TDSMAN Blog

Smart & Easy TDS Software for Preparing TDS Returns

TDSMAN Blog - Smart & Easy TDS Software for Preparing TDS Returns

Tax implications of fixed deposits

If you are in the higher tax bracket, that is 20% or 30%, make sure that you pay the additional interest before filing your tax returns.

The biggest disadvantage of FDs is that the interest earned is subject to taxation. This eats into the returns.

Taxed as per income bracket

The interest earned on the FDs is added to the depositor’s income and taxed as per income bracket. This reduces its attractiveness, especially for those in the highest tax bracket.

Pay tax even if bank cuts TDS

The bank will cut the tax at source (Tax Deducted at Source) before paying the interest, if the interest exceeds Rs 10,000 in a financial year.  But this is at the marginal rate of 10%. If you are in the higher tax bracket, that is 20% or 30%, make sure that you pay the additional interest before filing your tax returns. This is a common mistake most depositors do. It is a hassle if you receive a notice from the Income-Tax department for non payment of taxes. You will have to prove that not paying the tax was not deliberate and you may have to pay tax plus the penalty for the delay.

For ensuring that the bank has deducted TDS on your FD by checking Form 26AS. But sometimes if the bank deducts TDS but fails to submit the same to the I-T department, you may still get a notice.

If your PAN card details are not updated with the bank, the TDS will be deducted at 20%. And if you are in the 10% tax bracket, this will mean having to file for refund while filing tax returns, which can be a hassle. These are some of the things to keep in mind.

Form 15G and 15H

If your income is below the taxable limit and you have no then submit Form 15G to avoid TDS. For senior citizens whose income is below the taxable limit the form is 15H.

Reduce your TDS

You can also reduce your TDS by spreading your deposits across several banks so that the interest earned in a financial year remains less than Rs 10,000. But this will only reduce the TDS. You will still have to pay income tax as per your tax bracket.

Source: Business Standard

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Deductees reported in TDS Statements with structurally Valid, but actually Invalid PANs

CPC(TDS) has observed from its records that many deductors have reported deductees with invalid PANs in the quarterly TDS statements. These PANs appear structurally valid but they are invalid.

CPC(TDS) has issued a letter to all deductors in this regard. The letter produced is as follows:

Dear Deductor ( TAN XXXXXXXXXX ),

Centralized Processing Cell (TDS) has observed from its records that you have reported deductees with invalid PANs in your quarterly TDS statements. These PANs appear structurally valid, however, they are actually invalid, as they are not available in the PAN Master records.

For example, ARUPS4625S appears to be a valid PAN according to the alphabets and numerals in its structure, however, this is an invalid PAN, as this is not available in PAN Master.

What is the impact:

  • The impact of such errors is significant in nature, in view of following:
    • As per section 206AA, the tax is to be deducted at a higher rate, in case of reporting of invalid PANs. Therefore, Short Deduction is charged even if the tax has been deducted at the Section Rate, due to the applicability of section 206AA.
    • The deductor will not be able to generate TDS Certificates for their deductees with invalid PANs.
    • The taxpayer will not be able to avail correct TDS Credits

What actions to be taken:

  • The impact of such errors is significant in nature, in view of following:
    • PAN Verification facility on TRACES can be used for verifying the deductees. You are requested to Login to TRACES and navigate to “Dashboard” to locate “PAN Verification” in the Quick Links menu.
    • You can also use “Consolidated TAN – PAN File” that includes all the valid PANs attached with the respective TANs. To avail the facility, Login to TRACES and navigate to “Dashboard” to locate “Consolidated TAN – PAN File”.
    • To correct an invalid PAN reported earlier, a C5 Correction Statement is required to be filed.
    • The PANs can also be corrected using our Online Correction facility with Digital Signatures. To avail the facility, you are requested to Login to TRACES and navigate to “Defaults” tab to locate “Request for Correction” from the drop-down menu. For any assistance, please refer to the e-tutorial available on TRACES.

You can reach out to us on ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

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TDS/TCS Compliances May 2014

1. Last date for payment of tax deductions/collections for April – 7th May 2014
2. Last date of filing of TDS/TCS returns for Q4 of F.Y. 2013-14  – 15th May, 2014
3. Last date for issuance of the TDS/TCS certificates for Q4 – 30th May, 2014
* The above is applicable for deductors other than the Office of the Government.

 

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