R.N.I. No. MEHENG/2005/14226 Registered : Maharashtra Postal Regd. No.

MH/MR/N/29/08-10

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Web Edition: www.fastfacts.co.in/bulletin.asp Vol. 6 | Issue 6 | June 4, 2010

Amendment in TDS Rules

CBDT has amended the Rules relating to TDS • Govt deductors will have to mention Book
provisions, date and mode of payment of tax deducted Identification No in TDS Certificates
at source ( TDS ), TDS certificate and filing of • Format of TDS certificates has been modified and
‘statement of TDS ' ( TDS return) vide Notification now TDS details will have to be given for
No.41/2010; dated 31.05.2010. o Quarterly summary of tax deposited for
deductee according to eTDS Statement
Summary of main changes o Monthly details of challan deposited according to
- Challan Identification No by non-government
S. No. Existing Amended
deductors
1. Amount Credited in Amount Paid/Credited - Book Identification No by Govt deductors
Mar. can be deposited in March, can be • Due date for furnishing TDS certificate to the
by 31st May deposited by 30th April employee or deductee or payee is revised as under
2. Issuing Form 16 by Issuing Form 16 by
S. No. Category Periodicity Due date
30th April 31st May
of
3. Issuing Form 16A Mandatory Quarterly furnishing
monthly or TDS Certificate within TDS
consolidated yearly 15 days of submitting certificate
certificate eTDS statement
1. Salary Annual By 31 st day of May of
4. Submitting Q4 eTDS Submitting Q4 eTDS
(Form the financial year
statement by statement by 15th May
No.16) immediately following
15th June
the financial year in
5 - Major changes for Govt which the income was
deductors paid and tax deducted
6 - Credit of tax deposited 2. Non- Quarterly Within fifteen days
thru TAN, PAN and Salary from the due date for
eTDS Receipt No (Form furnishing the
No.16A) ‘statement of TDS'.
Applicability
The amended rules will apply only in respect of tax New form 24G for Govt Deductors
deducted on or after April 1, 2010. • Government Authorities (Pay and Accounts Officer
or Treasury Officer or Cheque Drawing and
Concept of Unique Indentification Number Disbursing Officer) responsible for crediting tax
introduced deducted at source to the credit of the Central
Now the Tax-deduction Account Number (TAN) of the Government by book-entry are now required to
deductor, Permanent Account Number (PAN) of the electronically file a monthly statement in a new
deductee, and Receipt number of TDS return filed by Form No. 24G containing details of credit of TDS to
the deductor will form the unique identification for the agency authorised by the Director General of
allowing tax credit claimed by the taxpayer in his Income-tax (Systems) .
income-tax return. • This form is to be submitted within 10 days of the
end of month
TDS Certificates • The agency will generate a Book identification No in
• Forms for TDS certificate have been revised to respect of each deduction
include the receipt number of the TDS return filed • Govt Deductor has to inform this Book
by the deductor. Indentification No to each deductee
• Form 16AA has been omitted. For TDS on salaries • Complete procedural details for this system are to
only Form 16 needs to be given. be prescribed

01 June 4, 2010
 ...Amendment in TDS Rules

Mode and Time of payment for Govt Deductors Impact on above changes for FY 2009-10
Govt Deductors will have to deposit tax deducted For FY 2009-10 there is no impact on TDS payment,
• On the same day where tax is paid without income Issue of TDS certificate and eTDS Statement and it
tax challan has been made clear that rules as existing prior to
• Within seven days of the end of month where tax is these amendments.
paid through a challan
Mode and Time of payment for Non-Govt Impact on above changes for FY 2010-11 – For
Deductors Non Govt Deductors
• Within seven days of the end of month
• By 30th April where income is paid or credited in S. No. Activity Due date
the month of March 1. Deposit of TDS for 7th of next month
all months except
Change in submission date March
Due date for furnishing TDS return for the last quarter
2. Deposit of TDS for By 30th April 2011
of the financial year has been modified to 15th May
March 2011
(from earlier 15 th June)
3. Issue Form 16 By 31st May 2011
S. No. Date of ending Due date
4. Issue Form 16A Qtr 1 – 30th July 2010
of the quarter
of the FY Qtr 2- 30th Oct 2010
1. 30th June 15th July of the FY Qtr 3- 30th Jan 2011
2. 30th September 15th October of the FY Qtr 4 - 30th May 2011
3. 31 st December 15 th January of the FY 5 Quarterly Return Qtr 1 – 15th July 2010
4. 31 st March 15th May of the FY Qtr 2- 15th Oct 2010
immediately following Qtr 3- 15th Jan 2011
the financial year in
Qtr 4 - 15th May 2011
which deduction is made

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02 June 4, 2010
Company Law Settlement Scheme, 2010
General Circular No. 1 /2010 dated 26-05-2010
It has been observed that a large number of
companies are not filing their due documents timely
with the Registrar of Companies. Due to this, the
records available in the electronic registry are not
updated and thereby are not available to the
stakeholders for inspection. Further, due to not filing
the documents on time, companies are burdened with
additional fee and facing the prosecutions also.
There are many companies, who have also not
increased their paid up capital up to the threshold limit
provided in sub-section (3) and sub-section (4) of
Section 3 of the Companies Act, 1956.
In order to give an opportunity to the defaulting
companies to enable them to make their default good
by filing belated documents and to become a regular
compliant in future, the Ministry, has decided to
introduce a Scheme namely, “Company Law
Settlement Scheme, 2010,” condoning the delay in
filing documents with the Registrar, granting
immunity from prosecution and charging additional
fee of 25 percent of actual additional fee payable for
filing belated documents under the Companies Act,
1956 and the rules made there under. The details of
the Scheme are as under:-
Period
The scheme shall come into force on the 30th May,
2010 and shall remain in force up to 31st August,
2010.
Definitions of defaulting company
"defaulting company” means a company registered
under the Companies Act, 1956 and a foreign
company falling under section 591 of the Act, which
has made a default in filing of documents on the due
date(s) specified under the Companies Act, 1956 and
rules made there under;
Applicability: -
Any “defaulting company” is permitted to file belated
documents in accordance with the provisions of this
Scheme:
Any defaulting private company or public company
which has not increased its paid capital up to the
threshold limit of rupees one lakh and rupees five lakh
respectively as provided in sub section (3) and (4) of
section 3 of the Companies Act, 1956, shall first file its
documents to increase their paid up capital up to the
threshold limit under the scheme and thereafter
would be allowed to file other belated documents;
Manner of payment of fees and additional fee on
filing belated document for seeking immunity
under the Scheme –
The defaulting company shall pay statutory filing fees
03
as prescribed under the Companies Act and rules
made there under along with an additional fee of 25
percent of the actual additional fee standardised
under sub-section (2) of Section 611 of the
Companies Act, 1956, payable on the date of filing of
each belated document;
Withdrawal of appeal against prosecution
launched for the offences-
If the defaulting company has filed any appeal against
any notice issued or complaint filed before the
competent court for violation of the provisions under
the Act in respect of which application is made under
this Scheme, the applicant shall before filing an
application for issue of immunity certificate, withdraw
the appeal and furnish the proof of such withdrawal
along with the application;
Application for issue of immunity in respect of
document(s) filed under the scheme –
The application for seeking immunity in respect of
belated documents filed under the Scheme may be
made electronically in the Form annexed, after
closure of Scheme and after the document(s) are
taken on file, or on record or approved by the
Registrar of Companies as the case may be, but not
after the expiry of six months from the date of closure
of the Scheme. There shall not be any fee payable on
this Form;
Order by designated authority granting
immunity from the penalty and prosecution –
The designated authority shall consider the
application and upon being satisfied shall grant the
immunity certificate in respect of documents filed in
the Scheme;
Scheme not to apply to certain documents –
(a) This Scheme shall not apply to the filing of
documents for incorporation or establishment of
place of business in India or where specific order
for condonation of delay or prior approval under
the provisions of the Companies Act, 1956 is to be
obtained from the Company Law Board or the
Central Government or Court or any other
Competent Authority is required;
(b) This Scheme shall not apply to companies against
which action under sub-section (5) of section 560
of the Act has been initiated by the Registrar of
Companies
After granting the immunity, the Registrar concerned
shall withdraw the prosecution(s) pending if any
before the concerned Court(s) At the conclusion of the
Scheme, the Registrar shall take necessary action
under the Companies Act, 1956 against the
companies who have not availed this Scheme and are
in default in filing of documents in a timely manner.
June 4, 2010
Applicability of Service Tax on laying of Cables under or alongside roads and similar activities
Circular no. 123/05/2010 – ST dated 24.05.2010:
There has been many disputes and litigations regarding applicability of service tax on activities such as shifting
overhead cables to underground; laying of electrical cables under or alongside roads/ railway tracks; between
grids/sub-stations/transformers distribution points of residential or commercial complexes; electrification of railways;
installation of street-lights, traffic lights, flood-lights.
Department has came out with this circular clarifying chargeability of service tax on activities described above. The
following would be the tax status of the activities in respect of which disputes have arisen.
S.No. Activity Status
1. Shifting of overhead cables/wires for any reasons such as widening/
renovation of roads
2. Laying of cables under or alongside roads Not a taxable service under any
3. Laying of electric cables between grids/sub-stations/transformer clause of sub-section (105) of
stations en route section 65 of the Finance Act,
4. Laying of electric cables up to distribution point of residential or 1994
commercial localities/complexes
5. Railway electrification, electrification along the railway track
6. Installation of transformer/ sub-stations undertaken independently Taxable service, namely
7. Installation of street lights, traffic lights flood lights, or other electrical Erection, commissioning or
and electronic appliances/devices or providing electric connections to them installation services [section
65 (105] (zzd].
8. Laying of electric cables beyond the distribution point of residential or Taxable service, namely
commercial localities/complexes. commercial or industrial
construction' or ‘construction
of complex' service [section
65(105) (zzq)/(zzzh)], as the
case may be.

Unique Features
Use of simple English
• No repetition
• Brief, to-the-point description
• Practical illustrations, flow charts, tables and diagrams
• Confusing issued discussed and practical issues explained

New in Fourth Edition

• Summary of changes as per Finance Bill 2010
• Completely updated for amendments since last edition
• New chapter covering Important Judgements
• DTAA - Withholding Tax Rate Chart
• Enhanced and updated developments related to TDS on payment to non-residents

This book covers

• Practical and step by step explanation of TDS deduction, deposit, TDS Certificate
and eTDS compliance
• Concise and practical explanation of TDS on salaries, other payments and
payment to non-residents
• Consequences of non-compliances
Fourth Edition May. 2010 Published by -
BOOK CORPORATION
As amended by Finance 4, R.N. Mukherjee Road, Kolkatta-700 001.
Act, 2010
Available at all leading Book Stores
Price Rs. 300/-
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04 June 4, 2010
Lower TDS Rate Certificate: New System Proposed
CBDT has issued Instruction No. 4/2010 dated 25-05-
2010 proposing a new system of issuance of
certificate of lower deduction of tax at source .
Present practice
• By Instruction No. 8/2006 dated 13/10/2006, it
was laid down that certificates for lower deduction
or nil deduction of tax at source u/s 197 are not to
be issued indiscriminately and for issue of each
certificate, prior administrative approval of the
concerned Range Head shall be obtained by the
AO.
• Subsequently, Instruction No. 7/2009, dated
23/12/2009 read with letter F.No.275/23/2007-
IT(B), dated 8/02/2010 has laid down monetary
limits for prior administrative approval of the CIT-
TDS or DIT-Intl. Taxation, as the case may be.
Such certificates are normally being issued at
present, manually rather than through the ITD
system.
Proposed system
• To maintain centralized data of issue of such
certificates and facilitate better processing of the
TDS returns filed by the deductors and in
continuation to the above instructions, henceforth
from the date to be notified the certificates u/s 197
shall be generated and issued by the AO
mandatorily through ITD system only.
• In case due to certain reasons, it is not possible to
generate the certificate through the system on the
date of its issue, the AO shall upload the necessary
data on the system within 7 days of the date of
issue (manually) of the certificate.
Note for issue of certificate u/s 197 mandatorily
through the system
• Chapter-XVIIB of the IT Act 196l provides for
deduction of tax at source by person responsible
for making payment of some specified nature
mentioned in Sec 192 to Sec 194 LA thereof. The
tax so deducted is deposited to Govt. a/c on
monthly basis. The deductor of tax is liable to file
quarterly returns of TDS wherein data about the
amount paid, tax deducted, rate of deduction, date
of deduction, date of payment of tax to
Government, identification of the
payees/recipients (by specifying their PAN) and
some other prescribed details are furnished.
• While processing the TDS return, the information
contained therein is matched with the legal
provisions (prescribed rates of deduction), due
dates for payment, the information of tax payment
received from banks etc. and defaults, if any, are
generated. The defaults are mainly non-deduction
(including short deduction), non-payment of tax
deducted (including part payment) and interest for
default or delayed payment.
Deficiencies in present system
Sec 197 of the IT Act, 1961 provides for issue of
05
certificate for no deduction or deduction of tax at
lower rate if the Assessing Officer is satisfied that the
issue of such certificate is justified in view of total
income of the recipient. Till FY 09-10 the certificates
u/s 197 were being issued manually by the concerned
Assessing Officer. The present system of issuance of
197 certificates suffers from the following
deficiencies:
• There is no check as to whether such certificate
has been issued by the authorized/ competent
assessing officer having jurisdiction.
• There is no information available in the system as
regards number of certificates issued at Nil/Lower
rate authorized by AO or the quantum of revenue
involved.
• Such certificates are being presently issued
without any systematic reference number which
could be amenable to verification. In the TDS
returns, since neither reference numbers of 197
certificates are being captured nor is it possible to
compare such numbers in the light of manual issue
of certificates, it is not possible to ascertain the
veracity of claim, of the deductors about no/low
deduction having been made on the strength of a
197 certificate actually issued by the department.
• The extent of default, for FYs 2007-08 and 2008-
09, generated as a result of deductors making
'mistakes' in ticking relevant column (about 197
certificates) in TDS returns is to the extent of more
than Rs 10,000 crores. This is indicative of the
magnitude of revenue involved in issuance of 197
certificates, which are being otherwise issued by
the field officers without perhaps being aware of
the extent of revenue involved.
Proposed system
Therefore, processes have to be put in place which
enables the department to take policy decision on the
issue on one hand and on the other help the field
officers to verify the genuineness of claims being
made in TDS returns as also to decide about the
extent of such certificates which are to be issued.
It is reported that in the middle of FY 09- 10, facility
was provided in the TDS module of ITD system to
generate certificates Under section u/s 197 through
the system.
Benefits of proposed system
Some of the benefit of issue of certificate u/s 197
through the system would be that:
• Entire information about the deductor and
deductee, nature of payment (related section), the
lower rate authorized, dates of validity of
certificate and quantum of payment would he
available to the department in the system.
• Element of reconciliation on part of deductors and
regulation in the case of field officers (so far as
issuance of the certificates is concerned) would be
introduced.
• The information (as above) can he used while
June 4, 2010
 ...Lower TDS Rate Certificate: New System Proposed
processing the TDS returns and matching the data
provided by the deductor in TDS return.
• The information/statistics would help the CBDT in
taking an informed policy decision on the issue in
future.
• The non-deduction defaults detected by the
system while processing the TDS returns would be
substantially reduced or almost eliminated, if all
certificate u/s 197 are issued compulsorily through
the system.
Under these facts, it is proposed that all certificates
u/s 197 be issued mandatorily through ITD system.
Law Updates
INCOME TAX
Section 80C of - Deductions - In respect of
insurance premium, etc. - Notified plan u/s
80C(2)(xii)
Notification 34/2010
• In pursuance of clause (xii) of sub-section (2) of
section 80C the Central Government has
specified the Jeevan Akshay-VI Plan of the Life
Insurance Corporation of India, as filed by that
Corporation with the Insurance Regulatory and
Development Authority, as the annuity plan of the
Life Insurance Corporation of India for the
purposes of the said clause
• for the assessment year 2008-09 and subsequent
years.
Income-tax (Fifth Amendment) Rules, 2010 -
Amendment in rule 18C
Notification 38/2010
• These rules may be called the Income-tax (5th
Amendment) Rules, 2010.
• They shall come into force on the date of their
publication in the Official Gazette.
• In the Income-tax Rules, 1962, in rule 18C, in
sub-rule (1), for the figures “2009”, the figures
“2011” shall be substituted.
Section 80-IA(4)(i) Clarification
Circular 4/2010
• References have been received by the Board as to
whether widening of existing roads constitutes
creation of new infrastructure facility for the
purpose of Section 80IA (4)(i)
• Section 80IA (4)(i) provides for a deduction to an
undertaking engaged in developing, or operating
and maintaining, or developing, operating and
06
However, considering that these certificates are
issued by the AOs scattered throughout the country,
there may be exigencies/situations when these may
not be generated through the system. In such cases,
the procedure may involve suitable measures to
capture the data on the system by the AO within
7 days of the date of issue (manually) of the
certificate.
The entire procedure is open for suggestions,
modifications and amendments as considered
necessary.
maintaining any infrastructure facility subject to
satisfaction of the conditions laid down in the
Section. The Explanation to subsection 80IA(4)(i)
states that for the purpose of this clause,
infrastructure facility means inter alia:-
a. a road including toll road, a bridge or a rail system;
b. a highway project including housing or other
activities being an integral part of the highway
project;”
• The issue has been examined by the Board. It has
been decided that widening of an existing road by
constructing additional lanes as a part of a highway
project by an undertaking would be regarded as a
new infrastructure facility for the purpose of
Section 80IA (4)(i). However, simply relaying of an
existing road would not be classifiable as a new
infrastructure facility for this purpose.
GRATUITY ACT
Gratuity Amount payable under Payment of
Gratuity Act enhanced from Rs.3.5 lakhs to Rs 10
lakhs
Payment of Gratuity (Amendment) Act, 2010 (No. 15
of 2010), dated 17-5-2010
• This Act may be called the Payment of Gratuity
(Amendment) Act, 2010.
• It shall come into force on such date as the Central
Government may, by notification in the Official
Gazette, appoint.
Amendment of section 4 of Act 39 of 1972.
• In section 4 of the Payment of Gratuity Act, 1972, in
sub-section (3), for the words “three lakhs and fifty
thousand rupees”, the words “ten lakh rupees”
shall be substituted.
June 4, 2010
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07 June 4, 2010
Registered : Maharashtra Postal Regd. No. MH/MR/N/29/08-10 R.N.I. No. MEHENG/2005/14226

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Create eTDS/eTCS Statement in Form 24Q,26Q,27Q,27EQ. File Validation Utility called automatically from eTdsWizard
Create Correction Statements. and Input/output file names auto-filled.
Print TDS Certificates in Form 16, 16A, 27D.
Fast Forward remembers the file selected earlier and skips
Print Paper Returns, Form 27A.
user intervention at each stage.
View FVU file and convert in MS Excel format.
E-Payment Auto-Filler directly takes you to ePayment web site
and auto fills TAN and other deductor details.
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Run Setup from CD and connect USB Dongle to activate. Auto Backup automatically takes backup of all created files in
Single click Auto-Upgrade. user selected folder.
Prepare data in MS Excel Templates.

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08 June 4, 2010