Form 26A introduced for removing default of Short Deduction and Non Deduction of TDS

Furnishing and Verification of Form 26A for removing of default of Short Deduction and/or Non deduction of TDS

1. Section 201(1) of Income Tax Act, 1961, any person, including the principal officer of    company, who fails to deduct the whole or any part of the tax in accordance with the provision on the sum paid or   credited to the account of resident shall not be deemed to be assessee in default in respect of such tax if such resident-

(i)                 has furnished his return of income under section 139

(ii)                has taken into account such sum for computing income in such return of income; and

(iii)             has paid the tax due on the income declared by him in such return of income                    

 2. As per sub-rule (1) of Rule 31ACB of Income-tax Rules, 1962, the certificate from an accountant under the first proviso to sub-section (1) of section 201 shall be furnished in Form 26A to the Principal Director General of Income-tax (Systems) or the person author issued by the Director General of Income-tax (Systems) in accordance with t he procedures, formats and standards specified under sub-rule (2), and verified in accordance with the procedures, formats and standards specified under sub-rule (2).

3. In exercise of the powers delegated by the Central Board of Direct Taxes (Board) under sub-rule (2) of Rule 31ACB of Income-tax Rules, 1962 the Principal Director General of Income-tax(Systems) hereby authorizes the persons mentioned at Col. No.1 to receive the form-type mentioned in Col. No. 2 to be filed in the mode specified at Col. No. 3 for the assessment years mentioned at Col. NO. 4 and pertinent to defaults under Sect ions of the Act mentioned at Col. No. 5:

1	2	3	4	5
Authorized A.O	Form type	Mode of furnishing form	A.Y.	To be used exclusively for default under section
Field Assessing Officer(TDS)[1]	26A	Paper	Up to & including 2016-17	201(1) and/or 40(a l(ia)
CPC-TDS	26A	Electronic	Up to & including 2016-17	200A
CPC-TDS	26A	Electronic]	Including & from 2017-18	200A; 201(1) and/or 40(al(ia)

Note1^. The AD should ensure that interest on non-deduction of the whole or any part of the tax or failure in payment after deduction as required by or under this Act shall be paid before furnishing the statement in accordance with the provisions of the Act .

Note2:Furnishing of Form 26A in electronic shall be enabled with effect from 15.01.2017.

4. Procedure for electronic filing of Form 26A is as follows:

As there are many defaults in TDS statements so as per Traces to reduce such defaults on account of Shortfall or no deduction the role of the deductor, Chartered Accountant/ Accountant ( if managed in house)for E filing and Traces has been prescribed specifically which is given hereunder:

4.1 Role of Deductor :

STEPS	PLACE OF ACTION	ACTION
1	TRACES Portal	Get Details of Short Deduct ion: Deductor needs to submit request to get details of short deduction .
2	TRACES Portal	Enter No Deduction transactions: Deductor needs to enter details of No- Deduction transaction at TRACES, if any and submit transaction details at TRACES in the rows provided for this purpose.
3	TRACES Portal	Submit Request: On submitting request, a Unique Request Number will be generated for further reference. The Short- Deduct ion and/or Non-Deduction request so submitted will be processed by TRACES and the 'successful transaction will be displayed to the Deductor after certain time. A unique DIN[3] will be generated by TDSCPC for unique Short deduction transaction. Similarly        a unique Alpha-Numeric String (combination of TAN, PAN and F.Y.) will be generated for No-deduction transaction. Both of these unique numbers and strings will be displayed after successful processing by TRACES. These unique DINs and Alpha-Numeric Strings will be communicated electronically to E-Filing Portal and available for further act ion by Deductor.
4	Offline	The deductor will communicate the DINs and/or Alpha-Numeric St rings generated in step no. 3 for each of the Short-Deduction and/or Non-Deduction transact ions to the accountant identified for certifying Annexure A and obtain the membership no. of such accountant to be used in step no. 5.
5	E-Filing Portal (Login as Deductor)	locate DIN on which Form 26A effect is to be given : Locate and select relevant DIN in menu driven opt ion for which request for Form 26A is to be submitted. locate No Deduction Transactions on which Form 26A effect is to be given : locate and select No-Deduction transaction for which request for Form 26A is to be submitted.
6	E-Filing Portal	Authorize Membership Number of Accountant [4] : Deductor, after ascertaining the membership number of the accountant who is to certify Annexure A of Form 26A, needs to authorize such accountant by entering his membership number in respect of each of the Short -Deduct ion and Non-Deduction transactions(in one or more sessions) and submit these authorizations.
7	E-Filing Portal	Certification from Authorized Accountant : On successful authorization by Deductor, the Account ant so authorized on E-Filing Portal may fill in the relevant details in Annexure A to Form 26A with respect to the Deductee in question and certify by digitally signing Annexure A. The details of unique DINs and Alpha-Numeric Strings will become visible to the authorized accountant(when he logs into his own account as a registered accountant on E-Filing Portal) only when Deductor has authorized such an accountant with respect to any Short-Deduction and/ or Non-Deduct ion transaction.
8	E-Filing Portal	Submit Digitally signed Form 26A : Once registered Accountant/Accountants certify DINs and/or Alpha-Numeric St rings, deductor needs to digit ally sign the form and submit its final request . Consequently, these submitted records will be shared with the FAOs concerned.
9	TRACES Portal	View Modified Status of default : Once request has been processed, short deduction will be re-calculated and Late Deduction Interest will be generated accordingly, which can be viewed by Deductor.
10	NSDL\TRACES Portal	Make payment for Modified Late Deduction Interest : Deductor needs to pay Late deduction Interest amount, according to the modified computation.

4.2 Role of Accountant at E-Filing:

1.      Accountant has to get himself registered at E-Filing Portal and share his membership number with the Deductor desiring to authorize him with respect to Short-Deduction and/or Non Deduction.

2.      Receive DINs and/or Alpha-Numeric Strings with respect to each of the Short-Deduction and/or Non-Deduction from the Deductor.

3.      After being so authorized by Deductor and upon receiving DINs and/or Alpha-Numeric

4.      Strings from Deductor ; login to E- Fling Portal with Accountant credentials.

5.      Use DINs and/or Alpha-Numeric Strings to identify the Deductee rows which are to be

6.      verified.

7.      Complete Annexure A to Form 26A with respect to the concerned Deductee.

8.      Submit the Annexure A so completed by digitally signing it.

4.3 Role of e-filer:

For Deductor	Validations	TRACES
1.     Provide view of Short-Deduction and/or Non-Deduction transactions to Deductor as communicated to E-Filing Portal electronically by CPC- TDS. 2.     Allow Deductor to locate and select Short-Deduction and/or Non-Deduction transactions and authorize Accountant(s) with respect to each of these transactions by entering membership number of Accountant(s). 3.     Allow Accountants so authorized to view Annexure A to Form 26A on the basis of DIN and/or Alpha-Numeric String; complete the Annexure; and submit it by digitally signing it. 4.     Allow Deductor to view Form 26A including Annexure A to Form 26A so submitted by authorized Accountant(s) and submit this Form 26A by digitally signing it.	Check mandatory compliance : ITR of Deductee(PAN) should have been filed u/s 139 and no demand should be payable at the time of assessment.	Share digitally signed Form 26A with CPC-TDS.

4.4 Role of TRACES:

For Deductor	Backend Processing
1.     Display identified Short-Deduction transactions for viewing of Deductor. 2.     Provide option of adding No-Deduction transactions to Deductor. 3.     Provide DIN and/or Alpha-Numeric String for each transaction after submission by Deductor as per Step 3 of Para 4.1. 4.     Display updated status of submitted Form 26A as received from E-Filing Portal.	Processing the request: Once Deductor submits          request of Form 26A, TDSCPC will reprocess the statement and Short deduction will be modified.

Contributed by Suhasini CA Finalist at Sandeep Ahuja & Co

Service Export from India Scheme

Service Exports from India Scheme.

The new Foreign Trade Policy 2015-2020, with effect from 1.4.2015, Service Exports from India Scheme (SEIS) has been announced by the Government thereby replacing the Service Exports From India Scheme (SFIS) available under Foreign Trade Policy 2009-14.

1. Major Attractions of Service Export from India Scheme:

         I.            Applicability: Applies only to ‘Service Providers located in India’ instead of ‘Indian Service Providers’. It is one of the most significant change from the previous Service Export From India Scheme

       II.             Net Foreign Exchange Earnings Based Rewards: Rate of reward under SEIS are based on net foreign exchange earned.

     III.             Freely Transferable Scrips: Rewards issued as duty credit scrip is freely transferable and usable for all types of goods and service tax debits on procurement of services / goods.

     IV.             Duty Drawback & CENVAT Credits : Debits are eligible for CENVAT credit or drawback.

       V.            Scrip can be used for payment of:

                (i)   Customs Duties for import of inputs or goods, except items listed in Appendix 3A;

                (ii)  Payment of excise duties on domestic procurement of inputs or goods, including capital goods           and

                (iii) Payment of service tax on procurement of services

                (iv) Payment of Customs Duty and fee as per paragraph 3.18 of this Policy.

2. Implications of Applicability of Scheme to Service Providers located in India instead of Indian Service Providers:

 There have been a number of litigations in the past involving foreign subsidiaries & brands who were denied benefits under SFIS  despite conducting business in India on grounds that they were not " Indian Service Providers" & not adding to the endeavour of  Exports of Indian Service Providers.

Some of the popular companies whose applications were rejected by DGFT between 2009-12 were Yum Restaurants India Pvt. Ltd. ( Holding Co. of KFC, Pizza Hut & Taco Bells), Nokia Solutions   etc.

3. Eligibility Conditions for Claiming Rewards under SEIS:

Only following cases of Services Exports From India are eligible for Rewards under the scheme.

a. Cross Border Trade from India to any other country and

b. Supply of a ‘service’ from India to service consumer(s) of any other country.

Following Service Exports are not eligible  to claim rewards in the following cases:

a. Exports of Service by means of  Commercial Presence Abroad:  i.e. Supply of a ‘service’ from India by means of commercial presence in any other country and

b. Exports with assistance of employees or representatives located abroad: Supply of a ‘service’ from India through the presence of employees or representatives in any other country not eligible for reward under the scheme

4.  Net Foreign Exchange Earning Limits for Claiming rewards under SEIS:

a. General Limit : Minimum net free foreign exchange earnings criterion prescribed is US$15,000 in preceding financial year for eligibility under the Scheme.

b. Lower Limits : for Individuals Service Providers &  Sole Proprietorships: For Individual Service Providers and sole proprietorship, such minimum net free foreign exchange earnings criterion is US $10,000 in preceding financial year.

 Note: In case of an Import & Export Code Holder, for calculating threshold limit under SEIS Foreign Exchange earnings only in respect of Services are to be considered & Foreign exchange earnings in respect of trading, capital receipts are not to be considered. IEC is necessary for a Manufacturer & service provider to claim reward under SEIS in respect of export of such services.

5. Meaning of Net Foreign Exchange Earnings under SEIS- Certain Exclusions.

Net Foreign Exchange:       Gross Foreign Exchange Recipts

                                                Less : Payments of Expenses in Foreign Currency/ Remittances of                                                                                       foreign exchange by the applicant.

          i.            Foreign Exchange Recipts & Payments via credit cards as notified by RBI shall also be taken into account for calculating net foreign exchange earnings.

        ii.            Foreign Exchange earnings for services provided by Airlines, Shipping lines service providers plying     from one foreign country to another with routes not touching India at all.

      iii.            Service providers in Telecom Sector.

      iv.             In case  of Educational Sector Services, capitation fees received by schools shall not be considered for calculating threshold limit for rewards under SEIS.

        v.            Clubbing of turnover of services rendered by SEZ / EOU /EHTP / STPI / BTP units with turnover of DTA Service Providers

      vi.             Raising of all types of foreign currency Loans;

    vii.             Export proceeds realization of clients;

  viii.             Issuance of foreign currency Bonds;

       ix.             Issuance of foreign currency Bonds;

6.  Nature of Rewards under SEIS:

Duty Credit Scrips shall be granted as rewards under MEIS and SEIS.

         I.            Meaning of Duty Scrips: Duty Scrip can be understood as a certificate, which can be used for payment of Taxes later i.e. as a certificate of credit of duty. 

       II.            The Duty Credit Scrips and goods imported / domestically procured against them shall be freely transferable. The Duty Credit Scrips can be utilised for:

                (i) Payment of Customs Duties for import of inputs or goods including capital goods, except items             listed in Appendix 3A.

                (ii) Payment of excise duties on domestic procurement of inputs or goods, including capital goods as       per DoR notification.

                (iii) Payment of service tax on procurement of services as per DoR notification.

                (iv) Payment of Customs Duty and fee as per paragraph 3.18 of this Policy.

7.  Cenvat Credit/ Duty Drawback of Duty Paid through Scrips issued under SEIS:

I. Exemption for Payment of Custom Duty:

As per notification no. 25/2015 of Customs, There is an Option to Pay Custom Duty on Imports against debit in Duty Credit Scrips issued under SEIS Duty :

          I.            Exemption to Imports into India: The Central Government has exempted  importers from cash payment of Custom Duty  when goods are  imported into India against debit in duty credit scrip issued under  Service Exports from India Scheme by the Regional Authority.

        II.             Conditions for Exemption for Duty of Customs:

a.       Issue of Valid Duty Scrip under SEIS Scheme :

Importer must have a valid  duty credit scrip  issued to him  located in India against export of notified services listed in SEIS Scheme and Aayat Niryat Forms of Foreign Trade Policy 2015- 2020.

b.       Registration of Duty Scrip at Port of Registration:

The duty scrip shall be registered with the Customs Authority at the port of registration specified on the said scrip.

The duty scrip shall be  produced before the proper officer of customs at the time of clearance for debit of the duties leviable on the goods against credit in the duty scrips and the proper officer of customs.

c.        Duty Drawback if, Exemption not Claimed:

If the importer does not avail abovementioned exemption then, the importer shall be entitled to avail drawback of the duty of customs paid on such imports.

d.       CENVAT Credit & Duty Drawback: The importer shall be entitled to avail drawback of the duty of customs leviable under the First Schedule to the said Customs Tariff Act against the amount debited in the said scrip.

II. Exemption for Payment of Excise Duty:  As per notification no. 21/2015 of Deptt.  The Central Government has exempted the goods specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985, when cleared against a Service Exports from India Scheme duty credit scrip issued by the appropriate Regional Authority.

Conditions for Exemptions from Excise Duty

    (i).            Presentation of Documents to Custom Officer: Provided condition (i) of notification no. 25 mentioned above are complied with & that the holder of the scrip presents the said scrip to the said Customs Authority along with a letter or proforma invoice from the supplier or manufacturer indicating details of its jurisdictional Central Excise Officer.

  (ii).            Debit of Duty & Updation of Records: The said custom authority, taking into account debits already made to the duty scrips, debit the amount of excise duty from the scrip, update its own records, mention necessary details on the said scrip & send the written advice of such debits to the appropriate Excise officer.

(iii).            Clearance Of Goods: For clearance of goods, the assessee presents the said scrip to excise officer & officer shall endorse the clearance of goods & validate on back side of scrip the amount of duty leviable & keep a record of such clearances.

(iv).            Maintenance of Records: The manufacturer retains a copy of the scrip for claiming CENVAT Credit & Drawback of the duty paid under the scheme.

III. Option to pay Service Tax by means of Duty Credit Scrip & Claim Credit thereon.

Central Government has exempted the taxable services provided or agreed to be provided against a Duty Credit Scrip by a person located in the taxable territory from the whole of the service tax leviable thereon under section 66B of the said Act.

The exemption shall be subject to the following conditions, namely:

a.     Location of Service Provider: That the holder of the scrip, to who has provided or agreed to provide taxable services must be located in the taxable territory.

b.    Presentation of Duty Credit Scrip to Customs Officer: That the holder of the scrip who may either be the person to whom the scrip was originally issued or a transferee holder, presents the scrip to the said Customs Authority along with a letter and an invoice or challan or bill, as the case may be, issued under rule 4A of the Service Tax Rules, 1994 by the service provider indicating details of his jurisdictional Central Excise Officer.

c.     Presentation of Duty Credit Scrip to Excise Officer: The holder of the scrip presents the scrip debited by the said Customs Authority within thirty days to the said Excise Officer, along with an undertaking addressed to the said Officer, that in case of any service tax short debited in the scrip, he shall pay such service tax along with applicable interest.

d.    Verification of debit of Duty: Based on the said written advice and undertaking, the said Officer shall verify and validate, on the reverse of the scrip, the details of the service tax leviable, which were debited by the said Customs Authority, and keep a record of payment of such service tax and interest, if any.

e.     CENVAT Credit of Service Tax: Holder of the scrip, to whom the taxable services were provided or agreed to be provided shall be entitled to avail drawback or CENVAT credit of the service tax leviable under section 66B of the said Act, against the service tax debited in the scrip and validated by the said Officer.

Exemption from Service Tax under RCM to Exporters Receiving Services In Relation to Export from a Commission Agent Located Outside India.

Description Of Service: Service provided by a commission agent located outside India & engaged under a contract by the Exporter for export of goods.

 Quantum of Exemption: Exemption shall be limited to the amount of Service Tax calculated on a value of 10% of FOB Value of export goods provided the service has been used for such goods only.

Conditions for Exemption:

    (i).            The amount of commission paid/ payable must be mentioned on the shipping bill or bill of export.

  (ii).            The exporter shall submit with half yearly return the following documents:

·         The original documents showing actual payment of commission to the commission agent.

·         A copy of agreement or contract entered into between the commission agent located outside India & the exporter in relation to sale of export goods outside India.

Non-Availability of Exemption:

The exemption shall not be available on:

·         Export of canalised items, project exports.

·         Export financed under lines of credit extended by the Govt. of India or EXIM Bank.

·         Export made by an Indian partner in a company with equity participation in an overseas joint venture or wholly owned subsidiary. 
        Contributed by Tanveer Alam CA Finalist at Sandeep Ahuja & Co

New Version for TDS Returns and New Features added

New versions of e-TDS/TCS Return Preparation Utility (RPU) and File Validation Utilities (FVUs) will be made available at TIN website applicable from November 26, 2016 at the following URL

ttps://www.tin-nsdl.com/etds-etcs/eTDS-download-regular.php.

1.       RPU Version 1.8 (Java based):

This is used for preparing and validating e-TDS/TCS Statement(s) and also contains inbuilt FVUs.

2.       FVU Version 5.3:

Applicable for quarterly e-TDS/TCS Statement(s) pertaining to FY 2010-11 onwards.

3.       FVU Version 2.149:

Applicable for quarterly e-TDS/TCS Statement(s) from FY 2007-08 up-to FY 2009-10.

Key features of new version of RPU and FVUs are as given below:-  

Newly added fields for Form 27Q

1.       Email ID of deductee

2.       Contact number of deductee

3.       Address of deductee in country of residence & ‘Tax Identification Number /Unique identification number of deductee

The above Particulars  are applicable only for below mentioned nature of remittances

1.        Interest payment

2.       Royalty

3.        Fees for technical services/ fees for included services

4.        Short term capital gains

5.       Long term capital gains  

Change in the encryption certificate present in the FVUs.

 Since existing encryption certificate present in FVUs is expiring on November 30, newly procured encryption certificate by NSDL e-Gov. will be incorporated in FVUs.

DVAT last date further extended to 28.11.16 for filing of DVAT return for second Quarter of Fin Year 16-17 & Other Updates

DVAT
DVAT has further extended the last date of filing of return of Second Quarter for the Financial Year 2016-17 in DVAT Form -16, DVAT-17, DVAT 48 with all annexures to 28.11.2016.

Demonetisation

Withdrawal limit Rs.50000/- per week extended to Overdraft and cash credit accounts. Such extension is not made available to personal Overdraft Accounts

Steps by Govt on demonetization to ease the process for public

Withdrawal of  Rs 2.50 lakh permitted from banks for weddings but bank account should be  KYC compliant and in the name of Bride, Grooom or their parents.

Registered mandi traders are allowed withdrawal upto Rs 50,000 per week

Farmers are allowed to withdraw against Crop loans upto Rs 25,000 per week 

Govt has Extended the due date of  payment of crop insurance premium by 15 days

Govt employees up to C Category can draw salary advance up to Rs 10,000 in cash and the same will be adjusted against their Nov salaries

The Government has extended the time limit for submission of Annual Life Certificates up to 15.01.2017. Now Pensioners and  family pensioners are required to submit their Annual Life Certificates on or before 15.01.2017 which was due to be filed in November and December 2016. This has been done to ease the pensioners from rush at banks due to demonetization of Rs.500/- and Rs. 1000/ – currency notes.

ON 21.11.2016
RBI has extended the withdrawal limit per week Rs.50000/- to OD and CC accounts but this limit will not be applicable on personal Overdraft Account.


 

DVAT date extended for filing of DVAT return for Quarter ended 30.09.16 and other updates

DVAT

DVAT has further extended the last date for submission of DVAT return in DVAT Form -16, DVAT Form-17 and DVAT Form -48 for the quarter ended on 30.09.2016 from 14.11.16 to 21.11.16

MCA – Submission of Financial Statements

MCA has revised Form AOC-4, AOC -4 Addendum, AOC-4 CFS today on 16.11.16

Cash Deposits with Banks and PAN of Account Holders

Ø  On Income Tax site one more key is added to show  cash deposits in accounts of PAN holders.

Ø  Rule 114B of Income Tax amended for compulsory quoting of PAN in case of Cash deposit exceeding 50,000/- in a single day and/or total more than Rs.2.5 lacs during the period from 09.11.16 to 30.12.16

Ø  Rule 114E amended for filing of AIR report by banking companies and  co-operative banks. The banks are required to inform Income Tax Department for all cash deposits in one or more current accounts in excess of Rs.12.5 lacs or in excess of Rs.2.5 lac in one or more accounts of a person during 09.11.16 to 30.12.16