The Board has amended the rules relating to Tax Deduction at Source (TDS) and Tax Collected at Source (TCS) vide Notification No. S.O.858 (E) dated 25th March 2009 [NOTIFICATION NO. 31/2009 -  Income-tax (8th Amendment) Rules, 2009 ].

In this context, taxpayers are informed that the new Form 17 (the challan for payment of TDS and TCS) is applicable only for payment of tax deducted or collected at source on or after 1st April 2009.

Therefore, in respect of any TDS or TCS made before the 1st April, 2009, the payment will continue to be made to the credit of the Central Government by using the challan in Form No. 281 (i.e. the old challan form) even after 31st March 2009.

Also See:

New Form 16 [Word Format]

New Form 16A [Word Format]

 

Further, para number 35 and 36 of circular no. 1/2009 dated 27/2/2009 explains the provisions as under:

35. Amendments to the provisions of Dematerialisation of TDS and TCS certificates

35.1 A scheme for dematerialisation of Tax Deducted at Source (TDS)/ Tax Collected at Source (TCS) certificates was introduced through the Finance Act, 2004, with effect from 01.04.2005 for any deduction or collection of tax at source made on or after 01.04.2005. The commencement of this scheme was postponed to 01.04.2006 by the Finance Act, 2005 and later to 01.04.2008 by the Finance Act, 2006. Since the national level information technology infrastructure of the Income-tax Department is not yet fully operational, the commencement of the scheme has been extended to 01.04.2010.

35.2 The system of allowing credit to the assessee for TDS/TCS needs a certain degree of flexibility considering the ongoing technological and business process changes. Providing rigorous conditions regarding the method of giving credit for TDS/TCS in the Act itself, makes the system difficult to restructure and implement according to the changing technological environment.

35.3 In view of this, section 199 and sub-section (4) of section 206C have been amended providing that the manner in which credit of TDS/TCS is to be given will be governed by Rules to be framed under section 199 & sub-section (4) of 206C i.e. the Board may make such rules as may be necessary for the purpose of giving credit in respect of TDS/TCS or tax paid by employer on perquisite under sub-section (1A) of section 192.

35.4 Applicability: This amendment has been made applicable with effect from 1^st April, 2008.

36 Consequences of non-deduction of tax at source

36.1 Under section 201, a person is deemed to be an assessee in default if there is a failure to deduct tax at source or for failure to deposit the tax deducted at source after such tax has been deducted. The persons covered under the ambit of section 201 are:-

(i) person referred to in section 200;

(ii) the principal officer and the company of which he is the principal officer in the cases referred to in section 194 [relating to deduction of tax at source on dividends].

36.2 Sub-section (1) of section 200 provides that any person deducting any tax at source on payments other than salary shall pay the sum so deducted to the Central Government or as the Board directs within the prescribed time. A view has been expressed that the provisions of sub-section (1) of section 201 do not cover failure to deduct tax at source. Such an interpretation is contrary to the intent of the legislature.

36.3 In view of the above, the sub-section (1) of section 201 has been amended to clarify that where a person, including the principal officer of a company who is required to deduct any sum in accordance with the provisions of Income-tax Act does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under the Income-tax Act, he shall be deemed to be an assessee in default under section 201.

36.4 Applicability: The amendment to substitute sub-section (1) of section 201 has been made applicable with retrospective effect from 1st June, 2002.

36.5 A similar amendment has also been carried out in Explanation to section 191.

36.6 Applicability: The amendment to substitute Explanation to section 191 has been made applicable with retrospective effect from 1June, 2003.

 

 

TDS and TCS payment rules: new challan form governs post-effective date; procedural and credit provisions clarified. The new Form 17 is prescribed for payment of TDS/TCS on or after 1st April 2009 while payments for TDS/TCS made before that date remain payable using Form 281. The dematerialisation scheme for TDS/TCS certificates is deferred to 1st April 2010. Rules will govern the manner of giving credit for TDS/TCS, effective 1st April 2008. Amendments clarify that failure to deduct or to pay deducted tax will render the person an assessee in default, with related explanatory substitutions given retrospective effect.