Note on amendment of rules and forms related to TDS and TCS

---------- Forwarded message ----------

From: Nandkishore Hegde <hegdenandkishore@yahoo.com>
Date: Sat, Mar 16, 2013 at 1:26 PM
Subject: Note on amendment of rules and forms related to TDS and TCS
To: NEXT GEN <NEXTGEN-CA@yahoogroups.com>, CA NEWS <CANEWS@yahoogroups.com>

 

Dear colleagues,

 

Please find a note prepared by my colleagues in the end of February on the amendment of rules. You may find this a bit old as the rules were notified in February. However given that we were busy with the Budget and its analysis in the first two weeks, I am taking the liberty of sending this to those who have not read about it.

 

Best regards

N .C. Hegde

 

 

 

Background

The Income-tax Act, 1961 ('the Act') empowers the Central Board of Direct Taxes ('CBDT'), subject to the control of the Central Government, to make rules for carrying out the purpose of the Act. The CBDT has made further rules to amend the Income-tax Rules, 1962 namely Income-tax (2nd Amendment) Rules, 2013 via Notification No. 11/2013/F.No. 142/31/2012-SO (TPL) dated 19 February 2013 ('Notification No. 11/2013').

 

These amendments are with regard to rules and forms in relation to tax deducted at source ('TDS') and tax collected at source ('TCS').

 

Amendment to Income-tax Rules

 

Following rules have been amended by the said notification:

 

·         Rule 31A – Statement of deduction of tax under sub-section 3 of section 200

 

Prior to the amendment of Rule 31A, the person responsible for deduction of tax at source (herein after referred to as 'deductor') may either file the TDS return in paper form or electronically. However, with the amendment of Rule 31A, the deductor also has an option to file the TDS return electronically through a digital signature. In case the TDS return is not signed digitally, the same is required to be filed electronically along with the verification of the return in Form 27A or verified through an electronic process as prescribed earlier.

 

The Notification also prescribes a new form for claim of refund of sum paid as tax deducted or collected at source. The deductor shall furnish Form No. 26B electronically under digital signature for claiming the refund.

 

Sub-rule (5) of Rule 31A is amended to provide that the Director General of Income-tax (Systems) ['DGIT(S)'] shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements as well as claim for refund in Form No. 26B.

 

·         Rule 31AA – Statement of collection of tax under proviso to sub-section (3) of section 206C

 

The amendments made to Rules 31AA are similar to that of Rule 31A wherein the person responsible for collection of tax at source (hereinafter referred to as 'collector'), may choose to furnish the TDS return electronically through a digital signature. However, if the same is not signed digitally, the same is required to be filed electronically along with the verification of the return in Form 27A or verified through an electronic process as prescribed earlier.

 

The collector, at the time of preparing statements of tax collected shall additionally furnish particulars of amount received or debited on which tax was not collected in view of the declaration made by the buyer of the goods under section 206C(1A) of the Act.

 

Sub-rule (5) of Rule 31AA is amended to provide that the DGIT(S) shall specify the procedures, formats and standards for the purposes of furnishing and also verification of the statements furnished as above.

 

·         Rule 31ACB – Form for furnishing certificate of accountant under the first proviso to sub-section (1) of section 201

 

The first proviso to section 201(1) by the Finance Act, 2012 provides that where the person responsible for deduction of tax does not deduct tax at source either fully or partly, shall not be considered as assesse in default if the payee furnishes his return of income under section 139 taking into account the sum received from the deductor while computing income and has paid the tax due on the said income. Further, the deductor is also required to furnish a certificate from an accountant in the form as may be prescribed.

 

In light of the above proviso, the CBDT has prescribed Form No. 26A. However, the details of the said form are yet to be notified.

 

·         Rule 37J – Form for furnishing certificate of accountant under the first proviso to sub-section (6A) of Section 206C

 

The first proviso to section 206C (6A) by the Finance Act, 2012 provides that where the person responsible for collection of tax does not collect the same either fully or partly, shall not be considered as assesse in default if the payer furnishes his return of income under section 139 taking into account the sum paid to the collector while computing income and has paid the tax due on the said income. Further, the collector is also required to furnish a certificate from an accountant in the form as may be prescribed.

 

In light of the above proviso, the CBDT has prescribed Form No. 27BA. However, the details of the said form are yet to be notified.

 

In continuation to the amendments in the Rules as mentioned above, certain forms have also been amended through the said notification. It may be noted that presentation of the information in the forms have changed when compared to the forms currently being used.

 

·         Form No. 15G – Declaration under section 197A (1) and 197A(1A) of the Act to be made by an individual or a person (not being a company or firm) claiming certain receipts without deduction of tax.

Ø  Details of the declarant are required to be provided in a tabulated manner along with the details of sources of income. However, the schedules as provided in the old form still prevail.

 

·         Form No. 15H – Declaration under section 197A(1C) of the Act to be made by an individual who is of the age of sixty years or more claiming certain receipts without deduction of tax.

Ø  This form is bought in line with Form 15G as mentioned above.

 

·         Form No. 16 – Certificate under section 203 of the Act for tax deducted at source on salary

 

·         Form No. 16A – Certificate under section 203 of the Act for tax deducted at source

Ø  Information being provided in Annexure A and B to Form No. 16 and 16A earlier shall now be provided as part of the Form No.16 and 16A respectively.

 

·         Form No. 24Q – Quarterly statement of deduction of tax under section 200(3) of the Act in respect of salary

 

·         Form No. 26Q – Quarterly statement of deduction of tax under section 200(3) of the Act in respect of payments other than salary

 

·         Form No. 27EQ – Quarterly statement of collection of tax at source under section 206C of the Act

 

·         Form No. 27Q – Quarterly statement of deduction of tax under section 200(3) of the Act in respect of payments other than salary made to non-residents

 

In relation to Form Nos. 24Q, 26Q, 27EQ, 27Q following amendments are prescribed:

Ø  Additional information with regard to details of Ministry/Department/State is required to be provided where the deductor is a Central/State Government.

Ø  Number of the certificate under section 197 issued by the Assessing Officer for non-deduction or lower deduction of tax is now required to be provided in Annexure I to the aforementioned forms.

Ø  Further, following additional information is required to be provided in Form 27Q

Ø  Whether the rate of TDS is as per the Act or Double Tax Avoidance Agreement

Ø  Nature of remittance

Ø  Unique Acknowledgement of the corresponding Form 15CA, if available

Ø  Country to which remittance is made

 

·         Form No. 27C – Declaration under section 206C (1A) of the Act to be made by a buyer for obtaining goods without collection of tax.

Ø  Details of the buyer of the goods are required to be provided in a tabulated manner along with the Assessing Officer's details.

 

·         Form No. 27D – Certificate under section 206C of the Act for tax collected at source.

Ø  Status of matching with the Form No. 24G (Book Adjustment Statement) has been considered in the new form.

 

Conclusion

A significant amendment brought out by the CBDT by way of Income-tax (2nd Amendment) Rules, 2013 is the option of filing of the e-TDS returns through digital signature and e-filing of TDS refunds. Further, new forms have been prescribed in light of the amendments made by the Finance Act, 2012.

 

Source: Notification No. 11/2013/F.No. 142/31/2012-SO (TPL) dated 19 February 2013 issued by the CBDT