TAX TALK-24.10.2011-THE HITAVADA
TAX TALK-24.10.2011-THE HITAVADA
TAX TALK
BY CA. NARESH JAKHOTIA (Chartered Accountant)
“PROCEDURE FOR MAKING CORRECTION IN THE INCOME TAX CHALLANS”
Query 1]
a] If I deposit amount of Rs. 6 Lacs in a FDR with Bank for 3 years on which Bank deducts TDS directly. In such case, whether bank will also deduct on current A/c. or S.B. A/c Interest? [bsc.arya@gmail.com]
b] I am a student pursuing CA-Final. Recently, during our bank audit, we have come across the interest payment of more than Rs. 10,000/- to the customer. No Tax is deducted by the bank in the current year nor has been done so in the past as well. I have gone through section 194A which no where provides exemptions from TDS on interest payment on Saving A/c. I have gone through the Circular No. 22/68-IT(B) [F.No. 12/23/68-IT(B)], dated 28-3/13-5-1968 which also confirms the deduction of Tax at source on Saving bank account interest. Please examine whether TDS will be applicable or on interest credit on saving bank A/c? [xxxx5147@gmail.com]
Opinion:
1. No Tax is deductible at source on interest paid/credited to the saving bank Account even though the interest amount on such account, individually or in aggregate, exceeds the threshold limit of Rs. 10,000/-,.
2. Circular No. 42 [F. No. 275/62/70-ITJ], dated 20-6-1970, exempts interest paid on deposits (other than time deposits) paid by bank from deducting tax at source (TDS). The same is covered by clause (vii) of section 194A (3) w.e.f.from 1-4-1970. The Circular No. 22/68-IT(B) [F.No. 12/23/68-IT(B)], dated 28-3/13-5-1968 was issued prior to introduction of clause (viii) to section 194A(3) & don’t have any relevance now as far as the saving bank account interest is concerned.
Query 2]
While paying the TDS through online payment mode u/s 192B (on salary) I have wrongly credited the amount in Surcharge column instead of Education cess column. I noticed the mistake only after the receipt copy is generated. Is there any chances of rectification and if there any provision for rectification to whom should I contact for the same. The details are as follows - Wrong Entry / Correct Entryi) Basic Tax - 84174.00 / Basic Tax - 84174.00ii) Surcharge - 2526.00 / Surcharge - 0iii) Education Cess - 0 / Education Cess - 2526.00iv) Penalty - 0 / Penalty - 0 v) Interest - 0 / Interest - 0vi) Others - 0 / Others - 0 Kindly help me in this matter.[arnava_2006@rediffmail.com]
Opinion:
There are numerous instances where there is an error while making payment of Tax either electronically or manually. To rectify these errors, Income-Tax Department has issued new guidelines effective 01-09-2011. This new mechanism allows Banks to correct physical challans only. For correction in electronic challan, request will have to be made to the concerned Assessing Officer.
For general benefit, the procedure for correction is physical challan is given hereunder:
Fields that can be corrected by bank:
· Assessment Year
· Major Head Code
· Minor Head Code
· TAN/PAN
· Total Amount
· Nature of payment (TDS Codes)
Time frame for correction request:
- Request for correction has to be made within 7 days of deposit of challan for correction in PAN, TAN and Assessment Year
- For Major head, minor head and nature of payment, request can be made within 3 months of deposit of challan.
Remedy available after time frame is over:
- After lapse of time frame, request can be made to the Assessing Officer.
Time frame given to bank to carry out correction:
- After receipt of request, bank must carry out the correction within 7 days
Other conditions for correction:
- Correction in name is not allowed
- Any combination of correction of Minor Head and Assessment Year together is not allowed
- PAN/TAN correction will be allowed only when the name in the challanmatches with the name as per the new PAN/TAN.
- The change of amount will be permitted only on the condition that the amount so corrected is not different from the amount actually received by the bank and credited to Govt. Account.
- For a single challan, correction is allowed only once. However, where 1st correction request is made only for amount, a 2nd correction request will be allowed for correction in other fields.
- There will be no partial acceptance of change correction request, i.e. either all the requested changes will be allowed, if they pass the validation, or no change will be allowed, if any one of the requested changes fails the validation test.
Procedure for requesting correction:
- The tax-payer has to submit the request form for correction (in duplicate) to the concerned bank branch.
- The tax-payer has to attach copy of original challan counterfoil.
- In case of correction desired for challan in Form 280, 282, 283, the copy of PAN card is required to be attached.
- In case of correction desired for payments made by a tax-payer (other than an individual), the original authorization with seal of the non-individual taxpayer is required to be attached with the request form.
- A separate request form is to be submitted for each challan.
Correction in Electronic Challans
- For correction in electronic challans and for correction after the time period for application to bank lapses, a written request in prescribed format has to be made to the Assessing Officer
- Assessing Officer has power to rectify the error , in bona fide cases, to enable credit of tax to assessee
Form of application to bank:
Income-tax department has given a format in which application can be made to the bank. The form is given is available at nareshjakhotia.blogspot.com or http://www.incometaxindia.gov.in/archive/LeftMenu_ChallanCorrectionMechanism_26082011.pdf
TAX TALK
BY CA. NARESH JAKHOTIA (Chartered Accountant)
“PROCEDURE FOR MAKING CORRECTION IN THE INCOME TAX CHALLANS”
Query 1]
a] If I deposit amount of Rs. 6 Lacs in a FDR with Bank for 3 years on which Bank deducts TDS directly. In such case, whether bank will also deduct on current A/c. or S.B. A/c Interest? [bsc.arya@gmail.com]
b] I am a student pursuing CA-Final. Recently, during our bank audit, we have come across the interest payment of more than Rs. 10,000/- to the customer. No Tax is deducted by the bank in the current year nor has been done so in the past as well. I have gone through section 194A which no where provides exemptions from TDS on interest payment on Saving A/c. I have gone through the Circular No. 22/68-IT(B) [F.No. 12/23/68-IT(B)], dated 28-3/13-5-1968 which also confirms the deduction of Tax at source on Saving bank account interest. Please examine whether TDS will be applicable or on interest credit on saving bank A/c? [xxxx5147@gmail.com]
Opinion:
1. No Tax is deductible at source on interest paid/credited to the saving bank Account even though the interest amount on such account, individually or in aggregate, exceeds the threshold limit of Rs. 10,000/-,.
2. Circular No. 42 [F. No. 275/62/70-ITJ], dated 20-6-1970, exempts interest paid on deposits (other than time deposits) paid by bank from deducting tax at source (TDS). The same is covered by clause (vii) of section 194A (3) w.e.f.from 1-4-1970. The Circular No. 22/68-IT(B) [F.No. 12/23/68-IT(B)], dated 28-3/13-5-1968 was issued prior to introduction of clause (viii) to section 194A(3) & don’t have any relevance now as far as the saving bank account interest is concerned.
Query 2]
While paying the TDS through online payment mode u/s 192B (on salary) I have wrongly credited the amount in Surcharge column instead of Education cess column. I noticed the mistake only after the receipt copy is generated. Is there any chances of rectification and if there any provision for rectification to whom should I contact for the same. The details are as follows - Wrong Entry / Correct Entryi) Basic Tax - 84174.00 / Basic Tax - 84174.00ii) Surcharge - 2526.00 / Surcharge - 0iii) Education Cess - 0 / Education Cess - 2526.00iv) Penalty - 0 / Penalty - 0 v) Interest - 0 / Interest - 0vi) Others - 0 / Others - 0 Kindly help me in this matter.[arnava_2006@rediffmail.com]
Opinion:
There are numerous instances where there is an error while making payment of Tax either electronically or manually. To rectify these errors, Income-Tax Department has issued new guidelines effective 01-09-2011. This new mechanism allows Banks to correct physical challans only. For correction in electronic challan, request will have to be made to the concerned Assessing Officer.
For general benefit, the procedure for correction is physical challan is given hereunder:
Fields that can be corrected by bank:
· Assessment Year
· Major Head Code
· Minor Head Code
· TAN/PAN
· Total Amount
· Nature of payment (TDS Codes)
Time frame for correction request:
- Request for correction has to be made within 7 days of deposit of challan for correction in PAN, TAN and Assessment Year
- For Major head, minor head and nature of payment, request can be made within 3 months of deposit of challan.
Remedy available after time frame is over:
- After lapse of time frame, request can be made to the Assessing Officer.
Time frame given to bank to carry out correction:
- After receipt of request, bank must carry out the correction within 7 days
Other conditions for correction:
- Correction in name is not allowed
- Any combination of correction of Minor Head and Assessment Year together is not allowed
- PAN/TAN correction will be allowed only when the name in the challanmatches with the name as per the new PAN/TAN.
- The change of amount will be permitted only on the condition that the amount so corrected is not different from the amount actually received by the bank and credited to Govt. Account.
- For a single challan, correction is allowed only once. However, where 1st correction request is made only for amount, a 2nd correction request will be allowed for correction in other fields.
- There will be no partial acceptance of change correction request, i.e. either all the requested changes will be allowed, if they pass the validation, or no change will be allowed, if any one of the requested changes fails the validation test.
Procedure for requesting correction:
- The tax-payer has to submit the request form for correction (in duplicate) to the concerned bank branch.
- The tax-payer has to attach copy of original challan counterfoil.
- In case of correction desired for challan in Form 280, 282, 283, the copy of PAN card is required to be attached.
- In case of correction desired for payments made by a tax-payer (other than an individual), the original authorization with seal of the non-individual taxpayer is required to be attached with the request form.
- A separate request form is to be submitted for each challan.
Correction in Electronic Challans
- For correction in electronic challans and for correction after the time period for application to bank lapses, a written request in prescribed format has to be made to the Assessing Officer
- Assessing Officer has power to rectify the error , in bona fide cases, to enable credit of tax to assessee
Form of application to bank:
Income-tax department has given a format in which application can be made to the bank. The form is given is available at nareshjakhotia.blogspot.com or http://www.incometaxindia.gov.in/archive/LeftMenu_ChallanCorrectionMechanism_26082011.pdf
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