CPC (TDS) advisory for submitting Form 24Q, Q4 TDS statements for Financial Year 2013-14

Date of communication : 12/04/2014 

Dear Deductor, 

Greetings from CPC(TDS) team. 
  
As esteemed stakeholder of CPC(TDS), it may be noted that the due date for filing 24Q quarterly TDS statement for 4th  quarter of FY 2013-14 is approaching fast. You are advised to file TDS statements well before due date (15th May, 2014). 
  
It is also requested to refer to Circular 8 of 2013 dated October 10, 2013 in the context of Tax Deduction at Source on Salary Income (attached for your reference) for Computation of Income and Manner of deduction of tax at source. 
  
In addition, please make note of the following key facts before filing the quarterly TDS statement: 
  
Correct Reporting: 
  
·  Cancellation of TDS statement and deductee row is no longer permissible. Accordingly, it is very important to report correct and valid particulars (TAN of the deductor, Category (Government / Non-Government) of the deductor, PAN of the deductees and other particulars of deduction of tax) in the quarterly TDS statement. 
· Validate PAN and name of fresh deductees from TRACES before quoting it in TDS statement. TAN-PAN Master can be downloaded from TRACES and be used to file statement to avoid quoting of incorrect and invalid PANs. 
·  Quote correct and valid lower rate TDS certificate in TDS statement wherever the TDS has been deducted at lower rate on the basis of certificate issued by the Assessing Officer. Please raise Flag “A” in the statement for such instances. 
· TDS statement must be filed by quoting challan(s) validated by CSI (Challan Status Inquiry) File and using correct Challan Identification Number (CIN)/ Book-entry Identification Number(BIN). 
  
Complete Reporting: 
  
· Please also complete Annexure II for all employees who work or have worked for any period of time during the current financial year, including Annexure I for TDS details. TDS Certificates will not be generated for deductees, for whom Annexure II has  not been completed. 
·  For employees who are employed with more than one employer/ different branch offices, during the financial year, employee should declare previous salary and TDS details, if any, with the current employer and the same should be considered by the current employer while deducting TDS on salary. If taxes have been deducted by previous employer(s)/ branch(es), CPC(TDS) will issue Form 16 Part A to respective employer(s)/ branch(es) during the Financial Year. Part B is to be issued by the employer(s)/ branch(es). 
· Completeness of statement will ensure that a C5, C3 or C9 correction can be avoided. It may be noted that CPC (TDS) does not encourage C9 corrections by addition of a new challan and underlying deductees. 
  
Mandatory Downloading of TDS Certificates from TRACES: 
  
· On the basis of information submitted by the deductor, CPC(TDS) will issue TDS Certificates that can be correct depending on correct and complete reporting by deductors. 
· Your attention is invited to CBDT circulars 04/2013 dated 17.04.2013, No. 03/2011 dated 13.05.2011 and No. 01/2012 dated 09.04.2012 on the Issuance of certificate for Tax Deducted at Source in Form 16/16A as per IT Rules 1962. It is now mandatory for all deductors to issue TDS certificates after generating and downloading the same from TRACES. 
·  Please note that under the provisions of section 203 of the Income Tax Act, 1961 read with rule 31A, Certificate of tax deducted at source is to be furnished within fifteen (15) days from the due date for furnishing the statement of tax deducted at source. 
· You can logon to our portal TRACES and refer to our e-Tutorial  to download TDS Certificates. 
  
Please submit the statement within due date to avoid Late filing fee, which, being statutory in nature, cannot be waived. It is therefore, suggested to take appropriate action with respect to the above while filing TDS statements. 

For any assistance, you can write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344. 
CPC (TDS) is committed to provide best possible services to you. 

CPC(TDS) TEAM

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Best practices to be followed for filing Q4 TDS statements for Financial Year 2013-14

Date of communication : 10/04/2014 

Dear Deductor, 
CPC (TDS) is reaching out to you to ensure that the best practices are followed for filing of your Q4 TDS statements. The emphasis is on timely, correct and complete reporting for taxes deducted at source, to ensure that the deductees are able to correctly claim TDS Credits and for generating correct TDS Certificates. As the due date for filing quarterly TDS statement for 4th  quarter is approaching close, you are requested to take note of following important information before submitting TDS statements. 
  
Payment of Taxes deducted/ collected: 
  
· In accordance with Central Government Account (Receipts and Payments) Rules, 1983, Government dues are deemed to have been paid on the date on which the cheque or draft tendered to the bank, was cleared and entered in the receipt scroll. 
· Rule 125 of Income Tax Rules, 1962 provisions for Electronic Payment of Tax by way of internet banking facility, for a Company and a Person to whom provisions of section 44AB of the Act are applicable. 
  
Timely Filing: 
  
· The due date to file TDS statements for Q4, FY 2013-14 is 15th May, 2014. 
· Please submit the statement within due date to avoid Late filing fee, which, being statutory in nature, cannot be waived 
  
Correct Reporting: 
  
· Please use your correct contact details, including Contact Number and email IDs in TDS Statements. 

· It is very important to report correct and valid particulars in respect to deductor and deductees. Please report the  TAN of the deductor, Category (Government / Non-Government) of the deductor, PAN of the deductees and other particulars of deduction of tax correctly in the quarterly TDS statement. 

· Please make use of TAN-PAN Master from TRACES to Validate PAN and name of deductees before quoting it in TDS statement. Please note that there are restrictions for correction of PAN. 

· Quote correct and valid lower rate TDS certificate in TDS statement wherever the TDS has been deducted at Lower/Nil rate on the basis of certificate issued by the Assessing Officer. Please raise Flag “A”/ “B”, as appropriate, and quote valid and correct Certificate Numbers. 

· TDS statement must be filed by quoting challan(s) using correct Challan Identification Number (CIN), validated by CSI (Challan Status Inquiry) File and correct Book Identification Number (BIN), as appropriate. 

· Please maintain your correct Contact details in your Registration profile at TRACES. 
  
Complete Reporting: 
  
· Please ensure completeness of your TDS statement by including all your deductees. Please note that the obligation to report each transaction correctly in the relevant quarter is on the deductor and non-compliance amounts to incorrect verification of completeness of TDS statement. 

· Completeness of statement will ensure that a C5, C3 or C9 correction can be avoided. It may be noted that CPC (TDS) does not encourage C9 corrections by addition of a new challan and underlying deductees. 

· Please also complete Annexure II (in case of 24Q) for all deductees employed for any period of time during the current financial year, including Annexure I for TDS details. 
  
Downloading TDS Certificates from TRACES: 
  
· On the basis of information submitted by the deductor, CPC(TDS) will issue TDS Certificates that can be correct depending on correct and complete reporting by deductors. 

· Your attention is invited to CBDT circulars 04/2013 dated 17.04.2013, No. 03/2011 dated 13.05.2011 and No. 01/2012 dated 09.04.2012 on the Issuance of certificate for Tax Deducted at Source in Form 16/16A as per IT Rules 1962. It is now mandatory for all deductors to issue TDS certificates after generating and downloading the same from TRACES. 

· Please note that under the provisions of section 203 of the Income Tax Act, 1961 read with rule 31A, Certificate of tax deducted at source is to be furnished within fifteen (15) days from the due date for furnishing the statement of tax deducted at source. 
  
· You can logon to our portal TRACES and refer to our e-Tutorial  to download TDS Certificates. 
  
For any assistance, you can write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344. 

CPC (TDS) is committed to provide best possible services to you. 
CPC (TDS) TEAM

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HIGHLIGHTS ON CSR PROVISIONS NOTIFIED ON 27.02.2014 CS DHANAPAL

 v  Effective Date for CSR Applicability – Section 135 of the Companies Act 2013, Schedule VII and the relevant rules, namely Companies (Corporate Social Responsibility Policy) Rules, 2014 have been notified to become effective from 01^st April 2014 vide MCA notification dated 27.02.2014.

 v  Amendment to Schedule VII - Schedule VII which contains list of activities which can be undertaken by a company as part of its CSR initiatives has been amended vide this notification and companies must refer to the new list for undertaking qualified CSR activities.

 v  Changes in CSR Rules – There are many welcome changes in the CSR Rules 
      which have been notified now as compared to the draft rules which were issued for
    public comments previously. Many of the ambiguities in the Section and the draft
    rules have been addressed in the final notified rules.

 v  CSR Applicability – Every company including its holding or subsidiary, and a foreign company defined under clause (42) of section 2 of the Act having its branch office or project office in India, which fulfills the criteria given below

  

 Ø  Meaning of Net Profit for CSR Purpose - "Net profit" means the net profit of a company as per its financial statement.

 Ø  Requirement of atleast 1 independent director in CSR Committee – Unlisted public companies and private companies which are not required to appoint an independent director shall have its CSR Committee without such director

  

 Ø  Requirement of atleast  3 directors in CSR Committee – a private company having only two directors on its Board shall constitute its CSR Committee with two such directors

 Ø  CSR Expenditure –

·         Contribution of any amount directly or indirectly to any political party under section 182 of the Act, shall not be considered as CSR activity.

·         Companies may build CSR capacities of their own personnel as well as those of their Implementing agencies but such expenditure shall not exceed 5% of total CSR expenditure of the company in one financial year.

 Ø  CSR Implementation through Trust/Society- The Board of a company may decide to undertake its CSR activities approved by the CSR Committee, through a registered trust or a registered society or a company established by the company or its holding or subsidiary or associate company under section 8 of the Act or otherwise.

 Ø  Non applicability in subsequent years – Once a company falls within the ambit of CSR applicability, it has to comply with all the CSR provisions until the completion of 3 consecutive years for which CSR applicability does not arise. 

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LOAN TO DIRECTORS AND OTHER ENTITIES UNDER THE NEW REGIME OF COMPANIES ACT 2013 CS DHANAPAL

Restriction on granting of loan to its directors by a company and other entities in which directors are interested has been one of the most touching issues in the Companies Act, 2013, since 12^th September 2013, when Ministry of Corporate Affairs notified 98 Sections of the Companies Act, 2013 to become effective and applicable from that date.

Section 185 of the Companies Act, 2013 which contains provisions dealing with granting of loans & advances and providing of guarantees and securities by a company to its directors and other entities in which directors are interested got notified with effect from 12.09.2013. This section is applicable both to private and public companies. This section in general prohibits a company to grant loans or advances or provide guarantees and securities, in any manner, to its directors or other entities in which directors are interested subject to few exceptions discussed below.

Section 295 of the Companies Act, 1956 contained similar provisions, but with two important differences. One, the Section was not applicable to Private Companies. This meant that Private Company was not governed by the restrictions imposed by Section 295 and was free to grant loans to its directors. Secondly, even in case of public companies, these transactions could be undertaken with the approval of Central Government.  But now the situation has changed completely. 

LOANS TO DIRECTORS (SECTION 185)

Transactions which are restricted:

•  Advancing of any loan, including any loan represented by a book debt, and
• Giving of any guarantee or providing of any security in connection with any loan taken by a director or other person in whom director is interested.

Entities between which the above transactions are prohibited:

            A. Company, on one side, and

            B. Any one or more of the following on the other side

·         any director of the company

·         any director of the holding company

·         any partner or relative of director of company or holding company

·         any firm in which any such director or relative is a partner

·         any private company of which any such director is a director or member

·         any body corporate at a general meeting of which not less than 25% of the total voting power may be exercised or controlled by any such director, or by two or more such directors together

·         any body corporate, the Board of directors, managing director or manager, whereof is accustomed to act in accordance with the directions or instructions of the Board, or of any director or directors, of the lending company.

Exceptions to above restrictions:

·         Giving of any loan to a managing or whole-time director as a part of the conditions of service extended by the company to all its employees or pursuant to any scheme approved by the members by a special resolution

·         A company which in the ordinary course of its business provides loans or gives guarantees or securities for the due repayment of any loan and in respect of such loans an interest is charged at a rate not less than the bank rate declared by the Reserve Bank of India.

Penal Provisions:

Company:	Fine, which shall not be less than Rs. 5 Lakhs but which may extend to Rs. 25 Lakhs.
Director or other person to whom any loan is advanced or guarantee or security is given or provided in connection with any loan taken by him or the other person:	Imprisonment which may extend to 6 months or Fine which shall not be less than Rs. 5 Lakhs but which may extend to Rs. 25 Lakhs, or Both.

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IMPACT OF COMPANIES ACT, 2013 ON PRIVATE COMPANIES CS DHANAPAL

IMPACT OF COMPANIES ACT, 2013 ON PRIVATE COMPANIES

Companies Act, 2013 has brought massive changes for private companies as barring a very few, all the exemptions which were available to private companies under the Companies Act, 1956 have been withdrawn in the Companies Act, 2013. In this article, we attempt to throw light on the impact of Companies Act, 2013 on private companies by means of comparison of the significant provisions relating to Private Companies under the Companies Act, 1956 and Companies Act, 2013 .

Comparison of provisions relating to private companies under CA, 1956 and CA, 2013

Basis of Comparison	Companies Act, 1956	Companies Act, 2013
Definition	Maximum number of members restricted to 50. Express clause in the definition was there “prohibits any invitation or acceptance of deposits from persons other than its members, directors or their Relatives” [Section 3(1)(iii)]	Maximum number of members restricted to 200 . No specific clause on prohibition of acceptance of deposits is there in the definition. [Section 2(68)]
Commencement of Business	Under Companies Act, 1956, a Private company can commence its operations immediately after incorporation. Only public companies have to seek certificate of commencement of business. (Section 149)	Under Companies Act, 2013, even a Private Company cannot commence its business or make any borrowings unless it files with ROC a statement that the subscription money and minimum paid up capital has been brought in. (Section 11)
Further issue of shares	Provisions relating to rights issue and Preferential allotment are not applicable to a private company. [Section 81 and 81(1A)]	A private company can make further allotment only by means of Rights Issue, ESOP or Private placement/preferential allotment and needs to comply with the all the provisions relating to these types of allotment. [Section  62]
Acceptance of Deposits from relatives of directors	A Private Company can accept deposits/loans from relatives of directors by virtue of exemption available in the definition of private company. [Section 3(1)(iii)]	A private company is prohibited to accept unsecured loans/deposits from relatives of directors. [Section 73 read with draft rules issued thereunder]
Shares with differential voting rights	Provisions relating to issue of shares with differential voting rights are not applicable to a private company [Section 86]	A private company has to comply with the provisions contained in Section 43 read with the rules issued there under to issue shares with differential voting rights. [Section 43]
Appointment of KMP	Under CA, 1956, irrespective of the capital, Private Companies are not mandated to appoint MD/WTD/Manager etc. except Whole Time Company Secretary in case of companies  having paid up capital of Rs. 5 Crores or more. [Section269 & 383A]	All companies, including private companies, having paid up capital of Rs. 5 Crores or more are required to have the following whole time KMP: 1. MD/CEO/Manager/WTD; 2. Company Secretary; and 3. CFO [Section 203]
Loans to Directors	Restrictions relating to giving of loans, advances or providing securities, guarantees to directors and other interested entities are not applicable to a private company. [Section 295]	All companies, including private companies, are restricted from giving loans, advances or providing securities, guarantees to directors and other interested entities barring few exceptions. [Section 185]
Resident Director	No requirement to have director resident in India.	All companies, including private companies, must have atleast one director who has stayed in India for a minimum period of 182 days during the previous calendar year. [Section 149]
Consent to act as director	In case of private companies, consent to act as director is not mandatory to be filed with ROC. [Section 264]	A person appointed as a director shall not act as a director unless he gives his consent to hold the office as director and such consent has been filed with the Registrar within thirty days of his appointment [Section 152]
Appointment of 2 or more directors by single resolution	Provision relating to appointment of directors to be voted on individually is not applicable to a private company which is not a subsidiary of a public company. [Section 263]	At a general meeting of a company, a motion for the appointment of two or more persons as directors of the company by a single resolution shall not be moved unless a proposal to move such a motion has first been agreed to at the meeting without any vote being cast against it. [Section 162]
Limit on number of directorship	Private Companies are not counted for the purpose of determining the limit of 15 companies in which a person can act as a director at any given time. [Section 275]	A person can act as director in a maximum of 20 companies at any given point of time out of which not more than 10 should be public companies. [Section 165]
Corporate Social Responsibility	No requirement to spend on CSR activities.	All companies, including private companies, who are meeting eligibility criteria fixed in this regard, are required to constitute a CSR committee consisting of at least 3 directors  out of which atleast 1 must be independent director and spend at least 2% of average net profits on CSR activities. [Section 135]
Contents of Financial Statements	•       Balance Sheet •       Statement of Profit & Loss •       Cash flow Statement (applicable only to listed companies and companies having Turnover in excess of 50 crores or borrowings in excess of 10 crores) AS 3 and listing agreement	•       Balance Sheet •       Statement of Profit & Loss •       Cash Flow Statement (Except for OPC and Small Company) •       Statement of Changes in Equity •       Notes to accounts
Consolidation of Accounts	Consolidation is not mandated under the Companies Act, 1956 for any company. Listing agreement requires consolidation for listed companies having subsidiaries. (Clause 32 of Listing agreement and AS 21)	•       All companies having subsidiary (s) need to prepare consolidated accounts. •       Subsidiary includes associate and joint ventures. (Section 129)
Maximum term of auditor	Appointment of auditor happens on yearly basis at AGM. No limit on maximum number of years. (Section 224)	•       Appointment of auditor will be for 5 years term in each appointment subject to ratification every year in AGM. •       Individual auditor can serve maximum 5 years and Firm for maximum 10 years followed cooling off period of 5 years.  (Section 139)
Number of Companies an auditor can audit	For Private Companies, no limit is there as Section 224(1B) is not applicable to private companies.	•       20 Companies in total. •       Private companies cannot appoint a person as auditor if he is already auditor for 20 other companies.  (Section 141)
Signing of Annual Return	Director + CS/Manager If no CS/Manager, then MD + Director If no MD, then 2 directors (Section 161)	•       Private Company being a Small Company –CS, •       If no CS, then •       1 Director •       Private Company, other than Small Company – CS + Director •       If no CS, then •       PCS + Director (Section 92)
Provisions regarding general meetings	Private companies can exempt themselves from the applicability of Sections 171 to 186 by mentioning so in its AOA. These sections deal with length of notice for General Meetings, explanatory statement etc.	•       All requirements regarding general meetings as specified in the Act are applicable to Private Companies. No exemption can be sought basis of AOA. •
Authentication of financial statements  of the company	By two directors including Managing Director , if there is one and Company Secretary ,  if there is one (Section 215)	•       Chairperson, if he is authorized by board or 2 Directors out of which one shall be Managing Director •       The Chief Executive officer, if he is a Director of the company, The chief financial officer and the company secretary of the company, wherever they are appointed.        (Section 134)
Inter Corporate Investment/Loans/Guarantee	Provisions of Section 372A regarding Inter Corporate Investments/Loans/Guarantee are not applicable.	•       Except subsection (1) of Section 186, other provisions on Inter Corporate Investments/loans/Gurantees are applicable.
Signing of Director’s Report	By Chariman of the Board if he is authorized by board or by such number of directors of the board as are required to sign the balance sheet and the profit and loss account of the company by virtue of sub- sections (1) and (2) of section 215 (Section 217)	•       Chairperson, if he is authorized by board or 2 Directors out of which one shall be Managing Director or by the Director where there is one Director (Section 134) •

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