Friday, January 1, 2010

e-TDS/TCS Procedure

e-TDS
Entities (both corporate and non-corporate deductors) making payments (specified under Income Tax Act) to third parties (deductees) are required to deduct tax at source (Tax Deducted at Source -TDS) from these payments and deposit the same at any of the designated branches of banks authorised to collect taxes on behalf of Government of India. They should also furnish TDS returns containing details of deductee(s) and challan details relating to deposit of tax to ITD.

As a part of automation of collection, compilation and processing of TDS returns ITD has notified an "Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003". It is applicable to all deductors furnishing their TDS return in electronic form. As per this scheme:

  • It is mandatory (w.e.f. June 1, 2003) for corporate deductors to furnish their TDS returns in electronic form (e-TDS return).
  • From F.Y. 2004-2005 onwards furnishing TDS returns in electronic form is also mandatory for government deductors in addition to corporate deductors.
  • Deductors (other than government and corporates) may file TDS return in electronic or physical form.
  • National Securities Depository Ltd. (NSDL) as the e- TDS Intermediary (appointed by ITD) receives, on behalf of ITD, the e-TDS returns from the deductors.

Deductors can submit e-TDS returns through TIN-Facilitation Centres (TIN-FC) established by NSDL or directly upload through NSDL web-site.

e-TCS
TCS means collection of tax at source by the seller (collector) from the buyer (collectee/payee) of the goods (specified u/s 206C of Income-tax Act, 1961, like timber obtained under forest lease, scrap, any other forest produce not being timber or tendu leaves etc.,). For e.g. if purchase value of goods is Rs.10,000/-, the buyer will pay an amount of Rs.10,000/- + X (X being the value of TCS as prescribed under Income-tax Act, 1961) to the seller. The seller will deposit the tax collected at source (TCS) at any of the designated branches of the authorised banks.

Following the automation of TDS returns in 2003, ITD has now notified an "Electronic Filing of Returns of Tax Collected at Source Scheme, 2005". It is applicable to all deductors furnishing their TCS return in electronic form. As per this scheme:

  • It is mandatory for corporate and government deductors to furnish their TCS returns in electronic form (e-TCS return) from F.Y. 2004-2005 onwards.
  • Deductors (other than government and corporates) may file TCS return in electronic or physical form.
  • NSDL as the e-TCS Intermediary (appointed by ITD) receives, on behalf of ITD, the e-TCS returns from the deductors.
REVISED FORMS AND FILE FORMATS FOR e-TDS/e-TCS RETURNS
Financial YearFormPeriodicityRemarks
2002-2003
2003-2004
24 - TDS
26 - TDS
27 - TDS
Annual
Annual
Quarterly
Corporates - mandatory to file
in electronic form
Other deductors - may file in
electronic form or in physical form
Form 27A to be filed in physical form with each return submitted through TIN-FC
2004-2005*Revised 24 - TDS
Revised 26 - TDS
Revised 27 - TDS
27E - TCS
Annual
Annual
Quarterly
Annual
Corporates, Government
Departments / Organisations -
mandatory to file in electronic form
Other deductors - may file in
electronic form or in physical form
Form 27A to be filed in physical form with each e-TDS return and Form 27B to be filed in physical form with each e-TCS return submitted through TIN-FC
2005-2006**24Q - TDS
26Q - TDS
27Q - TDS
27EQ - TCS
Quarterly
Quarterly
Quarterly
Quarterly
Corporates, Government
Departments / Organisations -
mandatory to file in electronic form
Other deductors - may file in
electronic form or in physical form
Form 27A to be filed in physical form with each return submitted through TIN-FC


*Forms for TDS/TCS returns have been revised by ITD. Corresponding file formats for e-TDS (Form 24, 26, 27) and e-TCS (Form 27E) have been notified by ITD and have come into effect from May 1, 2005.
**e-TDS/e-TCS returns will be filed quarterly for F.Y. 2005-2006. The file formats for quarterly returns (Forms 24Q, 26Q, 27Q and 27EQ) have been notified by the ITD and have been made available on NSDL web-site.

Deductors furnishing e-TDS/ e-TCS returns are required to furnish a control chart - Form 27A/ 27B in physical form along with the e-TDS/e-TCS return furnished in CD/floppy.

Form 27A is a summary of TDS return (Form 24, 26 or 27), which contains control totals of 'Amount Paid' and 'Income tax deducted at source'.

Form 27B is a summary of e-TCS return (Form 27E) which contains 'Amount Paid' and 'Income Tax Collected at Source'. The control totals mentioned on Form 27A/ 27B should match with the corresponding control totals in e-TDS/e-TCS return file. Form 27A is required to be furnished separately for each TDS return (Form 24, 26 or 27). Form 27B is required to be furnished separately for each TCS return (Form 27E)

Procedures and guidelines for preparing and furnishing e-TDS/e-TCS return are given in Deductors Manual available at downloads section.

NSDL has developed a freely downloadable utility called File Validation Utility to verify whether the e-TDS/e-TCS return files prepared by the deductors/ collectors conform to the prescribed format.


5 steps to e-TDS/e-TCS return

  1. The data structure (file format) in which the e-TDS / e-TCS return is to be prepared has been notified below:

    (a) Annual e-TDS return:

    (b) Annual e-TCS return:

    (c) Quarterly return:

    Data structure for Form 24Q of the quarter ending 31-March

  2. e-TDS/e-TCS return in accordance with the file formats is to be prepared in clean text ASCII format with 'txt' as filename extension. e-TDS/e-TCS return can be prepared using in-house software, any other third party software or the NSDL e-TDS Return Preparation Utility (e-TDS RPU-Light).

    Feedback Form

    Sample files prepared as per the file formats given below for reference.

    Annual Return:

    Quarterly Return:


  3. Once the file has been prepared as per the file format, it should be verified using the File Validation Utility (FVU) provided by NSDL.
    * FVU for Annual Returns: e-TDS / e-TCS returns prepared for FY 2004-05 (Forms 24, 26, 27 and 27E) can be validated using this utility.
    * FVU for Quarterly Returns: e-TDS / e-TCS returns prepared for FY 2005-06 and onwards (i.e. Forms 24Q, 26Q, 27Q and 27EQ) can be validated using this utility.

  4. In case file has any errors the FVU will give a report of the errors. Rectify the errors and verify the file again through the FVU.

  5. The upload file generated by the FVU on successful validation is to be furnished to a TIN-FC or directly uploaded through the NSDL web-site.

    Annual Returns:
    Each e-TDS return saved in a CD/floppy to be submitted along with a signed copy of the control chart (Form 27A).

    Each e-TCS return saved in a CD/floppy to be submitted along with a signed copy of the control chart (Form 27B).

    Quarterly Returns:
    Each e-TDS/TCS return saved in a CD/floppy to be submitted along with a signed copy of the control chart (Form 27A).


    File Validation Utility (FVU)

    FVU for Annual Returns:

    e-TDS / e-TCS returns prepared for FY 2004-05 (Forms 24, 26, 27 and 27E) can be validated using this utility.

    File Validation Utility - Version 2.052 (FVU)

    Once the return has been prepared as per the file format, it can be verified using the File Validation Utility (FVU) provided by NSDL. In the input screen of FVU, there are three fields provided to enter the name (including the path) for Input File, Error/Response File and Upload File. It is mandatory to fill all these fields:

    • Input File: To specify the name of the input file (including the path) i.e. the e-TDS/e-TCS return prepared as per file format to be validated by the FVU.
    • Error/Response File: To specify the name (including the path) where either an error or response file generated by the FVU on completion of validation will be saved. Error file is a file generated by FVU detailing the format level errors (if any) in the original input file submitted for validation. If the original return submitted to the FVU is a valid return a response file will be generated. This file contains the control total from the return and count of missing/ invalid PANs. These Error/ Response files will be saved at the pre-defined path.
    • Upload File: To specify the name (including the path) of the upload file generated by FVU after validation of the input file. In case of a valid e-TDS/e-TCS return, FVU will generate an Upload file, which will contain a hash value (a value generated by FVU using the characters in the input file) appended to the original e-TDS/e-TCS return.

    FVU for Quarterly Returns:

    e-TDS / e-TCS returns prepared for FY 2005-06 and onwards (i.e. Forms 24Q, 26Q, 27Q and 27EQ) can be validated using this utility.

    The e-TDS/TCS FVU is a Java based utility. JRE (Java Run-time Environment) [versions: SUN JRE: 1.4.2_02 or 1.4.2_03 or 1.4.2_04 or IBM JRE: 1.4.1.0] should be installed on the computer where the e-TDS/TCS FVU is being installed. Java is freely downloadable fromhttp://java.sun.com and http://www.ibm.com/developerworks/java/jdk or you can ask your vendor providing computer facilities (hardware) to install the same for you.

    The e-TDS/TCS FVU setup file (e-TDS/TCS FVU.exe) comprises of three files namely:

    1. TDS FVU Readme.rtf: This file contains instructions for setup of the e-TDS FVU.
    2. e-TDS FVU Setup.exe: This is a setup program for installation of FVU.
    3. TDS_FVU_STANDALONE.jar: This is the FVU program file.

    These files are in an executable zip file. These files are required for installing the e-TDS/TCS FVU.

    Instructions for extracting the files are given in:

    Extraction of e-TDS/TCS FVU:

    1. To extract these files, double-click on 'e-TDS FVU.exe'.
    2. A 'WinZip Self-Extractor - e-TDS FVU.exe' will open.
    3. By default, the path selected for extraction of the three files will be 'C:\e-TDS FVU'.
    4. The files can also be extracted in any other location (other than C:\e-TDS FVU). In that case, the appropriate path has to be defined by clicking the 'Browse' button where the three files should be extracted.
    5. Thereafter, click on 'Unzip' button.
    6. On clicking the 'Unzip' button, the three files mentioned above will get extracted to the specified path (i.e. in folder 'C:\ e-TDS FVU' by default or at the specified path).

    Installation of e-TDS/TCS FVU:

    The e-TDS/TCS FVU can be setup as per the procedure mentioned in the 'e-TDS FVU Readme.rtf' file (one of the three files extracted).

    Running the FVU:

    The procedure to run FVU is given in the Readme button on the window opened by clicking e-TDS/TCS FVU icon.

    e-TDS/e-TCS RPU

    NSDL e-TDS/TCS Return Preparation Utility (RPU)

    Since FY 2003-04, all corporate deductors should file Income tax returns for deduction of tax at source (TDS) only in electronic form. Further, from FY 2004-05, in addition to corporate deductors, filing of TDS returns in electronic form is mandatory for government deductors also.

    Extending the scheme of filing of returns in electronic form to tax collected at source (TCS), the ITD mandated that with effect from FY 2004-05, all TCS returns filed by corporate and government collectors should be only in electronic form.

    ITD has notified revised file formats for preparation of TDS and TCS returns in electronic form. Deductors/collectors can prepare the e-TDS/TCS returns as per these file formats using in-house software or any other third party software and submit the same to any of the TIN-FCs established by NSDL. Deductors/collectors can also directly upload the e-TDS/TCS returns through NSDL-TIN website.

    NSDL has developed software called e-TDS/TCS Return Preparation Utility (RPU) to facilitate preparation of e-TDS/ TCS returns. This is a freely downloadable MS excel based utility. Separate utilities are available for preparation of each type of return.

    RPU for Annual Returns: These utilities can be used to prepare e-TDS/TCS returns upto FY 2004-05. These utilities can be used for preparation of original or revised annual returns.

    RPU for Quarterly Returns: From FY 2005-06 onwards, TDS/TCS returns have to be filed every quarter (i.e. quarterly statements). The following utilities can be used to prepare regular quarterly statements:

    • Prepare Quarterly e-TDS/TCS Regular and corresponding Correction statement with RPU version 2.0 as per new data structure (with effect from October 01, 2009). “Download RPU version 2.0”

    Correction statements: Corrections required in the regular quarterly statements can be furnished by submitting a correction statement in the prescribed format. The following utilities can be used to prepare correction quarterly statements:

    • Prepare correction statement on regular statement (accepted in TIN as per the old data structure) with RPU version 1.8.“Download RPU version 1.8”
    • Prepare Quarterly e-TDS/TCS Regular and corresponding Correction statement with RPU version 2.0 as per new data structure (with effect from October 01, 2009). “Download RPU version 2.0”

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