NEW TDS SYSTEM- Challenges ahead

June 03, 2009

Wednesday

Areas of change

Procedural changes :

- in TDS Remittance

-    in TDS Return Filing

-    in TDS Certificate formats 

TDS RemittanceTDS payment to be made only through e-payment or by use of debit / credit card. Hard copy of challan is not allowed

New Remittance Challan in Form No. 17 has been introduced for TDS payment replacing Challan No. ITNS 281.

In respect of any TDS/TCS made before 1st April 2009, the old challan Form No. 281 should be used even though payment for the same is made after 31st March 2009

Details of deductee including Name, PAN, TDS amount is required to be given in electronic challan Form No. 17

Separate challans need not be prepared for payment of TDS under different sections. Only one challan for one month is sufficient.

TDS on salary, TDS on contract, TDS on professional payment, etc., can be paid under one challan in Form No. 17

TDS Return FilingForm No. 24Q, 26Q has to be prepared quarterly and is to be filed before 15th of June following the financial year (ie., 24Q/26Q return for the quarters ended June 2009 / Sept 09 / Dec 09/ Mar 10 should be filed on or before 15th June 2010)

New Form No. 24C – Compliance statement has been introduced w.e.f. 1st April 2009 and required to be filed quarterly.

Due dates for filing are :

For Quarter ending 30th June - 15th July

For Quarter ending 30th Sep - 15th Oct

For Quarter ending 31st Dec - 15th Jan

For Quarter ending 31st Mar - 15th June

TDS Certificate formatsForm No. 16 & 16A has been revised and is applicable for the FY 09-10.

Certificate for the FY 08-09 should be issued in the old format

TDS certificates should be issued;

- Within one month from the end of the month in which the deduction of tax at source is made; or

- If more than one certificate is required to be furnished to a deductee for deduction of income-tax made during a financial year and the deductee has requested for issue of a consolidated certificate in respect of such deductions then within one month from the end of the financial year

- If TDS deducted for the credit made on the last day of the Financial year then within one week after the date on which the TDS was paid

Procedure for filing Form 17At the time of furnishing TDS challan in Form 17 the deductor will be required to furnish the 3 basic information relating to the deduction : PAN & Name of the Deductee, Amount of TDS/TCS

After successful payment of TDS/TCS and uploading of basic information every deduction record will be assigned a Unique Transaction number (UTN)

NSDL will send the UTN file by email; or the same can be download from NSDL site

Further, deductee can also view their UTN’s from NSDL site

Form 17 should be used for payment of TDS deducted on or after 01st June 2009 (and not from 01st July 2009)

Procedure for filing Form 24CForm No. 24C is mandatory for all TAN holders to furnish this form irrespective of whether any payment liable to TDS has been made or not

This e-form No. 24C has to be furnished at http://incometaxindiaefiling.gov.in.

The first quarter in respect of which Form 24C is required to be furnished for the quarter ending 30th June 2009

For taxes paid in the old challan for the months of Apr 09 and May 09 the deductor is required to fill up Form No. 17 in respect of such payments any time between 1st July 2009 to 15th July 2009 and forward the UTN’s to the deductees.

Procedure for issuance of TDS certificatesCircular has given 2 options for FY 2008-09 for issuing TDS

certificates Option 1: Issue the TDS certificate in the old format and send a

consolidated statement of UTNs to the deductees as soon as the same is received by him; or

Option2: Issue the certificate in the new format after updating the

UTNs in the certificate

If assessee opts for Option 2 then TDS certificates can be issued on or before 30th June 2009 otherwise it should be issued on or before 30th April 2009

From FY 2009-10 TDS certificates can be issued only in the new format

Implications in filing IT Return for AY0910In the return of income for AY 2009-10 (FY 2008-09) UTN has to be quoted for every TDS claim.

Credit for TDS claim will be allowed only if the assessee quotes the relevant UTN for every TDS claim and if it matches with the UTN in the database in Income tax dept.

NSDL will assign UTN for every TDS transaction records in FY 2007-08 and 2008-09 reported in the quarterly returns

NSDL will send the UTN file by email; or the same can be download from NSDL site

Upon receipt of UTN, the deductor will inform the UTN to the deductees Further, deductees can also view their UTN’s from NSDL site

Payment to Non ResidentsFrom 1st July 2009 the procedure for payment to

Non-Residents amended.Information in Form 15CA to be filed with IT

Department electronically prior to the remittance.

Also hardcopy of 15 CA duly signed to be filed with Bankers alongwith Annexure “A” & CA Certificate in Annexure “B”.

Till now, only hardcopy was filed with the bankers and no direct filing with ITD.

New Form 16 & Form 16 AFrom 1st April 2009 the new forms comes into effect

TDS Unique Transaction Number [UTN] system introduced

UTN to be mentioned in each TDS certificates

PAN validation is to be made and the confirmation for the same should also to be given in each TDS certificate.

TDS compliance statement in Form 24C is to be filed; Sectionwise summary of Expense account as per GL with the Gross shown in TDS returns is to be reported; Reconciliation becomes mandatory.

Thank you

subshai@gmail.com