How to avoid Defaults in TDS Statements/Returns?

Tips to avoid Defaults in TDS Returns
Make sure taxes are deducted on time and at correct deduction rates /amount. The applicable section under which the deduction falls should be correctly applied.

Tax needs to be deducted either when payment is made or when amount is credited, whichever is earlier. It implies that tax needs to be deducted on the same day when advance payments are made. Late deduction is a default and will attract interest.

Taxes deducted during the course of the month, should be deposited on time. Typically it is by 7th of the following month. The only exception is that for deductions in March, it needs to be deposited by 30th April.

TDS Returns needs to be filed on completion of each quarter. Returns for Salary & Non-Salary TDS is to be filed separately in Form 24Q & Form 26Q respectively.

Use a proper TDS Return preparing software / tool that helps in predicting possible errors / defaults. This would prevent unnecessary hassles later.

Make sure TDS Returns are filed on time to avoid penalty on delayed filing. Typically, TDS Returns are to be filed by the end of the month following the quarter. Returns for March quarter is to be filed by 31st May.

Source: Tdsman

All you wanted to know about Tax Exemption on HRA

Along with the rest of the country, the salaried class waits for the annual budget to be announced each year. They look up to the government to provide them with higher take home pay by way of increase in tax free income and lowering of tax slabs. They also look for some relief through savings options providing tax benefits. Sometimes the hopes are fulfilled and at other times not.

Beyond the normal arithmetic of tax slabs, cess and surcharges, the salaried individual can claim the benefit of HRA exemption and fulfil his quest for a higher take home pay. Let us take a look at the dynamics of the HRA element in the individual taxpayer’s salary and how it can be managed to get tax exemptions.

Genesis of HRA
HRA or House Rent Allowance is a salary component for most people belonging to the salaried class. It is usually calculated by applying a specified percentage on the basic pay component. This percentage depends on the class of city as defined by the HRA classification list published by the government.

Pre-requisites for Claiming HRA exemption
Those receiving HRA and staying in rented accommodation are eligible to claim exemption. Let us look at the requirements for claiming such exemption.

I. Lease Agreement: A valid lease agreement between the landlord and the tenant (the employee in this case) is a necessary document which needs to be submitted to the employer for claiming tax benefit. The agreement must have all specific details regarding type of accommodation, rent to be paid, period of lease etc.

II. Rent Receipts: In order to provide the tax exemption benefit to the employee, the employer requires proper rent receipts to be submitted to them. At least three months’ rent receipts are necessary to be submitted by the employee. If the exemption claim as submitted by the employee is found to be legitimate then necessary tax exemption benefit will be passed on by the employer and the monthly Tax Deducted at Source (TDS) amount will get reduced to the extent of the exemption.

It may be relevant to mention here that no HRA tax exemption can be provided to the assessee employee unless proper rent receipts are submitted. It is therefore in the interest of the employee to ensure that the landlord provides proper receipts.

III. PAN of Landlord: Where actual rent paid by the employee to the landlord is more than Rs.100000/-, PAN of the landlord has to be declared as an IT compliance requirement criteria. In case the landlord does not have a PAN, a declaration to this effect from the landlord with his/her name and address can be gathered and retained for records.

IV. Failure to submit rent receipt on time: All exemption claims backed by requisite documents have to be submitted to the employer within a stipulated time. Failure to do so will mean that the employer will not be in a position to provide the exemption. In such cases the employee may collect such rent receipts and claim the exemption for HRA at the time filing Income Tax Returns. The amount eligible for exemption will be refunded by the IT authorities.

V. On rented accommodation for part of the year: Even if an employee is staying in a rented accommodation for the part of a year, he or she is entitled to claim HRA exemption for the period for which he was paying rent. For the remaining portion of the HRA, tax at applicable rate will be applied.

Those not on HRA
Some employees may require staying in rented accommodation even when their employer is not paying them HRA through their salary.

The Income Tax Act provides tax benefits under section 80GG to such employees to the maximum extent of Rs. 5000/- per month now, as against Rs.2000/- per month allowed earlier. In order to qualify and receive this tax exemption benefit the following criteria must be fulfilled:

i. Individual is salaried, self-employed or in business.
ii. Individual lives on rent, but is not paid HRA through salary.
iii. Individual does not own any house which is shown as self-occupied property in his/her Income Tax return.
iv. Spouse or minor child of the individual does not own a property where he resides or carries out any business or profession.

If the criteria as mentioned above are fulfilled then the least among the following computed amounts is allowed as exemption under section 80GG:
i. Rs.5000 per month
ii. 25% of total income after allowing deductions under section 80
iii. Actual Rent paid less 10% of income after allowing deductions under section 80

Eligible people who claim HRA tax exemption or exemption under section 80GG can thus save some of their hard earned money from being eaten away by taxes.

Source: CA Club India

CBDT launches New Services ‘Aaykar Setu’ for Taxpayers.

Recently, Finance Minister has announce to launches a new tax payer service module ‘Aaykar Setu’ that compiles various tax tools, live chat facility, dynamic updates, and important links to various processes within the Income Tax Department in a single module; Says that this e-initiative would not only provide better taxpayer services but would also help in reducing the direct physical interface between assesses and tax assessing authorities.

A new tax payer service module ‘Aaykar Setu’, was launched here today by the Union Finance Minister, Shri Arun Jaitley. To enhance mobile access experience, a mobile responsive android version was also released along with the desktop version. Shri Jaitley stressed on the Government’s commitment towards continuously upgrading tax payer services. He said that this e-initiative would help in reducing physical interface between assesses and tax assessing authorities and thereby minimizing the chances of any tax harassment.

The new step is an effort by the Income Tax Department (ITD) to directly communicate with the taxpayers, on a range of multiple informative and useful tax services aimed at providing tax information at their fingertips. The module compiles various tax tools, live chat facility, dynamic updates, and important links to various processes within the Income Tax Department in a single module. The tax payers will also be able to receive regular updates regarding important tax dates, forms and notifications on mobile numbers registered with the ITD.

All taxpayers who wish to receive such SMS alerts are advised to register their mobile numbers in the Aaykar Setu module.

The Central Board of Direct Taxes (CBDT) constantly endeavours to provide better taxpayer services and reduce taxpayer grievances. New schemes and e-initiatives to educate the taxpayers and deliver tax payer services in an effective manner are key to this effort.

Last date for opting composition levy would be July 21, 2017



The Rules related to Registration and Composition Scheme have been notified on 19th June, 2017. These Rules have been brought into effect from 22nd June, 2017. The intent of notifying these rules is to start the process of issue of registration certificate, called Goods and Services Tax Identification Number (GSTIN), to taxpayers who have already been issued provisional ID for registration(PID) as well as to the new taxpayers.

Any person who has been granted PID and who opts for composition scheme, should submit an intimation of option in a prescribed form on GSTN on or before 21st July, 2017.

Any persons who has PID may submit the required documents on GSTN for getting the certificate of registration. It is clarified that a period of three months is allowed to complete this procedure i.e. the formalities can be completed on or before 22nd September, 2017. In the interim, they can issue tax invoice using the PID already allotted to them.

A person seeking fresh registration can apply for registration within thirty days from the date on which he becomes liable for registration. They can also opt for composition scheme at the time of filing of registration form.

The applicant for grant of new registration can issue a bill of supply for supplying goods or services during the period from the date of liability to obtain registration till date of issuance of the registration certificate, if he has applied for registration within thirty days from the date he has become liable for registration. On grant of certificate of registration, he can issue revised tax invoices for the supplies made during this period.

Source: Taxmann

TDS Compliance Basic Principles and its Detailed Information.

CPC (TDS) has issued a advisory communications specially for TDS Deductor regarding TDS Compliance.  The Central Processing Cell has extended registered Deductors over 3 crore and therefore, CPC (TDS) suggest the Basic Principles of TDS Compliance and Complete TDS Compliance which is as under:

The Basic principles of TDS compliance are as follows:
  • Deduction/Collection of tax at correct rates at right time
  • TDS needs to be deposited timely every month.
  • Accurate Reporting of data related to tax deductions/ collections made
  • Filing of the quarterly TDS return within due time.
  • Verification and Issuance of TDS Certificates within stipulated time.
  • During the past year, CPC (TDS) released a host of useful utilities at TRACES, including the following, that we feel would be helpful in our journey together towards achieving default-free TDS Compliance:
  • CPC (TDS) is now sending "Intermediate Default Communication" for PAN Errors and Short Payments, which can be corrected during the interim period of a week of filing TDS Statements, before CPC (TDS) proceeds with computing Defaults for the relevant statement.
  • User-friendly Online Correction facility can be used for Correction of Deductees, Tagging Unmatched Challans and Payment of Fees/ Interest. (Please navigate to Defaults tab to locate Request for Correction from the drop-down menu. For any assistance, please refer to the e-tutorial available on TRACES).
  • Aggregated TDS Compliance Report assists the PAN of the Deductor to administer TDS Defaults for associated TANs and to take appropriate action
  • The Deductor's Dashboard provides you all necessary information to assist you in "Compliance Self-Assessment" and to take appropriate action.
  • Non-filing Self-declaration can be made by navigating to Statements / Payments menu and submit details under Declaration for Non-Filing of Statements.
  • PAN Verification and Consolidated TAN - PAN File facility on TRACES can be used for verifying the deductees.
  • The Conso Files and Justification Reports downloaded from TRACES help you to identify errors in submission of revised Quarterly TDS Statements.

Late TDS Return Filing Penalty not waived if PANs consequences.

Penalty for delay in filing of TDS return couldn't be levied if there was difficulty in obtaining PANs of deductees.

Where in view of change in IT system requiring furnishing details of PANs of all deductees for validation and uploading of e-TDS return, assessee delayed in filing its return in making efforts to obtain such details of deductees spreading throughout country, no penalty could be levied.

Source: Taxmann