Monday, April 4, 2011

Nil TDS on Transporter and others to be reported in ETDS quarterly returns

on Monday, April 4, 2011

As per Income tax act section 194C , Tds is not required to be deducted on payments made to transporter if Pan number has been provided to deductor .

Further as per section 197 of Income tax act ,Assessing Officer can issue a Nil rate certificate to parties under specified section on application on form 13 with  prescribed details and if such parties produce "Nil " rate certificate to deductor , deductor is not required to deduct tds . so In both the cases tax deduction is Nil.

Third type of Nil transaction is "where amount paid is less than cut off amount given in respective section"

In all three case above , Tin-Nsdl has provided tags in etds return .

  1. To incorporate Nil rate transporter entries in etds return by inserting a  tag "T" in remarks in 26q
  2. To incorporate Nil rate entries due to section 197 Tag "B" is to be shown in remarks column in 26q
  3. Now Tin-NSDL has also provided a tag "Y" to incorporate entries of nil deduction where amount is less than cut-off amount.

Now the question is ,whether one should file return as suggested by tin -nsdl or there is  legal Binding on us to report such entries.The answer is given below

As per Income tax act section 200 quarterly return is required to be filed where TDS has been deducted .Means if tds has not been deducted then no need to file the return .

But now Income Tax Rules 31AA has been amended to incorporate first two type of entries in quarterly returns from 01.04.2011.

As per new rules amended vide notification 16/2011 dated 29/03/2011

(b)in rule 31A, in sub-rule (4), after clause (iv),the following clauses shall be inserted, namely:-

“(v)furnish particulars of amount paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax under section 197 by the Assessing Officer of the payee;

(vi) furnish particulars of amount paid or credited on which tax was not deducted in view of the compliance of provisions of sub-section (6) of section 194C by the payee.”

so after this amendment we have to report following two type of entries in quarterly return (26q) compulsory
  1. Nil tds on payment to transporter
  2. Nil tds due to nil certificates issued by AO u/s 197 to party
But Act/ rules has not been amended to incorporate third type of entries .(Nil tds due to payment less than cut off amount)

There are chances in few cases that there is no payment /TDS under specific section but there are entries to be reported in above two categories . In that cases we have to create Zero value challan in etds return and have to shown deductee details against that challan .

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  1. Dear Rajan,

    Flag B is to be marked in case of 197A entries.
    In case of Section 197 entries, flag A is to be marked.

    CA Kanwaljit Singh Dhunna

    1. Thanks Kanwaljit ,
      you come after very long time. In above post I have discussed only "Nil" tds entries so I have not mentioned entries for "TDS at less rate "

  2. my self is working in limited company. and we paid inspection charges to foreign party (no permanent establishment in india) and inspection is also done in foreign country for getting certification to sell in foreign county. is it witholding tax is applicable?

  3. Kindly advise me on TDS payment on LORRY TRANSPORTER if a mfg company deduct tds from trnsporter or leave

  4. As per Sec 194C Tds deducted to Rs 12000/-
    (Amt paid Rs 1200000/- for Individual without providing PAN) Then how much we have to deduct either Rs 12000/- or Rs 240000/-
    (@20%) guide me

    1. you have to deduct 2,40,000 u/s 206AA

  5. Books of my partnership firm were audited as per 44AB for FY 10-11.During the year payment was made to transporter on regular basis without deducting TDS as PAN was furnished by him.No statement/return of TDS furnished. What are the possible consequences?

    1. 90% person are not reporting .You should forget about past and start reporting now

  6. what are consequences if we have not reported above in tds return