Wednesday, October 12, 2011

The New Scheme and Procedure of TDS (Form 16/16A) for Assmnt. Year 2011-2012

The obligation to deduct tax at source is upon the person responsible for paying the income/amount which is subject to TDS. Therefore such person i.e. payer has to follow the procedure for deducting the tax. The main responsibilities and procedure of TDS may be mentioned as under:

1. W.e.f. 1-10-2004, the payer has to apply for tax deduction and collection account number (TDCAN) IN Form No. 49B. Prior to 1-10-2004, the assessee had to apply for separate tax deduction account number (TAN) and tax collection account number (TCAN). Where the payer has already been allotted TAN or TCAN, he need not apply for TDCAN.

2. He is to deduct tax from the income/payment mentioned in the various sections i.e sections 192 to 196D.

3. The amount so deducted should be deposited in challan No. 281 within the requisite time to the credit of Central Government. Separate challans should be used to deposit tax deducted under each section and the correct nature of payment code in the relevant column is the challan should be indicated.

4. Tax is to be deducted at the basic rates prescribed under various sections. No surcharge, Education Cess or Secondary and Higher Education Cess(SHEC) is to be added to such basic rate except in he following cases:

(a) Tax deduction form payment of salary, whether the recipient is resident or non-resident. In this case Education Cess and SHEC has to be added to the basic rate.

(b) Tax deduction from payment/credit of any sum (other than salary) to a non-resident other than company. In this case also Education Cess and SHEC has to be added to the basic rate.

(c) Tax deduction from payment/credit of any sum to a foreign company. In this surcharge; Education Cess and SHEC shall have to be added to the basic rate. Surcharge @ 2% (2.5% for A.Y. 2011-12) shall be added only when the amount paid/credit exceeds Rs. 1 crore. As per section 206AA, if PAN is not provided, the rate of TDS shall be the normal rate prescribed or 20% whichever is higher.

5. Payee should be issued certificate of tax deduction at source on or before certain specified date.

6. Lastly, the payer should prepare such statements for such period as may be prescribed and file the same with the prescribed income-tax authority or the person authorized by such authority in such form and verified in such manner as may be prescribed.

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