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Closure of Short Payment defaults in Quarterly TDS Statements

CPC (TDS) has issued a reminder communication to Banks regarding closure of short payment defaults in Quarterly TDS Statements.

The issued communication has been given below:

Please refer to the earlier CPC(TDS) Communication Reference No.070/2014; dated 29th November 2014 regarding Defaults in TDS Statements for different TAN’s associated with your PAN.

The Centralized Processing Centre (TDS) has observed from its records that there are Short Payment Defaults in Quarterly TDS Statements submitted by different TANs associated with your PAN and therefore, downloading of TDS Certificates are currently restricted for your TANs .

The details of the TANs and outstanding Short Payment Defaults against them have been provided as annexed with this letter. Financial year wise details of the above are also available to you to be viewed online on the web-portal TRACES (www.tdscpc.gov.in) under “Aggregated TAN compliance Report”

Please note that

  • CPC (TDS) has initiated a special drive for closure of Short Payment Defaults due to Unmatched or Insufficient Challans in the TDS Statements.
  • Since the due date for filing of TDS Statements for Quarter 4, 2014-15 and distribution of TDS Certificates subsequently is approaching fast, you are suggested to close the above defaults without any further loss of time.

Order u/s 201 Intimation u/s 200A of the Income Tax Act, 1961 intimating the outstanding demand for different years has already been sent by Income Tax Department on Registered email address and by post, at the address, as mentioned in the relevant TDS Statement to the relevant deductors (TANs).

This information is being provided to you for further necessary action for closure of Short Payment Defaults at the earliest by moving deductee rows/ matching/tagging of Unmatched challans or by payment/ tagging in case of Insufficient challans.

This would be helpful for you in complying with the provisions of section 40(a)(ia) of Income Tax Act, 1961 and to ensure that correct information is disclosed in paragraph 21b(ii) of Tax Audit Report(Form 3CD) u/s 44AB of the Income Tax Act. Besides, after the closure of short payment defaults, the TANs under reference would be able to download Form 16/16A thus avoiding unnecessary inconvenience to your customers.

Actions to be taken by the TAN holders associated with you:

  • Download “Aggregate TDS Compliance Report” from our portal TRACES for the details of Short Payment defaults against each TAN associated with your PAN.
  • Quarter-wise Justification Reports can be downloaded by the referenced TANs from our portal TRACES for the details of Short Payment defaults.
  • Please use Challan ITNS 281 for payment of TDS in case of Insufficient Challans.
  • Online Correction facility provided by TRACES should be used for closing the above defaults by suitably moving deductee rows/ matching/ tagging of challans.

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

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

For any, you can write to corporate_connect@tdscpc.gov.in or call our toll-free number 0120-4816103.

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

                                                                                                     

                                                                                             

                                                                 

Kumar Padmapani Bora

                                                                   Deputy Commissioner of Income Tax

                                                                   Central Processing Cell – TDS

 

Notes: 

  • You are requested to instruct the deductors to pay the demand and file correction statement or make the necessary correction in the statement within 15 days.
  • Short payment default may be on account of mismatch in challan particulars as quoted by you in TDS statement with the challan particulars as per OLTAS. Accordingly, the OLTAS challans may have remained unconsumed on account of mismatch. You can check the OLTAS challan details on Traces. You are requested to close the short payment default through “moving deductee rows” and “tagging” of correct challan using “online correction” facility at TRACES portal (www.tdsccpc.gov.in).
  • It is to inform that while downloading TDS certificate (Form 16/16A), deductor would be prompted to first close the ‘Short payment’ default on account of ‘Challan mismatch’, if any. As the next due date for download of Form 16/16A is 30thMay 2015, you are requested to close your defaults well in advance to avoid any issue in downloading of TDS certificates for 4thquarter of 2014-15.
  • Non-deduction of TDS attracts provisions of section 40(a) (ia) of the Income Tax Act, 1961 in your final accounts.
  • Late Filing fee and Late Payment Interest are not allowable expenses.
  • Please maintain updated email address and Contact Number on TRACES to receive regular periodic updates and guidelines from TRACES.
  • Please refer to our FAQs and e-tutorials for detailed screen-driven assistance, before seeking further help.

CPC (TDS) TEAM

 Source: TRACES

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CPC (TDS) follow up communication regarding the use of Online Correction facility

CPC (TDS) has released a follow up communication regarding Online Correction facility not availed after sending “Intermediate Communication for Short Payments” in course of processing of Original Quarterly TDS Statements.

The issued communication has been given below:

Dear Deductor,(TAN XXXXXXXXXX)

As per the records of CPC (TDS), an Intermediate communication was sent to you intimating Short Payment errors in the Original TDS Statements filed by you during January 1 – February 10, 2015 and you were requested to use Online Correction facility at TRACES for closure of the above within a week of receipt of above communication.

However, after the above was communicated to you, no actions were taken using Online Correction functionality (without Digital Signatures) to correct above errors.

There may be a possibility that the above communication could not reach you due to incorrect email/ Mobile number provided and you are requested to correctly report the above in your TDS Statements.

Also, CPC (TDS) intends to collect your feedback to understand any challenges in using the Online Correction facility to correct potential errors. You are, therefore, requested to provide us the reason by sending your response to info@tdscpc.gov.in

You are also requested to submit a Correction Statement, without any further loss of time, to close the Short Payment Defaults in your Original TDS Statement(s).

Please note that

  • This further significance towards ensuring non-intrusive TDS Compliance, since, Short Payment Defaults ought to be closed at the time of submitting requests to download Consolidated Files or TDS Certificates from the web portal TRACES.
  • The onus for closure of Short Payment Defaults lies on the deductor submitting the TDS Statements.

Your attention is also drawn to the essence of above communication and the advantages of taking actions with Online Correction feature:

  • You would have preliminary information of potential Short Payments, before the Original Statement is completely processed for Defaults and Intimations are generated
  • The central point in the process is identification of errors in challans and facilitating their corrections before CPC (TDS) computes defaults in TDS statements
  • Correction of above defaults using Online Correction can be submitted within 7 days of receipt of the Intermediate Communication, before computation of Defaults for the referenced TDS statements
  • The above actions Above action will facilitate avoidance of multiple Correction Statement filing later, after the defaults are identified CPC (TDS) and Intimations have been sent.

What Action to be taken on receipt of Intermediate communication:

  • Please take note of the Intermediate communication from CPC (TDS) and submit Online Correction for potential defaults in TDS statement within the stipulated time frame.
  • Only “Online Correction” facility can be used for correction of above Short Payments and PANs

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.

  • The action requires to be completed within 7 days of receipt of the Intermediate Communication.

It is hoped that you will avail of the time window to correct errors, if any, going forward.

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

CPC (TDS) TEAM

Source: TRACES

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TDS on Big Transporters proposed to be levied wef 01.06.2015

Under the existing provisions of section 194C of the Act payment to contractors is subject to tax deduction at source (TDS) at the rate of 1% in case the payee is an individual or Hindu undivided family and at the rate of 2% in case of other payees if such payment exceeds Rs. 30,000 or aggregate of such payment in a financial year exceeds Rs. 75,000. Prior to 1.10.2009, section 194C of the Act provided for exemption from TDS to an individual transporter who did not own more than two goods carriage at any time during the previous year. Subsequently, Finance (No.2) Act, 2009 substituted section 194C of the Act with effect from 1.10.2009, which inter alia provided for non- deduction of tax from payments made to the contractor during the course of plying, hiring and leasing goods carriage if the contractor furnishes his Permanent Account Number (PAN) to the payer.

The memorandum explaining the provisions of Finance (No.2) Bill, 2009 indicates that the intention was to exempt only small transport operators (as defined in section 44AE of the Act) from the purview of TDS on furnishing of Permanent Account Number (PAN). Thus, the intention was to reduce the compliance burden on the small transporters. However, the current language of sub-section (6) of section 194C of the Act does not convey the desired intention and as a result all transporters, irrespective of their size, are claiming exemption from TDS under the existing provisions of sub-section (6) of section 194C of the Act on furnishing of PAN.

As there is no rationale for exempting payment to all transporters, irrespective of their size, from the purview of TDS, it is proposed to amend the provisions of section 194C of the Act to expressly provide that the relaxation under sub-section (6 ) of section 194C of the Act from non-deduction of tax shall only be applicable to the payment in the nature of transport charges (whether paid by a person engaged in the business of transport or otherwise) made to an contractor who is engaged in the business of transport i.e. plying, hiring or leasing goods carriage and who is eligible to compute income as per the provisions of section 44AE of the Act (i.e a person who is not owning more than 10 goods carriage at any time during the previous year) and who has also furnished a declaration to this effect along with his PAN.

This amendment will take effect from 1st June, 2015.

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TDS on Pre-mature EPF withdrawals Proposed @ 10% wef 01.06.2015

Under the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (EPF & MP Act, 1952), certain specified employers are required to comply with the Employees Provident Fund Scheme, 1952 (EPFS). However, these employers are also permitted to establish and manage their own private provident fund (PF) scheme subject to fulfillment of certain conditions.

The provident funds established under a scheme framed under EPF & MP Act, 1952 or Provident Fund exempted under section 17 of the said Act and recognised under the Income-tax Act are termed as Recognised Provident fund (RPF) under the Act. The provisions relating to RPF are contained in Part A of the Fourth Schedule (Schedule IV-A) of the Act. Under the existing provisions of rule 8 of Schedule IV-A of the Act, the withdrawal of accumulated balance by an employee from the RPF is exempt from taxation.

However, in order to discourage pre-mature withdrawal and to promote long term savings, it has been provided that such withdrawal shall be taxable if the employee makes withdrawal before continuous service of five years (other than the cases of termination due to ill health, closure of business, etc.) and does not opt for transfer of accumulated balance to new employer.

Rule 9 of the said Schedule further provides computation mechanism for determining tax liability of the employee in respect of such pre-mature withdrawal. For ensuring collection of tax in respect of these withdrawals, rule 10 of Schedule IV-A provides that the trustees of the RPF, at the time of payment, shall deduct tax as computed in rule 9 of Schedule IV-A.

Rule 9 of Schedule IV-A of the Act provides that the tax on withdrawn amount is required to be calculated by re-computing the tax liability of the years for which the contribution to RPF has been made by treating the same as contribution to unrecognized provident fund. The trustees of private PF schemes, being generally part of the employer group, have access to or can easily obtain the information regarding taxability of the employee making pre-mature withdrawal for the purposes of computation of the amount of tax liability under rule 9 of the Schedule-IV-A of the Act. However, at times, it is not possible for the trustees of EPFS to get the information regarding taxability of the employee such as year-wise amount of taxable income and tax payable for the purposes of computation of the amount of tax liability under rule 9 of the Schedule-IV-A of the Act.

It is, therefore, proposed to insert a new provision in Act for deduction of tax at the rate of 10% on pre-mature taxable withdrawal from EPFS.

However, to reduce the compliance burden of the employees having taxable income below the taxable limit, it is also proposed to provide a threshold of payment of Rs.30,000/- for applicability of this proposed provision. In spite of providing this threshold for applicability of deduction of tax, there may be cases where the tax payable on the total income of the employees may be nil even after including the amount of pre-mature withdrawal. For reducing the compliance burden of these employees, it is further proposed that the facility of filing self-declaration for non-deduction of tax under section 197A of the Act shall be extended to the employees receiving pre-mature withdrawal i.e. an employee can give a declaration in Form No. 15G to the effect that his total income including taxable pre-mature withdrawal from EPFS does not exceed the maximum amount not chargeable to tax and on furnishing of such declaration, no tax will be deducted by the trustee of EPFS while making the payment to such employee.

Similar facility of filing self-declaration in Form No. 15H for non-deduction of tax under section 197A of the Act shall also be extended to the senior citizen employees receiving pre-mature withdrawal.

However, some employees making pre-mature withdrawal may be paying tax at higher slab rates (20% or 30%). Therefore, the shortfall in the actual tax liability vis-à-vis TDS is required to be paid by these employees either by requesting their new employer to deduct balance tax or through payment of advance tax / self-assessment tax. For ensuring the payment of balance tax by these employees, furnishing of valid Permanent Account Number (PAN) by them to the EPFS is a prerequisite.

The existing provisions of section 206AA of the Act provide for deduction of tax @ 20% in case of non-furnishing of PAN where the rate of deduction of tax at source is specified. As mentioned earlier, there may be employees who are liable to pay tax at the highest slab rate. In order to ensure the collection of balance tax by these employees, it is also proposed that non-furnishing of PAN to the EPFS for receiving these payments would attract deduction of tax at the maximum marginal rate.

These amendments will take effect from 1st June, 2015.

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