Correct Procedure for eFiling of TDS/TCS statements on Income Tax eFiling website from May 2016

On 4th May 2016 Income tax department suddenly released a Notification No.6/2016 informing the Tax Deductors or Collectors that TDS/TCS returns will have to be filed at Income Tax department's eFiling website. However TIN FC (Facilitation Centres) will continue to accept TDS/TCS returns as before. 

More details can be found at: http://caclub.in/e-tds-returns-filing-at-e-filing-website-from-1st-may-2016/

In other words it was to be inferred that NSDL's website will no longer allow filing of TDS/TDS returns from May 2016! So, those who were registered on NSDL site were suddenly left high and dry and had to rush to Income Tax department's eFiling website for registration. And how many days did they have to do it? Just 11 days!

And what was the procedure? The notification said visit the Tax Deductor portion of eFiling website and register there. And if any one tries to register he is lost because proper procedure is not mentioned any where.

So, lot of tax people cancelled their plan for Sunday (15th May) holiday and mentally prepared themselves to spend it on this crucial activity.

Any way, don't worry. I have found it the hard way and I'm spending time to write-it down here so that those reach this blog will find it easy.

Here are the steps:

1. Visit TRACES website and login using your usual TAN credentials. We found that many a times during login 'Verification Code' field was not displaying at all - making login to Traces impossible!



2. On left hand side you will see "Register at E-Filing Site". Click on it.


3. Click on 'Redirect'. Upon successful redirect you would be taken to Income Tax department's eFiling site. I found that this happened only upon many unsuccessful attempts of 'Redirect'.



4. You are asked to enter Mobile number of the Authorised Person and Email id. Please note Email id field does not accept Email id with dash/hyphen "-" e.g., abc@pq-india.com! Any way, upon successful submission Income tax department sends an Email with subject "e-Filing Registration Activation Link". You are required to click on the activation link given within the body of the Email.

5. Upon successful activation you are taken to the eFiling site for first time login. There you are required to fill in TAN, PAN and PIN received on the Mobile. This PIN is sent as a SMS to the mobile number of the Authorised Person. Once verified you are required to fill in various details like Strong Password, Two Secret questions (for recovery in case you forgot username / password etc), Address (prefilled), two mobile numbers, two Email ids, land-line numbers and so on.

This part if fairly easy except that creation of password became tricky because it requires minimum 8 letters - one small, one Capital and one special character. Of course, website does not tell which characters are special - possibly "?" is not a special character! I found after lot of unsuccessful attempts.

Once registered, you would expect smooth sailing. But, no! It can't be so easy for Indians. Be prepared for a rough ride.

6. Login once again. Now first thing you need to do is to register your DSC (Digital Signature Certificate) of the Authorised Person. For that you need to download a utility called 'DSC Utility' or 'DSC Management Utility'. Click on 'Profile Setting' and select 'Register Digital Signature Certificate'.



Link is given to download the java jar file. To run it requires Java version 1.7 onwards. It works with latest Java 1.8 and also with Windows 8.1 without any problem. Also download the user manual - though it is not much useful - as usual!

7. Now insert the USB Token in the PC and run the "DSC_MGMT_UTILITY.jar" by double clicking. Select 'Register/Reset Password using DSC". Fill in TAN number and PAN number of Authorised Person. Select USB token. Insert USB Token in PC. Select Authorised Person's name from the USB Token.

You will be asked PIN of the USB Token. Click on 'Generate' Upon successful transaction it will generate a Signature File. You will have to store it on the PC.

Go to the screen shown at 6 (above) and browse this Signature file. Upon successful registration you will get a transaction number and an Email.

8. Now, try to upload the TDS return using TDS->Upload TDS option.

Select Financial Year, FVU Version(!), Type of Return, Quarter and Original / Revised. Upon clicking 'Validate' you will asked to browse FVU file in Zipped format.

Note that FVU file is to be created using latest RPU 1.5 - which creates FVU version 5! (more on numbering confusion created by NSDL some other time). RPU generates file in FVU format but you are required to store it in a 'zip' file using built-in utility of Windows. Right Click on FVU file and click on 'Send to' - select 'Compressed (zipped) Folder'.

Once again you will have to generate Signature file using 'DSC Utility'!!

9. Goto the PC and run the "DSC_MGMT_UTILITY.jar" by double clicking. This time select Tab with name "Bulk Upload". Select FVU zip file. Enter TAN and PAN number. Select USB Token and select name of the Authorised Person. Enter USB Token PIN and click on 'Generate Signature File'. It will generate a file with extension 'Signature' - save it on the PC. Go to eFiling site and select this file and click on 'Submit' to file the TDS return. If you have taken lot of time to do all this steps then you will be logged out. Login once again and start over with Step-8 and submit. Upon successful submission you will see Token Number (provisional) and you will get a Email with subject "Confirmation on upload of e-Filing TDS return"

Phew! Life is difficult in India!

Let me know if you found this useful.

Is India ready for eGovernance?

Since opening of Indian economy to the world, and proliferation of Internet all over, we are seeing more and more services provided by the government is becoming web centric. It means a lot, at least to the technology savvy young public, as they are able to get information literally on their finger tips by accessing very useful information on their smart phones and laptops.

But, as a old time Information Technology (IT) professional, I notice that many a times, implementation by government departments leaves much to be desired. Most of government websites are designed and maintained by National Informatics Centre (NIC).

I'll give some example to illustrate, what I mean.

1. Scant regard for IT Security

I will be able to best illustrate this point by showing screen-shots of few prominent government websites.

a. Error shown below is for a page on NSDL site that take you to a page that allows you to make TDS payments under Form 280, 281 etc. What it means that this page does not have valid SSL certificate. Certificate installed on this page is for other two sites.

The landing page has a valid SSL certificate but in a round about manner using SAN value.

Possibly this page has become obsolete over a period of time but it is still there on the NSDL website and still gives error shown below.


This 'Mismatched Address' SSL error on Aadhaar/UIDAI site is really not expected. The error is due to improper usage of a wildcard SSL certificate.

b. Error shown below is seen while doing 'Upload' of TDS return after logging in to eTDS/TCS website with proper credentials. It basically means that Jar file (Java executable file/application) is not digitally signed. If it was digitally signed using Code Signer Certificates for Java, possibly this error would not have appeared.

How does a user - who would be a accountant or tax consultant would react to such an error message. He would simply learn to 'ignore' all such errors and get his work done, somehow. But this tendency of ignoring errors could land him in great trouble if he is redirected to a phising site - which would steal all his confidential data and possibly install Trojan or a malware that would make his PC a part of a botnet.

Also, using Java applications for websites is considered very dangerous because of numerous vulnerabilities discovered over so many years. Here is an informative article on - whether one should uninstall Java.

2. Poor Design and coding of Web Applications
One has to find out by trial and error as to how to make certain sites work.

a. Website doesn't accept Amount with decimal points: Check Challan Status link of NSDL site (see below) does not like if you enter amount with decimal points! See screen-shot below, where if we enter amount with decimal points it gives error saying 'Please enter valid amount'.

Is it easy for any one to guess that he is not supposed to type in decimal point and two zeros after that?

In fact, few years back there was a site which required decimal point and two zeros to be compulsorily added to a number to make it work. If decimal and zeros were missing then system would throw an error.

b. Many sites don't accept valid Email ids: I have noticed many instances where a website or Excel Form will not accept certain valid Email id. For example, Form 280 (TDS) payment website does not accept an Email id if it has dash "-" in the Email id. Same issue is with Excel Form by Maharashtra VAT Departments for VAT returns. For example if Email id is abc@pqr-india.com it will be rejected, though prq-india.com could be a real registered domain.

Some sites while giving an error - unnecessarily resets values of certain fields without any reason. Below given example of Form-281 for TDS payments is a good example of such poorly designed system.

c. Aadhaar side does not accept valid 12 digit Aadhaar numbers: This error on Aadhaar site is craziest of all.

d. File Attachments sent by CPC, Bangalore (Income tax) are without Date and Time Stamp: Whenever I get any Email with attachments from CPC, Bangalore the file attachments are not having any date and time stamp. So, one can never be sure when such files were created by them in first place. Also, another problem is that while backing up such undated files backup software does not like and throws warnings because it works on date & time stamp to find out which is the latest file.

It is left to anybody's guess as to while should an Income Tax Assessment order which is digitally signed by the assessment officer should be undated.

e. Maharashtra VAT department's website and systems do not allow change of registered Email id, no matter what you do: We had registered vsnl.com Email id with Sales Tax (now VAT) department many years back. But, over a period of time we switched to a mail id using our own company domain. We changed registered mail id at most places except with Maharashtra VAT department.

We gave feedback on website saying our Email id has changed but nothing happened. We wrote grievance form after logging in to their website - nothing happened. We called helpdesk they could not help. We wrote letter and hand-delivered to the assessment officer - nothing happened. Once I had a chance to meet VAT Commissioner and I told him about it. His reaction was as if I was taking up a silly issue! And he did not take note of it for correction. May be that RTI may work.

But, result is that we don't get any circulars/ notices / information mails from VAT department. Is 'Ignorance a bliss'? Perhaps 'yes' but ultimately No.

More on this later.

Few simple but effective Pre-Budget Suggestions for Direct taxes

To: "Shri Sumit Bose - Revenue Secretary" <rsecy@nic.in>
Sent: Friday, December 28, 2012 1:31 PM
Subject: Few simple but effective Pre-Budget Suggestions for Direct taxes

Dear Shri Sumit Bose (23092653, 23092111 Ext:-5353),

Government is helplessly reeling under pressure to achieve +8% growth under bad economic conditions all over.

Under such circumstance it is required to think of radical measures to increase revenue collection and reduce inefficient operations of government.

Please find enclosed my 3 simple suggestions that will bring following benefits to Indian Government:

1. Increase revenue by making rich people pay taxes proportionate to their income
2. Increase Service tax collection based on negative list by re-deploying Income tax employees to Service tax
3. Free small businesses from the clutch of direct tax machinery by making them pay taxes proportional to their real income.

DIRECT TAXES

Sr	Issue	Suggestion	Justification
1	Income Tax exemption on Farm Income Currently farmers are exempted from Income tax. This has been a policy since independence. Due to this exemption many rich and influential people have become ‘farmer’ on paper – thus leading to tremendous loss to the exchequer. While in fact, real farmers are committing suicide for want to reasonable income.	The benefit of Income Tax Exemption on Farm Income should be abolished.	There is a clear and gross mis-use of Income tax exemption by rich and influential people for the detriment of economy. Time has come to plug loop hole.
2	Tax Deducted at Source Almost 55% of Direct tax revenue is collected by way of TDS. This has made Income tax payment almost redundant. TDS merely serves to make tax collection faster. Also, both tax payer as well government machinery is set-up to see that TDS system works efficiently. On the other hand lakhs of small people – who are outside the ambit of Income tax loose their income because they never claim refund of TDS deducted.	Abolish Tax Deducted at Source.	Honest tax payer will be relieved from the heavy burden of tax collection, payment along with attendant paper work. Government machinery will be saved from the unproductive work of getting income tax before its time. In fact, now such machinery can be deployed in CBEC (Indirect Tax) for collection Negative list based Service tax.
3	Small Business subjected to Presumptive Tax on 8% of Turnover or Gross Receipts u/s 44-AD (read with 44ab) Government loses tax revenue when a small business’ income is more than 8% of turn-over. Many small businesses have income less than 8% of turn-over; in fact, some times even loss also. All such businesses are subjected to compulsory audit u/s 44ab.	Abolish Section 44-AD Or Reduce Presumptive tax on 8% to 5%.	It is irrational to assume that small businesses earn 8% or more of Turn-over or Gross Receipts. In many cases it is less than 8% due to increased competition and increased day to day expenses. In such cases he is compulsorily subjected to audit u/s 44ab – costing Rs.15,000/- to 50,000/-.

 

How to use NSDL's eTDS Filing system

In one of the comments on my blog post on Passport Seva Kendra  I had mentioned this:

"Not only this public facing website or application, if you are a user of any other website whether government or even corporate (particularly those related to eProcurement, Tender etc) user interface, directions to use and self-help resources are terrible. Of course, there are exceptions but only very few e.g., www.cleartrip.com.

I've been having email and telephonic dialog with NSDL for their TDS website and have managed to correct a few things but there are simply too many small issues wrt usability.

It is really frustrating when even basic validation check - when done - errors are not displayed properly. For example, in ACES (Excise/Customs and Service Tax website) when certain figures don't match, error simply says figure don't match. Is this information enough to troubleshoot? Why can't it display both figures as well? If they are given, one can go back and find out easily where we made the error.

Similarly there are issues with respect to Income tax website, Maharashtra Sales Tax website. I can just go on. I'm thinking of writing a separate blog on such websites. But, I wonder if it would be worth the time and effort. "

Yesterday I really got bugged up with NSDL's eTDS Return Filing website for many reasons, which has prompted me to write this today.

As you are aware, Income tax department of outsourced the work of running TDS & TCS machinery called "Tax Information Network" to National Securities Depository Ltd (NSDL). (TDS=Tax Deducted at Source; TCS=Tax Collected at Source by Govt depts. Here 'Tax' means 'Income Tax'.)

NSDL has a dedicated website for same - Tax Information Network of Income Tax Department. From the website URL it seems that it's a commercial business venture of NSDL. I really wish that this website and related machinery setup by NSDL is run like a business. But, it is not; and it is designed and run like division of Income tax department only! Our bad luck!

Any way, if try to go back to basics and check if TDS (and Advance tax) is really necessary or not; we come across very revealing facts. Since this topic is not subject of this blog, reader may care to read
a magazine's article on The farce of TDS and advance tax exposed through huge refunds.

This blog is written with a primary purpose of becoming a 'primer' for those business firms who are expected to file TDS return using 'Tax Information Network' run by NSDL. It does not cover any topic related to TCS. It has discussion on both physical and electronic TDS returns.

Let us start.

1. When-ever any person (business entity) deducts TDS from the supplier's payment, he is expected to do two things. First deposit the TDS amount with the Income tax department by 7th of the next month. And tell government that he has deducted TDS from the supplier and paid to the government by filing a 'TDS Return'. Up to Financial Year 2004-05 this used to be a Annual Return; after that it has become a quarterly return. This vital piece of information is written as a one liner in an indirect manner viz., RPU for Annual Returns - These utilities can be used to prepare e-TDS/TCS returns up to FY 2004-05.

Easy? Seem so. But, not really because in practice it is very complicated. Complicated mainly because if things go well it is easy but if any one makes any mistake, however small it may be, hardly any one knows how to rectify it.

It becomes more complicated because first, there are too many pieces of information (in computer jargon, 'fields') and there are four parties on which we don't have any control viz., bank who accepts your TDS payment, TIN-FC (see below) who accepts your TDS Challan, NSDL - who processes TDS Return filed by you and runs the machinery for accepting TDS Return and TDS wing of Income Tax department.

For example, although while making TDS payment using Form 281 you have mentioned deductee type as non-company (code-21) bank may enter in NSDL system as company (code-20) then it is almost next to impossible for an ordinary person to find out why he is not getting the 'match' of the TDS paid amount. Believe me, when I say - it requires either Chartered Accountants degree or Post Graduation Degree from best of colleges of India - I'm not exaggerating. I'm telling you based on a real experience of this mistake by our bank. Any way, we found it and then we went the bank, explained to them their mistake, gave a letter for rectification of their mistake; and got it rectified after 2 weeks after number of follow-ups! Phew! Of course, peace came with the risk of receiving notice of Interest payment on late payment of TDS!

2. There are issues with First part which deals with a system called OLTAS, which I will take up through a separate blog post later.

3. Let's take second part, that of filing TDS returns. For business firms it can be filed in 'physical' or 'electronic' form. NSDL has set up a network of TIN-FC (Tax Information Network - Facilitation Centre) in every major city of India. Basically, these centres are run by private firms or individuals and they accept Physical and/or Electronic TDS Returns (called Form 24) from the tax payers. When they accept TDS Return in Physical  form (also called Paper Return) or Electronic form on CD/Pen-Drive they give Print acknowledgement of  same.

It has a holy number called 'PRN' - Provisional Receipt No. If you loose this piece of paper, you are facing your worst night-mares.It is as good as not filing the TDS return and taking risk of facing all consequences viz., interest, penalty, inability to file revised return etc etc. (I'm telling you from my own experience and believe me, in spite of writing numerous letters to NSDL and TDS dept's Assessment Officer, nothing has happened.)

If TIN-FC person makes a mistake in noting the TAN, Financial Year, Form No. (26-Professional Service, 24-Salary, 27-Withholding Tax etc) or Quarter (1Q,2Q,3Q,4Q) then also, only God can help you. Again here, I'm suffering because on one of the receipts TIN-FC wrote wrong Quarter and Year and we did not notice this mistake for many months; and we have not managed to sort it out yet. This is in spite of writing letters to NSDL, TDS dept etc.

4. Once TIN-FC accepts the TDS Return, they scan it first and a data entry operator reads the scanned form and types in the data written on the physical form on NSDL's web application i.e., physical return becomes a electronic form.

Here is where there is major problem because maximum mistakes happen at this stage. Why? Most of TIN-FCs are setup by large companies. These centres do not have rights to enter the data on NSDL system. They accept the Return, Scan the form and send it to their head office by email (or so) and send physical form by courier (i assume). Data is entered by a data entry staff at head office. This being a manual system - it is prone to every type of data entry error due to various reasons e.g., bad scanned copy of form, ill-legible hand-writing, in-ability of data entry operator to call up the party for clarification, mistake in the entry of PAN / Amount / Name of PAN holder, TAN, Date, Form No etc. etc.

A single mistake and person filing the return will know about it only when he checks his own TDS return on NSDL's website. How? Believe me, it is not intuitive. It is located under eTDS/TCS Filing and Quarterly Statement Status.

Why does it say "Quarterly Statement Status" instead of "Quarterly TDS Return Status"? Why it is under "eTDS/TCS Filing"? Why it is not seen after you login in to eTDS/TCS Online Filing? I don't know. If you know the reason, do let me know.

Isn't this complicated? Not yet, just wait and read further to know how messy this entire TDS business can become. In fact, government of India has publicly admitted in June 2010 that TDS system is in a mess. Don't believe me? Click here for my blog post for details.

5. Say, you have filed Physical TDS Return and you find that there it is "Accepted by TIN" as shown below:

But when you click on "1" (as shown above) you will see status of each TDS Challans as shown below:
 

A challan's status can be one of following:
a. Invalid Paper Return: (what does this mean, I have never managed to figure out. May it is like any reason other than known reasons given below)
b. Match Failed (Challan): TAN and/or amount relating to a challan in the statement does not match with the corresponding details received from banks.
c. PAN not in ITD database: Count of deductees, where structurally valid PAN stated in the statement is not found in the ITD PAN database.
d. No /Invalid PAN : Count of deductees where PANNOTAVBL, PANINVALID or PANAPPLIED stated in the PAN field in the statement.

Note: This is becoming slightly long..so stay tuned. I will update it as and when I found time.

Status of Income Tax Refund

There is a very useful service started by Income tax department to find out status of your Income tax refund. But useful of such an important service is marred by bad data in the Income tax database. For example see following screen-shot from the website.

Notice that contradictory information is shown

Notice the text in bigger red circle. First column says "cheque has not been sent" and next column says "refund cheque is encashed".
Also, notice that refund is sent on 10-8-2006 for the Assessment Year 2007-08 i.e., Financial year ended on 31-3-2007. So, our Income tax department is so efficient and forward looking that they are able to send the refund on 10-8-2006 before year has ended on 31-3-2007!! I like this efficiency.

It clearly shows that Income tax database is in a mess. And such mess can be easily traced back to the people who enter data in to the system. So, it's a garbage in garbage out.

Recently (24-6-2010) there was a press release by Income tax that said:
“The Income Tax Department has taken the initiative to clean up the mismatched TDS data base. Many refunds are pending with the IT Department due to the mismatch of tax paid by the assessee, but the same is not being reflected in the computer software of the department.”


If you are interested in knowing reactions of citizen's of India on such public admission of failure - visit following site:
http://taxguru.in/income-tax/i-t-department-decided-to-clean-up-the-mismatched-tds-database-and-issue-income-tax-refunds.html

I am victim of above mentioned mismatched TDS database. My Income-tax return's TDS figures are no-where near to the data shown on Form AS-26 that I got from TIN website. And when I inquired Income tax department by visiting my Assessing Officer (AO) - TDS data on his computer's AS-26 for me - does not match with AS-26 that I got from the TIN website. So, I'm in a total mess because I'm trying to reconcile three different sets of TDS details viz., one that I've based on TDS certificates, second is Form 26-AS based on TIN website and third is TDS details (AS-26) that I got from AO's computer. You don't believe me? If you want proof - I'm ready to provide the same. Just write to me.

And now Income tax department has issued notices for recovery of tax. When rectification is filed u/s 154 for the correction - poor letter gets filed in AO's files. Ideally AO should do the correction in 6 months. In one of my correction dated 21-4-2003 for Assessment Year 2001-02 - no correction has been done so far and demand is still pending!! My wife has filed for correction u/s 154 on 19-5-2010 for AY 2008-09; and as on 24-11-2010 - when I appeared before her AO and inquired him if corrections were done. He said our CA should bring it to his notice by writing a letter and attaching copy of correction letter u/s 154 filed with him! In fact,  as per IT rules he was bound to have done the correction in 6 months i.e., on or before 18-11-2010!

I don't have doubt that we are living in "Incredible India."

How can IT dept collect TDS when they can't give credit for the same to us?

Today we received Intimation u/s 143(1) for my wife from Income tax department for the year ended on 31-3-2008. Major source of her Income is salary and interest from deposits.

To our horror we noticed that although we had paid full tax (Advance tax, TDS deductions and Self Assessment tax) - she was served notice for payment for Income tax along with interest!!!

The delivery staff told me - "Do not worry, sir. There have been some doubts about TDS claims and as a precautionary measure department has not given credit of TDS. Ask your CA (Chartered Accountant) and show all original TDS certificates and you will get the correct order."

Upon simple inspection of the Assessment Order we noticed that except for the Returned Income figure none of the figures on the Assessment Order matched with the filed Return.  Upon a short telephonic discussion with CA, we were advised to approach the Income Tax department directly - as there are too many such cases and they are unable to cope up!

Wonderful. Isn't it? Would any one care to join the party?
 
As far as TDS is concerned we poor citizens have no say. At the end of the year we collect the TDS certificate from the deductor;  and claim credit while filing the Return. And we expect that it will go smoothly because TDS information is available online on Internet - for any one to see and check. But in India, it does not work that way.

What's the way out? Meet the CA or some tax expert personally, decipher every word written on the Assessment Order, write a letter to the Assessment Officer, submit it to the Assessing Officer - show original TDS certificates; and wait for the revised assessment order!

How a salaried class person is expected to do all this? Who will compensate citizens for all this un-necessary extra work?

I have never managed to understand rationale behind Tax Deducted at Source - particularly when we are regularly paying Income tax every year. If Government is not able to give credit for the collected TDS then it has no moral right to continue with the TDS collection.

I hereby urge every citizens of India to demand abolition of TDS. At least, it should be done for the regular tax payers.

What do you think?