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Budget 2015-16: Relaxing the requirement of obtaining TAN for certain deductors

Under the provisions of section 203A of the Act, every person deducting tax (deductor) or collecting tax (collector) is required to obtain Tax Deduction and Collection Account Number (TAN) and quote the same for reporting of tax deduction/collection to the Income-tax Department. However, currently, for reporting of tax deducted from payment over a specified threshold made for acquisition of immovable property (other than rural agricultural land) from a resident transferor under section 194-IA of the Act, the deductor is not required to obtain and quote TAN and he is allowed to report the tax deducted by quoting his Permanent Account Number (PAN). The obtaining of TAN creates a compliance burden for those individuals or Hindu Undivided Family (HUF) who are not liable for audit under section 44AB of the Act. The quoting of TAN for reporting of Tax Deducted at Source (TDS) is a procedural matter and the same result can also be achieved in certain cases by mandating quoting of PAN especially for the transactions which are likely to be one time transaction such as single transaction of acquisition of immovable property from non-resident by an individual or HUF on which tax is deductible under section 195 of the Act. To reduce the compliance burden of these types of deductors, it is proposed to amend the provisions of section 203A of the Act so as to provide that the requirement of obtaining and quoting of TAN under section 203A of the Act shall not apply to the notified deductors or collectors.

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

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Late Filing Fee u/s 234E – Judicial Interpretation – Hon’ble High Court of Bombay – February 6, 2015

Dear Deductor,

Section 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day’s delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). The provision for Levy of Late filing fee was introduced to improve Filing Compliance and to avoid subsequent inconvenience to the taxpayers due to inordinate delays in availability of tax credits in their 26AS Statements.

This assumes further significance in view of the decision of the Hon’ble High Court of Bombay, dated February 6 2015, upholding the validity of the Levy for Late Filing u/s 234E. The court has observed the following in its decision in the case of Rashmikant Kundalia vs. UOI:

Immediate Attention:

  • The late filing of TDS returns by the deductor causes inconvenience to everyone and s. 234E levies a fee to regularize the said late filing.
  • The fee is not in the guise of a tax nor is it onerous.
  • The levy is constitutionally valid.

CPC (TDS), in its endeavor to strengthen TDS Compliance, is reaching out to you to reiterate the essence of timely filing of Quarterly TDS Statements. Section 200(3) of the Income Tax Act, 1961 read with Rule 31A of the Income Tax Rules, 1962, prescribes the following due dates for filing of TDS Statements:

Where the TDS Statements are not filed within the due date, CPC (TDS) sends Intimations u/s 200A of the Act that includes Levy under section 234E. Your attention is hereby drawn towards the provisions of section 234E of the Act (Levy for Late filing of TDS Statement), which reads as follows:

  • Without prejudice to the provisions of the Act, 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.
  • The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.
  • The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.
  • The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012. 

Action to be taken in case of Levy intimated u/s 234E:

  • Please download the Justification Report from our portal TRACES to view your latest outstanding demand. Please click here for assistance on downloading the Justification Report.
  • Use Challan ITNS 281 to pay the Levy with your relevant Banker, if there are no challans available for consumption.
  • Please use the Online Corrections facility on TRACES to submit corrections, to payoff the demand. To avail the facility, please Login to TRACES and navigate to Defaults tab to locate Request for Correction from the drop-down list. You can refer to our e-tutorials for necessary help.
  • Alternatively, you may also download the Conso File from our portal provided there are no Short Payment Defaults.
    • Prepare a Correction Statement using the latest Return Preparation Utility (RPU) and File Validation Utility (FVU).
    • Submit the Correction Statement at TIN Facilitation Centre.

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.

CPC (TDS) TEAM

Source: TRACES

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CPC (TDS) reminder to Deductors: Statement filed during Q1 FY 2013-14 to Q2 FY 2014-15, TDS certificates not downloaded for any of the Quarters

CPC (TDS) has issued a reminder communication to deductors in which it has stated about the downloading of TDS certificates. According to CPC (TDS), TDS Statements have been filed by the deductors during Q1 FY 2013-14 to Q2 FY 2014-15 but TDS Certificates (Form 16A) have not been downloaded for all of the referenced quarters, from the TRACES portal. The provisions of Income Tax Act, 1961 in this regard has also been given in the issued communication.

The issued communication has been given below:

Dear Deductor, (TAN: XXXXXXXXXXXX)

As per the records of Centralized Processing Cell (TDS), TDS Statements have been filed by you for different quarter(s) for the above period, however, TDS Certificates (Form 16A) have not been downloaded for all of the referenced quarters, from the TRACES portal.

Please refer to the following provisions of the Income Tax Act, 1961 in this regard:

Downloading of TDS Certificates from TRACES made mandatory:

In this regard, your attention is invited to the CBDT circulars 04/2013 dated 17.04.2013, No. 03/2011 dated 13.05.2011 and No. 01/2012 dated 09.04.2012 on the 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.inin (herein after called TRACES Portal).

TDS Certificates downloaded only from TRACES hold valid:

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.

Due Date for downloading and Penalty for non-compliance:

Please be advised that under the provisions of section 203 of the Income Tax Act, 1961 read with rule 31A, Certificate of tax deducted at source is to be furnished within fifteen (15) days from the due date for furnishing the statement of tax deducted at source. Failure to comply with the provisions of the Act will attract penalty under the provisions of section 272A of the Act, a sum of one hundred rupees for every day during which the failure continues.

Taking cognizance of the above information, you are requested to download TDS Certificates at the earliest to avoid above implications and any further action by the Field TDS Officers.

Assistance for downloading TDS Certificates from TRACES:

You can logon to our portal http://www.tdscpc.gov.in and refer to our e-Tutorial to download TDS Certificates. 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.

CPC (TDS) TEAM

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Penalty order passed U/S 271C for non-deduction of TDS, beyond period of 6 months from date of reference for imposition of penalty would be barred by limitation

Recently, ITAT Jaipur Bench in M.D.S. Universityvs. Assistant Commissioner of Income-tax held that, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated whichever period expires later, the penalty U/S 271C cannot be imposed.

Facts of the case:

Penalty during the course of TDS survey, it was found that the assessee had not made TDS out of mobilization advance paid to M,’s Rajasthan State Road Development Corporation Ltd. The ITO (TDS), Ajmer on.19th March, 2000, held the assessee deductor as defaulter and raised a demand of TDS. This was brought to the notice of Addl. CIT, Udaipur, who issued a notice under s. 274/271C of the Act to show cause as to why penalty under s. 271C should not be imposed in its case for default of not making TDS U/S194C of the Act while making advances to M/s Rajasthan State Road Development Corporation Ltd. (RSRDCL).

The assessee submitted in its reply that it did not make any TDS on the payments made to RSRDCL on the impression that the TDS provisions were not applicable in view of s. 196 of the Act. It was further submitted that the assessee-deductor had deposited the entire payment raised by ITO (TDS) within a stipulated time. However, the AO did not find merit in the submissions of the assessee and levied penalty U/S 271C of the Act vide order dt. 18th Aug., 2010.

Being aggrieved, the assessee carried the matter to the learned CIT (A), who confirmed the penalty stating that the argument of the appellant that tax is to be deducted on the income component of the payment is not acceptable.

Hence, an appeal was made by the assesse.

It was held that:

Learned counsel for the assessee submitted that the penalty levied by the AO was barred by limitation as per the provisions contained in s. 275(l)(c) of the Act which provides that “no penalty can be imposed after expiry of financial year in which proceedings, in the course of which action for imposition of penalty has been initiated are completed”. It was contended that in this case, the relevant proceedings were commenced on 19th March, 2009 and the financial year ends on 31st March, 2009. It was further stated that the penalty could not have been imposed from the end of the month, in which action for imposition of penalty was initiated, which in the present case was on 24th Dec., 2009. Therefore, the penalty could have been levied before 30th June, 2010, however, in this case it was levied on 18th Aug., 2010, so, it was barred by limitation.

Thus it was held that, the penalty U/S 271C levied in the case was not justified and liable to be set aside. Considering the totality of the facts the ITAT was of the view that the learned CIT(A) was not justified in confirming the penalty order passed by the AO under s. 271C of the Act.

Source: Mr. Alok Patnia, founder of Taxmantra.com 

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