AMENDMENT IN TDS RULES

A. INTRODUCTION

The Central Board of Direct Taxes (CBDT) has amended the rules
relating to Tax Deducted At Source (TDS) vide Notification No.
41/2010, SO No. 1261 (E) dated May 31, 2010. The amendments
mainly relate to the date and mode of payment of TDS, TDS
Certificates and filing of TDS return.. The amended rules shall apply
only to the tax deducted at source on or after 1st April 2010.

B. SALIENT FEATURES AND COMPARISON

Salient features of the Notification are enumerated below. We have

also tried to capture the difference between the regulations as it was
and as it will be after the issue of this notification:

I. TDS CERTIFICATE FORMS

Prior to Issuance of Notification

The provisions stated that the TDS Certificate should include the Tax
deduction Account Number (TAN) of the deductor, Permanent Account
Number (PAN) of the deductee. These two details would form Unique
Identification Number for allowing credit claimed by the tax payer in his
income tax return.

Post Issuance of Notification

The Notification has now amended the rule and further introduced the
introduction of the receipt number of the TDS return filed by the Deductor.
Now Tax deduction Account Number (TAN), permanent Account Number
(PAN) and receipt number of the TDS return will form Unique Number for
claiming credit by the tax payer.

NMA Insights
The Notification mandates the receipt number of the TDS return to be
quoted in the income tax return by the tax payer to claim the credit.
Since TDS certificates are not attached along with the Income Tax
returns submitted by the assessee, inclusion of receipt number in the
return would make the return more consistent.
II. MODE OF PAYMENT

Prior to Issuance of Notification

The Authorities were responsible for crediting tax deducted at the

source to the credit of Central Government through book entry.

Post Issuance of Notification

The authorities are now required to electronically file a monthly statement in

a new form no. 24G containing details of credit of TDS to the agency
authorized by the Director general of Income tax.

NMA Insights
The new notification has provided a systematic approach for the credit of tax
deducted at source to the credit of central government. This will be less
tedious as compared to previous mode of payment.

III DUE DATE FOR FURNISHING TDS RETURN

Prior to Issuance of Notification

The provisions stated that the due date for filing TDS return for the last
quarter of the financial year shall be 15th of June

Post Issuance of Notification

The new notification has modified the due date for filing TDS return for
the last quarter of the financial year to 15th of May.

NMA Insights
Since the last date of issuing Form 16A was fixed at 31st May and the due
date of filing the return was 15th June, thus either incomplete certificates used
to be issued (without the acknowledgement number for last quarter) or there
was a delay in issuing the certificates by the Companies. This provision would
help bridge that gap.
IV DUE DATE FOR FURNISHING TDS CERTIFICATE

Prior to Issuance of Notification

Sl. Category Periodicity of Due date

No. furnishing TDS
certificate

1. Salary (Form 16) Annual Within 30 days of the end of

the financial year
2. Non-Salary (Form Monthly/ Annually Within 30 days of the end of
16A) the financial year

Post Issuance of Notification

Sl. Category Periodicity of Due date

No. furnishing TDS
certificate

1. Salary (Form Annual By 31st day of May of the

No.16) financial year immediately
following the financial year in
which the income was paid
and tax deducted.
2. Non-Salary (Form Quarterly Within fifteen days from the
No.16A) due date for furnishing the
‘statement of TDS’
NMA Insights
Since under the earlier provisions, the TDS certificate was to be issued by 30th
April, thus a number of Companies were issuing TDS certificates without
filling the details of the acknowledgement number of quarter 4. With this
amendment the Income Tax department would be able to reconcile the data
internally and not await the original Form 16A’s before completing the
assessments.
Also the earlier clause of issuing monthly Form 16A was becoming too
tedious for the Companies, thus quarterly issue of certificate is a welcome
amendment.

Conclusion

These amendments come in as a step forward towards the achieving the

objective of paperless filing of Income tax returns by the assessee. CBDT is
further strengthening its control over the details filed in the Income Tax
Return by the assessee and their authenticity. These details should reduce
the number of notices by the department seeking clarification on the
authenticity of the details filed in the Income Tax returns with respect to the
TDS certificates. However the CBDT should have considered revising the last
date of depositing TDS from 31st May to an earlier date as that may create
further complication.