ANDHRA PRAGATHI GRAMEENA BANK HEAD OFFICE::KADAPA INCOME TAX DEDUCTION OF TAX AT SOURCE ON SALARIES FINANCIAL YEAR 2007-08 REF.NO. 1) Cir.No.28-2006-BC-STF, dt.14.07.06 2) Cir.No.41-2006-BC-STF, dt.31.07.06 3) Cir.No.90-2006-BC-STF, dt.29.09.06 4) Cir.No.35-2007-BC-STF, dt.02.03.07 All Branches/Offices are aware that the Bank had issued detailed guidelines on various provisions of Income Tax Act 1961 vide Circulars cited basing on the information available with the Bank at that time. The further changes made vide Finance Act 2007 and some important provisions of Income Tax Act 1961 are given below for implementation by Branches/Offices of the Bank. 1. Basic Exemption limit is Rs.1,10,000/- for Individuals. Further, for women employees, basic exemption limit is Rs.1,45,000/- and for Senior Citizens of 65 years and above it is Rs.1,95,000/-. Total Taxable Income Range Upto Rs.1,10,000/-...... Rs.1,10,000/- to Rs.1,50,000/-.. Rs.1,50,000/- to Rs.2,50,000/-........... Nil Rates of Income-tax @ 10% of the amount by which the total income exceeds Rs.1,10,000/-. (@ 10% on Rs 5000/- for women) Rs.4000/- + 20% of the amount by which total income exceeds Rs.1,50,000/- (Rs 500/- + 20% for women) Above Rs.2,50,000/- Rs.24,000/- + 30% of the amount by which total income exceeds Rs.2,50,000/- (Rs 20500/- + 30% for women) 2. SURCHARGE @ 10% is applicable where taxable income exceeds Rs.10.00 lakh in case of individuals, HUF, Association of Persons and Body of Individuals. 3. EDUCATION CESS is to be levied @ 3% (2% Education Cess + 1% Secondary & Higher Education Cess) on Net Tax liability. Contd.2
2 4. Professional Tax paid, if any, during the financial year is fully deductible u/s 16(iii). 5. Perquisites on Accommodation: Finance Act 2007 has amended Section 17(2) with retrospective effect from 01.04.2004 for valuation of perquisites on rent-free/ concessional accommodation provided to the employees. Hence, for the current F.Y 2007-08, perquisite on accommodation provided by the Bank as well as taken on lease is to be considered for the purpose of TDS on Salaries of employees wherever applicable as detailed below: A) Where the accommodation is owned by the Bank: i) 15% of the salary in Cities having population exceeding 25 lacs as per 2001 census. ii) 10% of the salary in Cities having population exceeding 10 lacs but not exceeding 25 lakhs as per 2001 census iii) 7.5% of the salary in other areas is to be considered which is to be reduced by the DTQ, if any. B) Where the accommodation is taken on lease or rent by the Bank: The value of perquisite is calculated as follows: i) actual amount of lease rental paid or payable by the Bank ii) 15% of salary whichever is lower, in respect of the period during which the said accommodation was occupied. This is to be reduced by the DTQ and rent paid if any over and above eligibility. C) Where furniture is provided by the Bank or furniture is availed under the furniture scheme framed by the Bank, the value of perquisite as arrived above is to be increased by 10% p.a. of the Original Cost of the Furniture provided, less recovery made. D) Where an Officer employee is claiming HRA and furniture is provided by the Bank, perquisite is to be valued at 10% of the original cost of such furniture less recovery made thereon. 6. Perquisites in respect of use of Motor Car not applicable w.e.f. 01.04.2005 7. Perquisites on Interest Free or Concessional Loans: Perquisites in respect of interest free or concessional loans is to be valued taking into account the interest rate charged by State Bank of India for the general public for the same purposes as on 1 st April of the relevant financial year. Accordingly, perquisites in respect of loans and advances (including Festival Advance) extended to employees shall be computed in the following manner for the F.Y 2007-08 also: Contd.3
3 Type of loan/advance Rate of interest charged by the Bank Product of Monthly closing balance Interest charged to the employe e by the Bank Interest rate charged by SBI for general public Interest as per SBI rate (Col. 3xCol.5) Value of Perquisite (6-4) 1 2 3 4 5 6 7 1. Housing Loans: a) Old scheme irrespective of amount b) New scheme upto Rs.1.10 lakhs Above Rs.1.10 lakhs c) Addl. Housing loan old scheme d) Housing Loans on par with public: Upto 5 Years of repayment: Above 5 years & upto 10 years years Above 10 years 2. Vehicle Loan a) Four wheeler: Upto Rs.80000/- Above Rs.80000/- b) Two wheeler upto Rs.15000/- Above Rs.15000/- 3. OSL (CD) DL (New) Computer Loans 8.5% 5% 11% 11.5% 8/8.5/9.5% 8.5/9/10% 9/9.5/10.5% 8.5% 12% 7.5% 12% 11.5% 11.5% 10% 11.5% 10.25 % up to 5 years, 10.75 % above 5 years 12.00% 14.25% 14 % 14 % 14 % 14 % OD (AS) 4. Festival Advance Nil 11% TOTAL --- --- Contd..4
4 Perquisites will not arise under 7 where the aggregate amount of original loans including Festival Advance do not exceed Rs.20,000/- during the year or such loans are extended for medical treatment in respect of diseases specified in Rule 3A of Income Tax Rules Value of perquisite if arrived at negative in respect of any type of loan can be set off with perquisite on other type of loans. However, if the net value of perquisites on interest free/ concessional loans is negative, the same has to be ignored. This amount can not be set off against perquisites on accommodation/ furniture etc. 8. Perquisites on reimbursement of Medical Expenses by the Bank : (A) Reimbursement made by Bank to the employee for medical treatment of self or family (including annual medical aid paid on declaration basis) is exempt upto Rs.15,000/- in aggregate during the year. Reimbursements beyond Rs.15,000/- is to be treated as perquisites except in respect of specified diseases as discussed below: (B) Additional Medical expenditure reimbursement will not be treated as perquisites provided- i) the expenses have been incurred in any hospital (including dispensary/ clinic/ nursing home) maintained by Government or any local authority or any other hospital approved by Government for the purpose of medical treatment of its employees. Copy of Income Tax Approval Certificate issued by the Chief Commissioner of Income Tax to such Hospitals where treatment is taken is to be produced by the employees. OR ii) the expenses incurred for treatment of prescribed diseases or ailments (refer Annexure-C of Circular No. 28-2006-BC-STF dated 14.07.2006), in any hospital (including dispensary/clinic/ nursing home) approved by the Chief Commissioner of Income Tax. The employee shall attach a certificate from the hospital specifying the disease or ailment and copy of Approval Certificate issued by the Chief Commissioner of Income Tax to such hospital. 9. Taxable portion of LFC and LFC encashment is to be treated as Perquisites. 10. Reimbursement of education fees upto Rs.100/- p.m. per child is exempt u/s10((14)(ii). 11 Honorarium received from STCs is taxable as Salary Income. Lump sum allowances such as Closing Allowance, Rotational Transfer Allowance are also taxable. 12 A statement showing correct and complete particulars of the perquisites and the value thereof is to be given to employees:- (a) at relevant columns provided in Form No.16 if the amount of salary paid or payable to the employee is less than Rs.1,50,000/- or Contd 5
5 (b) in Form No.12BA, as Annexure to Form No.16, if the amount of salary paid or payable to the employee is more than Rs.1,50,000/- (specimen given in circular No. 28-2006-BC-STF dated 14.07.2006). 13. INCOME EXEMPT U/S 10: The following payments made to employees by debiting establishment charges are exempt u/s 10 to the extent as detailed. i) Leave Fare Concession u/s 10(5) : (A) Encashment of LFC upto 75% of the eligible amount is fully taxable since exemption is available only where journey is actually performed. (B) Exemption is available in respect of two journeys performed in a block of four calendar years i.e., 1986-89, 1990-93, 1994-97, 1998-2001, 2002-05, 2006-09. If the employee has not availed LFC, during any of the specified four years block, exemption can be claimed in the next block on availing LFC in the calendar year immediately following that block. This is known as Carry Over Concession. This carry over exemption is in addition to the eligible exemption allowable in respect of 2 journeys in the said Block. The quantum of exemption is restricted to the following: Where journeys performed by Air Where journey is performed by rail Where the place of origin of journey and destination are connected by Rail, and journey is performed by any mode of transport other than by air. Where the places of origin of journey and destination (or part thereof) are not connected by rail (i) Where a recognised public transport system exists. (ii) Where no recognised public transport system exists. Economy air fare of National Carrier (Indian Airlines or Air India) by shortest route to the place of destination or the amount spent, whichever is less. Air conditioned first class rail fare by the shortest route to the place of destination or amount spent/reimbursed, whichever is less. Air conditioned first class rail fare by the shortest route to the place of destination or amount spent/reimbursed whichever is less. First class or deluxe class fare of such transport by the shortest route or the amount spent, whichever is less. Air conditioned first class rail fare for the distance of journey by shortest route (as if the journey had been performed by rail) or the amount actually spent/reimbursed, whichever is less. Contd..6
6 ii) Gratuity u/s 10(10): The amount of gratuity paid to the employee on his/her retirement, VRS, termination, resignation or any gratuity paid to spouse, children or dependents on his/her death is exempt upto a prescribed limit as given below: A) Gratuity paid as per Andhra Pragathi Grameena Bank Officers and Employees Service Regulations 2006 is exempt up to Rs.350000/- which is to be calculated as under: Amount arrived at being one half months' salary for each year of completed service (calculated on the basis of average salary for the ten months immediately preceding the month in which such an event occurs), subject to a limit of Rs.3.50 lakh (salary means Basic Pay + DA + Other Allowances ranking for EPF). i.e. total of preceding 10months Basic Pay + D.A + Other allowances ranking for EPF 10 x 1/2 x no. of completed years of service subject to a maximum of Rs.350000/- If an employee retires on 31 st December, Average Salary is to be calculated by taking salary (B.P + D.A + Other allowances ranking for EPF) from February to November. (B) Gratuity paid as per Gratuity Act is fully exempt subject to a maximum of Rs.350000/-. iii) Commutation of Pension u/s 10(10A): Payment towards commutation of 1/3 rd portion of pension is fully exempt. iv) Leave Encashment on Retirement u/s 10(10AA): Leave encashment at the time of retirement is exempt subject to a ceiling of 10 months' leave, calculated on the basis of Average Salary (BP + D.A + Other Allowances ranking for EPF) drawn during the ten months preceeding the month of retirement and subject to a limit of Rs.300000/- (At present our employees are eligible to encash upto a maximum of 240 days leave on retirement, etc.). Taxable leave encashment is calculated as follows: i.e. total of preceding 10months Basic Pay + D.A + Other allowances ranking for EPF 10 x 1/30 x no. of days of leave encashment subject to a maximum of Rs.300000/- NOTE:HRA and portion of Other Allowances not ranking for EPF included in leave encashment on retirement is taxable. Leave encashment paid to legal heirs of the deceased employee is not taxable (CBDT Cir.No.309 dated 3.7.1981). However, leave encashment on LFC is fully taxable. Contd..7
7 14. House Rent Allowance u/s 10(13A): H.R.A. received is exempt upto a sum being the least of the following: Mumbai/Delhi/Kolkata/Chennai 1. HRA actually received 2. Rent paid in excess of 10% of salary 3. 50% of the salary Other Cities 1. HRA actually received 2. Rent paid in excess of 10% of salary 3. 40% of salary Notes: a. Salary means Basic Pay + D.A. + Other allowances ranking for EPF b. HRA is not exempt if the employee is not actually paying rent. c. HRA is not exempt if the employee resides in his/her own house d. Where HRA is less than Rs.3000/- p.m. and Employee resides in a rented house, Rent receipts need not be insisted upon as proof of payment in general. e. Where an employee owns a house in the same city/town and claims HRA exemption stating that he/she is residing in a rented house, rent receipt shall be insisted upon irrespective of the amount of HRA. 15. Allowances exempt u/s 10(14): (A) Any Transport allowance granted to an employee to meet expenditure for the purpose of commuting between place of residence and place of duty is exempt subject to a maximum of Rs.800/-p.m. (B) Any allowance including halting allowances reimbursed to meet cost of travel on tour or on transfer. This includes packing and transportation charges on transfer also. (C) Any allowance granted for encouraging the academic, research and other professional pursuits. (D) Any allowance granted to meet the expenditure incurred on the purchase or maintenance of uniform worn during the performance of duties of an office. 16. DEDUCTIONS FROM GROSS TOTAL INCOME UNDER CHAPTER VI-A i)section 80C Deduction in respect of Life Insurance Premia, deferred Annuity, EPF etc. The investments eligible for deduction u/s 80C include: (A) Premium on insurance paid on the life of self, spouse and children. (B) Sum paid to keep in force a contract for a deferred annuity on the life of self, spouse and children. Contd..8
8 (C) Contribution to Provident Fund including additional contribution if any. (D) Subscription to National Savings Certificate by self. Accrued interest on NSCs also qualify for deduction. (E) Contributions to Public Provident Fund (PPF) for self, spouse and children. (F) Contribution to Unit Linked Insurance Plan such as ULIP 1971, ULIP of LIC Mutual Fund etc. notified u/s 10(23D) for self, spouse and any child. (G) Contribution to Annuity Plan of LIC or any other insurer as notified by Central Govt. (H) Subscription to Units of any Mutual Fund notified u/s 10(23D) by the Central Govt. (I) Specified Term Deposit in any Scheduled Bank with maturity period of not less than 5 years within an overall ceiling of Rs.1.00 lakh. (J) Contribution by an individual to any Pension Fund set up by any Mutual Fund notified u/s 10(23D) by the Central Govt. or National Housing Bank notified in this regard by Central Govt. (K) Tuition fees (excluding development fees/ donation or payments of similar nature) paid whether at the time of admission or thereafter i) to any University/ College/ School or Educational Institution situated within India. ii) for the purpose of full time education of any two children upto an overall ceiling of Rs.1.00 lakh. (L) i) Repayment to Housing Loan (towards principal) to any Bank including Co-op. Bank, LIC, NHB, Housing Finance Companies, Co-op. Society of which he/she is a shareholder or member, Public Limited Company engaged in the business of providing long term finance for construction/ purchase of houses etc. upto the overall ceiling of Rs.1.00 lakh. ii) Stamp duty, registration fee and other expenses incurred for the purpose of transfer of house property is also eligible for deduction within the overall limit. iii) However, repayment to loan availed for any addition, alteration, renovation, repair of the house property carried out after the issue of Completion Certificate or after the occupation of the house property by self or by tenant, payment towards admission fee/ cost of share, initial deposit to Society/ Company, will not qualify for deduction u/s 80C. (M) Subscription to equity shares or debentures (Infrastructure Bonds) forming part of eligible issue of capital, approved by CBDT, issued by any Public Limited Company/ Public Financial Institution and entire proceeds of the issue are wholly utilized for carrying out any business exclusively specified u/s 80-1A(4). Contd..9
9 ii) Section 80CCC - Deduction in respect of contribution to certain Pension Funds upto Rs.1,00,000/- (within the overall limit of Rs.1.00 lakh including u/s 80C): Amount paid to effect or keep in force a contract for any annuity plan of LIC or any other Insurer (approved by IRDA), for receiving pension from such fund whose income is exempt u/s 10(23AAB), shall be allowed as deduction. The amount paid or deposited (excluding Interest or bonus accrued or credited to the account of assessee if any) or Rs.1,00,000/- p.a. whichever is less, is allowed as deduction. The amount so deposited or paid during the Financial Year should be out of his taxable income and deduction u/s 80C is not allowable for such contribution. Amount received on surrender of the annuity plan or pension received from the annuity plan is taxable as Income during the Year of such withdrawal or receipt. iii) Section 80 CCE prescribing limit on deduction u/s 80C & 80 CCC: The aggregate amount of deduction u/s 80C and 80 CCC shall be restricted to Rs.1.00 lakh only. In fact Section 80CCE limits the deduction to Rs.1.00 lakh including Section 80CCD. Deduction u/s 80CCD is applicable for contribution to pension scheme of Central Govt. made by Central Govt. employees who are appointed on or after 01.01.2004. 17.Section 80D Deduction in respect of Medical Insurance Premia. Any sum paid by cheque to keep in force an insurance on the health of individual or spouse or dependent parents or dependant children shall be allowed a deduction of actual amount paid or Rs.15,000/- p.a.. whichever is less. Where the Insurance Cover is on the health of a Senior Citizen, the maximum amount of deduction allowed is upto Rs.20,000/- or actual amount paid whichever is less. The insurance shall be in accordance with a scheme framed in this behalf by General Insurance Corporation of India and approved by the Central Government or Any other Insurer and approved by IRDA. The scheme is popularly known as "Mediclaim" Insurance Policy. Note: "Senior Citizen" is a resident individual who attains the age of 65 years at any time during the relevant Financial Year. 18.Section 80 E- Deduction in respect of Interest on Loans taken for Higher Education of self, Spouse and Children. Any amount paid out of income chargeable to tax towards interest on loan taken from any Financial Institution or any approved charitable institution for the purpose of pursuing higher education of self, spouse and children is eligible for a deduction u/s 80E This deduction shall be claimed in maximum of 8 financial years on actual repayment basis and without any upper limit. Financial Institution means a banking company to which the Banking Regulation Act 1949 applies (including any bank or banking institution referred to section 51 of that Act) or any other Financial institution by notification in the official Gazette specifically. Approved Charitable Institution means an Institution notified by Central Bank u/s 10(23C) or u/s 80G(2)(a). Contd..10
10 Higher education means full time studies for any graduate or post graduate course in engineering, medicine, management or the postgraduate course in applied sciences or pure sciences including Mathematics or Statistics. 19. Accrued Interest on NSCs : Accrued Interest on NSCs (VIII Issue) eligible for deduction U/S 80 C shall be calculated as under for the Financial Year 2007-08 Financial Year Accrued Int for NSCs of Date of Purchase of Purchase Rs.1000/- 2002 2003 130.90 Upto 28.2.2003 2002-2003 119.80 March 2003 2003-2004 103.30 April 03 to March 04 2004 2005 95.50 April 04 to March 05 2005 2006 88.30 April 05 to March 06 2006-2007 81.60 April 06 to March 07 Note: Accrued interest on NSC is taxable since 80L deduction is withdrawn. 20. LOSS FROM HOUSE PROPERTY u/s 24: The Loss from the House Property both (self occupied/ let out) is eligible for set off to the Salary Income of employees while computing Tax liability at the Branches/Offices. In the case of self occupied house property, interest on HL availed before 31.03.1999 deduction upto Rs.30,000/- and interest on HL availed after 01.04.1999 deduction upto Rs.1,50,000/- can be claimed against salary income. Income or Loss from let out house property can be considered at the Branch/ Office level based on declaration made by the concerned employee in this behalf. For further details, please refer circular No. 28-2006- BC-STF dated 14.07.2006. 21. TDS ON OTHER PAYMENTS: A TDS chart is provided in Annexure as applicable for the current F.Y 2007-08. i) Interest paid on term deposits, when it exceeds Rs.5,000/- p.a attracted TDS u/s 194 of the Income Tax Act upto 31.05.2007. This limit is enhanced to Rs.10,000/- p.a. from 01.06.2007 onwards. ii) Branches can accept Form No.15G (in duplicate) from the Depositors (other than firms and Ltd. Companies) for non deduction of tax at source on interest where such interest paid or credited exceeds Rs.10,000/- p.a (on or after 01.06.2007), but is below Rs.1.10 lac p.a. in the case of individuals, Rs.1.45 lac p.a. in the case of women and Rs.1.95 lac in the case of senior citizens of 65 years and above. Besides, Senior Citizens have to submit in duplicate, declaration in Form 15H along with Form No.15G. One copy each of 15G and declaration in Form No.15H received in each month shall be sent to the Office of the Commissioner of Income Tax of the jurisdiction by 7 th of the succeeding month without fail. Contd..11
11 iii) TDS on Interest is to be made wherever required when interest is credited to the account of the Depositors or paid to them. Usually interest is credited to the party s account on quarterly basis. Hence, TDS is to be made on quarterly basis and shall not be done in lump sum in the month of March. One of the major observation of the Branch Auditors is non-deduction of tax at source on Interest uniformly at the time of credit in each quarter. iv) TDS u/s 194C is to be made on contract payments where the amount credited or paid to a contractor or sub contractor exceeds Rs.20,000/- in a single payment or Rs.50,000/- in aggregate during a financial year. Expenditure on AMC, Couriers, Generators, Rent etc. are covered under Contract Payments. TDS rates are furnished in the Annexure-I v) TDS rate on Nithya Nidhi Deposit Agents Commission is enhanced from 5% to 10% w.e.f. 01.06.2007 u/s 194H where Commission payment exceeds Rs.2,500/- p.a. Hence, revised rate applicable is 10.30%. Where Nithya Nidhi Agents produce Certificate issued by Income Tax Officer for non deduction of tax or at a lower rate, the Branch can act upon such certificate. However, such Certificate has to be produced for each financial year. vi) TDS on rent paid is to be made u/s 194I where the aggregate of the amounts of rent income credited or paid or likely to be credited or paid during the financial year exceeds Rs.1,20,000/-. vii) TDS rate u/s 194J on Professional/ Technical Fees is enhanced from 5% to 10% w.e.f. 01.06.2007 where payment exceeds Rs.20,000/- p.a. Hence, revised rates will be 10.30% or 11.33% as applicable depending upon the status of the payees. 22. Remittance of tax: Due date for remittance of TDS amount on all types of payments including Salary/ Pension, Interest on Deposits, Professional & Technical fees, Contract Payments, Commission or Brokerage, Rent, AMC etc., is 7th of subsequent month. Some of our branches are delaying in remitting TDS amount. Income Tax Authorities are vested with necessary powers to levy interest/ penalty for any delay in remittances since Bank is statutorily required to furnish Tax Audit Report of the bank to the Assessing Officer of the Bank. Hence, TDS amount should be remitted by 7 th without fail. TDS made during the month of March be remitted by 31 st March itself or 2 nd of April before commencement of Audit. For further guidance, if any required on TDS on other payments like interest on Deposits (U/S 194A), contract payments (U/S 194C(1)), Advertising contract (U/S 194C(2)), Commission or Brokerage (U/S 194H), Rent Payments (U/S 194I), and Professional/Technical Fees (U/S 194J) etc, including e filing of Form No.26Q, Branches may contact RO/Department concerned handling the subject at Head Office. Contd.12
12 23. Penalty for default: u/s 201, if the person responsible (i.e employer) for deduction of tax at source has defaulted without reasonable cause or excuse in his obligation to deduct the whole or any part of the tax at source or after deducting fails to pay tax to the credit of Central Govt. he shall be deemed to be an assessee in default in respect of such tax and shall be liable to: (A) u/s 201 (1A) to pay simple interest at 12% p.a. on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid. (B) u/s 221 to pay penalty not exceeding the amount of such tax. (C) For failure to deduct the whole or any part of the tax, penalty equal to the tax that should have been deducted will be levied u/s 271 C, and (D) Prosecution u/s 276-B for failure to pay the tax deducted at source to the credit of Central Govt. (E) Penalty of Rs.100/- per day for delay in filing E-TDS returns, Form No.15G/15H etc. u/s 272A. (F) Penalty of Rs.10,000/- for failure to furnish PAN of the deductees in E-TDS Returns u/s272b. 24. QUARTERLY E-TDS RETURNS : i) Form No.24Q for TDS on salaries and 26Q for TDS on other payments is to be filed at the end of each quarter before 15 th July, 15 th October, 15 th January and before 30 th April for the last quarter. TDS details of the relevant 3 months only is to be furnished therein (Refer circular No.90-2006-BC-STF dated 29.09.2006). Form No.27Q is the Quarterly Return for TDS on payments to NRIs, RNORs towards interest, dividend etc. All E-TDS Returns are to be filed with TIN-FCs only. Annual Returns in Form No.24 and Form No.26 have been dispensed with. ii) TAN: Every Branch/Office deducting TDS is required to have a Tax Deduction Account Number (TAN) and quoting TAN in e-tds returns, Form No.16, 16A is mandatory. Branches/ Offices newly opened which have no TAN should apply for TAN in Form No.49B immediately along with requisite payment to the TIN-FCs. Failure to obtain TAN will attract penalty of Rs.5,000/-. Form No.49B is available with Income Tax Department/ TIN-FCs. iii) Surrendering of TAN numbers pertaining to erstwhile 3 RRBs (i.e. Sree Anantha Grameena Bank, Rayalaseema Grameena Bank and Pinakini Grameena Bank) offices and branches. All offices / Branches are aware that all Offices / branches of amalgamated Andhra Pragathi Grameena Bank had obtained TAN numbers for remitting tax. As considerable time has elapsed, all Offices / Branches are advised to surrender TAN numbers standing in the name of erstwhile three RRBs Offices / branches by writing a letter to the concerned TDS Assessing Officer of area concerned. Contgd 13
13 iv) Permanent Account Number of the Bank is AAMFA8921A, which is required to be furnished in Form No.16, 16A, Quarterly E-TDS Returns, Form No.24Q, 26Q, 27Q without fail. Every employee of the Bank is expected to have obtained a PAN. v) PAN of the deductees: Quarterly Return without furnishing PAN of the Deductees is treated as Invalid Returns. Now-a-days, TIN-FCs are declining to accept Quarterly E-TDS Returns, if PAN is not quoted in majority of cases. Quoting of PAN of the deductees is one of the essential requirements for all types of transactions including filing of Quarterly Returns. The Income Tax Dept. is very much particular about the PAN of the deductees. W.e.f. 01.10.2007, CBDT has instructed TIN-FCs, that the Returns with less than specified percentage of structurally valid PAN should not be accepted Form 24Q 90%, Form 26Q & 27Q 70%. PANs are allotted centrally by using customized software for All India Uniqueness that generates a 10-character number based on the information collected from the person. For example: AAAPA1234A. Application for PAN is to be made in Form No.49A with prescribed fees and PAN is usually allotted within a month. First three characters are alphabetic series running from AAA to ZZZ. Fourth character is also alphabetic which indicates the status of the assessee like C for Company, P for Individual, H for HUF, F for Firm, A for AOP, T for AOP (Trust), B for BOI for local authority, J for artificial juridical person, G for Government. Fifth character is again an alphabetic character and it is the first character of assessee s last name/ surname. Sixth to ninth characters are the numeric characters and these are sequential numbers running from 0001 to 9999. Tenth (last) character is an alphabet, for alphabetic check. Branches/ Offices are advised to obtain PAN from employees, customers, vendors and others compulsorily. Also ensure that the PAN submitted are structurally correct. Application i.e. Form No. 49 A for allotment of PAN shall be obtained from Authorized offices like UTI etc. located at District Head Quarters or near by big towns. Contd.14
14 vi) Stopping of misuse or abuse of Form No.60 in lieu of PAN: Quoting PAN is mandatory in transactions such as opening of bank accounts, cash deposits above Rs.50,000/- during a day, payment of Rs.50,000/- or more for acquiring RBI bonds etc. when such depositor do not have Permanent Account Number, he/she is required to make a declaration in Form No.60. Wherever declaration in Form No.60 is furnished, Branch Officials shall ensure that norms are strictly adhered to such as demanding proof of address etc. To facilitate information based investigation by the Income Tax Department, correct and authentic quoting of PAN in Annual Information Return (AIR) on the specified transactions is very much required. Hence, Branches/ Offices are hereby advised to create awareness among customers regarding their legal obligation to quote PAN correctly. 25. OTHER RELATED ISSUES: i) Uniform deduction of tax from the salary of employees is mandatory. Failure to do so will attract penalty in addition to interest at 12% for the short payment in earlier months. ii) Branches/Offices have to issue Certificate in Form-16 by 30 th April for TDS on salary to all the employees/ex-employees who have retired during the Financial Year. iii) Branches have to issue Certificate in Form-16 by 30th April for TDS on Pension payments. iv) The employees whose Taxable income is more than Rs.110,000/- (women employees Rs.1,45,000/-) are required to file Income Tax Return u/s 139(1) of the Income Tax Act. v) Certificate in Form No.16A for TDS on Other Payments is to be issued by 30 th of the next month from the month of deduction i.e for TDS made in December 2007 and remitted on 06.01.2008, TDS Certificate in Form No.16A is to be issued by 30.01.2008. 26. Annual Information Return (AIR) is a statutory Return prescribed u/s 285BA of the Income Tax Act. Out of the 9 specified type of transactions, 2 are relevant for branches. One is cash deposits to SB A/c aggregating to Rs.10.00 lakh or more during the financial year and 2nd is on collection of subscription to RBI Savings Bonds for Rs.5.00 lakh and above during the financial year. Data of AIR is transmitted by the Bank to RBI for consolidation at their respective Public Debt Offices. Though the due date for the Bank for submission is 31st of August, branches shall submit the data to ROs by 31 st May without fail. Here also, obtaining and furnishing PAN of the customer/ depositor is compulsory. 27. A WORD OF CAUTION: Branches/Offices are advised to adhere to the guidelines on TDS and timely remittance as well as issue of TDS Certificate and submission of e-tds Returns so as to avoid observations by Auditors/levy of penalty by income Tax Authorities, in future. Contd 15
15 28. IMPORTANT: Despite clear instructions issued from time to time on TDS matters, it is observed that some of the branches have not taken compliance of TDS Provisions seriously and giving scope to statutory Auditors to make some observations on non compliance of TDS provisions. Hence the branches/offices are once again advised to exercise due care in complying with TDS Provisions. Further it shall be noted that if the Bank is required to pay any interest or penalty, the head of the branch/office and concerned staff will be held responsible for the same. We are reiterating that as per existing guidelines all branches/offices shall calculate total income tax of the officers/employees and remit the same in 12 equal monthly installments unfailingly to the income Tax authority starting from April in every year pertaining to all Assesses. In other words the salary disbursing authority shall deduct 1/12 th of the Income tax every month starting from every April and remit the same to Central Govt. A/C. In this connection all branches/offices are hereby informed that the income tax department had penalized heavily for non remitting income tax in 12 equal monthly installments and recovered penalty from concerned employee & disbursing authority. Hence both salary disbursing authority and concerned employee/officers are responsible for any lapses under the Act. 29. OFFENCES & PROCECUTIONS: We reiterate that the prosecutions under the Act are very stringent for every offence or violation of rules. Employees/officers/head of branches/offices are hereby advised to follow the guidelines scrupulously other wise both assesses and head of the branch/office shall be held personally responsible for the offences committed under the Act. All other guidelines given in cited circulars are unaltered. This circular shall be circulated among all the staff working at Branches/Offices against their acknowledgement. Clarification, if any, on this circular may be sought from the Personnel Department, Head Office, Kadapa. (M. JAI PRAKASH) CHAIRMAN Encl: Annexure (TDS Chart for the Financial Year 2007-08) (P.T.O.)
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17 ANNEXURE Sl.No. Nature of Payment U/S Where the amount exceed p.a. TDS CHART FOR THE FINANCIAL YEAR 2007-08 (w.e.f. 01.06.2007) Rate of TDS Individual/ Firms/ HUF/AOP/ Ltd.Cos BOI TDS Certificate Form No. Quarterly e TDS Return Co-op Society, local authority 1 Salaries 192 110000 Slabwise - - 16 24Q 2 Interest on Deposits 194 A 10000 10.30% 11.33% 10.30% 16 A 26Q 15 th 22.66% 3 (a) Contracts Payments 194 C(1) 20000 2.06% 2.266% 2.06% 16 A 26Q 15 th (b) Advertising Contract 194 C(2) 20000 1.03% 1.133% 1.03% 16 A 26Q 15 th 4 Commission or Brokerage 194 H 2500 10.30% 11.33% 10.30% 16 A 26Q 15 th 5 Rent Payments 194 I 120000 15.45% 22.66% 20.60% 16 A 26Q 15 th 6 Professional/ Technical Fees 194 J 20000 10.30% 11.33% 10.30% 16 A 26Q 15 th 7 Payments to non-residents 195 Fully taxable 33.99%* 33.99% - 16 A 27 15 th 1. The above rate of TDS are inclusive of Surcharge and education cess. Basic Rates of 1%, 2%, 5%, 10%, 15%, 20% and 30% are increased by S.C @ 10% wherever applicable and 2% education cess on Basic Rate + SC. 2. Contract payments if exceed Rs.50000/- in aggregate during the Financial Year, TDS is applicable even where individual contracts are below Rs.20000/-. 3. TDS is to be remitted by 7 th of succeeding month. Certificate in Form No.16A is to be issued by the end of next month from the month of deduction unless a request is made by the deductee for consolidated one by 30 th April. 4. Form No.27, 24Q for TDS on salaries and 26Q for TDS on other payments are quarterly e TDS returns. 5. No surcharge for partnership firms. Where total income do not exceed Rs 1.00 crore during the financial year 2007-08 6. Where payment do not exceed Rs.10 lakh p.a., TDS rate is 30.90% only (without surcharge) u/s 195 for Non-Residents Due Date
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