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.  

No Penalty in Banks on prepayment of Home Loans

MUMBAI: In a relief to borrowers, the RBI today asked banks to immediately stop charging penalty on pre-payment of home loans taken on floating interest rates. 

"It has...been decided that banks will not be permitted to charge foreclosure charges\pre-payment penalities on home loans on floating interest rate basis, with immediate effect," the Reserve Bank said in a communication to banks.

e-TDs:- Heavy Late Fee and Penalty in TDS (Tax Deduction at Source)

Late Fee:- Presently, if TDS Return is submitted late, penalty is charged @ 100/- per day  as per section 272A. Penalty amount is limited to maximum of TDS amount.  Practically, this penalty is not imposed in any case due to lengthy procedure to charge penalty.  According to new rules applicable w.e.f. 01-07-2012 or after  TDS/TCS  section 272A has been changed with new Section 234E which is hard in comparison with old.

             In simple words, penalty will be charged @ 200/- per day on late submission of TDS/TCS return.  Penalty amount will not be increased the TDS/TCS amount.  Penalty amount will be deposited prior submission of TDS/TCS return.  This penalty will be start w.e.f. 2nd Quarter of the Financial Year 2012-13.

              A new penalty under section 274H will also be charged except above new penalty.  Minimum amount of this penalty will be Rs. 10,000 and Maximum amount of the penalty will be Rs. 1,00,000/-  This penalty will be imposed under two circumstances :-

1. In case, incorrect information is submitted in TDS/TCS return. 
2. In case, TDS/TCS return is submitted after one year, means deductor do not deposit TDS/TCS/RETURN/INTEREST with in one year after deducting TDS/TCS from deductor or collector. 

Note :-  Section 273B has been amended to relax in New Penalty, but there is no provision in relaxation of Late Fee.  It means Late Fee amount will be paid as mandatory. 

New Section 234E 

234E.   (1) 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. 

       (2) 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.

          (3) 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.

       (4) 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.”.

                                                         Section 2734B

100. In section 273B of the Income-tax Act, after the word, figures and letter “section 271G,”, the
word, figures and letter “section 271H,” shall be inserted with effect from the 1st day of July, 2012

No Penalty on surrender amount during Survey.

Delhi High Court : - Commissioner of Income Tax Vs SAS Pharmaceuticals : (2011) 199  Taxmann  255 (Magazine)

  Income Tax Act Section 271(1) (c) says that if any person conceal his income than as per this section penalty can be imposed one time of the amount of Income Tax to three time of the amount of Income Tax. In this case, there was an survey on 06.01.2003 in the place of businessman. During survey it was found that there were defecencies in the Cash and Stock of the businessman. Due to this businessman surrender some income and while submitting his regular income, he includes separately income of surrendered amount and pays complete Income Tax. All this has been done by a businessman to avoid litigation and to by peace of mind

         Assessing Officer impose penalty on businessman with the saying that if there was no survey, businessman conceal the surrendered amount and do not pay income tax on such amount. He has paid only Income Tax on surrendered amount only after survey. Businessman submit appeal against the penalty amount. In the end, Hon'ble High Court gives his decision that to impose penalty concealment will be watched on the basic of Point of View of Income Tax Return. An amount included in Income Tax Return can not be treated as concealed income. In normal case, Income Tax Departments decide that assessee has concealed any income or not on the basis of Tax Assessment Proceding. Because during Tax Assessment Procedure, there was no extra income in this case, therefore there penalty can not be imposed on assessee. 

Payment of Interest on Late Deduction of TDS or Late Deposit of TDS [Section 201 (1A) and (2)]

Besides the above penalty, if any such person, principal officer or company does not deductor whole or part of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest as under :-

Period of Defaults		Rate of Interest
(a)	From the date the tax was deductible to the date on which such tax id deducted	1% p.m. or part of the month
(b)	From the date on which such tax is deducted to the date on which such tax is actually paid	1.5% p.m. or part of the month

Example

S.No.	Nature of Exp.	Date of Payment/ Credit	Date of Deduction of Tax	Date of Deposit of Tax	Rate of Interest	Period for which it’s payable
1	Payment to Contractor	16-08-2010	31-03-2011	31-07-2011	1% 1.5%	From 16-08-10 to 31-03-11 i.e. for 8 months From 01-04-11 to 31.07.11 i.e. for 4months
2	Payment to Contractor	16-08-2010	16-08-2010	31-07-2011	1.5%	From 16.08.10 to 31.07.11 i.e. for 12 months
3	Payment to Contractor	16-08-2010	30-04-2011	30-09-2011	1% 1.5%	From 16.08.10 to 30.04.11 i.e. 9 months From 01.05.11 to 30.09.11 i.e. 5 months
4	Rent	31-03-2011	31-03-2011	30-04-2011	No Interest payable as tax has been within the due date.

  

            Further the amount of tax deducted together with interest for delayed payment shall be a charge upon all the assets or the person or the company as the as may be. 

            Where the assessee failed to deduct tax under section 194C, but it was found that the contractor had paid the advance tax and self-assessment tax over and above the tax payable, thereby not causing any loss to the revenue,  if the revenue is permitted to levy interest under section 201(1A) even in a case where the person liable to tax has paid tax on due date, the revenue would derive undue benefit by getting interest on the amount of tax which had already been paid on the due date.  Such a position cannot be permitted. 

          Interest leviable even if tax has been paid by the deductee;  Where the tax has been paid by the deductee-assessee, tax can not be incomes from the deductor,  but interest under section 201(1A) shall be payable by the deductor till the date of payment of tax by the deductee-assessee.

"Tax Evasion" may be Criminal Offence

NEW DELHI: In a throwback to the past, the committee on black money is considering making tax evasion  (अपवंचन, बहाना )  a criminal offence. 

The committee headed by Central Board of Direct Taxes ( CBDT )) chairman Prakash Chandra , which held its first meeting on Thursday, will examine the proposal, a government official who did not wish to be identified said. Though the suggestion has come in the past, the department stayed away from such a move in the wake of public uproar. 

But given the pressure on the government to crack down on black money, the proposal is back on the table though it might require amendment to the law. The official said the move would create a strong deterrent as evaders simply pay tax and penalty and walk away since it's a civil offence at present. 

In the past, government had provisions under laws such as Fera to put offenders behind bars even for minor offences. Given the misuse and economic liberalization that led to several controls on foreign capital vanish, the government repealed it and replaced it with Foreign Exchange Management Act (Fema). The review is being initiated along with a fresh look at Fema, Prevention of Money Laundering Act and those dealing with indirect taxes, the official who was present in the committee's meeting said. 

Members of the committee were also of the opinion that instead of enacting a fresh law to deal with black money, a better option would be to plug the gaps. "The idea is to identify loopholes and plug them, wherever needed. If we still find deficiencies, then we will examine the possibility of a new law," the official added. 

Given the pressure on the government to act on black money and corruption , the committee headed by Chandra has decided that government agencies would exchange notes in around 10 days and work out the basic structure by the end of June so that the sixmonth deadline is met. 

An official, however, clarified that the committee was not looking at generation of black money in the economy, which is being dealt with by a separate panel. Over the last few weeks, the finance ministry has been moving at full speed and has set up at least three committees related to generation of illicit wealth besides roping in experts to estimate the extent of black money in the economy.

Penal Provisions for TDS/TCS Defaults

PENAL PROVISIONS FOR TDS/TCS DEFAULTS

Below is a list of some Sections regarding TDS/TCS vide which deductor can be penalise at any time.  Every deductor should read below nature of defaults so that he can avoid any penalty in future. 

S.No.	Section	Nature of default	Penalty
	221 Read with section 201	Failure to deduct or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then , such person, shall without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax and hence shall be liable to penalty under section 221.	Sum equal to the amount of tax which he/it failed to deposit into Central Govt. Accounts within stipulated time.
	271C	Failure to deduct the whole or any part of tax at source as required by or under the provisions of Chapter XVIIB.	Sum equal to the amount of tax which he/it failed to deduct.
	272A(2)(c)	Failure to file the return of TDS under section 206.	Rs. 100 for every day during which the failure continues but the penalty shall not exceed the amount of tax deductible.
	272A(2)(f)	Failure to deliver or cause to be delivered in due time, a copy of the declaration in new Form No. 15G/15H as per section 197A.	Rs. 100 for every day during which the failure continues but the penalty shall not exceed the amount of tax deductible.
	272A(2)(g)	Failure to issue TDS certificates as required by section 203 or section 206C.	Rs. 100 for every day during which the failure continues but the penalty shall not exceed the amount of tax deductible.
	272A(2)(i)	Failure to furnish a statement as required by section 192(2C) relating to payment of tax on non monetary perquisites of the employees.	Rs. 100 or every day during which the failure continues.
	272A(2)(j)	Failure to deliver or cause to be delivered in due time, a copy of the declaration in form No. 27C.	Rs. 100 or every day during which the failure continues.
	272A(2)(k)	Failure to deliver or cause to be delivered a copy of the quarterly statement with in the time specified in section 200(3).	Rs. 100 or every day during which the failure continues.
	272A(2)(l)	Failure to deliver or cause to be delivered the quarterly return with in time specified under section 206A(l).	Rs. 100 or every day during which the failure continues.
	272B	Failure to intimate PAN to the tax deductor/tax collector at source or wrong quoting of PAN .	Rs. 10,000/-
	272BB & 272BBB	Failure to apply for allotment of TAN and failure to quote TAN in challans, Certificates and statements.	Rs. 10,000/-
	276B	Failure to pay the tax deducted at source to the credit of Central Government.	Punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine.
	271CA	Failure to Collect the whole or any part of tax at source as required by or under the provisions of Chapter XVIIBB.	Sum equal to the amount of tax which he/it failed to collect.