New / Revised TDS rates for the F.Y. 2015-16 or A.Y. 2016-17

Friends     Deductor always think about the TDS Rates.  Deductor deduct TDS on behalf of Income Tax Department and deposit the same accordingly.   But there is fear regarding change of TDS rates.  In case TDS rates have been reduced and deductor deduct / deposit higher rates (as earlier applicable) then Income Tax department has no problem.  In other side in case TDS rates goes on higher side and deductor deduct / deposit lower rate (as earlier applicable) then Income Tax department raises demand notice to deductor that you have not deducted TDS accordingly to TDS rates and you have to deposit the balance TDS with Interest. 

                  However Deductor should read below TDS  Rates before deducting TDS for the Financial Year 2015-16 or Assessment Year 2016-17

Click here to view the table of TDS Rates (Click Here)

e-TDS :- 20% TDS on Correct Pan Numbers in TDS statements.

Friends,    Approx one or more months back, I was in view that there is any lapse in the software of Income Tax department that they have charged 20% TDS on having correct Pan Numbers.   No doubt that the correct PAN's were updated through correction statements by deductor.  In the first attempt there was error in PAN's.   I had contacted customer care of TRACES but no satisfactory reply was received.   Generally, they told that send screen shoots of the error images along with active pan images etc.  Now again as I had asked them/TRACES for  the reason of charging of 20% on correct PAN , they have given below reply which is very serious for deductors :- 

Reply received from TRACES is given as under :- 

Dear Sir/Ma'am,

Thank you for contacting us, it is our pleasure to assist you.

Your query related to PAN error default is acknowledged.

It is to inform you that the provisions of section 206AA apply at the time of tax deduction, which happens   prior to the filing of statement. Thus, the deductor is expected to have a Valid PAN at the time of deduction. Only a typographical error is expected at the time of filing the TDS statement.

The demand in the hands of the deductors is being rectified in cases where the difference between the Invalid PAN and the Valid PAN is not more than 2 characters. This is being done in order to take care of the genuine typographical errors in data entry.

The rectification of demand in other cases is not done if the mismatch is more than two alpha characters & two numerics. Therefore, out of 10 characters in case of structurally valid PAN, 4 characters are being considered for rectification of demand.

Note : Please note that online Facility for PAN and Challan correction in TDS statements is now available at TRACES (www.tdscpc.gov.in). Please refer to the e-tutorials for necessary details.

Regards,

Team TDS CPC

                                 Keeping in view of the above details , deductors are required to take care in submission of PAN in  TDS return.   There are too many limitations for correction in PAN through correction statements by Income Tax Department.  

e-TDS:- Relaxation in Deduction of TDS or Non-Deduction of TDS

Friends,

Deductor is not "Default in Assessee" with some conditions

   
                 If a deductor do not deduct TDS or Short dedcut TDS, he is called "Assessee in Default" as per section 201(1).  Such type of dedcutor is responsible to pay interest on TDS amount.  

            In this budget a good change has been done in the interest of businessman.  The implementation of this change is effected from 1 July, 2012.  After change, a deductor who is responsible to deduct income tax do not deduct TDS or deduct TDS in short will not be treated as "Assessee in Default" if he proof the following conditions. 

1. The person who has been paid income,  has included the said income  in his return and he has also submitted his income tax return. 
2. The person who has received income has deposited income tax which is calculated on his income after including the said income. 
3. Deductor has received C. A. certificate relating to above two points. 

Who will issue Form 16 when Service with Two Employer in a Financial Year

Friends

 (Complication in Service under more than one employer in a Financial Year)

 It is common question that who will issue form 16, in case an employee works with two or more  employers in a single Financial Year.  Solution with example is given as under :-

Example:- 

• First Service with A employer (01.04.2010 to 31.07.2010)
• Second Service with B employer   (01.08.2010 to 15.02.2011)
• Third Service with C employer (16.02.11 to 31.03.2011)
• A deducts TDS Rs. 4000/-, B deducts TDS Rs. 6000/- and C deducts TDS Rs. 8500/-
• Can an employee force his employer to issue form 16 at the time of transfer or not ?.

Solution:-

• If an employee/assessee is employed under more than one employer during the year, each of the employers shall issue Part A of the certificate in Form No. 16 pertaining to the period for which such assessee was employed with each of the employers. Part B may be issued by each of the employers or the last employer at the option of the assessee.
  
  Finally, Form 16 Part A will be issued by all employers for the amount deducted and deposited by them and  Form 16 Part B will be issued at the option of the assessee either from Last employer or from each of the employer. 

• Employee/Assessee can not force his employer to issue form 16 at the time of his transfer, reason is that  Due date of From 16 is 31st May from the end of Financial Year. 

Download Notification from Here (Click Here)

20 % TDS w.e.f. 01.04.2010

As per new provision of tax deduction at source (TDS) under the Income Tax Act 1961 effective from April 1, 2010, TDS at higher of the prescribed rate or 20% will be deducted on all transactions liable to TDS, where the Permanent Account Number (PAN) of the deductee is not available.

No.402/92/2006-MC (04 of 2010)

Government of India / Ministry of Finance

Department of Revenue Central Board of Direct Taxes

***

New Delhi dated 20th January 2010

PRESS RELEASE

A new provision relating to tax deduction at source (TDS) under the Income Tax Act 1961 will become applicable with effect from 1st April 2010. Tax at higher of the prescribed rate or 20% will be deducted on all transactions liable to TDS, where the Permanent Account Number (PAN) of the deductee is not available. The law will also apply to all non-residents in respect of payments / remittances liable to TDS. As per the new provisions, certificate for deduction at lower rate or no deduction shall not be given by the assessing officer under section 197, or declaration by deductee under section 197A for non-deduction of TDS on payments shall not be valid, unless the application bears PAN of the applicant / deductee.

2. All deductors are liable to deduct tax at the higher rate in all transactions not having PAN of the deductees on or after 1st April 2010. In order that there is no dispute regarding quoting / non-quoting of PAN or accuracy thereof, the law requires all deductees and dedutors to quote PAN of deductees in all correspondences, bills, vouchers and other documents sent to each other. All deductors are, therefore, advised to intimate their deductees to obtain and furnish their PAN so as to avoid TDS at a higher rate. All deductees, including non-residents having transactions in India liable to TDS, are advised to obtain PAN by 31st March 2010 and communicate the same to their deductors before tax is actually deducted on transactions after that date.

3. The procedure for obtaining PAN is simple, inexpensive and quick. Application for PAN can be filed in Form 49A to National Securities Depository Ltd. (NSDL) or Unit trust of India Investor Services Ltd. (UTIISL) or their intermediaries. Non-residents can apply through the local embassy / consulate of India. Applications can also be filed, paid for or tracked online through the Internet on the following web-sites:-

http://incometaxindia.gov.in/

https://incometaxindiaefiling.gov.in/portal/index.jsp

http://www.tin-nsdl.com/

http://www.utitsl.co.in/

4. The Central Board of Direct Taxes (CBDT) has issued Notification No.94/2009 relating to taxation of perquisites / profits in lieu of salary and Circular No.1/2010 for the guidance of tax dedutors for salaries. These documents are available on the department’s web site at

http://incometaxindia.gov.in/

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