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Traces

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Advisory to deductors making TDS payment through multiple challans in a month

For Deductor’s convenience, CPC(TDS) has established processing logic in the system that can accept a Single Challan for reporting of Tax Deposited in following circumstances :

1. Payment of Tax Deducted under different sections of the Income Tax Act, 1961:

 The CPC(TDS) system gives credit of TDS against different sections of the Act, even though a specific section has been quoted in the challan.

Example: The challan used for payment of TDS relevant to Section 192 of the Act can also be used for the purpose of reporting tax deposited under Section 194 of the Act also.

Situation prior to Financial Year 2012-13 Consumption of Challan in TDS Statement on the basis of Section quoted in the Challan details
Situation after Financial Year 2012-13 Section quoted in Challan, at the time of depositing Tax deducted/ collected is irrelevant for the purpose of consumption in TDS Statement.

2. Payment of Tax Deducted for different Assessment Years:

In case tax has been deposited more than the required tax deducted at source for a particular Assessment Year, the excess amount of tax can be claimed in the following quarters of the relevant year. The balance amount if any, can be carried forward to the next year for claim in the TDS statement.

Example: If excess payment of Tax has been made in Quarter 1 of financial year 2013-14, the same can be used for Quarter 2,3&4 of F.Y. 2013-14 as well as for Q1 to Q4 of F.Y.2014-15. The excess amount of tax paid in Q1 of F.Y.2013-14 can also be used for payment of tax default of Q1 to Q4 of F.Y.2012-13.

3. Different challans used for the purpose of reporting multiple Deductees associated with different branches with same TAN:

The deductor may have used multiple challans for reporting multiple deductees associated with different branches, in the TDS Statement.

A single challan can be used for the purpose of reporting Tax Deducted for such deductees.

Example: If a Bank has multiple branches with same TAN, payment of Tax Deducted can be made by a single challan and all the deductees can be tagged using the same.

Based on the above information, you may use a single challan in a month towards payment of Tax Deposited.

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Tax Deduction at Source (TDS) is one of the means of collection of direct taxes. TDS constitutes nearly 40% of the direct tax collections.

LEGACY

In the legacy system, the deductees claimed TDS credits based on manual TDS certificates, issued by the deductors. There was no correlation between tax deductions, tax payments and issuance of TDS certificates. Verification from the deductor was limited & restricted. Thus, the conventional practice of giving credit of tax deductions, based on manual TDS certificates was open ended leading to tax frauds.

PLUGGING THE GAP

The tax deductors electronically report TDS to the Income Tax Department through quarterly TDS statements. The deductor is obliged to report the following details:

  • PAN & Name of the deductee;
  • Nature, extent & the date of transaction;
  • Amount, rate & the date of tax deducted/collected at Source;
  • Details of tax payment including the amount & date thereof

Based on the information submitted by the deductor, the deductee is given credit of taxes. Therefore, a robust mechanism that ensures correct, reliable flow of data to the department’s database and its collation on the basis of taxpayer identifier(s) (PAN) prevents revenue leakage.

Centralized Processing Cell for TDS (CPC(TDS)) has been conceptualized to ensure a seamless flow of data for tax credits. It leverages technology to provide efficient services. CPC(TDS) introduces transparency in the processes through online display of information. Thus, it forms the backbone of overall TDS administration of the Income Tax Department.

Concept

  • Centralized Processing Cell (TDS) is a technology driven transformational initiative on ‘Tax Deduction at Source’ that provides a comprehensive solution through ‘Tax Deduction, Reconciliation, Analysis and Correction Enabling System (TRACES)’ – its core engine.
  • CPC (TDS) undertakes bulk processing of TDS statements to generate ‘Annual Tax Credit’ statements for each taxpayer (PAN holder) in Form 26AS, TDS certificates in Form 16 / 16A & identifies TDS defaults of short payment, short deduction, interest etc.
  • CPC (TDS) reconciles and co-relates information from various sources including banks (tax payment), deductors (reporting tax deduction), Assessing Officers ( mapping no tax / low tax deductions) and tax professionals (reporting international transactions).

With its inclusive approach, the initiative provides bouquet of services to its stake holders including deductors, deductees, Principal Accounts Officers of the Central and State Governments & the officers of the Income Tax Department.

The users/ stakeholders interact with the CPC (TDS) system and with each other through multiple channels of communication including Call Centre, e-mail, website etc.

India is amongst very few countries where Comprehensive Solution for withholding tax (TDS) has been put in place.

Read More- Download The Hand book from the following link –  http://contents.tdscpc.gov.in/docs/TDS-CPC-Handbook.pdf

– See more at: http://taxguru.in/income-tax/tdscpc-handbook.html#sthash.KTApPy43.dpuf