CBDT has released circular no 17/2014 in which all the rules related to TDS on Salary has been explained . This circular generally issued i...
CBDT has released circular no 17/2014 in which all the rules related to TDS on Salary has been explained . This circular generally issued in the month of September,October but this year the circular has been issued in the month of December as the new govt has passed the Finance Bill in second quarter of the Fy 2014-15.Complete circular is given below for your ready reference. Download link for circular is given in second part of this circular here
provided to the deductors
at website
www.tdscpc.gov.in/ including online
correction of statements (Form 24Q).
4.9.1 The person deducting the tax (employer in case of salary income), is required to file duly
verified Quarterly Statements of TDS in Form 24Q
for the periods [details in Table below] of
each financial year, to the TIN/facilitation Centres authorized by DGIT (System‘s) which is
currently managed by M/s National Securities Depository Ltd (NSDL). Particulars of e-TDS
Intermediary
at
any of the TIN Facilitation Centres are available at http://www.incometaxindia.gov.in and http://tin-nsdl.com portals. The requirement of filing an annual return of TDS has been done away with w.e.f. 1.4.2006. The quarterly statement for the
SUBJECT: INCOME-TAX DEDUCTION FROM
SALARIES DURING
THE FINANCIAL
YEAR 2014-15
UNDER SECTION 192 OF THE
INCOME-
TAX ACT, 1961.
*****
Reference is invited
to Circular No.08/2013 dated 25.10.2013 whereby the rates of
deduction of income-tax
from the payment of income under the head "Salaries" under Section
192 of the Income-tax Act, 1961 (hereinafter
‗the Act‘),
during the financial
year 2013-14,
were intimated. The present Circular contains the rates of deduction of income-tax from the
payment of income chargeable under the head "Salaries" during the financial year 2014-15 and explains certain
related provisions of the Act and Income-tax Rules, 1962 (hereinafter the
Rules). The relevant Acts, Rules, Forms and Notifications are available at the website of the Income Tax
Department-
www.incometaxindia.gov.in.
2. RATES OF
INCOME-TAX AS PER
FINANCE (No.
2) ACT, 2014:
As per
the Finance (No. 2) Act, 2014, income-tax is required to be
deducted under Section 192 of
the Act from income chargeable under the head "Salaries"
for the financial year 2014-15 (i.e. Assessment
Year
2015-16) at the following rates:
2.1 Rates
of tax
A. Normal Rates of tax:
Sl
No
|
Total Income
|
Rate
of tax
|
1
|
Where the
total income does not exceed Rs.
2,50,000/-.
|
Nil
|
2
|
Where the
total income exceeds Rs.
2,50,000
but does not exceed Rs. 5,00,000/-.
|
10 per cent of
the amount by which
the
total income
exceeds Rs. 2,50,000/-
|
3
|
Where the
total income exceeds Rs.
5,00,000/- but does not exceed Rs.
10,00,000/-
.
|
Rs. 25,000/- plus
20 per cent of the
amount by which
the total income
exceeds Rs.
5,00,000/-.
|
4
|
Where the
total income exceeds Rs.
10,00,000/-.
|
Rs. 1,25,000/-
plus 30 per cent
of the
amount by which the total income exceeds Rs.
10,00,000/-
|
B. Rates of tax for every individual, resident in India, who is of the age of sixty years or
more but less
than eighty years
at any
time during
the financial year:
Sl
No
|
Total Income
|
Rate of tax
|
1
|
Where the total income does not
exceed Rs.
3,00,000/-
|
Nil
|
2
|
Where the total income exceeds Rs.
3,00,000
but does not exceed
Rs. 5,00,000/-
|
10 per
cent
of the amount by which
the
total
income exceeds Rs.
3,00,000/-
|
3
|
Where the total income exceeds Rs.
5,00,000/-
but does not exceed
Rs. 10,00,000/-
|
Rs.
20,000/- plus 20 per cent of
the
amount by
which the total income exceeds Rs. 5,00,000/-.
|
4
|
Where the total income exceeds Rs.
10,00,000/-
|
Rs.
1,20,000/- plus 30 per cent of
the
amount
by
which the total income
exceeds Rs.
10,00,000/-
|
C. In case of every individual being a resident in India, who is
of
the age of eighty
years
or more at any
time during
the financial year:
Sl
No
|
Total Income
|
Rate of tax
|
1
|
Where the total income does not exceed
Rs.
5,00,000/-
|
Nil
|
2
|
Where the total income exceeds Rs.
5,00,000
but
does not exceed
Rs. 10,00,000/-
|
20 per
cent
of the amount by which
the
total income exceeds Rs. 5,00,000/-
|
3
|
Where the total income exceeds Rs.
10,00,000/-
|
Rs.
1,00,000/- plus 30 per cent of
the
amount by
which the total
income exceeds Rs. 10,00,000/-
|
2.2 Surcharge on Income tax:
The amount of income-tax shall be increased by
a surcharge @10% of the income-tax on payments to an individual
taxpayer, if the total income of the individual exceeds Rs 1 crore during FY 2014-15
(AY 2015-16). However the amount of Surcharge shall not exceed the amount by which the
individual‘s total income exceeds Rs 1 crore and if
surcharge so arrived at, exceeds such amount
(assessee‘s total income minus one crore) then it will be restricted
to the amount of total income
minus Rupees one crore.
2.3.1 Education Cess on Income tax:
The amount of income-tax including the surcharge if any,
shall be increased by Education Cess on
Income Tax
at the rate of
two percent of the income-tax.
2.3.2 Secondary and Higher Education Cess on Income-tax:
An additional education cess is chargeable at the rate of one percent of income-tax including the surcharge if any, but not
including the education cess on income-tax
as
in 2.3.1.
3. SECTION 192 OF THE INCOME-TAX
ACT, 1961: BROAD SCHEME OF TAX DEDUCTION
AT SOURCE FROM
"SALARIES":
3.1 Method of Tax Calculation:
Every person who is responsible for paying
any income chargeable under the head "Salaries"
shall deduct income-tax
on the estimated income
of the assessee under the head
"Salaries"
for
the financial year
2014-15.
The income-tax is required to be calculated on the
basis of the rates given above, subject
to
the provisions related to requirement
to furnish PAN as per
sec 206AA of the Act,
and shall be deducted
at
the time of each payment.
No tax, however, will
be required to be deducted at source in
any case unless the estimated
salary income including the value
of perquisites, for the financial year exceeds
Rs. 2,50,000/- or Rs.3,00,000/- or Rs.
5,00,000/-, as the case may be,
depending upon the age of the
employee.(Some typical illustrations of computation of tax are given at Annexure-I).
3.2 Payment of Tax
on Perquisites
by Employer:
An option has been given to the employer to pay
the tax on non-monetary perquisites given to an employee. The employer may, at its option, make payment of the tax on
such perquisites himself without making any TDS from the salary of the employee. However, the employer will have to pay the tax at the time when such tax was otherwise deductible i.e. at the time of payment of
income chargeable under the head ―salaries‖ to
the employee.
3.2.1
Computation of Average Income Tax:
For the purpose of making the payment of tax mentioned in para 3.2 above, tax
is to be
determined at the
average of income tax computed on the basis of rate in force
for the financial year, on the income chargeable
under the head
"salaries", including the value
of perquisites for which tax has
been paid by the employer himself.
3.2.2 Illustration:
The income chargeable under the head ―salaries‖ of an employee below sixty years of age for
the year inclusive of all perquisites is Rs.4,50,000/-, out of which, Rs.50,000/- is on account of non- monetary perquisites and the employer opts to pay the tax
on such perquisites as
per the
provisions
discussed in para 3.2
above.
STEPS:
Income Chargeable under the head ―Salaries‖
inclusive of
all perquisites
|
Rs. 4,50,000/-
|
Tax on Total Salary (including Cess)
|
Rs. 20,600/-
|
Average Rate of
Tax [(20,600/4,50,000) X 100]
|
4.57%
|
Tax payable
on Rs.50,000/= (4.57%
of 50,000)
|
Rs. 2285/-
|
Amount required
to be deposited each month
|
Rs. 190 ((Rs. 190.40) =2285/12)
|
The tax
so paid by the employer shall be deemed to be TDS made from the salary of the employee.
3.3 Salary From More Than One Employer:
Section 192(2)
deals with situations
where
an individual is
working under more than one employer
or has changed from one employer
to another. It provides for deduction of
tax at source by such employer (as the tax payer may choose) from the aggregate salary of the employee, who is or has been in receipt of salary
from more than one employer. The employee is now required to furnish to the present/chosen employer details of the income under the head "Salaries" due
or received from the former/other employer and also tax deducted at source therefrom, in writing
and
duly verified by him and by the former/other
employer. The present/chosen
employer
will be required to deduct tax at source on the aggregate amount of salary (including salary
received
from the former or
other employer).
3.4 Relief When Salary
Paid in Arrear or Advance:
3.4.1 Under section 192(2A) where the assessee, being a Government servant or an employee in a
company, co-operative society, local authority, university, institution,
association or body is
entitled to the relief under Section 89(1)
he may furnish to the person responsible for making
the payment referred to
in Para (3.1), such particulars in Form No.
10E duly verified by him, and thereupon the person responsible, as aforesaid, shall compute the relief on the basis of such particulars and
take the same into account in making
the deduction under Para(3.1)
above.
3.4.2 With effect from 1/04/2010 (AY 2010-11), no such relief shall be granted in respect of
any amount received
or receivable by an assessee on
his voluntary retirement
or termination of his
service, in accordance with any
scheme or schemes of voluntary retirement or in the case of a public sector company referred to in section 10(10C)(i) (read with Rule 2BA), a scheme of
voluntary separation, if an exemption in respect of any amount received or receivable on such
voluntary retirement or termination of his service or voluntary
separation has been claimed by
the
assessee under section 10(10C) in respect
of such, or any other, assessment year.
3.5 Information regarding
Income under any
other head:
(i) Section 192(2B) enables a taxpayer to furnish
particulars
of income under any head other
than "Salaries" ( not being a loss under any such head other than the loss under the
head ― Income
from house property‖) received by the taxpayer for the same financial
year and of any tax deducted at source thereon. The particulars may now be furnished in a simple statement, which
is properly
signed and verified by
the
taxpayer in the manner as prescribed under Rule 26B(2) of the Rules and shall be
annexed to the simple statement. The
form of verification is reproduced as under:
I, …………………. (name of the assessee), do declare that what is stated above is
true to the
best
of my information and
belief.
It is reiterated that
the DDO can take into account any loss only under the head ―Income from
house property‖. Loss under any other head cannot be considered by the DDO
for calculating the amount of tax
to be deducted.
3.6 Computation of income under the head “ Income from house property‖:
While taking
into
account the loss from House Property, the DDO shall ensure that the employee files the declaration referred to above
and
encloses therewith a computation of such loss from house
property. Following details shall be obtained and kept by the employer in respect of loss
claimed under the head ―Income from house property‖ separately for each house property:
a) Gross annual
rent/value
b) Municipal Taxes paid, if any
c) Deduction claimed for
interest paid, if any d)
Other deductions claimed
e) Address of the property
f) Amount
of loan, if any;
and
g) Name and
address of the lender
(loan
provider)
3.6.1 Conditions for Claim of Deduction of Interest on Borrowed Capital for Computation
of Income From House Property [Section
24(b)]:
Section 24(b) of the Act allows deduction from income from houses property on interest on borrowed capital as under:-
(i) the deduction is allowed only in case of house
property which is owned and is in the
occupation of the employee for his own residence. However, if
it is actually not
occupied by the employee in view of his place of the employment being at other place,
his residence in that
other
place should not be in a building belonging to him.
(ii) the quantum of deduction allowed
as per table below:
Sl
No
|
Purpose of borrowing capital
|
Date of borrowing
capital
|
Maximum Deduction
allowable
|
1
|
Repair or
renewal or
reconstruction of
the house
|
Any time
|
Rs. 30,000/-
|
2
|
Acquisition or construction of
the house
|
Before 01.04.1999
|
Rs. 30,000/-
|
3
|
Acquisition or construction of the
house
|
On or after
01.04.1999
|
Rs. 1,50,000/-
(upto AY 2014-15)
|
Rs. 2,00,000/-
(w. e. f. AY 2015-16)
|
In case of
Serial No. 3 above
(a) The
acquisition or construction of the house should be completed within3 years from
the end of the FY in which the capital was borrowed. Hence it is necessary for the DDO to have the completion certificate of the house property against which
deduction
is claimed either from the builder or through self-declaration from the employee.
(b) Further any prior period interest for the FYs upto the FY in which the property was
acquired or constructed (as
reduced by any part
of interest allowed as
deduction under
any
other
section of the Act) shall be deducted in equal installments for the FY in question and
subsequent four FYs.
(c) The employee has to furnish before the DDO a certificate from the person to whom any interest is payable on the borrowed capital specifying the amount of interest
payable. In case a new loan is taken to repay the earlier loan, then the certificate
should also show the details of Principal
and
Interest of the loan so
repaid.
3.7 Adjustment for Excess or Shortfall of Deduction:
The provisions of Section 192(3) allow the deductor to make adjustments for any excess or shortfall in the deduction
of
tax
already made during the financial
year, in
subsequent deductions
for that employee within
that financial year
itself.
3.8 Salary Paid in Foreign Currency:
For
the purposes of deduction of tax on salary payable
in
foreign currency, the value in rupees
of such salary shall be calculated at the “Telegraphic transfer buying rate” of such currency
as on the date on which tax is required to be deducted at source ( see Rule 26).
4. PERSONS RESPONSIBLE FOR DEDUCTING TAX AND
THEIR DUTIES:
4.1. As per section 204(i) of the Act, in case of payments other than payments by the Central
Government or the State Government, the
"persons responsible for paying" for the purpose of
Section 192 means
the
employer himself or if the employer is a Company, the Company
itself
including the Principal Officer thereof. Further, as per
Section 204(iv), in case the credit, or
as
the case may be, the payment is made by or on behalf of Central Government or State Government,
the DDO or any other person by whatever name called, responsible for crediting, or as the case may be, paying such
sum is the ―persons
responsible for paying"
for the purpose of Section
192.
4.2. The tax determined
as per para 9
should be deducted from
the
salary u/s
192 of the Act.
4.3. Deduction
of Tax at Lower Rate:
If
the jurisdictional TDS officer
of the Taxpayer issues a
certificate of No Deduction or
Lower Deduction of Tax under
section 197 of the
Act, in response to the
application filed
before him in Form No 13 by the Taxpayer; then the DDO should take into account
such certificate and deduct tax on the salary
payable at the rates mentioned
therein.(see Rule 28AA). The Unique Identification Number of the certificate is required to be reported in Quarterly
Statement of TDS (Form 24Q)
4.4. Deposit of
Tax Deducted:
Rule 30 prescribes time and mode of payment of tax deducted at source to the account of Central
Government.
4.4.1. Due dates for payment
of TDS:
Prescribed time of payment/deposit of TDS to the credit of Central Government account is as under:
a)
In
case of an Office of Government:
Sl No.
|
Description
|
Time up to which to be deposited.
|
1
|
Tax deposited without Challan [Book Entry]
|
SAME
DAY
|
2
|
Tax deposited with Challan
|
7TH DAY NEXT MONTH
|
3
|
Tax on perquisites opt to be deposited by the employer.
|
7TH DAY NEXT MONTH
|
b)
In any case
other than an Office of Government
Sl No.
|
Description
|
Time up to which to be deposited.
|
1
|
Tax deducted in March
|
30th APRIL NEXT FINANCIAL YEAR
|
2
|
Tax deducted in any other month
|
7TH DAY NEXT MONTH
|
3
|
Tax on perquisites opted to be deposited by the employer
|
7TH DAY NEXT MONTH
|
However, if a DDO applies before the jurisdictional Additional/Joint Commissioner
of Income Tax to permit quarterly payments of TDS under section 192, the Rule 30(3) allows for payments on quarterly basis and as
per time given in Table
below:
Sl. No.
|
Quarter of the financial year ended on
|
Date for quarterly payment
|
1
|
30th June
|
7th July
|
2
|
30th September
|
7th October
|
3
|
31st December
|
7th January
|
4
|
31st March
|
30th April next Financial Year
|
4.4.2 Mode of Payment of TDS
4.4.2.1 Compulsory filing of Statement by PAO, Treasury Officer, etc in case of payment of
TDS by Book Entry:
In the case of an office of the Government, where tax has been paid to the credit of the Central Government without the production of a challan [Book Entry], the Pay
and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person by
whatever name
called to whom
the deductor reports
about the tax deducted
and who is responsible for crediting such sum
to the credit of the
Central Government, shall‐
(a) submit a statement in Form No. 24G within ten days from the end of the month to the
agency authorized by
the
Director General of Income‐tax
(Systems) [TIN Facilitation
Centres currently managed by M/s National Securities Depository
Ltd] in respect of tax
deducted by the deductors
and reported to him for that
month; and
(b)
intimate the number (hereinafter referred to as the Book Identification Number or
BIN) generated by the agency
to each of the deductors in respect of whom the sum
deducted has been credited. BIN consists of receipt number of
Form 24G, DDO sequence
number in Form No. 24G and date
on which tax is deposited.
The procedure of furnishing
Form 24G
is detailed in Annexure
III. PAOs/DDOs
should go through the FAQs
in Annexure
IV to understand the correct
process to be followed.
The
ZAO/PAO of Central
Government
Ministries
is
responsible
for filing of
Form No. 24G on monthly basis.
The
person responsible for filing
Form
No. 24G in case of State Govt. Departments is shown
at Annexure V.
The procedure of furnishing Form 24G is detailed
in Annexure IV. PAOs/DDOs should
go through the FAQs therein
to understand the correct process
to be followed.
4.4.2.2 Payment by an
Income Tax Challan:
(i) In case the payment is made by an Income Tax Challan, the amount of tax so deducted shall be deposited to the credit of the Central Government by remitting it, within the time specified in
Table in para 4.4.1 above, into any office of the Reserve Bank of India or branches of the State Bank
of India
or of
any authorized
bank;
(ii) In case of a company and a person (other than a company), to whom provisions of section
44AB are applicable, the amount deducted shall be electronically remitted into the Reserve
Bank of India or the State Bank of India or any authorised bank accompanied by an electronic income-tax challan
(Rule125).
The amount shall be construed as electronically remitted to
the Reserve Bank of India or to the
State Bank
of India
or to any authorized bank,
if the amount is remitted
by
way of:
(a)
internet banking facility of the Reserve Bank of India or of the State Bank of India or
of any authorized bank;
or
(b) debit card.
{Notification No.41/2010 dated 31st May 2010}
4.5 Interest,
Penalty & Prosecution
for
Failure to Deposit
Tax Deducted:
4.5.1 If a person fails to deduct the whole or any part of the tax at source, or, after deducting,
fails to pay the whole or any
part
of the tax to the credit of the Central Government within the prescribed time, he shall be liable to
action in accordance with the
provisions of section 201 and shall
be deemed to be an assessee-in-default in respect of such tax and liable for penal action u/s
221 of
the Act. Further Section 201(1A) provides that such person shall be liable to pay
simple interest
(i) at the rate of 1% for every
month or part of the month on the amount of such tax from
the date on which such tax was deductible to the date
on which such tax is deducted;
and
(ii) at the rate of one and one-half percent for every
month or part of a month on the amount of such tax from the date on which such tax
was
deducted to the date
on which such tax is actually paid.
Such interest, if chargeable, is mandatory in nature
and has to be paid before furnishing of quarterly statement
of TDS
for respective quarter.
4.5.2 Section 271C inter alia lays down that if
any person fails to deduct whole or any
part
of tax at source or fails to pay the whole or part of tax under
the
second proviso to section 194B, he shall be liable to pay, by way of
penalty, a sum equal to
the amount
of tax
not deducted or
paid by him.
4.5.3 Further, section 276B lays
down
that if a person fails to pay to the credit of
the Central Government within
the
prescribed time, as
above, the tax deducted at
source by him or tax payable by
him under the second proviso to section 194B, he shall be
punishable with
rigorous imprisonment for a term which shall be between 3 months and 7 years, along with fine.
4.6 Furnishing of Certificate for Tax
Deducted (Section
203):
4.6.1 Section 203 requires the
DDO to furnish to the employee a certificate in Form 16 detailing the amount of TDS and certain other particulars. Rule
31 prescribes that Form 16 should be furnished to the employee by 31st May after the end of the financial year in which the income was paid and tax deducted. Even the banks deducting tax at the time of payment of pension are required to issue such certificates. Revised Form 16 annexed to Notification No 11 dated 19-
02-2013 is enclosed. The
certificate
in Form 16 shall specify
(a) Valid
permanent account number
(PAN) of the deductee;
(b) Valid tax deduction
and
collection account
number (TAN) of
the deductor;
(c)
(i) Book identification number or numbers (BIN) where
deposit of tax deducted
is without production
of challan in case of
an office of
the Government;
(ii)
Challan identification number
or
numbers (CIN*) in case
of
payment through bank.
(*Challan identification
number (CIN) means the
number comprising
the Basic
Statistical Returns (BSR) Code of
the Bank branch where
the tax has been deposited, the
date on which the tax has been deposited
and challan serial number
given by the bank.)
(d) Receipt numbers of all the relevant quarterly statements of TDS (24Q). The receipt
number of the quarterly statement
is of 8 digit.
Further as per Circular 04/2013 dated 17-04-2013 all deductors (including Government deductors who deposit TDS in the Central Government Account through book entry) shall issue
the Part A of Form No. 16, by
generating and subsequently
downloading it through TRACES Portal and after duly authenticating and verifying it, in respect of all sums deducted on or after the
1st day of April, 2012 under the provisions of section 192 of Chapter XVII-B. Part A of Form No
16 shall
have a unique TDS certificate number.
'Part B (Annexure)' of
Form No. 16 shall be prepared by the deductor manually and
issued to the deductee after
due authentication and verification alongwith the Part A of
the Form No. 16.
If the DDO fails to issue these certificates to the person concerned, as required by
section 203, he will
be liable to pay, by way of penalty, under section 272A(2)(g), a
sum which shall be Rs.100/- for every day during which the failure continues.
It is, however, clarified that there is no obligation to issue the TDS certificate in case tax at
source is not deductible/deducted by virtue of claims
of exemptions and deductions.
[Note: TRACES is a web-based application of the Income - tax Department that provides an interface to all stakeholders associated with
TDS administration. It enables viewing of
challan status, downloading of NSDL Conso File, Justification Report and Form 16 / 16A as
well as viewing of annual tax credit statements (Form 26AS). Each deductor is required to
Register in the Traces portal. Form
16/16A issued to deductees should mandatorily be generated and downloaded from the TRACES portal].
Certain essential
points regarding the filing of the Statement and obtaining TDS certificates
are
mentioned below:
(a)
TDS certificate (Form16) would be generated for the deductee only if Valid PAN is
correctly mentioned in the Annexure II of Form 24Q in Quarter 4 filed
by the deductor.
Moreover, employers are advised
to ensure in Form 16 that the
status of ―matching‖ with respect
to ―Form 24G/OLTAS‖ is
‗F‘. If the status
of matching other than ‗F‘, kindly take necessary
action promptly to rectify the same.
It is
pertinent to
mention here that certain
facilities have been
provided to the deductors
at website
www.tdscpc.gov.in/ including online
correction of statements (Form 24Q).
(b) The employer should
quote the gross amount of salary (including any amount exempt under section 10 and the deductions under chapter VI A) in column 321 (Amount paid/credited)
of Annexure I of
Form
24Q as
per NSDL RPU (hereafter
Return Preparation
Utility).
(c) The employer should quote the amount of salary excluding any amount exempt under section 10 in column 337 (Total amount of salary) of Annexure II of Form 24Q as per NSDL
RPU.
(d) TDS on Income (including loss from House Property) under any Head other than the head
‗Salaries‘ offered for TDS (shown in column
341)
can be shown in column 353
(Reported amount
of TDS
by
previous employer,
as per
NSDL RPU.
(e) Employer is advised
to quote Total Taxable Income (Column 346) in Annexure II without rounding-off and TDS should be deducted and reported accordingly
i.e. without rounding-off of TDS also.
Example:
Total
Taxable
Income
|
Total Taxable
Income
(Rounded Off)
|
TDS to be
Deducted
(Incl. cess)
|
TDS Deducted/ Reported
after rounding-off of
income (Incl.
cess)
|
Short
Deduction
|
1350094
|
1350090
|
236929.05
|
236927.80
|
Rs. 1.25
|
4.6.2. If an assessee is employed by 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 and Part B may be issued by each of the
employers or the last employer
at the option of the assessee.
4.6.3. Authentication by
Digital Signatures:
(i) Where a certificate is to be furnished in Form No. 16, the deductor
may, at his option,
use digital signatures to authenticate
such certificates.
(ii) In case of
certificates issued under
clause (i), the deductor shall ensure
that
(a) the conditions
prescribed
in para 4.6.1 above are complied
with;
(b) once the certificate is digitally signed,
the contents of the certificates are not
amenable to change; and
(c) the certificates
have
a
control number
and
a
log
of
such
certificates
is
maintained by the deductor.
v The
digital signature is being used to authenticate most
of the e-transactions
on the internet as transmission of information using digital signature
is failsafe. It saves time specially in organisations having large number of employees where issuance of certificate
of deduction of tax with manual signature is time consuming
(Circular no 2 of 2007 dated
21.05.2007)
4.6.4. Furnishing
of particulars pertaining to perquisites, etc (Section
192(2C):
4.6.4.1
As per section 192(2C), the responsibility
of providing correct and complete particulars of
perquisites or profits in lieu of salary given to an employee is placed on the person
responsible for paying such income i.e., the person responsible
for
deducting tax at source. The form and manner
of
such particulars are prescribed in Rule 26A, Form 12BA (Annexure II) and Form 16
of the Rules. Information relating to the nature and value of perquisites is to be provided by
the employer in Form 12BA in case salary paid or payable is above Rs.1,50,000/-. In other cases, the
information would have to
be provided by the
employer in Form
16 (PART B) itself.
4.6.4.2
An employer, who has paid the tax on perquisites on behalf of the employee as per the
provisions discussed in
para 3.2 of this circular, shall furnish to the employee concerned, a
certificate to the effect that tax has been paid to the Central Government and specify
the amount
so paid, the rate at which tax has been paid and certain other particulars in the amended Form
16.
4.6.4.3
The obligation cast on the employer under Section 192(2C) for furnishing a statement
showing the value of perquisites provided
to the
employee is a crucial responsibility of the
employer, which is expected to
be discharged in accordance
with law
and rules of
valuation framed there under. Any false
information, fabricated documentation or suppression of requisite information will entail consequences thereof provided under
the law. The certificates
in Forms 16 and/or Form 12BA specified above, shall be furnished to the employee by 31st May of the financial year immediately
following the financial year in which the income was paid and tax deducted. If he fails to issue these
certificates to the person concerned, as required by section
192(2C), he will be liable to pay, by way of penalty,
under section 272A(2)(i), a sum which shall be Rs.100/- for every day during which
the failure continues.
As per Section 139C of the Act, the Assessing Officer can require the taxpayer to produce Form
12BA
alongwith Form 16, as issued by the
employer.
4.7 Mandatory Quoting
of PAN and TAN:
4.7.1
Section 203A of the Act makes it obligatory
for
all
persons
responsible for deducting tax at source
to obtain and quote the Tax deduction and collection Account No
(TAN)
in the
challans, TDS-certificates, statements and other documents.
Detailed instructions
in
this regard
are
available in this Department's Circular
No.497 [F.No.275/118/ 87-IT(B) dated 9.10.1987]. If a person
fails to comply with the provisions of section
203A, he will be liable to pay, by way of penalty, under
section
272BB, a sum of ten thousand
rupees.
Similarly,
as per
Section
139A(5B), it is obligatory
for persons
deducting tax at source to quote PAN of the persons from
whose income tax has been
deducted in the statement furnished u/s 192(2C), certificates
furnished u/s 203 and all statements prepared and delivered as per the provisions of section
200(3) of the
Act.
4.7.2 All tax deductors are required to file the TDS statements in Form No.24Q (for tax deducted from salaries). As the requirement of filing TDS certificates alongwith the return of
income has been done away with,
the lack of PAN of deductees is creating difficulties in giving
credit for the tax deducted. Tax deductors are, therefore, advised
to procure and quote correct
PAN
details of all deductees in the TDS statements for salaries in Form 24Q. Taxpayers are also
liable to furnish their correct PAN to their deductors. Non-furnishing of PAN by
the deductee
(employee) to the deductor (employer) will result in deduction of TDS at higher rates u/s 206AA of the
Act mentioned
in para 4.8 below.
4.8 Compulsory Requirement
to furnish PAN by employee (Section
206AA):
4.8.1 Section 206AA in the Act makes furnishing of PAN by the employee compulsory in case of receipt of any sum or income or amount, on which tax is deductible. If employee (deductee) fails to
furnish his/her PAN to the deductor , the deductor has been made responsible
to make TDS at higher of the
following
rates:
i) at the rate specified
in the relevant
provision of this Act; or
ii) at the rate or
rates in force; or
iii) at the rate of
twenty per cent.
The deductor has to determine the tax amount in all the three conditions and apply the higher rate
of TDS. However, where the income
of the
employee computed for TDS u/s 192 is below taxable limit, no tax will be deducted. But
where the income of the employee computed for TDS u/s 192
is above taxable limit, the deductor will calculate the average rate of income-tax based on rates
in force as provided in sec 192. If the tax so calculated is below 20%, deduction of tax will be
made at the rate of 20% and in case the average rate exceeds 20%, tax is to deducted at the
average rate. Education cess @ 2% and Secondary and Higher Education Cess @ 1% is not to be
deducted, in case the tax is
deducted at
20%
u/s 206AA of the Act.
4.9 Statement
of deduction
of tax
under section 200(3) [Quarterly Statement
of TDS]:
4.9.1 The person deducting the tax (employer in case of salary income), is required to file duly
verified Quarterly Statements of TDS in Form 24Q
for the periods [details in Table below] of
each financial year, to the TIN/facilitation Centres authorized by DGIT (System‘s) which is
currently managed by M/s National Securities Depository Ltd (NSDL). Particulars of e-TDS
Intermediary
at
any of the TIN Facilitation Centres are available at http://www.incometaxindia.gov.in and http://tin-nsdl.com portals. The requirement of filing an annual return of TDS has been done away with w.e.f. 1.4.2006. The quarterly statement for the
last quarter filed in Form 24Q (as amended by Notification No. S.O.704(E) dated 12.5.2006) shall be treated as the annual return of TDS. Due
dates of
filing this statement quarterwise is as in the
Table below:
TABLE: Dates
of filing Quarterly Statements
E-TDS
Return 24Q
Sl No
|
Return for Quarter ending
|
Due date for Government
Offices
|
Due date for Other
Deductors
|
1
|
30th June
|
31st July
|
15th July
|
2
|
30th September
|
31st October
|
15th October
|
3
|
31st December
|
31st January
|
15th January
|
4
|
31st March
|
15th May
|
15th May
|
4.9.2 The statements referred above may be furnished in paper form or electronically under
digital signature or alongwith verification of the statement in Form 27A of verified through an electronic process in accordance with the procedures, formats and standards specified by
the Director General of Income‐tax (Systems). The
procedure for furnishing
the
e-TDS/TCS
statement is detailed at
Annexure VI.
4.9.3
All Returns
in Form 24Q are required to be furnished in electronically
except in case where
the number of deductee records is less than 20 and deductor is not an office of Government, or a company or a person who is
required to get his accounts audited under section 44AB of
the Act. [Notification No. 11 dated
19.02.2013].
4.9.4 Fee for default
in furnishing statements (Section
234E):
If a person fails to deliver or caused to be delivered a statement within the time prescribed in
section 200(3) in respect of tax deducted at source
on or after 1.07.2012 he
shall be liable to pay, by way of fee a sum of Rs. 200 for every day during which the failure continues. However, the amount of such fee shall not
exceed the amount of tax which was deductible at source. This
fee is mandatory
in nature and
to be paid before furnishing of such statement.
4.9.5 Rectification of mistake
in filing TDS Statement:
A DDO can also file a correction statement for
rectification of any mistake or to add, delete or
update the information furnished in the statement delivered earlier.
4.9.6 Penalty for
failure in furnishing statements or furnishing
incorrect
information
(section 271H):
If a person fails to deliver or caused to be delivered a statement within the time prescribed in
section 200(3) or furnishes an incorrect statement, in respect of tax deducted at source on or after
1.07.2012, he shall be liable to pay, by way of penalty a sum which shall not be less than Rs.
10,000/-
but which may extend to Rs 1,00,000/-. However, the penalty shall not be levied if the
person proves that after paying TDS with the fee and interest, if any, to the credit of Central
Government, he
had delivered
such statement
before the expiry of one year
from the time prescribed for delivering the
statement.
4.9.7 At the time of preparing
statements of tax deducted, the
deductor is required to:
(i)
mandatorily quote his tax deduction and collection account number (TAN) in the statement;
(ii) mandatorily quote his permanent account
number (PAN) in the statement except in
the case where the deductor is an office of the Government( including State
Government). In case of Government deductors “PANNOTREQD‖ to be quoted in
the
e-TDS statement;
(iii) mandatorily quote PAN of
all deductees;
(iv)furnish particulars of
the tax paid to the Central Government including book identification number or challan
identification number, as
the case may be.
(v)
furnish particular of amounts paid or credited on which tax was not deducted in view of the issue of certificate of no deduction of tax u/s 197 by the assessing
officer of the payee.
4.9.8 It may be noted that under the new TDS procedure, TAN of the deductor/ PAN of the
deductee and receipt number of TDS statement filed by
the deductor act as unique
identifier for granting online credit of TDS to the deductee. Hence due care should be taken in filling
these particulars. Due care should also be taken in indicating
correct CIN/ BIN in TDS statements.
4.10 TDS on Income from Pension:
In
the case of pensioners who receive their
pension (not being Family Pension paid to a spouse)
from a nationalized bank,
the instructions contained in this circular shall apply in the same
manner as they apply to salary-income.
The deductions from
the
amount
of
pension under section 80C on account of contribution to Life Insurance, Provident Fund, NSC etc., if the
pensioner furnishes the relevant details to the banks, may be allowed.
Necessary instructions in this regard were issued by the
Reserve Bank of India to
the State Bank of India and other nationalized
Banks vide RBI's
Pension Circular(Central
Series) No.7/C.D.R./1992 (Ref. CO: DGBA:
GA (NBS) No.60/GA.64 (11CVL)-/92) dated
the
27th
April 1992, and, these
instructions should be followed by all the branches of the Banks, which have been
entrusted with the
task of payment of pensions.
Further
all
branches of the banks are bound u/s 203 to issue
certificate of tax deducted in Form 16 to the pensioners also vide CBDT circular
no. 761 dated 13.1.1998.
4.11. Matters pertaining to the TDS
made in case of Non Resident:
4.11.1 Where Non-Residents are deputed to work in India and
taxes are borne by the employer, if
any refund becomes due to the employee after he has already left India and has no bank account in India by the time the assessment orders are passed, the refund can be issued to the employer
as the tax has been borne by it [Circular No. 707 dated 11.07.1995].
4.11.2 In respect of non-residents,
the salary paid for services rendered in India shall be regarded
as income
earned in India. It has been specifically provided in the Act that any salary
payable for
rest period or leave period which is both preceded or
succeeded by service in India and
forms part of
the service contract of employment will
also be
regarded as income earned in
India.
Download TDS on salary Circular No 17/2014 for Fy 2014-15
Download TDS on salary Circular No 17/2014 for Fy 2014-15
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