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Important guidelines related to payment of TDS/ TCS liability

Important Guidelines for payment towards liability on account of Tax Deducted / Collected at Source (in accordance with CGA Rules and Rule 125 of Income Tax Act)

A. Central Government Account ( Receipts and Payments ) Rules, 1983:

Date of Receipt for Cheques or Drafts: The Central Government Account (Receipts and Payments) Rules, 1983 contain, inter alia, regulate public moneys received by or on behalf of the Government of India. As per clause 20 of Part I (Preliminary and General Principles), the Date of receipt of Government revenues, dues etc. is determined as follows:

20. Date of receipt of Government revenues, dues etc.-
Government dues tendered in the form of a cheque or draft which is accepted under the provisions of rule 19 and is honoured on presentation, shall be deemed to have been paid-

i. where the cheque or draft is tendered to the bank, on the date on which it was cleared and entered in the receipt scroll;

B. Rule 125 of Income Tax Rules, 1962:

Electronic Payment of Tax: Rule 125 of Income Tax Rules, 1962 relates to Electronic Payment of Tax. The relevant provisions are as under:

  • The following persons shall pay tax electronically on or after the 1st day of April, 2008:
    •   a company; and
    •  a person (other than a company), to whom the provisions of section 44AB are applicable.
  • For the purposes of this rule :
    • “pay tax electronically” shall mean, payment of tax by way of-
    • internet banking facility of the authority bank; or

In the light of the above, it is suggested that the payments towards TDS may kindly be made through e-payment mode. This helps in better reporting of challan by deductors and consequential matching of such challans.

It shall help the deductors in reduction of late payment interest that may arise due to delay in date of tendering of cheques and date of credit to the Government account.

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Mandatory filing of TDS Statements and Issuance of TDS Certificates downloaded from TRACES

If tax at source has been deducted by you on various payments / credits but no TDS Statements have not been filed by you as yet. In this regard, your urgent attention is invited to relevant CBDT Circulars and provisions of the Income Tax Act, mandatory filing of TDS Statements and Issuance of TDS Certificates downloaded from TRACES.

1. Mandatory filing of TDS Statements:

You are advised to refer to Section 200(3) of the Act, read with Rule 31A, which reads as follows:

  • Every person responsible for deduction of tax under Chapter XVII-B, shall, in accordance with the provisions of sub-section (3) of section 200, deliver, or cause to be delivered, the following quarterly statements to the Director General of Income-tax (Systems) or the person authorised by the Director General of Income-tax (Systems), namely:
    • Statement of deduction of tax under section 192 in Form No. 24Q;
    • Statement of deduction of tax under sections 193 to 196D in-
      • Form No. 27Q in respect of the deductee who is a non-resident not being a company or a foreign company or resident but not ordinarily resident; and
      • Form No. 26Q in respect of all other deductees.

It is, therefore, advised to file the applicable TDS Statements at the earliest to comply with the above provisions.

2. Implications of Non/Late filing of TDS Statements:

  • For Tax payers: Non/ Late filing of TDS statements results into the TDS Credit not being available to the deductees (employees / vendors) for claiming the amount of tax already deducted from the payments made to them besides generating correct TDS Certificates for them.
  • For Deductors: In case of default on account of Non / late filing of TDS Statements, a fee shall also be levied on the deductor u/s 234E of the IT Act which reads as under:

Where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.

3. Issuance of TDS Certificates downloaded from TRACES:

CBDT circulars 04/2013 dated 17.04.2013, CBDT Circular No. 03/2011 dated 13-5-2011 and CBDT Circular No. 01/2012 dated 9-4-2012 refer to Issuance of certificate for Tax Deducted at Source in Form 16/16A as per IT Rules 1962. It is now mandatory for all deductors to issue TDS certificates after generating and downloading the same from “TDS Reconciliation Analysis and Correction Enabling System” or (http://www.tdscpc.gov.in)(hereinafter called TRACES Portal).

In view of above circulars, it may kindly be noted that the TDS Certificates downloaded only from TRACES Portal will be valid. Certificates issued in any other form or manner will not comply to the requirements referred in the Income-tax Act 1961 read with relevant Rules and Circulars issued in this behalf from time to time. The TDS Certificates can be downloaded by registering yourself with TRACES Portal.

You are accordingly advised to file TDS Statements and also get Registered on TRACES Portal, if not done already.

For any assistance, you can write to ContactUs@tdscpc.gov.in or call  toll-free number 1800 103 0344.

 

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