Rajan,Chakravarthy & Associates

CBDT has issued a circular providing salient features of the new system for TDS/ TCS payment and information reporting Background ITD has introduced a scheme for centralized processing of annual income-tax returns which envisages no interface with the tax payer and processing of returns to be done in an automated jurisdiction-less manner. Implementation of such scheme requires having a robust system for information relating to payment of TDS and  TCS so that the credit for TDS and TCS can be granted accurately and the risk of financial fraud is minimized. The CBDT has now issued circular providing detailed clarification with regard to the new scheme. Some of the salient features of this new scheme are discussed in the subsequent paragraphs.

The Circular No. 2/2009 dated 21 May 2009 specifies that henceforth the claim for TDS and TCS shall be allowed only if the following conditions are complied:

• The amount of TDS/ TCS has been deposited by the deductor/ collector;
• Deductor/ collector furnishes information relating to the deductee;

• The TDS/ TCS claim matches the information furnished by the deductor/ collector.

The revised information reporting scheme has been harmonized with a view to make TDS payment and information reporting system uniform across all deductors (including Central and State Government).

Payment of TDS/ TCS

Rule 30 and Rule 37CA of the Income-tax Rules which provide for time for payment of the TDS/ TCS to the credit of the Central Government and the mode of such payment have been substituted. It is now mandatory for all deductors (including the Central and State Governments) to make the payment by electronically furnishing the newly introduced income-tax challan in Form No. 17. While furnishing this challan, the deductor will be simultaneously required to furnish three basic information relating to the deduction i.e., PAN, name of the deductee and amount of TDS/ TCS, to the Taxpayer Information Network system maintained by NSDL either through screen based upload or fi le upload.

Effective date

The new system of reporting is effective for all TDS/ TCS transactions made on or after 1 April 2009. However, any TDS or TCS effected from 1 April 2009 to 31 May 2009 is to be paid to the credit of the Central Government by using the old challan forms. In this case, the deductor/ collector shall, nevertheless, be required to fi ll up Form No.17 in respect of such payments at any time between 1 July 2009 and 15 July 2009.

The TDS or TCS effected on or after 1 June 2009 shall be required to be paid by electronically furnishing incometax challan in Form No. 17.

Obtaining UTN

Upon payment of TDS / TCS to the credit of the Central Government and after uploading of basic information, every tax deduction record will be assigned a UTN. The deductor will be able to get the UTN for all deductions by e-mail or by downloading the UTN fi le. The deductor will be required to quote such UTN on the TDS/TCS certifi cate issued to the deductees. NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. The deductees will be able to claim credit for the TDS/ TCS by quoting the UTN in their annual income-tax return. The deductors/ collectors who have effected TDS / TCS after 1 June 2009 will be able to obtain the UTN as and when the payments are made and the basic information is furnished.

Issuing certifi cates for TDS/TCS in Form Nos. 16/16A/27D
New Form Nos. 16/16A/27D have been suitably revised with effect from 1 April 2009 to incorporate the mandatory requirement of quoting UTN.

For deduction/ collection made before 1 April 2009, the deductor/ collector may opt to issue Form Nos.

16/16A/27D in old format but he will be required to send a consolidated statement of UTNs to the deductees as soon as the same are received by him.

Alternatively, the deductor/ collector may opt to issue certificates for TDS/ TCS in new Form Nos. 16/16A/27D.There is no revision in the time-limits for issuing Form Nos. 16/16A/27D which is within one month from the end of the month in which the deduction/ collection is made. However, if the deductor/ collector opts to issue new Form Nos. 16/16A/27D, then the new Forms may be issued beyond the stipulated period of one month but not later than 30 June 2009.

For deduction/ collection made after 1 April 2009, it is mandatory to use new Form Nos. 16/16A/27D.

Source: Deloitte, Haskins & Sells