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Modifications in the e-TDS/TCS data structure and new File Validation Utility applicable from October 1, 2009

September 4th, 2009

The data structure of quarterly e-TDS / TCS statements has been modified by the Income Tax Department to incorporate certain additional fields and validations to further improve the data quality.

Key changes in the data structure of both regular and correction e-TDS/TCS files are indicated below:

  1. The types of deductor in the data structure have been further bifurcated. For e.g. State Govt., Central Govt., Company, Firm etc.

  2. The following fields have been added: -

    • Ministry name,
    • PAO / DDO code,
    • PAO / DDO registration no.,
    • State name,
    • Name of the utility used for return preparation.

In addition to the new fields, certain functionalities as under have been built in the FVU:

  1. Functionality to verify the challan details quoted in the e-TDS / TCS returns with the challan details uploaded by banks is provided.

  2. In case of failure of verification of challans, a warning file containing details of challan mismatch will be generated.

  3. Statistic report generated by FVU will contain details of verification of challans and bifurcation of payment by Government deductors (transfer voucher / challan)

All deductors are required to ensure that quarterly e-TDS/TCS returns filed from October 1, 2009 is as per the new data structure. Any statement filed as per the old data structure will be rejected at TIN w.e.f October 1, 2009.

However, e-TDS / TCS correction on regular returns filed as per the old data structure (validated with FVU version upto 2.126) should be validated with FVU version 2.126 only.

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TIN & NSDL

August 26th, 2009

Tax Information Network (TIN), a repository of nationwide Tax related information, has been established by National Securities Depository Limited (NSDL) on behalf of Income Tax Department of India (ITD). TIN is an initiative by ITD for the modernisation of the current system for collection, processing, monitoring and accounting of direct taxes using information technology.

TIN system:


TIN has three key sub-systems:

  • Electronic Return Acceptance and Consolidation System (ERACS) which consists of an infrastructure for interface with the taxpayers (a nation wide network of TIN-Facilitation Centres i.e. TIN-FC) and a web-based utility for upload of electronic returns of Tax Deduction at Source (TDS) & Tax Collection at Source (TCS) and Annual Information Return (AIR) to the central system of TIN.
  • Online Tax Accounting System (OLTAS) for daily upload to the central system, the details of tax deposited in various tax collecting branches across the country.
  • Central PAN Ledger Generation System (CPLGS) which is the central system that consolidates for each PAN:
    1. details of tax deducted/collected on its behalf (TDS/TCS) which is obtained by matching the TDS/TCS returns submitted by the deductors/collectors with the tax deposit (challan) information from the banks;
    2. details of the tax deposited (advance tax/self assessment tax) directly by the taxpayer with the bank;
    Refer to http://www.tin-nsdl.com/ for furthur details.

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How to deduct correct eTDS

August 14th, 2009

The sections 192 to 196 of Income Tax Act, directs “Any person responsible for paying any income chargeable to tax” to deduct income-tax thereon at the rates specified respectively.

Salaries:
While making the payment of Salary, deductor should consider the following and deduct correct TDS from the payment being made.

  1. Calculate the annual Approximate/Actual Salary
    1. Calculate the Exact Taxable Salary amount Paid/Payable till current month for the financial year.
    2. Calculate the approximate salary that will be paid for rest of the FY, assuming the current month salary for rest of the year salary.
  2. Add any other income reported by the Assessee [Employee].
  3. Deduct if any Loss declared by the Employee, from the annual taxable salary. Note that, only House property loss (interest in case of Self Occupied House Property) should be considered.
  4. Deduct the allowed deductions declared by employee under Section 80C, 80D, 80G, etc.
  5. Calculate the Income Tax, Surcharge and cess on the net Income, as per the “Rates in Force”
  6. Deduct if any rebate U/s 88E or Relief U/s 89. (explain the heads)
  7. Keeping it as total tax, now deduct the TDS made till last month from it.
  8. Divide the net TDS by “Remaining number of months in the FY, including current month”.
  9. Deduct this amount from employees Salary

Non Salaries:
A deductor accordingly, should follow the below points while making/preparing each payment.

  1. Categorizing each payment to relevant “type of Payment” or “Section”.
  2. Check that the payment is not a payment is being done to Government, Reserve Bank, certain corporations established under Central Act, or Mutual Funds. [comes under Section 196]
  3. Refer the Threshold limit for such section or Type of Payment.
  4. Refer the Rate of Tax
    1. Check the Assessee [party] has not submitted his declaration under Section 197A for non-deduction of TDS. [Only for payment of Interest (Securities and Other than securities), Dividends and Interest on NSC, Viz: sections 194, 194A, 193, 194EE]
    2. Check the Assessee [party] has not submitted a certificate by Assessing Officer under Section 197 for non-deduction of TDS or deduction at a Lower Rate.
    3. Check the relevant rate of TDS under respective type of payment [sections 193 to 196]
  5. Get the effective rate TDS, including Surcharge and Cess [if any].
  6. Deduct the amount as per the effective rate of TDS from the amount being paid.

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Budget 2009-10: TDS changes

August 7th, 2009
TDS Rates
Applicable for AY 2010-11 (FY 2009-10)
1. 194-I: Rental Payments
a. Earlier rates:
Plant and Machinery = 10%
Land or building or furniture or fittings to Individual/HUF = 15%
Land or building or furniture or fittings to Others = 20%
b. Revised Rates:
Plant and Machinery = 2%
Land or building or furniture or fittings to anyone = 10%
2. 194-C: Contracts
a. Earlier rates:
Contracts = 2%
Sub-Contracts = 1%
Advertisement Contracts = 1%
b. Revised Rates:
Contracts to Individuals/HUF = 1%
Contracts to others = 2%
Surcharge and Cess
1. No surcharge or Cess is applicable for TDS. Only the specified TDS rates should be considered for deduction
2. Applicable for AY 2010-11 (FY 2009-10).
Payment to Transporters:
1. For any Transporters, if they Provide the PAN number, the TDS on contract payments is NIL.
2. But, if they do not provide the PAN during the payment, 1% TDS has to be made for Individuals/HUF and at 2% for others.
3. Payments to transporters without deducting TDS (as they have quoted PAN) should be reported by Deductor with PAN details
to the Income Tax Department in the prescribed format.
4. Applicable for AY 2010-11 (FY 2009-10).
Compulsory PAN (Section 206AA)
1. It is mandatory to quote PAN in all correspondence, bills and vouchers exchanged between Deductor and deductee.
2. TDS shall be made at a flat rate of 20% (or actual rate, whichever is higher) for any payments, where assessee has not
quoted the PAN during the payment.
a. This is applicable even in case where assessee gives Form 15G/15H u/s 197A.
b. This is also applicable for Non resident Payments.
3. Assessing officer shall not rise the letter for lower/no deduction, If assessee doesn’t quote a PAN.
4. Applicable for AY 2011-12 (FY 2010-11). Means the payments made on or after 01st April 2010.
TDS reconciliation (Section 200A)
1. A new section 200A is introduced.
2. TDS return filed by the deductor will be processed by the following way:
a. TDS deductible will be computed on the basis of data in TDS statement, after adjusting any arithmetic error or an
incorrect claim.
b. The interest, if any, shall be computed on the basis of the sums deductible on the basis of data in TDS statement.
c. Any amount payable by / refund to Deductor shall be determined.
d. Intimation shall be sent to Deductor on Amount payable / refundable.
e. The amount refundable, if any shall be granted to Deductor.
TDS returns
1. Currently returns has to be filed Quarterly in Form 24Q/26Q/27Q/27EQ
2. Currently government is not allowed to decide the Periodicity of TDS returns, as the power is limited only for structure
of forms and the manner.
3. In order to provide administrative flexibility in deciding the periodicity of such TDS related statements, the existing
provisions are modified, so as to allow the Government to prescribe periodicity of such TDS statements besides prescribing
their form and manner.
4. Applicable from 01st October 2009.
Computerized processing of TDS returns
1. Currently every TDS return involves manual-cum-computerized processing inside the department.
2. To make the process efficient, department will computerize whole process, where statements regard to TDS will be
processed.
a. This will be on the same lines, how IT returns processing has been computerized in Income Tax Department.
b. This processing will allow manual interference for
A. Any arithmetical error in the statement.
B. An incorrect claim, if such incorrect claim is apparent from any information in the statement, for example, in respect
of rate of deduction of tax at source where such rate is not in accordance with the provisions of the Act.
c. A Centralized Processing Center may be established in this regard.
d. Applicable for AY 2011-12 (FY 2010-11).

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Know Form 27A/B

July 22nd, 2009

Form No. 27A/B is a control chart of quarterly e-TDS/TCS statements to be filed in paper form by deductors/collectors alongwith quarterly statements. It is a summary of e-TDS/TCS returns which contains control totals of ‘amount paid’ and ‘income tax deducted at source’. The control totals of ‘amount paid’ and ‘income tax deducted at source’ mentioned on Form No. 27A/B should match with the corresponding control totals in e-TDS/TCS return. A separate Form No. 27A/B is to be filed for each e-TDS/TCS return.
In case of Annual Returns the relevant control charts are Form 27A for e-TDS and Form 27B for e-TCS.

While submitting Form No. 27A/B, one should ensure that:
a) There is no overwriting/striking on Form No. 27A/B. If there is any, then the same should be ratified (signed) by the authorised signatory.
b) Name and TAN of deductor and control totals of ‘amount paid’ and ‘income tax deducted at source’ mentioned on Form No. 27A/B should match with the respective totals in the e-TDS/TCS return.
c) All the fields of Form No. 27A/B are duly filled.

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