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TDS fees u/s 234E may be demanded through intimation

 In order to facilitate smooth administration of tax collection, Chapter XVII-B of the Income-tax Act require certain persons to deduct tax (the deductor) on specified payments at the prescribed rates.

Under Sec.200 the deductor is duty bound to credit the amount so deducted to the Central Government or as the Board directs. Further, having so credited the amount, proviso to Sec.200 enables the deductor to file a correction statement for rectification of any mistakes or update or delete any information furnished under the TDS statement that may be verified by the authority.

Sec.200A provides for processing of TDS statements for determining the amount payable or refundable to the deductor.

In order to improve compliance with furnishing TDS and discourage delays, the Finance Act, 2012 inserted Sec. 234E whereby fee was levied for late furnishing of TDS statement.

II. Proposed Amendment
The existing provisions of Sec.200A does not provide mechanism for determination of late fee under Sec. 234E at the time of processing of TDS statements. It is, therefore, proposed to amend the provisions of Section 200A of the Act so as to enable computation of fee payable under section 234E of the Act at the time of processing of TDS statement under section 200A of the Act.

Further, the existing scheme of payment of TDS follows a book entry system in case of Government deductor. Thus, the government deductors are allowed to make payment of tax deducted by them without production of challan. Under this system, the Drawing and Disbursing Officer (DDO) intimates the TDS amount to the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer (PAO/TO/CDDO) who then credits the TDS amount to the Central Government through book entry.

In order to improve the reporting of payment of TDS/TCS through book entry and to make the existing mechanism enforceable, the provisions of sections 200 of the Act are proposed to be amended. Accordingly, where the tax deducted (including paid under section 192(1A)) has been paid without the production of a challan, the PAO/TO/CDDO or any other person by whatever name called who is responsible for crediting such sum to the credit of the Central Government, shall furnish within the prescribed time a prescribed statement for the prescribed period to the prescribed income-tax authority or the person authorised by such authority by verifying the same in the prescribed manner and setting forth prescribed particulars.

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