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.

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.