Government drops change in TDS rules
Government had proposed changes in the TDS rules by issuing a Notification on 25th March, 2009. The said changes were to come into effect on 1st April, 2009. Thereafter, because the necessary infrastructure was not in place, the Govt. postponed the effective date to 1st July, 2009. As per the amended Rules, all tax deductors were to:

a) Pay the TDS only electronically
b) Use a new challan form (No. 17) for paying the TDS
c) Fill in name, PAN and amount of TDS for each deductee while paying the TDS
d) Generate a Unique Transaction Number (UTN) for each TDS entry
e) Quote the UTN in the TDS certificate (Form 16/Form 16A) issued
f) Quote the UTN in the TDS returns (for which new form no. 24C was notified)

At the same time, the deductee, while filing his own return of income, was expected to quote the UTN for every item of TDS if he wanted to get credit for the TDS. This provision was made effective retrospectively i.e. w..e.f. Assessment Year 2008-09 (financial year ended 31st March, 2008 and all subsequent years).

All in all, the new rules would have certainly led to lot of problems for tax deductors as well as for deductees. Also, many tax payers were unable to file their returns of income for the year ended 31st March, 2009 even though the same were ready for filing simply because of the confusion about the generation of the UTNs.

Fortunately, now, the Government has acknowledged the plight of the tax deductors and the deductees and has, by issuing a Press Release on 30th June, decided to keep in abeyance the applicability of the new Rules which were notified on 25th March, 2009.

Therefore, now, till further notice,

a) All tax deductors can continue to deposit the TDS in the existing challan no. ITNS 281

b) All corporate tax deductors will continue to pay the TDS electronically. Similarly, Individuals and Partnership Firms will also pay the TDS electronically if they are subject to tax audit

c) All other tax deductors can continue to pay the TDS in physical mode as they have been doing uptill now.

d) The quarterly TDS statements that are required to be filed will continue to be so filed as per existing rules and no new forms are to be filed

e) The returns of income for A.Y. 2009-10 (i.e. for the year ended 31st March, 2009) can be filed without quoting the UTN (even though the form requires the assessee to fill up the same)

We hope that with this, all the confusion that has prevailed in the context of payment of TDS to the Govt. and generation of the UTNs stands cleared. If you have any doubts about the matter, please feel free to contact the undersigned.

Ameet Patel
SKP - Mumbai, India

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    * Govt plans to bring back economy to high growth of 9%
    * GDP growth dipped to 6.7% in FY'09
    * FM to make pre-budget talks with state FMs annual affair
    * Fiscal deficit up from 2.7% to 6.8% of GDP
    * Return to fiscal prudence at the earliest
    * 'Aam admi' is focus of all programmes and schemes
    * IT exemption limit raised; Rs15,000 for senior citizens
    * Limit raised by Rs10,000 for tax payers, including women
    * 10% surcharge on personal income tax scrapped
    * Fringe Benefit Tax abolished
    * No change in corporate tax
    * Defence gets Rs1.4 trillion, up 34%
    * Total fiscal stimulus in 2008-09 amounts to Rs 1.9 trillion
    * IIFCL to evolve mechanism for increased funding of infra
    * IIFCL to re-finance commercial bank loans up to 60% in critical projects through PPP to tune of Rs1 trillion
    * Allocations for highways being stepped up by 23%
    * Funds for housing, amenities for urban poor up Rs39.7 billion
    * Funds for JN Urban Renewal Mission up 87% to Rs128.9 billion
    * Assistance for storm-water drainage project up by Rs3 billion
    * Farm credit target up at Rs3.3 trillion from Rs2.9 trillion
    * Interest rates incentive to farmers to repay loans on time
    * Additional Rs10 billion for accelerated irrigation scheme
    * Export Credit Guarantee scheme extended till March 2010
    * 2% interest subvention (IS) scheme extended till March 2010
    * IS scheme to cover 7 job-oriented sectors, including textile, handicrafts and handlooms.
    * Commodity Transaction Tax abolished
    * New pension system trust exempted from STT DDT
    * Minimum Alternate Tax hiked to 15% from 10%
    * Tax holiday on petro sector extended to natural gas
    * 100% tax deduction on political donation
    * Stimulus for print media for another six months
    * Fertilizer subsidy to be nutrient-based, not price
    * Expert Group to form viable pricing for imported petro goods
    * Banks and insurance firms to remain in public sector
    * Rs1 billion one-time grant to expand banks in unbanked areas
    * Govt committed to provide Rs100 a day as wages under NREGA
    * Allocation of Rs391 billion to be made for NREGA, NREGA coverage increased to 4.

    1. General Tax Payers
    Up to Rs 160,000………………………NIL
    Rs 160,001 to Rs 300,000………..10%
    Rs 300,001 to Rs 500,000………..20%
    Rs 500,000 and above………………30%

    2 For Women
    Up to Rs 190,000……………………….NIL
    Rs 190,001 to Rs 300,000………..10%
    Rs 300,001 to Rs 500,000…………20%
    Rs 500,000 and above……………….30%

    3 For Senior Citizens
    Up to Rs 240,000……………………….NIL
    Rs 240,001 to Rs 300,000…………10%
    Rs 300,001 to Rs 500,000…………20%
    Rs 500,000 and above……………….30%

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