Volume 2, Issue 6


10th April, 2009


Tax Alert
New Rules for TDS

The Central Board of Direct Taxes (“CBDT”) recently amended the Income Tax Rules, 1962 (the Rules) pertaining to compliance requirements in relation to depositing the tax deducted at source (TDS) and the filing of quarterly compliance statements of TDS i.e. Rules 30, 31, 31A and 31AA. The new Rules and their impact are summarised below.

These new rules have come into force from 1st April, 2009 and would therefore, apply to all tax deductions made for the current financial year i.e. F.Y. 2009‐10 and all subsequent years.

  • The entire TDS compliance procedure is made electronic for all categories of tax deductors (no other mode allowed) – from depositing of TDS to filing the quarterly compliance statements of TDS
  • The existing Challan No. 281 used for depositing the TDS into the Government Treasury has been substituted by Form No. 17 requiring additional details of deductees including name, PAN, TDS etc. The uploading of Form No 17 (i.e. payment of the TDS) may not be possible in case of missing PAN details. Hence, care should be taken to collate all the deductee details before making the payments/withholding tax.
  • The existing Challan No. 281 required details as to type of deductee (Company/Non Company) and the nature of payment from which tax is deducted (payment under Section 192, Section 194C, Section 194J, etc.). However, Form No. 17 does not require such details; which means deductors now need to electronically file only one form per quarter for all the TDS transactions. This does away with the present requirement of filing in multiple challans for each type of deductee and for each type of payment.
  • Now, there will be no requirement of furnishing certificate of non deduction of TDS for income from salaries less then basic taxable threshold in Form No. 16AA.
  • New prescribed Form No. 16 requires TDS Unique Transaction Number (UTN) as provided by the ITD and whether PAN uploaded was validated by ITD. No further details regarding these have been notified by the ITD. Therefore, one would have to wait for further clarifications on this issue.
  • The present requirement of submission of quarterly compliance (declaration) to be submitted in Form No. 27A has been substituted by Form No. 24C which is designed to incorporate comprehensive details of TDS compliance like nature of payment, total of the prescribed payments under the TDS provisions (whether the amount of payment/ credit triggers the TDS provisions or not), amount of TDS at prescribed rate, amount of TDS at less than prescribed rate, etc. The additional details would require deeper analysis of the payments/accounts and highlight any discrepancy in the TDS
    deduction.
  • The details required in the existing Form No. 24Q, Form No. 26Q and Form No. 27Q broadly get covered in the new Form 24C. Going forward, these forms would be required to be filed annually with one annexure per Form No. 17. Further, these Forms would not be required to be filed with the ITD on computer media. All TDS returns have now to be filed only online. No physical interaction is required with NSDL or any other entity.
A detailed comparison of the provisions in the Existing Rules and the New Rules in relation to TDS compliance requirements have been tabulated below:
 
Particulars Existing Rules New Rules
Time and mode of payment to Government account of tax deducted at source
Date of payment of TDS by Government deductor Same day Not prescribed.
Date of payment of TDS by Non‐ Government deductor

In case of amount credited to the account of payee, if the credit is on the last date of the accounting year of the deductor – within two months from the end of the month in which amount is credited.

In other cases – within one week from the end of the month in which deduction is made.

No change

 

No change
Prescribed challans Challan No. 281 Form No. 17
  No details of deductees are required to be given in Challan No. 281 Details of deductee including name, PAN, TDS amount, etc required to be given in electronic challan Form No. 17
Mode of payment Mode of e-payment not mandatory for all categories of tax deductors. Use of physical challan is permitted in some cases. Compulsory furnishing Form No. 17 electronically and payment only by way of internet banking facility or by use of credit or debit card of authorized bank.
Certificate of tax deducted at source
Form No. 16AA Certificate of deduction of tax at source for income from salaries less then basic taxable threshold in Form No. 16AA required to be furnished Form No. 16AA deleted
Form 16 and Form 16A   Additional details for TDS Unique Transaction Number (UTN) as provided by the ITD and whether PAN uploaded was validated by ITD
Time limit for issue of TDS certificate in Form No. 16A for the amount credited on the date up to which the accounts of the deductor were prepared Within one week after the expiry of two months from the month in which income was credited Within one week from the date on which the tax is paid
Time limit for payment made u/s. 192, 192(1A), 194D and a consolidated certificate1 One month from the end of the financial year in which such deduction is made No change
Time limit in special cases where quarterly payments are permitted by Assessing Officer Within fourteen days from the date of payment of income‐tax No change
Giving credit for tax deducted at source on basis of duplicate certificate Obtain an Indemnity Bond from the deductee; and get the payment certified by the Assessing Officer designated in this behalf by the Chief Commissioner or the Commissioner. No change

1Where more than one certificate is required to be furnished to a deductee for deductions of income‐tax made during a
financial year and the deductee has requested for issue of a consolidated certificate in respect of such deductions.

Existing Rules Particulars Existing Rules New Rules
Filing of statement of TDS
Who is required to furnish quarterly statements Every person responsible for deducting tax Every person who has been allotted TAN. Accordingly, even in case of when payments in a particular quarter do not fall under the provisions of Section 192 to 195, every person holding a valid TAN would be required to file quarterly statements.
Quarterly statements in form No. 24Q, 26Q, 27Q   Additional details for TDS Unique Transaction Number (UTN). One annexure per Form No 24C (per challan)
Timeline To be submitted on or before 15 July, 15 October, 15 January of the first three quarters of the financial year respectively, and on or before 15 June following the last quarter of the financial year. To be submitted electronically by 15 June
following the last quarter of the financial
year.
TDS Compliance
statement		 Compliance Statement to be submitted in Form No. 27A (declaration) along with quarterly statements in Form No. 24Q, 26Q, 27Q on specified computer media. Compliance Statement in Form No. 24C. The Form No. 24C is designed to incorporate comprehensive details of TDS compliance like nature of payment, total expenses under the section, TDS deducted at prescribed rate, TDS deducted at less than prescribed rate, etc. No prescription for filing the quarterly statements in Form No. 24Q, 26Q, 27Q on computer media.
Timeline To be submitted on or before 15 July, 15 October, 15 January of the first three quarters of the financial year respectively, and on or before 15 June following the last quarter of the financial year. No change.

Similar new rules have also been prescribed for Tax Collected at Source. The same have not been dealt with in this Alert.