TDSMAN Blog

smart & easy software for eTDS & eTCS returns

CBDT optimist on Standard Operating Procedure – Urges taxpayers to file rectification request for TDS mismatches

SECTION 139D OF THE INCOME-TAX ACT, 1961 – FILING OF RETURN IN ELECTRONIC FORM – EXTENSION OF FACILITY TO TAXPAYERS TO VERIFY IF DEMAND IN THEIR CASE IS DUE TO TAX CREDIT MISMATCH ON ACCOUNT OF INCORRECT FURNISHING OF SPECIFIED PARTICULARS AND SUBMIT RECTIFICATION REQUESTS WITH CORRECT PARTICULARS OF TDS/TAX CLAIMS FOR CORRECTION OF THESE DEMANDS

PRESS NOTE NO.402/92/2006-MC, DATED 17-4-2014

Detailed instructions have been issued by the CBDT to all the assessing officers laying down a Standard Operating Procedure (SOP) for verification and correction of demand by the AOs. As per this SOP, the taxpayers can get their outstanding tax demand reduced/deleted by applying for rectification along with the requisite documentary evidence of tax/demand already paid. The SOP also makes special provisions for dealing with the tax demand upto Rs. 1,00,000/- in the case of Individuals and HUFs in order to accommodate certain extraordinary situations. The SOP is expected to mitigate the long standing grievances of taxpayers by way of reduction/deletion of tax demands.

The CBDT has further noted that many taxpayers are committing mistakes while furnishing their tax credit claims in the return of income. Such mistakes include quoting of invalid/incorrect TAN; quoting of only one TAN against more than one TAN tax credit; furnishing information in wrong TDS Schedules in the Return Form; furnishing wrong challan particulars in respect of Advance tax, Self-assessment tax payments etc. As a result of these mistakes, the tax credit cannot be allowed to the taxpayers while processing returns despite the tax credit being there in 26AS statement. The CBDT, therefore, desires the taxpayers to verify if the demand in their case is due to tax credit mismatch on account of such incorrect particulars and submit rectification requests with correct particulars of TDS/tax claims for correction of these demands. The rectification requests have to be submitted to the jurisdictional assessing officer in case the return was processed by such officer, or the taxpayer is informed by CPC, Bangalore that such rectification is to be carried out by Jurisdictional assessing officer. In all other cases of processing by CPC, Bangalore, an online rectification request can be made by logging into e-filing website http://incometaxindiaefiling.gov.in as per the procedure given in detail in its Help Menu.

facebooktwittergoogle_plusredditpinterestlinkedinmail

Steps for filing Rectification request on receipt of demand notice due to mis-match of Income Tax

The CBDT has noted that many taxpayers are committing mistakes while furnishing their tax credit claims in the return of income.

Such mistakes include:

  • quoting of invalid/incorrect TAN;
  • quoting of only one TAN against more than one TAN tax credit;
  • furnishing information in wrong TDS Schedules in the Return Form; furnishing wrong challan particulars in respect of Advance tax, Self-assessment tax payments etc.

As a result of these mistakes, the tax credit cannot be allowed to the taxpayers while processing returns despite the tax credit being there in 26AS statement. The CBDT, therefore, desires the taxpayers to verify if the demand in their case is due to tax credit mismatch on account of such incorrect particulars and submit rectification requests with correct particulars of TDS/tax claims for correction of these demands.

The procedure for filing online rectification request has been given below:

Rectification Request

Rectification request can be filed u/s 154 of the Income Tax Act by the taxpayer in case of any mistake apparent from the record.

Prerequisite to file Rectification request

1. The Income Tax Return for the Assessment Year should have been processed in CPC, Bangalore.

2. An Intimation under Section 143(1) OR an order under Section 154 passed by CPC, Bangalore for the e-Filed Income Tax return should be available with the taxpayer.

3. For Electronic returns filed and processed at CPC, only online rectifications will be considered.

4. If the refund arising out of return processed at CPC is adjusted against the demand of other Assessment Years and then the assessee is challenging the demand itself, in that case

  • Rectification application has to be filed for the demand year, if the demand was raised by CPC then online application has to be filed
  • for the demand raised by the Field Assessing Officer, the application has to be filed before him.

5. No rectification has to be filed for giving credit to taxes paid after raising the demand. To file your Rectification, you should be a registered user in e-Filing application.

Step By Step guide on how to file rectification at Income Tax efiling Site:

To file your Rectification, you should be a registered user in e-Filing application.

Step 1 – LOGIN to e-Filing application and GO TO –> My Account –> Rectification request.

Step 2 – Select the Assessment Year for which Rectification is to be e-Filed, enter Latest Communication Reference Number (as mentioned in the CPC Order).

Step 3 – Click ‘Submit’.

Step 4 – Select the ‘Rectification Request type’.

Step 5 − On selecting the option ‘Taxpayer Correcting Data for Tax Credit mismatch only’, three check boxes, TCS, TDS, IT, are displayed. You may select the check-box for which data needs to be corrected. User can add a maximum of 10 entries for each of the selections. No upload of any ITR is required.

Step 6- On selecting the option ‘Taxpayer is correcting the Data in Rectification’ − select the reason for seeking rectification, Schedules being changed, Donation and Capital gain details (if  applicable), upload XML and Digital Signature Certificate (DSC), if available and applicable. You can select a maximum of 4 reasons.

Step 7 – On selecting the option, ‘No further Data Correction required. Reprocess the case’ − check-boxes to select- Tax Credit mismatch, Gender mismatch (Only for Individuals), Tax/ Interest mismatch are displayed. User can select the check-box for which re-processing is required. No upload of an ITR is required.

Step 8 – Click the ‘Submit’ button.

Step 9 – On successful submission, following message is displayed.

Step 10 – You can check status of rectification request online through your account login. Further you can withdraw rectification request, if you have filed it incorrectly or if it is no more required.

 

 

 

 

 

 

facebooktwittergoogle_plusredditpinterestlinkedinmail

FAQ on Section 194H – TDS from Commission and Brokerage

Q1. Who is responsible to deduct tax u/s 194H?

Ans. Any person, (other than individual or a Hindu undivided family) who is responsible for paying, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, deduct income-tax thereon.

However, individuals and HUF who were covered under section 44AB(a) and (b) in the preceding previous year i.e. whose gross turnover/receipts of the business/profession in the immediately preceding financial year exceeded business/profession in the immediately preceding financial year exceed Rs.  1,00,00,000 / 25,00,000, as the case may be, are also required to deduct tax at source.

Q2. What is the point of deduction of TDS u/s 194H?

Ans. It will be deducted at the time of credit of such income to the account of the payee or to any account, whether called suspense account or by any other name or at the time of payment, of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier.

Q3. At what rate TDS has to be deducted u/s 194H?

Ans. The rate of TDS shall be 10%.

Notes: No surcharge, education cess or SHEC shall be added to the above rates. Hence, tax will be deducted at source at the basic rate.

The rate of TDS will be 20% in all cases, if PAN is not quoted by the deductee on or after 1-4-2010.

Q4. Under what circumstances TDS u/s 194H is not deductible?

Ans. (1) No deduction shall be made under this section in a case where the amount of such income or, as the case may be, the aggregate of the amounts of such income credited or paid or likely to be credited or paid during the financial year to the account of, or to the payee, does not exceed ` 5,000 (` 2,500 upto 30.06.2010)

(2) No tax shall be deducted on any commission or brokerage payable by Bharat Sanchar Nigam Ltd. or Mahanagar Telephone Nigam Ltd. to their public call office franchises (Third proviso to section 194H inserted w.e.f. 1-6-2007)

Q5. What is the meaning of words “Commission or brokerage” for the purpose of section 194H?

Ans. Commission or brokerage includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person:

(a)    for services rendered (not being professional services), or

(b)    for any services in the course of buying or selling of goods, or

(c) in relation to any transaction relating to any asset, valuable article or thing, not being securities.

Q6. Whether Provisions of section 194H applicable on discounts offered  by laboratories rendering testing facility to collection centers/  franchisees?

Ans. Where assessee laboratory was rendering services of testing samples to collection centres/franchisees, TDS under section 194H not required in respect of discount offered by assessee to said collection centres/ franchisees. 

Q7. Whether Provisions of section 194H applicable to trade incentive to  dealers?

Ans. Where assessee, a manufacturer of bicycles, was giving trade incentive to dealers, Tribunal was justified in holding that if dealers were selling goods at price for which they were purchasing from company, such trade incentive would amount to commission for purpose of section 1 94H. 

Q8. Whether Provisions of section 1 94H applicable on Discount granted  to licensed stamp vendors on sale of stamp paper?

Ans. Discount granted to licensed stamp vendors on sale of stamp paper, by treasury cannot be termed as `commission or brokerage’ to attract TDS under section 194H. 

Q9. Whether provisions of S. 194H shall apply to free issue of goods under trade scheme?

Ans. Free issue of goods under trade scheme and free gift on sponsorship and promotions and early payment discount given to distributors do not constitute commission as the distributor works on principal to principal basis and not on principal agent relation.

Q10. Whether TDS u/s 194H deductible on turnover commission payable by RBI to Agency Banks?

Ans. Tax deduction at source under section 194H should not be applicable in respect of Turnover Commission payable by the Reserve Bank of India to the Agency Banks (Banks authorized for conducting Government business) for performing the general banking business of the Central and State Governments on behalf of RBI. Circular: No. 6/2003, dated 3-9-2003.

facebooktwittergoogle_plusredditpinterestlinkedinmail

Late filing of TDS return – Penalties, Prosecution & Interest Calculation

The various provisions of TDS are statutorily required to be strictly complied with. Any default in compliance can attract, levy of interest, penalty and in certain cases initiation of prosecution proceedings.

Failure to deduct tax

Where the employer has failed to deduct tax or when short deduction of tax has been done, following statutory provisions are attracted:-

Charging of interest u/s 201(1A) – The deductor is treated to be ‘assessee in default’ in respect of the short deduction/non deduction of tax. Under Section 201(1A) he is liable to pay simple interest @ 1% for every month or part of a month on the amount of tax in arrear from the date on which such tax was deductible to the date on which such tax is actually deducted. Further such interest shall be paid before furnishing the quarterly statement of each quarter.  Charging of interest u/s 201(1A) is mandatory and there is no provision for its waiver.

Procedure for interest calculation

 The calculation of interest is to be done as per Rule 119A and is summarized below:

• Where the interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be full month and interest shall be so calculated.

• The amount of tax in respect of which interest is to be calculated is to be rounded off to nearest multiple of Rs. 100 ignoring any fraction of Rs. 100.

Penalty u/s 221 - The assessee in default is liable to imposition of penalty where the assessing officer is satisfied that the defaulter has failed to deduct tax as required without good and sufficient reason. The quantum of penalty is not to exceed the amount of tax in arrear. Besides, a reasonable opportunity of being heard is to be given to the assessee.

Penalty u/s 271C – A penalty equivalent to the amount of tax the deductor has failed to deduct, is leviable u/s 271C. Such penalty is however only leviable by a Joint Commissioner of Income Tax.

Failure to deposit tax in govt. account after deduction

 Where the employee has deducted the tax at source but failed to deposit wholly or partly, the tax so deducted in government account, the following statutory provisions are attracted:-

• Interest u/s 201(1A)- The deductor is treated as an assessee in default and interest u/s 201(1A) is leviable @1.5% for every month or part of the nonth on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid. Further, the tax along with the simple interest u/s 201(1A) becomes a charge upon all the assets of the deductor.

• Penalty u/s 221- Penalty to the extent of tax not deposited is leviable by the A.O. as discussed earlier.

• Prosecution proceedings u/s 276 B- Where the deductor has failed to deposit tax deducted at source, in govt. a/c without a reasonable cause then he is punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine.

Failure to apply for TAN or to quote TAN

Where a person who is responsible to deduct tax at source has failed, without reasonable cause:-

• To apply for TAN within prescribed period or

• After allotment, failed to quote such TAN in challans for payment of tax or TDS certificate or returns of TDS (as required u/s 206) – then a penalty u/s 272BB of a sum of Rs.10,000 may be imposed by the assessing officer. However a reasonable opportunity of hearing must be given to the employer/deductor.

Failure to furnish TDS certificate or returns/statement of tax deduction at source

 (penalty u/s. 272A(2)) Where the employer has failed to issue TDS certificate (form 16) within one month of the end of financial year (by 31st of May of the next F.Y. for F.Y. 2010-11 onwards) or has failed to furnish the quarterly statement of tax in form 24Q, within the time prescribed u/s 200(3) (rule 31A), then a penalty of Rs. 100 is leviable for each day during the period for which default continues. The quantum of penalty is not to exceed the tax deductible and it is to be levied only by a Joint Commissioner or Joint D.I.T. after giving the assessee an opportunity of being heard.

Prosecution u/s 277- Where a person, who is required to furnish statement u/s 200(3) (quarterly statements) makes a false statement in verification or, delivers an account or statement which is false and which the person knows or believes to be false or does not believe to be true, then he is punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years along with fine. Where theamount of tax, which would have been evaded if the statement or account had been accepted as true, is 1 lakh rupees or less, then rigorous imprisonment may be from 3 months to three years and with fine.

The Finance Act, 2008 has introduced amendment in section 201 (w.e.f. 1.6.2002) which clarifies, that in case any employer, or any principal officer of a company;

• does not deduct, or

• does not pay,

• or after so deducting fails to pay the whole or any part of the tax, then such person shall be deemed to be an assessee in default. Further penalty to be charged u/s. 221 shall not be levied by the assessing officer unless he is satisfied that such failure to deduct and pay tax was without good and sufficient reasons.

facebooktwittergoogle_plusredditpinterestlinkedinmail
  • RSS
  • Facebook