CBDT vide Notification No. 71/2021 [F. No. 370142/19/2021-TPL] / GSR 395(E) dated 8th June 2021 has amended Rule 31A and introduced changes in Form 26Q, Form 27Q and Form 26A to provide for reporting of additional information through Income-tax (17th Amendment) Rules, 2021.
Introduction
Rule 31A prescribes for furnishing of Statement of deduction of tax under sub-section (3) of section 200. The amendments and changes in are prescribed in Rule 31A(4) and are outlined below-
Rule 31A(4) prescribes for reporting of certain information and transactions which are subject to TDS or exemption provided from deduction of tax in the Form 26Q.
Amendments in Rule 31A(4)
The 17th Amendment Rules, 2021 has introduced four amendments to Rule 31A(4). One Rule 31A(4)(x) is substituted with a new clause (x) and three new clauses (xiv)/(xv)/(xvi) are introduced in the said sub-rule (4).
1. To report interest income on which tax is not deducted by virtue of section 194A(3)(x) or section 194A(5) in Form 26Q
Section 194A(3)(x) provides for exemption from deduction of tax to such interest income which is paid or payable by an infrastructure capital company or infrastructure capital fund or infrastructure debt fund or a public sector company or scheduled bank in relation to a zero-coupon bond issued on or after the 1st day of June, 2005 by such company or fund or public sector company or scheduled bank.
Section 194A(5) provides that the Central Government may notify that the deduction of tax shall not be made or shall be made at such lower rate, from such payment to such person or class of persons, as may be specified in the said notification.
The 17th Amendment Rules of 2021 has substituted the existing clause (x) of Rule 31A(4) to provide the followings-
(a) for clause ‘(x)’ the following clause shall be substituted namely: -
‘(x) furnish particulars of amount paid or credited on which tax was not deducted or deducted at lower rate in view of the notification issued under sub-section (5) of section 194A or in view of exemption provided under clause (x) of sub-section (3) of section 194A.’;
Henceforth, any interest income paid on zero-coupon bonds on which tax is not deducted by virtue of section 194A(3)(x) and interest income paid to any person from whom no tax is required to be deducted due to applicability of section 194A(5) is required to be reported in Form 26Q.
2. To report Dividend income on which tax is not deducted by virtue of section 194 in Form 26Q
The 17th Amendment Rules of 2021 has inserted a new clause (xiv) to the Rule 31A(4) to provide the followings-
“(xiv) furnish particulars of amount paid or credited on which tax was not deducted in view of clause (d) of the second proviso to section 194 or in view of the notification issued under clause (e) of the second proviso to section 194;
Section 194 provides for deduction of tax from the payment of any dividend income (including dividends on preference shares) within India by an Indian company @ 10%.
However, no tax is required to be deducted if the amount of dividend payment does not exceed Rs. 5,000/- in the aggregate to an individual in any financial year.
However, the second proviso to section 194 inter-alia provides that no tax is required to be deducted if the payment of the dividend is made to a ‘business trust’ and to any other person as may be notified by the Central Government on this behalf.
Henceforth, any dividend income paid to a business trust or to any notified person shall be required to be reported in Form 26Q.
3. To report Income of Foreign Institutional Investors from securities on which tax is not deducted u/s 196D in Form 27Q
The 17th Amendment Rules of 2021 has inserted a new clause (xv) to the Rule 31A(4) to provide the followings-
(xv) furnish particular of amount paid or credited on which tax was not deducted in view of proviso to sub- section (1A) or in view of sub-section (2) of section 196D
Section 196D provides for deduction of tax from any income in respect of securities referred to in clause (a) of sub-section (1) of section 115AD payable to a Foreign Institutional Investor @ 20%. Sub-section (1A) further provides that where such income is payable to a specified fund as referred to in clause (c) of the Explanation to clause (4D) of section 10 then tax is required to be deducted @ 10%.
The proviso to sub-section (1A) provides that no deduction shall be made in respect of an income which is exempt under clause (4D) of section 10.
Sub-section (2) further provides that no deduction of tax shall be made from any income, by way of capital gains arising from the transfer of securities referred to in section 115AD, payable to a Foreign Institutional Investor.
After the amendment, henceforth, any income paid to a specified fund or to any FII on which tax is not deducted by virtue of first proviso to section 196D(1A) or section 196D(2) shall be required to be reported in Form 27Q.
4. To report transactions of purchase of goods on which no tax is deducted under section 194Q in Form 26Q
The 17th Amendment Rules of 2021 has inserted a new clause (xvi) to the Rule 31A(4) to provide the followings-
(xvi) furnish particulars of amount paid or credited on which tax was not deducted in view of sub-section (5) of section 194Q with effect from 1st day of July,2021.
Section 194Q provides that a buyer of goods shall deduct TDS @ 0.1% if the aggregate value of goods purchased exceeds Rs. 50 Lakh in a financial year.
Sub-section (5) of section 194Q provides that no tax is required to be deducted from any payments made for the purchase of any goods if -
(i) tax is deductible under any other provisions,
(ii) if such purchase of goods is subject to TCS other than section 206C(1H)
After the amendment, henceforth, any purchase of goods on which tax is not deducted by virtue of section 194Q(5) is required to be reported in Form 26Q.
Amendment in Form 26A
Form 26A is a form for furnishing an accountant certificate under the first proviso to sub-section (1) of section 201 of the Income-tax Act, 1961 read with Rule 31ACB.
This is applicable when a person fails to deduct tax or deducts short tax from any payment made to any payee. By furnishing Form 26A, the payer can absolve itself from being declared as assessee-in-default. With this form it is certified that the payee has taken the sum into his income and paid tax accordingly.
Form 26A has used the term ‘payee’ only wherever it is used except in clause (ii) of Annexure-A of Form 26A where the expression “the payee, who is a resident,” is used. Now, the words ‘who is a resident' is excluded from the expression.
Amendment in Form 26Q/27Q
New sections of TDS as introduced by the Finance Act, 2021 are incorporated in Form 26Q. New section codes were notified for this purpose.
This includes section 194Q (Code: 94Q) and section 206AB.
More so over, new tagging codes are specified for the above four amendments in Rule 31A(4) in Col. 424 of Form 26Q which are as follows-
Amendment in Form 27EQ
Form 27EQ is prescribed for furnishing a statement of TCS with the income tax department as per Rule 31AA. In the heading of the Form, the expression “See section 206C and rule 31AA '' is substituted with “See section 206C, 206CC, 206CCA and rule 31AA”.
Form 27EQ is also amended to incorporate tagging code “I” if collection is at a higher rate in view of section 206CCA applicable from 1-7-2021.
Amendment in Form 27Q
In the heading of the Form 27Q, section 206AA and section 206AB is inserted.
Further, the following two tagging codes are notified -
It is further provided that in case of deductees covered under rule 37BC, Permanent Account Number or Aadhaar Number NOT AVAILABLE should be mentioned.
Rule 37BC prescribes for relaxation from the deduction of tax at a higher rate as specified in section 206AA.
Read the full text of Notification No. 71/2021 dated 8th June 2021 on Changes in Rule 31A and Form 26Q, Form 27Q and Form 27EQ
MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 8th June, 2021
(INCOME-TAX)
G.S.R. 395(E).— In exercise of the powers conferred by sections 194,194A,194Q, 196D, 206AB and 206CCAread with section 295 of the Income-tax Act, 1961, (43 of 1961) the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-
1. Short title and commencement. – (1) These rules may be called the Income-tax (17th Amendment) Rules, 2021.
(2) Save as otherwise provided in these rules, they shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules), in rule 31A, in sub-rule (4) –
(a) for clause ‘(x)’ the following clause shall be substituted namely: -
‘(x) furnish particulars of amount paid or credited on which tax was not deducted or deducted at lower rate in view of the notification issued under sub-section (5) of section 194A or in view of exemption provided under clause (x) of sub-section (3) of section 194A.’;
(b) after clause (xiii), the following clauses shall be inserted namely: -
“(xiv) furnish particulars of amount paid or credited on which tax was not deducted in view of clause (d) of the second proviso to section 194 or in view of the notification issued under clause (e) of the second proviso to section 194;
(xv) furnish particular of amount paid or credited on which tax was not deducted in view of proviso to sub- section (1A) or in view of sub-section (2) of section 196D.;
(xvi) furnish particulars of amount paid or credited on which tax was not deducted in view of sub-section (5) of section 194Q with effect from 1st day of July,2021.”.
3. In the principal rules, in Appendix II, in form 26A, in Annexure A, in clause (ii), the words “, who is a resident,” shall be omitted.
4. In the principal rules, in Appendix II, in form 26Q ––
(a) for the brackets, words, figures and letters “[See sections 192A, 193, 194, 194A, 194B, 194BB, 194C, 194D, 194DA, 194EE, 194F, 194G, 194H, 194-I, 194J, 194K, 194LA, 194LBA, 194LBB, 194LBC, 194N, 194-O, 197A and rule 31A]” the following brackets, words, figures and letters, shall be substituted namely: -
“[See sections 192A, 193, 194, 194A, 194B, 194BB, 194C, 194D, 194DA, 194EE, 194F, 194G, 194H, 194-I, 194J, 194K, 194LA, 194LBA, 194LBB, 194LBC, 194N, 194-O, 194Q, 197A, 206AA, 206AB and rule 31A]”; (b) for the “Annexure”, the following “Annexure” shall be substituted, namely: -
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Download Copy of Notification No. 71/2021 dated 8th June 2021 on Changes in Rule 31A and Form 26Q, Form 27Q and Form 27EQ in pdf format
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