All you want to know about TDS

1. All you want to know about TDS Team Professional Times

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

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

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

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

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

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

8. How to download Form 16A from TIN • Procedure contd. • Provide details of responsible person to be printed on Form 16A. • Click to generate PDF. • Form 16A PDF will be generated in a folder. • Nomenclature of the folder: TAN_Form16A_FY_Quarter_date of PDF conversion. For example: AGRA10001E_FORM16A_2011-12_Q1_20-06-2011 • Form 16A PDF will be generated PANwise. • Nomenclature of PDF: PAN_Form16A_2011-12_Quarter.pdf For example: AAACA1924F_FORM16A_2011-12_Q1.pdf • Form 16A file is generated for valid PANs only. • For deductee records with invalid PANs or PAN which are not present in the Income Tax Department database, PDF will not be generated.

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

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

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

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

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

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

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

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

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

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

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

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

21. Precautions : contd.

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

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

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

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

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

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

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

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

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

31. TDS Mantra Whenever in doubt, err on Revenue side.

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

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