TDSMAN Blog

smart & easy software for eTDS & eTCS returns

TDSMAN Blog - smart & easy software for eTDS & eTCS returns

Analysis of File Validation Utility (FVU) Version 4.7

NSDL department recently released FVU 4.7 and introduced following changes:

I.  New Sections 192A & 194LBB introduced

Section 192A: TDS deducted against payment of accumulated balance due to an employee made by the trustees of the Employees’ Provident Fund Scheme, 1952 

As per the notification number WSU/6(1)2011/IT/Vol-IV/5931 released by EPFO on 21st May 2015 a new section 192A has been inserted regarding payment of accumulated provident fund balance due to an employee.

This section is valid for all payments done after 1st June 2015.

According to this notification, TDS will be deducted at following rates at the time of payment of accumulated balance:

  1. TDS will be deducted at 10% in case PAN is provided.
  2. TDS will be deducted at 34.608% in case PAN is not provided.

However, TDS will not be applicable for the either of the following:

  1. In case payment is less than ₹ 30,000
  2. If employee withdraws PF after a period of 5 years continuous service
  3. In case Employee has submitted Form 15H / 15G
  4. In case PF is transferred from one account to another
  5. If service is terminated due to ill health
  6. In case employer has discontinued its business

Further, Form 15G and Form 15H will not be accepted in case payment is more than Rs. 2,50,000 and Rs. 3,00,000 respectively.

Section 194LBB: Income in respect of units of investment fund

According to this section, TDS shall be deducted at 10% for payments made to a unit holder in respect of units of an investment fund specified in Clause(a) of the Explanation 1 to Section 115UB.

This income should be other than that proportion of income which is of same nature as income referred to in clause (23FBB) of section 10.

This section is applicable from 1st June 2015.

II.   Remark ‘T’ now applicable from Q3 of FY 2009-10

Remark ‘T’, which is quoted for payment made to Transporter where TDS deducted is NIL, is now applicable from Q3 of FY 2009-10. Earlier this remark was applicable from FY 2010-11 onwards.

III.   Total tax Deducted & Tax Deposited should now be same

Following 2 columns are present in Deductee record / Annexure (I) entry:

Total Tax deducted = TDS + Surcharge + Cess

Tax Deposited: Total Tax deposited for the deductee

Although the total tax deducted and deposited is same, yet earlier department allowed these values to be different which was leading to unwarranted confusion and ambiguity. This has now been rectified.

Now it has become mandatory to ensure that both these value are identical.

IV.   Correction of records marked with Higher Rate ‘C’ Flag

If proper PAN is not provided by the vendor to the company who is making the payment, then tax is deducted at higher rate (minimum 20%) and while entering this record in TDS Return, ‘C’ flag is marked against it.

Earlier, there were restrictions in corrections of these records and only limited columns were allowed to be changed i.e. PAN quoted, date of payment, amount of payment & Tax deposited.

Now as per the new regulations, all the fields except Total tax deposited and Higher rate flag can be corrected. Following columns can be corrected in this case:

  • Name of deductee (Applicable to all Forms)
  • PAN of the deductee (Applicable to all Forms)
  • Payment Date of the deductee (Applicable to all Forms)
  • Tax Deposited for the deductee (Applicable to all Forms)
  • Date of deduction (Applicable to all Forms)
  • Section code (For statements pertains to FY 2013-14 onwards and to all Forms)
  • Nature of remittance (Applicable only for Form 27Q)
  • Unique acknowledgement of the corresponding form no. 15CA (if available) (Applicable only for Form 27Q)
  • Country of Residence of the deductee (Applicable only for Form 27Q)
  • Grossing up indicator (Applicable only for Form 27Q)

Note: For correcting records marked with higher rate flag, total tax deducted cannot be modified and total deposited can be modified.

So the rule of keeping Total Tax deducted and Tax deposited same does not apply to correction of records marked with ‘Higher rate’ flag.

 

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TDS Returns – Do’s & Don’t’s

Given below are some dos and don’t for filing of TDS returns:

Dos

  1. Ensure that TDS return is filed with same TAN against which TDS payment has been made.
  2. Ensure that correct challan particulars including CIN and amount is mentioned.
  3. Correct PAN of the deductee is mentioned.
  4. Correct section is quoted against each deductee record.
  5. Tax is deducted at correct rate for each deductee record.
  6. File correction statement as soon as discrepancy is noticed.
  7. Issue TDS certificate downloaded from TRACES website.

Dont’s

  1. Don’t file late returns as it affects deductee tax credit.
  2. Don’t quote incorrect TAN vis-à-vis TDS payments.
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Interest calculation for delayed payment of TDS

The interest is to be calculated as per illustrations below: 

Case 1:

Tax Deducted on 26th June, TDS deposited on 9th July (due date was 7th July)

The period of 26th June to 30th June will be calculated as one month (being part of a month) & from 1st July to 9th July will also be treated as one month. As such in this case, the interest payable is for two months. Total interest would be 3%. Sounds odd, but it is true –  for a delay of 2 days, one has to pay interest for two months. 

Case 2:

Tax Deducted on 20th March, TDS deposited on 5th May  (due date was 30th April)

The period of 20th March to 31st March will be calculated as one month, 1st April to 30th April will be another month & from 1st May to 5th May will be treated as another one month. As such in this case, the interest payable is for three months. Total interest would be 4.5%. For a 5 day delay, the interest payable is for 3 months. 

Logic behind this calculation is that, if dues are not paid on time, the interest for each month (or part thereof) is to be paid right from the date of deduction till date of deposit of the TDS. Each month is treated based on the ‘Calendar Month’ instead of counting the number of days.

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Healthy Practices for Error-Free TDS Returns

Healthy practices for error – free TDS returns has been given below:

  1. Deduction/ Collection of Tax at Correct Rates.
  2. Timely Deposit of Tax Deducted at Source.
  3. Accurate Reporting of data related to tax deductions/ collections made.
  4. Submission of TDS Statements within the due dates.
  5. Verification and Issuance of TDS Certificates within time.
  6. CPC (TDS) is now sending “Intermediate Default Communication” for PAN Errors and Short Payments, which can be corrected during the interim period of a week of filing TDS Statements, before CPC (TDS) proceeds with computing Defaults for the relevant statement.
  7. User-friendly Online Correction facility can be used for Correction of Deductees, Tagging Unmatched Challans and Payment of Fees/ Interest. (Please 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).
  8. Aggregated TDS Compliance Report assists the PAN of the Deductor to administer TDS Defaults for associated TANs and to take appropriate action.
  9. The Deductor’s Dashboard provides you all necessary information to assist you in “Compliance Self-Assessment” and to take appropriate action.
  10. Non-filing Self-declaration can be made by navigating to Statements / Payments menu and submit details under Declaration for Non-Filing of Statements.
  11. PAN Verification and Consolidated TAN – PAN File facility on TRACES can be used for verifying the deductees.
  12. The Conso Files and Justification Reports downloaded from TRACES help you to identify errors in submission of revised Quarterly TDS Statements.
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