At last I have arranged a press release according to which new tds rules are now effective from 01.07.2009 instead of 01.04.2009.Income Tax department again fooling taxpayers .As press release which has been issued on April 11,2009 is available to general public as well as press only on 11.05.2009???????.I think they treated this paper like a secret document and after persuasion and pressure from trade body only then it is made available to general Public.
As I have updated you earlier that Implementation of Form 17 and other new rules implementation may delay on 02.05.2009 but on that time no one has access to this so called "press release".Even highest accounting body ICAI has sought a clarification regarding implementation of Form 17.So by this any body can judge that when a highest accounting professional body has no knowledge of delay in implementation then we can easily assume that no boy know about it.
No information on Income tax or NSDL website....no news in major news papers only website that break the news taxindiaonline ,which has mentioned that old form can be used upto 30.06.2009 but that site also have no access to press release.(we can assume )
Its shameful for income tax department first because they have issued New system of TDS notification without any home work and second failed to inform the taxpayers about delay in implementation.Further due to this delay,many new problem has arisen.
1.According to new rules Govt deductor is now required to deposit tds, 7th of next month where as as per old rules tax is required to be deposited on same day ...many govt departments have stopped depositing tax on same day .Now the implementation of new rules is wef 01.07.2009 so they have to deposit the tax on same day...
2.As per old rules quarterly return is required to be deposited on 15 July for the first quarter where as in new return new return on form 24 C is reuired quarterly and form 24Q ,26Q,and 27EQ is required to be deposited only on 15 June in next year .Now the question is whether quarterly return(form 24Q,26Q,27q,27EQ) for etds /etcs for first quarter if Fy 2009-10 is required or not.
3.Unique transaction number is required to be given on Form 16 and 16A and on income tax returns ,as the system to generate this number has been postponed ,the question is here that whether the column of UTN will be kept blank in form 16 /16A and ITR form in respect of Quarter one or any sytem will be placed to generate the UTN for First quarter entries.
4.How Form 26AS of deductee will be updated If pan of deductee has not been updated in NSDL system either at the time of tax deposit or at the time of filing of return.
On the basis of above few query/point and other related point ,I strongly support the demand that new TDS rules should be implemented from 01.04.2010 . Implementation in mid of the Fy only create problems and confusion for the Taxpayers.
No.402/92/2006-MC (11 of 2009)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, Dated: April 11, 2009
PRESS RELEASE
The Central Board of Direct Taxes have decided to defer the implementation of Notification No.31/2009 dated 25.3.2009 amending or substituting Rules 30, 31, 31A and 31AA of the Income Tax Rules, 1962. The amended / substituted Rules will now come into effect on 1st July 2009 instead of 1st April 2009.
Tax deductors / collectors may continue to deposit TDS / TCS tax and file TDS / TCS returns as per the pre-amended provisions in the interim period
Friday, May 29, 2009
NEW INCOME TAX RETURN 2009-10 FORM & RELATED MATTERS
Circular No. 03 / 2009
F.No. 142/02/2009-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
….
New Delhi, the 21th May, 2009
Subject:- New Return Forms for Assessment Year 2009-10 – matters connected
thereto – regarding.
_______________________________________________________________________
The Central Board of Direct Taxes have, vide notification S.O. No.866 (E) dated 27th, March,notified the following new forms for Assessment Year 2009-10 :-
•(i) ITR-1 return of income for individuals having income from salary/ pension/ family pension and not having any other income except income by way of interest chargeable to income-tax under the head Income from other sources;
•(ii) ITR-2 return of income for Individuals and Hindu Undivided Families (HUFs) not having any income under the head Profits or gains of business or profession;
•(iii) ITR-3 return of income for Individuals and HUFs being partners in firms and not carrying out business or profession under any proprietorship;
•(iv) ITR-4 return of income for individual and HUFs having proprietory business or profession;
•(v) ITR-5 combined form for return of income and fringe benefits for Firms/ Association of Persons / Body of Individuals;
•(vi) ITR-6 combined form for return of income and fringe benefits for companies (other than companies claiming exemption under section 11;
•(vii) ITR-7 combined form for return of income and fringe benefits for persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D);
•(viii) ITR-8 stand alone form for return of fringe benefits for persons who are not required to furnish return of income but are required to furnish return of fringe benefits.
The above return forms are available at http//www.incometaxindia.gov.in. Circular No. 03 / 2009
2. Rule 12 of the Income Tax Rules, 1962 (hereinafter referred to as ‘the said rule’) provides for the form and the manner in which the income tax return is required to be furnished.
3. Sub-rule (3) of the said rule provides that return of income/ fringe benefits can be furnished in any of the following manners:-
•(i) furnishing the return in a paper form;
•(ii) furnishing the return electronically under digital signature;
•(iii) transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V;
•(iv) furnishing a bar-coded return in a paper form.
4. Sub-rule (5) of the said rule provides that the return of income/ fringe benefits for assessment year 2008-09 or any earlier assessment years shall be furnished in the appropriate form as applicable in that assessment year.
5 In exercise of the powers conferred by section 139D of the Income Tax Act,1961 (hereinafter referred to as ‘the Act’), ( read with clause (eebb) of sub-section (2) of section 295 of the Act, sub-rule (3) of the said rule provides that-
•(a) it shall be mandatory for the firms to whom provisions of section 44AB are applicable and for the companies (other than the companies claiming exemption under section 11) to furnish the return of income/ fringe benefits electronically in the manner mentioned at (ii) or (iii) of paragraph 3;
•(b) the return of income/ fringe benefits in Form ITR-7 by charitable/ religious trusts, political parties and other non-profit is to be furnished in the paper form only; and
•(c) all other taxpayers have the option to furnish the return of income/ fringe benefits in any of the manner mentioned in paragraph 3.
6. In exercise of the powers conferred by section 139C of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), read with clause (eeba) of sub-section (2) of section 295 of the Act, sub-rule (2) of the said rule provides that the returns required to be furnished in above mentioned Forms (except in ITR-7) shall not be accompanied by any attachments/ annexures. Thus, taxpayers should not enclose with these return forms any statement showing the computation of income or tax, copies of balance-sheet, profit and loss account, TDS/ TCS certificates, proof of payment of advance tax or self-assessment tax. However, these documents
shall have to be produced before the Assessing Officer on demand by him. The Chief Commissioners of Income-tax/ Commissioners of Income-tax must ensure that documents if any, annexed with these returns or Form ITR-V are detached at the time of receiving these returns/ ITR-V and are returned to the taxpayers immediately.
7. Following clarifications are also issued in respect of certain issues arising from furnishing the returns in the above mentioned forms:
•(i) An assessee should obtain the report of audit from an accountant under section 44AB of the Act on or before the due date of the furnishing of the return and should fill out the relevant columns of the return forms on the basis of such report. However, the report of audit should not be attached with the return or furnished separately any time before or after the due date. The assessee should retain the report with himself. If called for by any income-tax authority during any proceeding under the Act, it shall b e incumbent upon the assessee to furnish/produce the same in original. No penalty under section 271B shall be initiated or levied for not furnishing the tax audit report on or before the due date. However, if the audit report has not been obtained before the due date, provisions of section 271B shall continue to be attracted.
•(ii) These returns are not to be accompanied with any other document including any statutory form or report of audit (other than the report under section 92E), which is otherwise required to be furnished before the due date or along with the return for making any claim. The provisions of the law shall be deemed to have been complied with in respect of the requirement of the filing of the attachments or documents or reports along with the return. No penalty shall be initiated/ levied for not furnishing such documents if such documents were otherwise obtained before the specified date, if any, provided in the statute. All these documents should be retained by the taxpayers. If called for by any income-tax authority during any proceeding under the Act, it shall be incumbent upon the assessee to Furnish /produce the same, in original.
•(iii) The report as required under section 92E of the Income-tax Act should not be furnished along with the return. However, it should be separately furnished before the date specified in rule 10E.
8. As stated in paragraph 5 above, it is mandatory for a company and a firm liable to audit under section 44AB of the Act to furnish the return electronically. However, electronic filing is optional for other categories of tax-payers. The e-Return has to be furnished at http://incometaxindiaefiling.gov.in. Further, it is advisable, though not mandatory, to use a digital signature for electronically furnishing the return. If the return is electronically furnished under a digital signature, the tax-payer is not required to furnish the Form ITR-V with
the Income-tax Department as a follow up to the electronic transmitting of data in the return. Similarly, any return which is digitally signed by the assessee and filed with an E-Return Intermediary (ERI), who, in turn, submits the return to the Income Tax Department under his digital signature, will also be deemed to have been filed under a digital signature of the assessee and no Form ITR-V is required to be submitted. In such cases, the date of electronic transmission of the data in the return shall be the date of furnishing the return.
9. However, if the assessee does not use a digital signature for electronically transmitting the data, he is required to follow-up the electronic transmission of the data by submitting the Form ITR-V with the Income-tax Department as verification of the electronic filing of the return. In such a case, the date of transmitting the data electronically will be the date of furnishing the return if the Form ITR-V is furnished within thirty days after the date of transmitting the data electronically. In case, Form ITR-V, is furnished after the above mentioned period, it will be deemed that the return in respect of which the Form ITR-V has been filed was never furnished and it shall be incumbent on the assessee to electronically re-transmit the data and follow it up by submitting the new Form ITR-V within thirty days.
10. Since the Form ITR-V is bar-coded, assessee is advised not to fold the same and post it in A4 size envelope. The assessee shall furnish the Form ITR-V to the Income-tax Department by mailing it to “Income Tax Department – CPC, Post Box No - 1, Electronic City Post Office, Bangalore - 560100, Karnataka” within thirty days after the date of transmitting the data electronically. The Post Box shall deliver all the Form ITR-V to the Centralized Processing Centre (CPC) of the Income-tax Department in Bangalore. Upon receipt of the Form ITR-V, the CPC shall send an e-mail acknowledging the receipt of Form ITR-V. The e-mail shall be sent in due course to the e-mail address furnished by the tax-payers in his return. No Form ITR-V shall be received in any other office of the Income-tax Department or in any other manner.
11. All returns filed electronically shall be processed, on priority basis, only at the Centralized Processing Centre of the Income-tax Department in Bangalore.
12. Since no documents are required to be furnished along with the return of income, the credit for Tax Deducted at Source (TDS), Tax Collected at Source (TCS), advance tax and self assessment tax (hereinafter collectively referred to as ‘pre-paid taxes’) shall be allowed on the basis of information relating to pre-paid taxes furnished in the relevant schedules of the return forms subject to matching with the information provided by the deductor, collector and the banks. Therefore, tax payers are advised to ensure that the information relating to pre-paid taxes is complete in all respect and correct. With a view to enabling the matching of information relating to pre-paid taxes furnished by the tax payers, the Income-tax Department has created a
system of Unique Transaction Number (UTN) and Challan Identification Number (CIN).Assesses must ensure that the deductor and the collector have provided them with separate UTNs in respect of each TDS and TCS transaction. Similarly, they must also ensure that the UTN for every TDS and TCS claim in the return is correctly filled in. Similarly, they must ensure that they correctly fill in the CIN in respect of payments of advance tax and self-assessment tax. Further, no disallowance of claim for pre-paid taxes shall be made by the Assessing Officer only on the ground that the TDS/TCS certificates and challans have not been furnished along with the return of income or Form ITR-V.
13. The return of income in Form No. ITR-1 to Form No.ITR-8 for Assessment Year 2009-10 have been notified which require, amongst other, the quoting of the relevant UTN for every TDS or TCS claim made by the assessee. Therefore, the credit for any TDS or TCS claim will be allowed, amongst others, if the assessee quotes the relevant UTN for every TDS and TCS claim and the said UTN matches with the UTN in the database of the Income Tax Department. With a view to enabling the processing of returns relating to financial year 2007-08 (Assessment Year 2008-09) and enabling the assessee to receive the UTN for TDS and TCS transactions in the Financial Year 2008-09 (relevant for Assessment Year 2009-10), the following procedure will be followed: -
•(a) National Securities Depository Limited (NSDL) shall assign an UTN for every TDS and TCS transaction record in Financial Year 2007-08 and 2008-09 reported in the quarterly returns received by it.
•(b) NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.
•(c) Upon receipt of the UTN, the deductor will inform the UTN to the deductee. In cases where the UTNs are available to the deductor before the issue of the TDS/TCS certificate to the deductee, the deductor will indicate the UTNs on the certificate. However, if the UTNs are not available to the deductor before the issue of TDS/TCS certificate, the deductor shall, subsequently, send a consolidated statement of all TDS/TCS transactions indicating the UTNs.
•(d) NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. As a result, even if the UTNs are not received by the deductee from the deductor, they can be directly obtained from the NSDL database and quoted while making claims of TDS and TCS in the return of income.
14. In the past, instances have come to the notice of the Board that in spite of specific directions contained in the Instructions for filling the return forms, the practice of accepting returns, along with annexures is still continuing. Tax-payers have in the past also complained that staff and officials in certain stations are refusing to accept returns which are not accompanied with annexures. These practices are against the expressed policy of the Government and are not in consonance with the legal provisions. Therefore, it is emphasized that
Chief Commissioners of Income Tax must ensure strict compliance with the provisions of law. It may be reiterated that all annexures accompanying the income tax return forms should be detached and returned to the tax payers by the receiving official.
15. The contents of this circular are for strict compliance by all officers and staff of the Income Tax Department. Any violation by the officers and staff of Income Tax Department will be seriously viewed.
(Munesh Kumar)
Secretary,
Central Board of Direct Taxes
[F.No.142/02/2009-TPL]
F.No. 142/02/2009-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
….
New Delhi, the 21th May, 2009
Subject:- New Return Forms for Assessment Year 2009-10 – matters connected
thereto – regarding.
_______________________________________________________________________
The Central Board of Direct Taxes have, vide notification S.O. No.866 (E) dated 27th, March,notified the following new forms for Assessment Year 2009-10 :-
•(i) ITR-1 return of income for individuals having income from salary/ pension/ family pension and not having any other income except income by way of interest chargeable to income-tax under the head Income from other sources;
•(ii) ITR-2 return of income for Individuals and Hindu Undivided Families (HUFs) not having any income under the head Profits or gains of business or profession;
•(iii) ITR-3 return of income for Individuals and HUFs being partners in firms and not carrying out business or profession under any proprietorship;
•(iv) ITR-4 return of income for individual and HUFs having proprietory business or profession;
•(v) ITR-5 combined form for return of income and fringe benefits for Firms/ Association of Persons / Body of Individuals;
•(vi) ITR-6 combined form for return of income and fringe benefits for companies (other than companies claiming exemption under section 11;
•(vii) ITR-7 combined form for return of income and fringe benefits for persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D);
•(viii) ITR-8 stand alone form for return of fringe benefits for persons who are not required to furnish return of income but are required to furnish return of fringe benefits.
The above return forms are available at http//www.incometaxindia.gov.in. Circular No. 03 / 2009
2. Rule 12 of the Income Tax Rules, 1962 (hereinafter referred to as ‘the said rule’) provides for the form and the manner in which the income tax return is required to be furnished.
3. Sub-rule (3) of the said rule provides that return of income/ fringe benefits can be furnished in any of the following manners:-
•(i) furnishing the return in a paper form;
•(ii) furnishing the return electronically under digital signature;
•(iii) transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V;
•(iv) furnishing a bar-coded return in a paper form.
4. Sub-rule (5) of the said rule provides that the return of income/ fringe benefits for assessment year 2008-09 or any earlier assessment years shall be furnished in the appropriate form as applicable in that assessment year.
5 In exercise of the powers conferred by section 139D of the Income Tax Act,1961 (hereinafter referred to as ‘the Act’), ( read with clause (eebb) of sub-section (2) of section 295 of the Act, sub-rule (3) of the said rule provides that-
•(a) it shall be mandatory for the firms to whom provisions of section 44AB are applicable and for the companies (other than the companies claiming exemption under section 11) to furnish the return of income/ fringe benefits electronically in the manner mentioned at (ii) or (iii) of paragraph 3;
•(b) the return of income/ fringe benefits in Form ITR-7 by charitable/ religious trusts, political parties and other non-profit is to be furnished in the paper form only; and
•(c) all other taxpayers have the option to furnish the return of income/ fringe benefits in any of the manner mentioned in paragraph 3.
6. In exercise of the powers conferred by section 139C of the Income Tax Act,1961(hereinafter referred to as ‘the Act’), read with clause (eeba) of sub-section (2) of section 295 of the Act, sub-rule (2) of the said rule provides that the returns required to be furnished in above mentioned Forms (except in ITR-7) shall not be accompanied by any attachments/ annexures. Thus, taxpayers should not enclose with these return forms any statement showing the computation of income or tax, copies of balance-sheet, profit and loss account, TDS/ TCS certificates, proof of payment of advance tax or self-assessment tax. However, these documents
shall have to be produced before the Assessing Officer on demand by him. The Chief Commissioners of Income-tax/ Commissioners of Income-tax must ensure that documents if any, annexed with these returns or Form ITR-V are detached at the time of receiving these returns/ ITR-V and are returned to the taxpayers immediately.
7. Following clarifications are also issued in respect of certain issues arising from furnishing the returns in the above mentioned forms:
•(i) An assessee should obtain the report of audit from an accountant under section 44AB of the Act on or before the due date of the furnishing of the return and should fill out the relevant columns of the return forms on the basis of such report. However, the report of audit should not be attached with the return or furnished separately any time before or after the due date. The assessee should retain the report with himself. If called for by any income-tax authority during any proceeding under the Act, it shall b e incumbent upon the assessee to furnish/produce the same in original. No penalty under section 271B shall be initiated or levied for not furnishing the tax audit report on or before the due date. However, if the audit report has not been obtained before the due date, provisions of section 271B shall continue to be attracted.
•(ii) These returns are not to be accompanied with any other document including any statutory form or report of audit (other than the report under section 92E), which is otherwise required to be furnished before the due date or along with the return for making any claim. The provisions of the law shall be deemed to have been complied with in respect of the requirement of the filing of the attachments or documents or reports along with the return. No penalty shall be initiated/ levied for not furnishing such documents if such documents were otherwise obtained before the specified date, if any, provided in the statute. All these documents should be retained by the taxpayers. If called for by any income-tax authority during any proceeding under the Act, it shall be incumbent upon the assessee to Furnish /produce the same, in original.
•(iii) The report as required under section 92E of the Income-tax Act should not be furnished along with the return. However, it should be separately furnished before the date specified in rule 10E.
8. As stated in paragraph 5 above, it is mandatory for a company and a firm liable to audit under section 44AB of the Act to furnish the return electronically. However, electronic filing is optional for other categories of tax-payers. The e-Return has to be furnished at http://incometaxindiaefiling.gov.in. Further, it is advisable, though not mandatory, to use a digital signature for electronically furnishing the return. If the return is electronically furnished under a digital signature, the tax-payer is not required to furnish the Form ITR-V with
the Income-tax Department as a follow up to the electronic transmitting of data in the return. Similarly, any return which is digitally signed by the assessee and filed with an E-Return Intermediary (ERI), who, in turn, submits the return to the Income Tax Department under his digital signature, will also be deemed to have been filed under a digital signature of the assessee and no Form ITR-V is required to be submitted. In such cases, the date of electronic transmission of the data in the return shall be the date of furnishing the return.
9. However, if the assessee does not use a digital signature for electronically transmitting the data, he is required to follow-up the electronic transmission of the data by submitting the Form ITR-V with the Income-tax Department as verification of the electronic filing of the return. In such a case, the date of transmitting the data electronically will be the date of furnishing the return if the Form ITR-V is furnished within thirty days after the date of transmitting the data electronically. In case, Form ITR-V, is furnished after the above mentioned period, it will be deemed that the return in respect of which the Form ITR-V has been filed was never furnished and it shall be incumbent on the assessee to electronically re-transmit the data and follow it up by submitting the new Form ITR-V within thirty days.
10. Since the Form ITR-V is bar-coded, assessee is advised not to fold the same and post it in A4 size envelope. The assessee shall furnish the Form ITR-V to the Income-tax Department by mailing it to “Income Tax Department – CPC, Post Box No - 1, Electronic City Post Office, Bangalore - 560100, Karnataka” within thirty days after the date of transmitting the data electronically. The Post Box shall deliver all the Form ITR-V to the Centralized Processing Centre (CPC) of the Income-tax Department in Bangalore. Upon receipt of the Form ITR-V, the CPC shall send an e-mail acknowledging the receipt of Form ITR-V. The e-mail shall be sent in due course to the e-mail address furnished by the tax-payers in his return. No Form ITR-V shall be received in any other office of the Income-tax Department or in any other manner.
11. All returns filed electronically shall be processed, on priority basis, only at the Centralized Processing Centre of the Income-tax Department in Bangalore.
12. Since no documents are required to be furnished along with the return of income, the credit for Tax Deducted at Source (TDS), Tax Collected at Source (TCS), advance tax and self assessment tax (hereinafter collectively referred to as ‘pre-paid taxes’) shall be allowed on the basis of information relating to pre-paid taxes furnished in the relevant schedules of the return forms subject to matching with the information provided by the deductor, collector and the banks. Therefore, tax payers are advised to ensure that the information relating to pre-paid taxes is complete in all respect and correct. With a view to enabling the matching of information relating to pre-paid taxes furnished by the tax payers, the Income-tax Department has created a
system of Unique Transaction Number (UTN) and Challan Identification Number (CIN).Assesses must ensure that the deductor and the collector have provided them with separate UTNs in respect of each TDS and TCS transaction. Similarly, they must also ensure that the UTN for every TDS and TCS claim in the return is correctly filled in. Similarly, they must ensure that they correctly fill in the CIN in respect of payments of advance tax and self-assessment tax. Further, no disallowance of claim for pre-paid taxes shall be made by the Assessing Officer only on the ground that the TDS/TCS certificates and challans have not been furnished along with the return of income or Form ITR-V.
13. The return of income in Form No. ITR-1 to Form No.ITR-8 for Assessment Year 2009-10 have been notified which require, amongst other, the quoting of the relevant UTN for every TDS or TCS claim made by the assessee. Therefore, the credit for any TDS or TCS claim will be allowed, amongst others, if the assessee quotes the relevant UTN for every TDS and TCS claim and the said UTN matches with the UTN in the database of the Income Tax Department. With a view to enabling the processing of returns relating to financial year 2007-08 (Assessment Year 2008-09) and enabling the assessee to receive the UTN for TDS and TCS transactions in the Financial Year 2008-09 (relevant for Assessment Year 2009-10), the following procedure will be followed: -
•(a) National Securities Depository Limited (NSDL) shall assign an UTN for every TDS and TCS transaction record in Financial Year 2007-08 and 2008-09 reported in the quarterly returns received by it.
•(b) NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.
•(c) Upon receipt of the UTN, the deductor will inform the UTN to the deductee. In cases where the UTNs are available to the deductor before the issue of the TDS/TCS certificate to the deductee, the deductor will indicate the UTNs on the certificate. However, if the UTNs are not available to the deductor before the issue of TDS/TCS certificate, the deductor shall, subsequently, send a consolidated statement of all TDS/TCS transactions indicating the UTNs.
•(d) NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. As a result, even if the UTNs are not received by the deductee from the deductor, they can be directly obtained from the NSDL database and quoted while making claims of TDS and TCS in the return of income.
14. In the past, instances have come to the notice of the Board that in spite of specific directions contained in the Instructions for filling the return forms, the practice of accepting returns, along with annexures is still continuing. Tax-payers have in the past also complained that staff and officials in certain stations are refusing to accept returns which are not accompanied with annexures. These practices are against the expressed policy of the Government and are not in consonance with the legal provisions. Therefore, it is emphasized that
Chief Commissioners of Income Tax must ensure strict compliance with the provisions of law. It may be reiterated that all annexures accompanying the income tax return forms should be detached and returned to the tax payers by the receiving official.
15. The contents of this circular are for strict compliance by all officers and staff of the Income Tax Department. Any violation by the officers and staff of Income Tax Department will be seriously viewed.
(Munesh Kumar)
Secretary,
Central Board of Direct Taxes
[F.No.142/02/2009-TPL]
NEW TDS SYSTEM CLARIFICATION CIRCULAR -2/2009
Income tax department comes with a detailed circular regarding Provisions of new TDS and TCS system and try to resolve all the issue one by one but to what extent they are successful in their goal ,we have wait and see.I have Just gone through the circular and found some overlapping in time schedule they have given, in some of the provisions.The main issue in the circular are given below
1.Form 17: applicable from 01.04.2009 but tax deposit can be done only from 01.06.2009 through form 17.Period from 01.04.09 to 30.05.2009, form 17 is to be uploaded only without depositing the tax through this form.
2.UTN (unique transaction number ) will be available for AY 2009-10 also through NSDL
3.ITR form where TDS/TCS is involved ,UTN is necessary to be quoted against TDS entries for AY 2009-10 also ,so if you are planning to filing your income tax return and you have not UTN for tax deduction entries then you have to wait for a period and get it from your deductor.
4.Form 16:New form 16 applicable for ay 2010-11 can be issued upto 30June 2009 for AY 2009-10 or detail of UTN has to be given to deductor for AY 2009-10.
5.Form 24C is required to be filed quarterly and 24Q,26Q and 27q is required to be filed only yearly even not required for the first quarter of the FY 2009-10
Full circular is given for your ready reference ,I will try to update you on each and every aspect of the New TDS system and impact of the new clarification on Tax payer/and tax deductor and what we should do so that we can match ourselves with the NEW chagces.
F.No. 142/22/2008-TPL
Circular No. 02 / 2009
Page 1 of 8
F.No. 142/22/2008-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
….
New Delhi, the 21st May, 2009
•Subject:- New TDS and TCS payment and information reporting system- Notification No.858(E), dated 25th March, 2009 published in Official Gazette-regarding.
_______________________________________________________________________
The Finance Act, 2008 inserted a new sub-section (1A) in section 143 of the Income-tax Act,1961 empowering the Board to make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee. For the purposes of enabling centralised processing of returns, it is necessary to ensure the integrity of the database, in particular, the information relating to tax deduction at source, advance tax and self assessment tax.
2. One of the fundamental principles of financial accounting is that if a person claims credit for payment of money to a third person, the credit should be allowed only if the payment and the information relating to the transaction have been received from the third person. The advance tax and self assessment tax is paid directly by the assessee by filling a challan which bears a unique Challan Identification Number (CIN) and the PAN of the assessee. These two number systems are used to cross verify the claim of tax payment made by the assessee and allow appropriate credit.
3. In the context of TDS, the first best principle is that no claim for TDS / TCS should be admissible unless the deductor / payer has paid the amount so deducted / collected to the credit of the Central Government and the information relating to the transaction is received. Since the business process of the Income Tax department was manually organised and the volume of TDS related information was large, it was not feasible to undertake 100 per cent matching of TDS claims with information furnished by the deductor. Consequently, the Income Tax Department adopted a risk management strategy for allowing claim for TDS as a second best option. With the advances in information technology, it is technically feasible to design a business process which would enable 100 per cent matching in real time, thereby, eliminating the risk. Pursuant to the recommendation of the Task Force on Direct Taxes (chaired by Dr. Kelkar), as a first step in this direction, the deductors were required to electronically furnish the TDS related information (through the NSDL). This system was introduced in early 2004 as one of the modules of the Taxpayer Information Network (TIN).
4. The quantity and quality of data flowing through this module is far from satisfactory. The data is largely unverifiable. The matching of the deduction reported by the deductor and claimed by the deductee assessee continuous to be poor for the following reasons:-
•(i) Non-compliance, especially by Government deductors, with TDS return filing requirement.
•(ii) Low quoting of PAN number in TDS returns that are filed on account of non-furnishing of PAN by deductees to their deductors and negligence by deductors.
5. Unlike in the case of advance tax and self assessment tax, the TDS information does not bear a unique transaction identification number. As a result, the PAN forms the only basis for matching. To the extent PAN quoting is inadequate or deficient, it is not feasible to match the claim made by the deductee assessee with the TDS information reported by the deductor. Hence, it becomes necessary to make ad-hoc rules for allowing credit for TDS or in the alternative, interface with the assessee for physical verification of the TDS certificate. Both these approaches are flawed since there is no reconciliation of deductees claim with the information provided by the deductor and the integrity of the system is questionable. The efforts of the Income Tax Department over the last four years for improving the TDS and TCS database have not yielded desired result.
6. Further, Government (both Central and State together) is the largest deductor of tax being the largest employer and the largest spender on works contract. Under the extant procedure, tax deducted by the Central Government departments is paid to the account of the Central Government through book
transfer. Unlike other deductors, these departments do not make any direct payment of the TDS amount in the banks. Similarly, the Central Government Ministries, departments and their sub-ordinate and attached offices are large scale defaulters in complying with the TDS information reporting requirements. Even the certificates issued by these organisations are often illegible and of poor quality. Hence, these are unreliable. This has been a constant source of public grievance. It also creates an opportunity for interface with the taxpayer. This process also does not assure the department of the legitimate revenues and enforce compliance. Hence, the mechanism of payment of tax so deducted and compliance with the reporting requirements is not satisfactory.
7. Unlike the Central Government, the State Government is required to make a consolidated payment of the TDS amount in respect of all its deductors and deductions directly into the Reserve Bank of India. This is done by the Accountant General of the State. As a result, there is no correlation between the deduction, payment and reporting. Further, compliance by State Governments with the TDS information reporting requirement is no better than in the case of the Central Government.
8. In the light of the above, the Department adopted the second best option of a risk management strategy for allowing TDS claims. Under this strategy, the Department has been allowing credit for TDS claims even though the transactions do not fully match/reconcile with the information provided by the deductor. Further, the Department have also been unable to undertake follow up verification of such claims at the deductors end on account of inadequate resources. As a result the system is vulnerable and exposes public revenues to extreme risk of fraud and leakage.
9. With a view to resolving the problems in granting credit for pre-paid taxes, the Central Board of Direct Taxes constituted a sub-group to analyse the various problems in granting credit for prepaid taxes and make appropriate recommendations. According to the Sub-group, the problem of matching and reconciliation of prepaid taxes is rooted in the three sets of data pertaining to TDS entering the system separately at different times from different sources, thus causing mismatch. Therefore, the Sub-group recommended that the ‘problem can be solved if the agency receiving the TDS amount and the TDS returns (and the documents by which this is done) is the same. In such a situation the TDS payments can be immediately credited to the accounts of the deductees by the agency handling both the operations. For example, if the detailed list giving break-up and identity particulars of deductees are given to the bank along with the TDS challans for the consolidated amount of TDS at the time of payment, the accounts of deductees can be simultaneously credited, thus eliminating the reconciliation issues between challan data in OLTAS and in TDS returns. Owing to the advances in technology, it is now feasible to implement this recommendation.
10. The Sub-group also examined the issue of granting credit for TDS deducted by government deductors and recommended that Central Government deductors should also be brought into the discipline of deposit of TDS in bank accounts like other deductors.
11. As stated above, the Government has introduced the centralised processing of returns which envisages no interface with the taxpayer. Further, the processing is also required to be done in an automated jurisdiction-less manner. Therefore, it is necessary to have in place a perfect TDS payment and information reporting system so as to optimise the efficiency of the centralised return processing system. It is imperative to move to the first best solution to also minimize the risk of financial fraud. This is in the interest of all stakeholders – Government, Income-tax Department and taxpayers.Therefore, the Board have decided that, henceforth, claim for TDS and TCS shall be allowed only if the–
•(i) amount has been deposited by the deductor / collector;
•(ii) information relating to the deductee has been furnished by the deductor / collector;and
•(iii) claim matches the information furnished by the deductor / collector.
12. With a view to enabling the implementation of the aforesaid decision, the TDS and TCS payment and information reporting system has been redesigned vide notification No. 858(E) dated 25th March, 2009 published in Official Gazette. The salient features of the new TDS and TCS payment and information reporting system are the following: -
•(i) The new system has been harmonized for all deductors (including Central and State Governments). Therefore, like non-governmental tax deductors, every deductor in the Central and State Government have also been made responsible for making direct payment of TDS in the bank. They are no longer allowed to make payments of the TDS and TCS by making book adjustments or consolidated payments. As a result, the TDS payment and information reporting system will be uniform across deductors.
•(ii) Rule 30 and Rule 37 CA of the Income-tax Rules, 1962 have been substituted to provide,inter alia, for the following: -
◦(a) All sums of tax deducted at source under Chapter XVII-B and of tax collected at source under Chapter XVII-BB shall, in general, 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. Similarly, the same time limit for payment will also apply for income-tax due under sub-section (1A) of section 192.
◦(b) It is mandatory for all deductors (including Central Government and State Governments) to pay the amount by electronically remitting it into the RBI, SBI or any authorized bank.
◦(c) It is mandatory for all deductors (including Central Government and State Governments) to make the payment by electronically furnishing an income-tax challan in Form No. 17.
•(iii) In the process of electronically furnishing the income-tax challan in Form No. 17, thedeductor will be simultaneously required to furnish to the Taxpayer Information Network (TIN) system maintained by National Securities Depository Limited (NSDL) either through screen based upload or file upload, three basic information relating to the deduction i.e., PAN, name of the deductee and amount of TDS/TCS.
•(iv) Upon successful remittance of the TDS/TCS to Central Government account and the uploading of the basic information as mentioned above to the TIN system, every deduction record will be assigned a unique transaction number (UTN).
•(v) NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.
•(vi) The UTN will be required to be quoted by the deductor on the TDS/TCS certificate issued by him to the deductee.
•(vii) NSDL will also create a facility to allow independent viewing of the UTNs by the deductee.
•(viii) With a view to enabling the Income Tax Department to monitor compliance by the deductor with the TDS provisions, every person (including Central Government and State Government) who has obtained a Tax Deduction or Collection Account Number (TAN) shall electronically furnish a quarterly statement of compliance with TDS provisions in Form No. 24C. It is mandatory for all TAN holders to furnish this form irrespective of whether any payment liable to TDS has been made or not. This form shall be furnished on or before the 15th July, the 15th October, the 15th January in respect of the first three quarters of the financial year, respectively, and on or before the 15th June following the last quarter of the financial year. This e-form No. 24C has to be furnished at incometaxindiaefiling.gov.in. The first quarter in respect of which Form 24C is required to be furnished is the quarter ending on 30th June, 2009.
•(ix) In order to enable the deductor to furnish the UTN to the deductee, the existing Form 16 and Form 16A have been appropriately modified.
•(x) The quarterly returns of TDS and TCS hitherto required to be filed in Form No. 24Q,Form No. 26Q, Form No. 27Q and Form No. 27EQ shall now be required to be filed for all quarters on or before the 15th June following the Financial Year. Effectively, the quarterly returns have now been replaced by an annual return.
13. The above new system will be effective for all tax deducted at source or tax collected at source on or after the 1st April, 2009. However, any TDS or TCS effected on or after the 1st April, 2009 but not later than 31st May, 2009 shall continue to be paid to the credit of the Central Government by using the old challan form. The TDS or TCS effected on or after the 1st June, 2009 shall be required to be paid electronically by electronically furnishing income tax challan in Form No. 17.
14. Where the payment of TDS or TCS effected on or after the 1st April, 2009 but not later than 31st May, 2009 is paid to the credit of the Central Government by using the old challan form, the deductor / collector shall, nevertheless, be required to fill up Form No.17 in respect of such payments any time between 1st July, 2009 to 15th July, 2009. Therefore, the deductors/collectors are advised to prepare the schedule relating to details of TDS / TCS from deductees in Form No.17 in advance (in an excel sheet) and be in a state of preparedness to file the same by 15th July, 2009 so that the UTNs relating to TDS / TCS transactions carried out in the month of April and May can be generated / obtained for onward transmission to the deductees.
15. Further, a deductor can split the total amount of TDS and TCS which he is required to deposit to
the credit of the Central Government so that every deposit to the account of the Central Government is
made through a separate challan in Form 17. For example, if a deductor is liable to deposit Rs. 1 lakh, he
can split the amounts into four payments of Rs 25000/- each and deposit each of the amounts through a
separate challan in Form 17 at four different times.
16. The return of income in Form No. ITR-1 to Form No.ITR-8 for Assessment Year 2009-10 have
been notified which requires, amongst other, the quoting of the relevant UTN for every TDS or TCS claim
made by the assessee. Therefore, the credit for any TDS or TCS claim will be allowed, amongst others, if
the assessee quotes the relevant UTN for every TDS and TCS claim and the said UTN matches with the
UTN in the database of the Income Tax Department. With a view to enabling the processing of returns
relating to Financial Year 2007-08 (Assessment Year 2008-09) and enabling the assessee to receive the
UTN for TDS and TCS transactions in the Financial Year 2008-09 (relevant for Assessment Year 2009-10),
the following procedure shall be followed: -
•(a) National Securities Depository Limited (NSDL) shall assign an UTN for every TDS and TCS transaction records in Financial Years 2007-08 and 2008-09, reported in the quarterly returns received by it.
•(b) NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.
•(c) Upon receipt of the UTN, the deductor will inform the UTN to the deductee. In cases where the UTNs are available to the deductor before the issue of the TDS/TCS certificate to the deductee, the deductor will indicate the UTNs on the certificate. However, if the UTNs are not available to the deductor before the issue of TDS/TCS certificate, the deductor shall, subsequently, send a consolidated statement of all TDS/TCS transactions indicating the UTNs.
•(d) NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. As a result, even if the UTNs are not received by the deductee from the deductor, they can be directly obtained from the NSDL database and quoted while making claims of TDS and TCS in the return of income.
17. TDS certificates were hitherto required to be issued in Form 16 or Form 16A as the case may be. Similarly, TCS certificates were issued in Form 27D. These forms have been substituted by the new Form 16, Form 16A and Form 27D with effect from the 1st day of April, 2009. In the new Forms, it is mandatory for the deductor/collector to quote, inter-alia, the UTN. Therefore, where the certificate is required to be issued in respect of deduction or collection made before the 1st April, 2009, the deductor/collector may adopt any of the following course of action:-
•(a) The deductor/collector may issue certificate of deduction or collection in the Form 16,Form 16A or Form 27D, as the case may be, as it existed prior to 1st April, 2009 and send a consolidated statement of UTNs to the deductee/buyer/lessee etc., as soon as the same is received by him; or
•(b) The deductor/collector may issue certificate of deduction or collection in the new Form 16, Form 16A or Form 27D, as the case may be.
18. Rule 31 of the Income Tax Rules, as it existed prior to its substitution, provides that, in general, the TDS certificates in Form 16 and Form 16A should be issued within one month from the end of the month in which the deduction is made. Similarly, Rule 37D, as it existed prior to its substitution, provides that, in general, the TCS certificates in Form 27D should be issued within one month from the end of the month in which the collection is made. Therefore, if the deductor/collector chooses to adopt the course specified in item (b) of para 13 above, the TDS/TCS certificate may be issued beyond the stipulated period of one month but not later than 30th June, 2009.
19. As regards, TDS/TCS certificates in respect of deduction or collection effected on or after the 1st April, 2009, it is mandatory to issue the certificates in the new Forms and quote the UTN relating to the TDS/TCS transactions.
20. As stated above, a new Form 24C has been notified to monitor compliance with the provisions of TDS/TCS. The first part of the Form relates to personal information and filing status. The Schedule COM-I relates to details of TDS/TCS compliance in the first month of the relevant quarter. Likewise details of TDS/TCS compliance for the second and third month of the relevant quarter would have to be reported in Schedule COM-2 and Schedule COM-3 respectively. In this Schedule in column (3), for example, against section 194A in column (1), the TAN holder is required to furnish the total amount of interest paid during the month. Let us assume that this total amount is Rs. 1 crore. In column (4) of the corresponding entry, the deductor is required to furnish the total amount on which TDS was liable or eligible to be deducted out of Rs. 1 crore. As is well known, no TDS is required to be deducted if the interest payment is less than Rs. 10,000. If the total of the amounts of interest payment/credit less than Rs. 10,000 is Rs. 30 lakhs, then the deductor must report in column (4) an amount of Rs. 70 lakhs (Rs. 1 crore – Rs. 30 lakhs). In column (5), the deductor has to report that the total amount on which tax was deducted at prescribed rate out of the amount reported in column (4). In the instant case the rate of tax to be deducted at source is 11.33 percent (including surcharge and education cess). However, in many instances the recipients of interest exceeding the threshold limit of Rs. 10,000/- would either furnish certificate for non deduction of tax or deduction at a lower rate than the prescribed rate. Let us assume that the amount of interest paid to such recipients is Rs. 15 lakhs. Therefore, the amount of interest payment liable to TDS at the prescribed rate would be Rs. 55 lakhs (Rs. 70 lakhs – Rs. 15 lakhs), which is required to be reported in column (5). Since the prescribed rate is 11.33%, and the amount of interest liable to TDS at the prescribed rate is Rs. 55 lakhs, the amount of TDS on such payment is Rs. 6,23,150/-. This amount is required to be reported in column (6). In column (7), the deductor is required to report the amount of Rs. 15 lakh i.e., the amount of interest payment liable to TDS at less
than the prescribed rate. Let us assume that the TDS at ‘nil’ or lower rate on the amount of Rs. 15 lakh
is Rs. 50,000/-. This amount would be required to be reported in column (8). The total amount of TDS
of Rs. 6,73,150/- (Rs. 6,23,150 + Rs. 50,000) is required to be reported in column (9). The above
example is reproduced below in the tabular form as would appear in Form 24C:-
21. Form 24C is required to be furnished by all TAN holders irrespective of whether a TDS/TCS transaction has been effected during the quarter or not. In the event of the column (3) of the Schedules in From 24C is zero for all nature of payments, the deductor/collector should specify in the section on filing status in Form 24C that it is a case of ‘Nil Return’ and it would not be necessary to fill in the Schedules.
22. In Schedule PAY of Form 24C, the deductor/collector is required to indicate the details of the payment of the TDS/TCS to the credit of the Central Government.
23. 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 behaviour.
(Munesh Kumar)
Secretary
Central Board of Direct Taxes
1.Form 17: applicable from 01.04.2009 but tax deposit can be done only from 01.06.2009 through form 17.Period from 01.04.09 to 30.05.2009, form 17 is to be uploaded only without depositing the tax through this form.
2.UTN (unique transaction number ) will be available for AY 2009-10 also through NSDL
3.ITR form where TDS/TCS is involved ,UTN is necessary to be quoted against TDS entries for AY 2009-10 also ,so if you are planning to filing your income tax return and you have not UTN for tax deduction entries then you have to wait for a period and get it from your deductor.
4.Form 16:New form 16 applicable for ay 2010-11 can be issued upto 30June 2009 for AY 2009-10 or detail of UTN has to be given to deductor for AY 2009-10.
5.Form 24C is required to be filed quarterly and 24Q,26Q and 27q is required to be filed only yearly even not required for the first quarter of the FY 2009-10
Full circular is given for your ready reference ,I will try to update you on each and every aspect of the New TDS system and impact of the new clarification on Tax payer/and tax deductor and what we should do so that we can match ourselves with the NEW chagces.
F.No. 142/22/2008-TPL
Circular No. 02 / 2009
Page 1 of 8
F.No. 142/22/2008-TPL
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
….
New Delhi, the 21st May, 2009
•Subject:- New TDS and TCS payment and information reporting system- Notification No.858(E), dated 25th March, 2009 published in Official Gazette-regarding.
_______________________________________________________________________
The Finance Act, 2008 inserted a new sub-section (1A) in section 143 of the Income-tax Act,1961 empowering the Board to make a scheme for centralised processing of returns with a view to expeditiously determining the tax payable by, or the refund due to, the assessee. For the purposes of enabling centralised processing of returns, it is necessary to ensure the integrity of the database, in particular, the information relating to tax deduction at source, advance tax and self assessment tax.
2. One of the fundamental principles of financial accounting is that if a person claims credit for payment of money to a third person, the credit should be allowed only if the payment and the information relating to the transaction have been received from the third person. The advance tax and self assessment tax is paid directly by the assessee by filling a challan which bears a unique Challan Identification Number (CIN) and the PAN of the assessee. These two number systems are used to cross verify the claim of tax payment made by the assessee and allow appropriate credit.
3. In the context of TDS, the first best principle is that no claim for TDS / TCS should be admissible unless the deductor / payer has paid the amount so deducted / collected to the credit of the Central Government and the information relating to the transaction is received. Since the business process of the Income Tax department was manually organised and the volume of TDS related information was large, it was not feasible to undertake 100 per cent matching of TDS claims with information furnished by the deductor. Consequently, the Income Tax Department adopted a risk management strategy for allowing claim for TDS as a second best option. With the advances in information technology, it is technically feasible to design a business process which would enable 100 per cent matching in real time, thereby, eliminating the risk. Pursuant to the recommendation of the Task Force on Direct Taxes (chaired by Dr. Kelkar), as a first step in this direction, the deductors were required to electronically furnish the TDS related information (through the NSDL). This system was introduced in early 2004 as one of the modules of the Taxpayer Information Network (TIN).
4. The quantity and quality of data flowing through this module is far from satisfactory. The data is largely unverifiable. The matching of the deduction reported by the deductor and claimed by the deductee assessee continuous to be poor for the following reasons:-
•(i) Non-compliance, especially by Government deductors, with TDS return filing requirement.
•(ii) Low quoting of PAN number in TDS returns that are filed on account of non-furnishing of PAN by deductees to their deductors and negligence by deductors.
5. Unlike in the case of advance tax and self assessment tax, the TDS information does not bear a unique transaction identification number. As a result, the PAN forms the only basis for matching. To the extent PAN quoting is inadequate or deficient, it is not feasible to match the claim made by the deductee assessee with the TDS information reported by the deductor. Hence, it becomes necessary to make ad-hoc rules for allowing credit for TDS or in the alternative, interface with the assessee for physical verification of the TDS certificate. Both these approaches are flawed since there is no reconciliation of deductees claim with the information provided by the deductor and the integrity of the system is questionable. The efforts of the Income Tax Department over the last four years for improving the TDS and TCS database have not yielded desired result.
6. Further, Government (both Central and State together) is the largest deductor of tax being the largest employer and the largest spender on works contract. Under the extant procedure, tax deducted by the Central Government departments is paid to the account of the Central Government through book
transfer. Unlike other deductors, these departments do not make any direct payment of the TDS amount in the banks. Similarly, the Central Government Ministries, departments and their sub-ordinate and attached offices are large scale defaulters in complying with the TDS information reporting requirements. Even the certificates issued by these organisations are often illegible and of poor quality. Hence, these are unreliable. This has been a constant source of public grievance. It also creates an opportunity for interface with the taxpayer. This process also does not assure the department of the legitimate revenues and enforce compliance. Hence, the mechanism of payment of tax so deducted and compliance with the reporting requirements is not satisfactory.
7. Unlike the Central Government, the State Government is required to make a consolidated payment of the TDS amount in respect of all its deductors and deductions directly into the Reserve Bank of India. This is done by the Accountant General of the State. As a result, there is no correlation between the deduction, payment and reporting. Further, compliance by State Governments with the TDS information reporting requirement is no better than in the case of the Central Government.
8. In the light of the above, the Department adopted the second best option of a risk management strategy for allowing TDS claims. Under this strategy, the Department has been allowing credit for TDS claims even though the transactions do not fully match/reconcile with the information provided by the deductor. Further, the Department have also been unable to undertake follow up verification of such claims at the deductors end on account of inadequate resources. As a result the system is vulnerable and exposes public revenues to extreme risk of fraud and leakage.
9. With a view to resolving the problems in granting credit for pre-paid taxes, the Central Board of Direct Taxes constituted a sub-group to analyse the various problems in granting credit for prepaid taxes and make appropriate recommendations. According to the Sub-group, the problem of matching and reconciliation of prepaid taxes is rooted in the three sets of data pertaining to TDS entering the system separately at different times from different sources, thus causing mismatch. Therefore, the Sub-group recommended that the ‘problem can be solved if the agency receiving the TDS amount and the TDS returns (and the documents by which this is done) is the same. In such a situation the TDS payments can be immediately credited to the accounts of the deductees by the agency handling both the operations. For example, if the detailed list giving break-up and identity particulars of deductees are given to the bank along with the TDS challans for the consolidated amount of TDS at the time of payment, the accounts of deductees can be simultaneously credited, thus eliminating the reconciliation issues between challan data in OLTAS and in TDS returns. Owing to the advances in technology, it is now feasible to implement this recommendation.
10. The Sub-group also examined the issue of granting credit for TDS deducted by government deductors and recommended that Central Government deductors should also be brought into the discipline of deposit of TDS in bank accounts like other deductors.
11. As stated above, the Government has introduced the centralised processing of returns which envisages no interface with the taxpayer. Further, the processing is also required to be done in an automated jurisdiction-less manner. Therefore, it is necessary to have in place a perfect TDS payment and information reporting system so as to optimise the efficiency of the centralised return processing system. It is imperative to move to the first best solution to also minimize the risk of financial fraud. This is in the interest of all stakeholders – Government, Income-tax Department and taxpayers.Therefore, the Board have decided that, henceforth, claim for TDS and TCS shall be allowed only if the–
•(i) amount has been deposited by the deductor / collector;
•(ii) information relating to the deductee has been furnished by the deductor / collector;and
•(iii) claim matches the information furnished by the deductor / collector.
12. With a view to enabling the implementation of the aforesaid decision, the TDS and TCS payment and information reporting system has been redesigned vide notification No. 858(E) dated 25th March, 2009 published in Official Gazette. The salient features of the new TDS and TCS payment and information reporting system are the following: -
•(i) The new system has been harmonized for all deductors (including Central and State Governments). Therefore, like non-governmental tax deductors, every deductor in the Central and State Government have also been made responsible for making direct payment of TDS in the bank. They are no longer allowed to make payments of the TDS and TCS by making book adjustments or consolidated payments. As a result, the TDS payment and information reporting system will be uniform across deductors.
•(ii) Rule 30 and Rule 37 CA of the Income-tax Rules, 1962 have been substituted to provide,inter alia, for the following: -
◦(a) All sums of tax deducted at source under Chapter XVII-B and of tax collected at source under Chapter XVII-BB shall, in general, 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. Similarly, the same time limit for payment will also apply for income-tax due under sub-section (1A) of section 192.
◦(b) It is mandatory for all deductors (including Central Government and State Governments) to pay the amount by electronically remitting it into the RBI, SBI or any authorized bank.
◦(c) It is mandatory for all deductors (including Central Government and State Governments) to make the payment by electronically furnishing an income-tax challan in Form No. 17.
•(iii) In the process of electronically furnishing the income-tax challan in Form No. 17, thedeductor will be simultaneously required to furnish to the Taxpayer Information Network (TIN) system maintained by National Securities Depository Limited (NSDL) either through screen based upload or file upload, three basic information relating to the deduction i.e., PAN, name of the deductee and amount of TDS/TCS.
•(iv) Upon successful remittance of the TDS/TCS to Central Government account and the uploading of the basic information as mentioned above to the TIN system, every deduction record will be assigned a unique transaction number (UTN).
•(v) NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.
•(vi) The UTN will be required to be quoted by the deductor on the TDS/TCS certificate issued by him to the deductee.
•(vii) NSDL will also create a facility to allow independent viewing of the UTNs by the deductee.
•(viii) With a view to enabling the Income Tax Department to monitor compliance by the deductor with the TDS provisions, every person (including Central Government and State Government) who has obtained a Tax Deduction or Collection Account Number (TAN) shall electronically furnish a quarterly statement of compliance with TDS provisions in Form No. 24C. It is mandatory for all TAN holders to furnish this form irrespective of whether any payment liable to TDS has been made or not. This form shall be furnished on or before the 15th July, the 15th October, the 15th January in respect of the first three quarters of the financial year, respectively, and on or before the 15th June following the last quarter of the financial year. This e-form No. 24C has to be furnished at incometaxindiaefiling.gov.in. The first quarter in respect of which Form 24C is required to be furnished is the quarter ending on 30th June, 2009.
•(ix) In order to enable the deductor to furnish the UTN to the deductee, the existing Form 16 and Form 16A have been appropriately modified.
•(x) The quarterly returns of TDS and TCS hitherto required to be filed in Form No. 24Q,Form No. 26Q, Form No. 27Q and Form No. 27EQ shall now be required to be filed for all quarters on or before the 15th June following the Financial Year. Effectively, the quarterly returns have now been replaced by an annual return.
13. The above new system will be effective for all tax deducted at source or tax collected at source on or after the 1st April, 2009. However, any TDS or TCS effected on or after the 1st April, 2009 but not later than 31st May, 2009 shall continue to be paid to the credit of the Central Government by using the old challan form. The TDS or TCS effected on or after the 1st June, 2009 shall be required to be paid electronically by electronically furnishing income tax challan in Form No. 17.
14. Where the payment of TDS or TCS effected on or after the 1st April, 2009 but not later than 31st May, 2009 is paid to the credit of the Central Government by using the old challan form, the deductor / collector shall, nevertheless, be required to fill up Form No.17 in respect of such payments any time between 1st July, 2009 to 15th July, 2009. Therefore, the deductors/collectors are advised to prepare the schedule relating to details of TDS / TCS from deductees in Form No.17 in advance (in an excel sheet) and be in a state of preparedness to file the same by 15th July, 2009 so that the UTNs relating to TDS / TCS transactions carried out in the month of April and May can be generated / obtained for onward transmission to the deductees.
15. Further, a deductor can split the total amount of TDS and TCS which he is required to deposit to
the credit of the Central Government so that every deposit to the account of the Central Government is
made through a separate challan in Form 17. For example, if a deductor is liable to deposit Rs. 1 lakh, he
can split the amounts into four payments of Rs 25000/- each and deposit each of the amounts through a
separate challan in Form 17 at four different times.
16. The return of income in Form No. ITR-1 to Form No.ITR-8 for Assessment Year 2009-10 have
been notified which requires, amongst other, the quoting of the relevant UTN for every TDS or TCS claim
made by the assessee. Therefore, the credit for any TDS or TCS claim will be allowed, amongst others, if
the assessee quotes the relevant UTN for every TDS and TCS claim and the said UTN matches with the
UTN in the database of the Income Tax Department. With a view to enabling the processing of returns
relating to Financial Year 2007-08 (Assessment Year 2008-09) and enabling the assessee to receive the
UTN for TDS and TCS transactions in the Financial Year 2008-09 (relevant for Assessment Year 2009-10),
the following procedure shall be followed: -
•(a) National Securities Depository Limited (NSDL) shall assign an UTN for every TDS and TCS transaction records in Financial Years 2007-08 and 2008-09, reported in the quarterly returns received by it.
•(b) NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.
•(c) Upon receipt of the UTN, the deductor will inform the UTN to the deductee. In cases where the UTNs are available to the deductor before the issue of the TDS/TCS certificate to the deductee, the deductor will indicate the UTNs on the certificate. However, if the UTNs are not available to the deductor before the issue of TDS/TCS certificate, the deductor shall, subsequently, send a consolidated statement of all TDS/TCS transactions indicating the UTNs.
•(d) NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. As a result, even if the UTNs are not received by the deductee from the deductor, they can be directly obtained from the NSDL database and quoted while making claims of TDS and TCS in the return of income.
17. TDS certificates were hitherto required to be issued in Form 16 or Form 16A as the case may be. Similarly, TCS certificates were issued in Form 27D. These forms have been substituted by the new Form 16, Form 16A and Form 27D with effect from the 1st day of April, 2009. In the new Forms, it is mandatory for the deductor/collector to quote, inter-alia, the UTN. Therefore, where the certificate is required to be issued in respect of deduction or collection made before the 1st April, 2009, the deductor/collector may adopt any of the following course of action:-
•(a) The deductor/collector may issue certificate of deduction or collection in the Form 16,Form 16A or Form 27D, as the case may be, as it existed prior to 1st April, 2009 and send a consolidated statement of UTNs to the deductee/buyer/lessee etc., as soon as the same is received by him; or
•(b) The deductor/collector may issue certificate of deduction or collection in the new Form 16, Form 16A or Form 27D, as the case may be.
18. Rule 31 of the Income Tax Rules, as it existed prior to its substitution, provides that, in general, the TDS certificates in Form 16 and Form 16A should be issued within one month from the end of the month in which the deduction is made. Similarly, Rule 37D, as it existed prior to its substitution, provides that, in general, the TCS certificates in Form 27D should be issued within one month from the end of the month in which the collection is made. Therefore, if the deductor/collector chooses to adopt the course specified in item (b) of para 13 above, the TDS/TCS certificate may be issued beyond the stipulated period of one month but not later than 30th June, 2009.
19. As regards, TDS/TCS certificates in respect of deduction or collection effected on or after the 1st April, 2009, it is mandatory to issue the certificates in the new Forms and quote the UTN relating to the TDS/TCS transactions.
20. As stated above, a new Form 24C has been notified to monitor compliance with the provisions of TDS/TCS. The first part of the Form relates to personal information and filing status. The Schedule COM-I relates to details of TDS/TCS compliance in the first month of the relevant quarter. Likewise details of TDS/TCS compliance for the second and third month of the relevant quarter would have to be reported in Schedule COM-2 and Schedule COM-3 respectively. In this Schedule in column (3), for example, against section 194A in column (1), the TAN holder is required to furnish the total amount of interest paid during the month. Let us assume that this total amount is Rs. 1 crore. In column (4) of the corresponding entry, the deductor is required to furnish the total amount on which TDS was liable or eligible to be deducted out of Rs. 1 crore. As is well known, no TDS is required to be deducted if the interest payment is less than Rs. 10,000. If the total of the amounts of interest payment/credit less than Rs. 10,000 is Rs. 30 lakhs, then the deductor must report in column (4) an amount of Rs. 70 lakhs (Rs. 1 crore – Rs. 30 lakhs). In column (5), the deductor has to report that the total amount on which tax was deducted at prescribed rate out of the amount reported in column (4). In the instant case the rate of tax to be deducted at source is 11.33 percent (including surcharge and education cess). However, in many instances the recipients of interest exceeding the threshold limit of Rs. 10,000/- would either furnish certificate for non deduction of tax or deduction at a lower rate than the prescribed rate. Let us assume that the amount of interest paid to such recipients is Rs. 15 lakhs. Therefore, the amount of interest payment liable to TDS at the prescribed rate would be Rs. 55 lakhs (Rs. 70 lakhs – Rs. 15 lakhs), which is required to be reported in column (5). Since the prescribed rate is 11.33%, and the amount of interest liable to TDS at the prescribed rate is Rs. 55 lakhs, the amount of TDS on such payment is Rs. 6,23,150/-. This amount is required to be reported in column (6). In column (7), the deductor is required to report the amount of Rs. 15 lakh i.e., the amount of interest payment liable to TDS at less
than the prescribed rate. Let us assume that the TDS at ‘nil’ or lower rate on the amount of Rs. 15 lakh
is Rs. 50,000/-. This amount would be required to be reported in column (8). The total amount of TDS
of Rs. 6,73,150/- (Rs. 6,23,150 + Rs. 50,000) is required to be reported in column (9). The above
example is reproduced below in the tabular form as would appear in Form 24C:-
21. Form 24C is required to be furnished by all TAN holders irrespective of whether a TDS/TCS transaction has been effected during the quarter or not. In the event of the column (3) of the Schedules in From 24C is zero for all nature of payments, the deductor/collector should specify in the section on filing status in Form 24C that it is a case of ‘Nil Return’ and it would not be necessary to fill in the Schedules.
22. In Schedule PAY of Form 24C, the deductor/collector is required to indicate the details of the payment of the TDS/TCS to the credit of the Central Government.
23. 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 behaviour.
(Munesh Kumar)
Secretary
Central Board of Direct Taxes
UTN(unique transaction number) mandatory for ITR AY 2009-10
Dear Friends,In new ITR for Ay 2009-10 new columns has been inserted in TDS schedule regarding UTN(inique Transaction Number) ,at the time of releasing of Form Every body assume that this is a error by Income tax Department but Now department has clarified vide circular 2/2009 that UTN is mandatory to be filled in New ITR for AY 2009-10 ,otherwise TDS credit will not be given.But after these circular Following new point arises which requires clarification.
1. Department has issued clarification circular on 21/05/2009 ,however person can file his return for Ay 2009-10 from 1st April 2009 ,so what will be the remedy for tax payers who have filed their return between Ist April 2009 to 21st may 2009 without the detail of UTN.
2. Department has started New form 26AS from the year 2005-06 ,In which TDS and entries are being posted from TDS return uploaded by the Deductor ,so if the Credit has been shown in form 26AS for tax deduction then credit should be given to the deductee even he has not filled UTN detail in ITR.
3. Last quarter return for previous year 2008-09 regarding TDS (24Q and 26Q) can be submitted by the deductor upto 15th June 2009.As per detail given below UTN number of AY 2009-10 can be alloted by NSDL only after receipt of TDS return from deductor and thereafter deductor will provide UTN numbers to deductee either in seprate sheet or in New form 16 Format with UTN by 30th June 2009.So in best possible scenario deductee can get detail of UTN by 30th June2009 where as last date to file Income tax return is 31.07.2009 so deductee has only one month time to file the return.so In my opinion this time should also be extended and date to file Income tax Return for Ay 2009-10 should be extended to 30.09.2009 for taxpayer which is presently fixed as 31st July 2009.
UTN MANDATORY TO FILE ITRs FOR A.Y.2009-10
. The return of income in Form No. ITR-1 to Form No.ITR-8 for Assessment Year 2009-10 have been notified which requires, amongst other, the quoting of the relevant UTN for every TDS or TCS claim made by the assessee. Therefore, the credit for any TDS or TCS claim will be allowed, amongst others, if the assessee quotes the relevant UTN for every TDS and TCS claim and the said UTN matches with the UTN in the database of the Income Tax Department. With a view to enabling the processing of returns relating to Financial Year 2007-08 (Assessment Year 2008-09) and enabling the assessee to receive the UTN for TDS and TCS transactions in the Financial Year 2008-09 (relevant for Assessment Year 2009-10), the following procedure shall be followed: -
(a) National Securities Depository Limited (NSDL) shall assign an UTN for every TDS and TCS transaction records in Financial Years 2007-08 and 2008-09, reported in the quarterly returns received by it.
(b) NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.
(c) Upon receipt of the UTN, the deductor will inform the UTN to the deductee. In cases where the UTNs are available to the deductor before the issue of the TDS/TCS certificate to the deductee, the deductor will indicate the UTNs on the certificate. However, if the UTNs are not available to the deductor before the issue of TDS/TCS certificate, the deductor shall, subsequently, send a consolidated statement of all TDS/TCS transactions indicating the UTNs.
(d) NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. As a result, even if the UTNs are not received by the deductee from the deductor, they can be directly obtained from the NSDL database and quoted while making claims of TDS and TCS in the return of income
1. Department has issued clarification circular on 21/05/2009 ,however person can file his return for Ay 2009-10 from 1st April 2009 ,so what will be the remedy for tax payers who have filed their return between Ist April 2009 to 21st may 2009 without the detail of UTN.
2. Department has started New form 26AS from the year 2005-06 ,In which TDS and entries are being posted from TDS return uploaded by the Deductor ,so if the Credit has been shown in form 26AS for tax deduction then credit should be given to the deductee even he has not filled UTN detail in ITR.
3. Last quarter return for previous year 2008-09 regarding TDS (24Q and 26Q) can be submitted by the deductor upto 15th June 2009.As per detail given below UTN number of AY 2009-10 can be alloted by NSDL only after receipt of TDS return from deductor and thereafter deductor will provide UTN numbers to deductee either in seprate sheet or in New form 16 Format with UTN by 30th June 2009.So in best possible scenario deductee can get detail of UTN by 30th June2009 where as last date to file Income tax return is 31.07.2009 so deductee has only one month time to file the return.so In my opinion this time should also be extended and date to file Income tax Return for Ay 2009-10 should be extended to 30.09.2009 for taxpayer which is presently fixed as 31st July 2009.
UTN MANDATORY TO FILE ITRs FOR A.Y.2009-10
. The return of income in Form No. ITR-1 to Form No.ITR-8 for Assessment Year 2009-10 have been notified which requires, amongst other, the quoting of the relevant UTN for every TDS or TCS claim made by the assessee. Therefore, the credit for any TDS or TCS claim will be allowed, amongst others, if the assessee quotes the relevant UTN for every TDS and TCS claim and the said UTN matches with the UTN in the database of the Income Tax Department. With a view to enabling the processing of returns relating to Financial Year 2007-08 (Assessment Year 2008-09) and enabling the assessee to receive the UTN for TDS and TCS transactions in the Financial Year 2008-09 (relevant for Assessment Year 2009-10), the following procedure shall be followed: -
(a) National Securities Depository Limited (NSDL) shall assign an UTN for every TDS and TCS transaction records in Financial Years 2007-08 and 2008-09, reported in the quarterly returns received by it.
(b) NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.
(c) Upon receipt of the UTN, the deductor will inform the UTN to the deductee. In cases where the UTNs are available to the deductor before the issue of the TDS/TCS certificate to the deductee, the deductor will indicate the UTNs on the certificate. However, if the UTNs are not available to the deductor before the issue of TDS/TCS certificate, the deductor shall, subsequently, send a consolidated statement of all TDS/TCS transactions indicating the UTNs.
(d) NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. As a result, even if the UTNs are not received by the deductee from the deductor, they can be directly obtained from the NSDL database and quoted while making claims of TDS and TCS in the return of income
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