26 January 2008
Sir, In the case of a construction company where there are several labour contractors (many small time contractors) who do not have PAN numbers, can you please suggest a very practical solution for compliance to TDS return filing. - Tax has been deducted & paid, but return filing is pending for want of PAN numbers of the contractors. We have attempted engaging only PAN holders as contractors, but have not been able strictly follow it which is practically difficult for small and mid-sized companies in the real estate / construction business.
26 January 2008
In my opinion you can adopt the following procedure:-
--You should continue to deduct the tax as per the normal provisions & procedures as it is legally binding to comply with the provisions of Sec 194.
So, TRY THIS METHOD AT THE TIME OF FILLING THE RETURN:-
You should quote the PAN number of only those contractors who have provided you the PAN no., for the rest of the deductees do not enter the record of tax deducted by you of the persons for which you have not got the PAN numbers (i.e. do not make the entry of the persons for which you do not have PAN No.) The consequential effect of the same will be as follows:-
Total Tax deposited (as per challans) will be higher than total tax deducted.
--Also you will have to take the consent letter from those persons for which you are not entering the details in the return mentioning clearly therin that
AS THE PERSONS ARE UNABLE OR NOT PROVIDING THE PAN NO's AS SUCH THEY HAVE NO RIGHT TO ASK FOR FORM 16A OR DETAILS OF TAX DEDUCTED & DEPOSITED BY YOU.
By this method you will be capable of uploading the return with full compliance both at the Income Tax front as well as the minimum requirement of 70 % PAN of deductees for FORM 26 Q.
27 January 2008
Thanks. I hope that this should be an acceptable solution to the dept. May be we can also remit the taxes deducted in two different challans(one for PAN holders and the other for other deductees)and show in the e-tds form only those persons for whom PAN is available. This way the the tax deducted amount as per challan & as per the e-tds form would also tally. Ofcourse no TDS certificate will be issued such deductees. Would this be okay.
CAclubindia
