Friday, September 19, 2014

TDS BACKGROUND, CONCEPT, OBJECTIVES, COMPONENTS



BACKGROUND

Tax Deduction at Source (TDS) is one of the means of collection of direct taxes. TDS constitutes nearly 40% of the direct tax collections.

LEGACY
In the legacy system, the deductees claimed TDS credits based on manual TDS certificates, issued by the deductors. There was no correlation between tax deductions, tax payments and issuance of TDS certificates. Verification from the deductor was limited & restricted. Thus, the conventional practice of giving credit of tax deductions, based on manual TDS certificates was open ended leading to tax frauds.

PLUGGING THE GAP
The tax deductors electronically report TDS to the Income Tax Department through quarterly TDS statements. The deductor is obliged to report the following details:
  • PAN & Name of the deductee; Nature, 
  • extent & the date of transaction;
  • Amount, rate & the date of tax deducted/collected at Source;
  • Details of tax payment including the amount & date thereof
Based on the information submitted by the deductor, the deductee is given credit of taxes. Therefore, a robust mechanism that ensures correct, reliable flow of data to the department’s database and its collation on the basis of taxpayer identifier(s) (PAN) prevents revenue leakage.

Centralized Processing Cell for TDS (CPC(TDS)) has been conceptualized to ensure a seamless flow of data for tax credits. It leverages technology to provide efficient services. CPC(TDS) introduces transparency in the processes through online display of information. Thus, it forms the backbone of overall TDS administration of the Income Tax Department.

CONCEPT
  • Centralized Processing Cell (TDS) is a technology driven transformational initiative on ‘Tax Deduction at Source’ that provides a comprehensive solution through ‘Tax Deduction, Reconciliation, Analysis and Correction Enabling System (TRACES)’ - its core engine.
  • CPC (TDS) undertakes bulk processing of TDS statements to generate ‘Annual Tax Credit’ statements for each taxpayer (PAN holder) in Form 26AS, TDS certificates in Form 16 / 16A & identifies TDS defaults of short payment, short deduction, interest etc.
  • CPC (TDS) reconciles and co-relates information from various sources including banks (tax payment), deductors (reporting tax deduction), Assessing Officers ( mapping no tax / low tax deductions) and tax p ro fe s s i o n a l s ( re p o r t i n g i nte r n at i o n a l transactions).
With its inclusive approach, the initiative provides bouquet of services to its stake holders including deductors, deductees, Principal Accounts Officers of the Central and State Governments & the officers of the Income Tax Department.

The users/ stakeholders interact with the CPC (TDS) system and with each other through multiple channels of communication including Call Centre, e-mail, website etc.,

India is amongst very few countries where Comprehensive Solution for withholding tax (TDS) has been put in place.

OBJECTIVES
  • Provide a comprehensive technology platform for all stakeholders.
  • Enhance TDS processing capabilities.
  • Streamline tax accounting.
  • Address TDS  mismatch  issues  through  Online Generation of TDS certificates.
  • Minimize TDS frauds.
  • Improve filing of Income Tax Returns and reporting of correct Income.
  • Release of manpower from Bulk Functions.
  • Empower  assessing  officers  using  Business Analytics for risk profiling and enforcement functions.
  • Provide insights for policy formulation on the basis of data relating to nature & extent of financial transactions & demographic profile of persons involved in such transactions.
COMPONENTS



Data Centre:
  • Primary Data Centre, Noida
  • Disaster Recovery Site, Pune

Document Management Centre, Vaishali

Website – TRACES Portal - for

  • Deductors
  • Deductees
  • Principal Accounts Officers
Portal for Field Assessing Officers

Call Centre :

  • Inbound
  • Outbound

Bulk email facilities

  • Awareness of Tax Provisions
  • Feedback on compliance

Online Feedback Module
Ticket Management Systems

CPC (TDS) FOR END USERS


Deductors:
Non-intrusive integrated platform that provides online services related to TDS Statement / Challan processing, Corrections, Default information, TDS certificates and real-time support for clarifications

Taxpayers:
View of Tax Credit Statements in Form 26AS with real-time support for clarifications

Field TDS Assessing Officers: Comprehensive Portal that enables :

•    Consolidation of Demand Registers
•    Real time Analytics and MIS for enforcement
•    Online Ticket Management System

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