Allocation of Interest in TDS Returns

      No Comments on Allocation of Interest in TDS Returns

For delayed payment of TDS or delayed deduction, the deductor needs to pay interest for these delays. The interest is paid in through Challan / Book Entry similar to TDS payments.

While preparing TDS Returns, one needs to ‘allocate’ the interest component from each Challan. Unless this is explicitly not allocated / specified, the Department will not adjust the interest liability. Effectively, the interest liability will remain pending and default notices will be generated even if there is enough unused balance in the Challans.

While preparing TDS Returns, for each Challan, from its total value, there is a provision to allocate in either full or in part from this value towards ‘Interest’ – this is called ‘Interest Allocation’.

Once the TDS Return is successfully filed, the Department will pool all the allocated interest values from the Challans and adjust the interest liability for the deductor.

It is a common complaint ‘I have paid the interest, but still the interest default exists’. Main reason for this is that Interest has not been Allocated while preparing TDS Returns.

Useful guidelines to avoid common mistakes while submitting TDS Statements

Section 194B: TDS on Winnings from Horse Races

      No Comments on Section 194B: TDS on Winnings from Horse Races

TDS shall be deducted on winnings from horse races.

1. Applicability: Winning amount needs to be more than Rs 10,000.
2. Deductor: Any person shall deduct the tax at the time of payment.
Any person, here means a book-maker or a person to whom a license has been granted by the Government for horse racing or arranging for wagering, betting in any race course.
3. Tax Rate: TDS at a flat rate of 30% shall be applicable on such income.
4. Nature of Win: Winning can be in form of cash or kind. TDS needs to be deducted on both these components. Market value of the prize needs to be assessed and TDS needs to be deducted on the assessed amount.
5. Points to Note:
a. Race-income other than horse races like camel races etc. is not covered by this section.
b. TDS to be deducted on gross wins and losses should not be set off while calculating the TDS amount.
c. Deduction/expenditure shall not be allowed on such income to the prize recipient.

˜Authored by – CA Anushka Saraogi˜

Useful guidelines to avoid common mistakes while submitting TDS Statements

Section 194B: TDS on Winnings from Lottery, Game Shows etc…

TDS shall be deducted on winnings from lottery, game shows and puzzles by the prize distributor.

1.  Applicability: Winning amount needs to be more than Rs 10,000

2.  Deductor: Prize distributor can be any person and shall deduct the TDS at the time of  payment

3.  TDS Rate: TDS at a flat rate of 30% shall be applicable on such income.

4.  Nature of Win: Winning can be in form of cash or kind. TDS needs to be deducted on both these components. Market value of the prize needs to be assessed and tax needs to be deducted on the assessed amount

5Points to Note:

    • TDS u/s 194B shall be deducted on the net winnings i.e. after considering bonus/commission paid to lottery agent
    • Deduction/expenditure shall not be allowed on such income to the prize recipient
˜Authored by – CA Anushka Saraogi˜

Section 194N – TDS on Cash Withdrawals

Useful guidelines to avoid common mistakes while submitting TDS Statements

Following are some useful guidelines to avoid common mistakes, while submitting TDS Statements and you are requested to go through the following in detail.

Incorrect reporting of 197 Certificates:

Please refer to the following guidelines for correct reporting of 197 Certificates:

  • The Certificate Number should be of 10 digits with Alpha-numeric structure. Please refer to the following examples:
      • Correct Format 1111AA111A;
      • Incorrect Format: 1111AA111A/194C
    • Certificate Number should be valid during the period for which it is quoted.
    • The Certificate Number should be for the same PAN, Section Code and Section Rate for which it has been mentioned in the statement
    • Threshold limit Amount of the Certificate should not be exceeded.
    • Please ensure that the Certificate is not expired. Please refer to the following illustration:
      • Lower deduction Certificate under section 197, issued in April 2013 (e.g. Certificate Number-1) stands cancelled by Assessing Officer on 10/11/2013.
      • A fresh certificate Under Section 197 (e.g. Certificate Number-2) is issued with effect from 11/11/2013.
      • Deductor quotes Certificate Number-2 against the transactions recorded during the period from 01/11/2013 to 10/11/2013 in Q3 TDS statement.
      • Deductor should have quoted Certificate Number-1 for the transactions conducted till 10/11/2013.

Common errors resulting in Short Payment Defaults:

  • Typographical errors committed by deductor, in reporting the date 20032014    in the Tax Deducted column.
  • Total of Amount Paid / Credited reported in the Tax Deducted column of the statement. This results in short payment and Deductors need to ensure that the TDS/TCS Deducted/Collected amount should be equal to TDS/TCS Deposited Amount.

The above mistakes are illustrated below:

Amount Paid/ Credited

TDS Deducted

TDS Deposited

Remarks

1,55,000.00 1,55,000.00 15,500.00 Wrong TDS Deducted Amount
2,20,420.00 20032014.00 22042.00 Date mentioned in the TDS Deducted Column

 Actions to be taken:

  • CIN Particulars (BSR Code, Date of Deposit and Challan Serial Number) mentioned in the TDS statement should exactly match with the CIN Particulars as available on Challan Status at www.tdscpc.gov. in or Challan Status Enquiry at www.tin-nsdl.com
  • For BIN (Book Identification Number), the particulars (24G receipt number, Date of transfer voucher and DDO Serial Number) mentioned in the TDS statement by the Govt. Deductors should exactly match with the BIN Particulars as available on Challan Status at www.tdscpc.gov. in or BIN View at www.tin-nsdl.com
  • Amount of Tax deposited pertaining to different BINs/ CINs should not be clubbed together while reporting in the TDS statements.
  • Few other common mistakes in reporting dates are as follows:

Actual Date of Deposit 
(As per Challan)

Date of Deposit mentioned in TDS Statement

Observations

07/01/2014 (07th Jan 2014) 07/01/2013 (07th Jan 2013) Wrong Year (2013 instead of 2014)
07/01/2014 (07th Jan 2014) 01/07/2014 (01st July 2014) Wrong Date Format (MM/DD/YYYY)

Click Here to download the trial version of TDSMAN (FY: 2020-21) for your evaluation. Prepare one return and experience it … our helplines (033) 22875500, 09836490007 will assist you in case of any difficulty.

Late Payment Intimation – reasons & how to resolve?