCS payment and information reporting system: |
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| The new system has harmonized all deductors (including Central and State Government and non-governmental tax deductors) making them responsible for direct payment of TDS in the bank. |
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| Rule 30 and
37CA of the Income Tax Rules,
1962 have been substituted to provide, inter alia, for |
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- All sums of tax deducted at source under Chapter XVII-B and Chapter XVII-BB to be paid to the credit of the Central Government within one week from the end of the month in which the deduction, or collection, is made
- All deductors mandatorily to pay the amount by electronically remitting it into the RBI, SBI or any authorized bank
- All deductors mandatorily to make the payment by electronically furnishing an income tax challan in
Form
No.
17
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| Form 16 and
16A used to issue TDS certificates and Form
27D used to issue TCS certificates have now been substituted by the new Forms
16, 16A and
27D wherein it is mandatory for the deductor / collector to quote, inter alia, a Unique Transaction Number (UTN). The UTN shall be assigned to every deduction record upon successful remittance of the TDS/ TCS to the Central Government account and uploading of basic information i.e., PAN, name of the deductee and amount of TDS/ TCS, while electronically furnishing the income-tax challan in
Form No.17. |
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| Every person who has obtained a Tax Deduction or Collection Act Number (TAN) shall electronically furnish a quarterly statement in the newly introduced Form
24C. It is mandatory for all TAN holders to furnish this form irrespective of whether any payment liable TDS has been made or not. Such form has to be furnished electronically at http://incometaxindiaefiling.gov.in. The first quarter in respect of which Form No
24C is required to be furnished is the quarter ending on
30th June,
2009. |
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| This new system shall be effective for all tax deducted at source or tax collected at source on or after April
1, 2009. However, any TDS or TCS effected on or after April
1, 2009 but not later than May
31, 2009 shall continue to be paid to the credit of the Central Government by using an old challan form. The TDS or TCS effected on or after June
1, 2009 shall be required to be paid electronically by furnishing income tax challan in
Form No.
17. |
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| However, where the certificate is required to be issued in respect of deduction or collection made before April
1, 2009, the deductor/ collector may adopt any of the following courses of action: |
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- The deductor / collector may issue certificate of deduction or collection in Forms
16, 16A or
27D, as the case may be, as it existed prior to April
1, 2009 and send a consolidated statement of UTNs to the deductee / buyer lessee etc., as soon as the same is received by him; or
- The deductor / collector may issue certificate of deduction or collection in the new Forms
16, 16A or
27D, as the case maybe
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| The new TDS and TCS payment and reporting system will enable faster payment, accurate accounting and uniformity across deductors. It will facilitate accurate, quicker and full credit for taxes paid enabling faster refunds to taxpayers. It will also minimize interface of tax administration with taxpayers and intermediaries, thereby eliminating any opportunity for rent seeking behavior. |
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| [Source:
Notification
No. S.O.
858 (E)
dated March
25, 2009 and Circular no.
02/2009 dated May
21, 2009] |
| Disclaimer |
| This is not advice. The recipient should not act solely on the basis of the material contained herein. Contents herein are general in nature and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. The material herein is issued as a helpful guide to the reader, for their private information. Therefore it should be regarded as confidential and not be made available to any person without our prior approval. We therefore recommend that our formal advice be sought by contacting the following address before acting in any of the areas: |
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| Carvalho Associates |
| Chartered Accountants |
| 2B, Park Centre, |
| 25, Venkatanarayana Road, |
| T.Nagar, Chennai -
600 017 |
|
| Phone :
+91 - 44 - 4212 6808 |
| Email : mail@carvalho-associates.com |
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