Employers required to collect PAN of the lender banks from the employees to claim Interest in House Property in the salary return

The Finance Act, 2015 had introduced a new section 192(2D) of the Income-tax Act, wherein the employer was obliged to collect the necessary evidence or proof in Form 12BB  to allow any claim for any deduction and/or tax saving investments.

One of the requirements in Form 12BB for claiming the interest on house property is to provide the PAN of the lender i.e. the financial institutions, NBFC or others from where the loan is taken, if available. Though the same is not a mandatory requirement in Form 12BB, the same has been made mandatory in the Annexure-II required to be filed in the salary return -From 24Q for the last quarter of the financial year. The same was made effective from 1st June 2016 by the CBDT by way of its Notification No. 30/2016 dated 29 April 2016.

In case the PAN is not available, no deduction of interest shall be allowed and the total tax deduction of the employees shall be higher than previously deducted.

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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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FAQ on Late TDS payment

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What is the Late payment interest?

When deductor deposits the TDS after due date of deposit, it is a case of late payment and interest will be charged accordingly.

What is the Interest Rate for Late Payment?

  • Prior to 1st July 2010-1% per month
  • After 1st July 2010-1.5% per month

What is the procedure of calculating interest on Late Payment?

Late Payment interest is calculated @ 1.5% per month or Part of the month from the date of deduction +1 day till date of Deposit.

Late TDS payment

Procedure of calculating Late Payment:

Calculation

No. of months in Defaults = 3 i.e., 4-Mar-12+1 day to 12-May-12

4000*1.5%*3(Months) =180.00

What should I do in case of Late Payment Intimation Received?

Follow the steps mentioned below:

  • The default amount will have to be deposited through challan number ITNS – 281 by ticking minor head ‘400’
  • Add Challan to statement (C9 correction) using “Online Correction Functionality” available on TRACES as C9 correction has been stopped in Offline Correction
  • For closure of late payment default, fill up the fee amount in “interest” column in challan details through Online Correction by clicking on “Request for Correction” under “Default” tab and select Pay 220/LP/LD/LF/ Interest u/s 220 category
  • Please note that once the challan is added to the statement using the “Online Correction Functionality” further corrections can also be done by downloading latest Conso File
  • Note: In case of paper return, interest amount should be mentioned in annexure

What are the facts that should be considered for calculating Late payment interest raised by TDSCPC? 

Interest is calculated as per sec. 201 (1A) (ii) of IT act 1961, considering the below mentioned facts:

  • Interest is charged from date on which such tax was deducted to the date on which such tax was actually paid
  • Interest is chargeable for every month or part of the month on the amount of such tax.
  • A month is considered to be a calendar month as per general clauses act

What is the due date for the Quarterly deposit of TDS in special case under rule 30(3)?

Quarterly date of deposited of TDS:-Q1 (Apr to Jun) – 7 July, Q2 (Jul to Sep)- 7 OCT, Q3 (Oct to Dec)- 7 Jan, Q4 (Jan to Mar)- 30th April.

If Extension is given, and then the Due date of Deposited will be considered from?

Late Payment interest will be calculated from the date of deduction but eligibility for extension will be considered from the date of payment/credit.

What is the additional Late Payment Interest?

Additional late payment will arise, while in correction statement, deductor has added new deductee rows and has given credit to deductee against newly paid challan or modified Date of Deduction or have made changes in any unmatched challan against which the TDS payment made.

Source: TRACES

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Basic duties of the person who is liable to deduct tax at source

Following are the basic duties of the person who is liable to deduct tax at source:

  • He shall obtain Tax Deduction Account Number and quote the same in all the documents pertaining to TDS.
  • He shall deduct the tax at source at the applicable rate.
  • He shall pay the tax deducted by him at source to the credit of the Government (by the due date specified in this regard*).
  • He shall file the periodic TDS statements, i.e., TDS return (by the due date specified in this regard*).
  • He shall issue the TDS certificate to the payee in respect of tax deducted by him (by the due date specified in this regard*).

*Refer tax calendar for the due dates.

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