The different types of corrections that can make


The following are the various types of corrections that you can make to an accepted regular TDS/TCS statement:

1. Update deductor details such as Name, Address of Deductor. This type of correction is known as C1
2. Update challan details such as challan serial no., BSR code, challan tender date, challan amounts etc. This type of correction is known as C2.
3. Update/delete /add deductee details. This type of correction is known as C3.
4. Add / delete salary detail records. This type of correction is known as C4.
5. Update PAN of the deductee or employee in deductee/salary details. This type of correction is known as C5.
6. Add a new challan and underlying deductees. This type of correction is known as C9.
7. Cancel accepted statement. This type of correction is known as Y. Regular TDS /TCS statement can be cancelled only if the TAN of the deductor is to be corrected. After the regular statement with incorrect TAN is cancelled a regular TDS / TCS statement with the correct TAN should be filed.

Furnish a correction statement


The payment information provided in the regular TDS/TCS statement, is verified with the corresponding details provided by the bank where tax was deposited. On successful verification credit of tax deducted/collected by you is reflected in the annual tax statement (Form 26AS) of the deductees/transacting parties where PAN of deductee / transacting party is present. 

In case of deficiencies in the accepted regular TDS/TCS statement such as incorrect challan details or PAN not provided or provided incorrectly, the tax credit will not reflect in the Form 26AS of the deductees in your statement. 
To facilitate correct credit in Form 26AS of the deductees you are required to remove deficiencies, if any, in the accepted regular TDS/TCS statement by filing a correction statement.

Correction TDS/TCS statement


Deductor/collector is required to furnish one regular TDS/TCS statement for a particular TAN, Form, Financial year and quarter. In case there are any additions/updations to be made to the details of the regular statement accepted at the TIN central system, the same should be done by furnishing a correction statement.

SALARIED CAN CLAIM DEDUCTION FOR EMPLOYMENT-RELATED EXPENSES 

The most wronged persons in the income-tax regime are salaried persons. The scheme of the Income-Tax Act, 1961 clearly shows that the income to be taxed under the Act has to be worked out after allowing the expenses, which are permitted under the Act or are allowable on the basis of commercial expediency/practices. However, in the cases of incomes from 'salary' or 'house property', the expenses are deductible not on the basis of actual expenditure but on estimated basis by way of standard deduction (SD) to ensure simplicity in tax administration. On this analogy, persons deriving income from salary were allowed deduction on standard basis (up to a maximum limit of Rs 30,000) in the computation of taxable income. It needs to be appreciated that a salaried employee too has to incur expenses, to continue and progress in the present day competitive environments, on books, newspapers, journals, computers, stationery, floppies, travelling, training, etc., on his own account. If he does not incur such expenses, he may stagnate and may even lose his job. These expenses cannot be considered as 'personal expenses'. Even the history of SD shows that it was being given in lieu of individual employment-related expenses.
Untenable grounds
However, ignoring these realities, the then Finance Minister, Mr P. Chidambaram, vide Finance Act, 2005, withdrew the SD available to salaried employees on totally untenable grounds, namely: (i) it is in the nature of personal allowance; (ii) exemption limit for taxpayers has been raised; and (iii) tax brackets have been scaled up. None of these justify withdrawal of SD, which was being given, in a consolidated way, for expenses incurred in the context of employment. The other two grounds - (ii) and (iii) - do not apply only to salary earners. All taxpayers are entitled to these benefits. Hence, there were no grounds to deny SD to salaried employees for these reasons too. However, despite the withdrawal of SD, salary earners can still claim deduction for employment-related expenses for the reasons mentioned hereinafter. As mentioned earlier, the 'gross receipts' are not to be taxed under the I-T Act. Taxable income is to be computed after deducting the expenses incurred in earning the income. The expenses allowable could be of two categories: (i) specifically mentioned in the Act; and (ii) allowable on commercial principles/expediency basis. It is, no doubt, true that the I-T Act has laid down its own standards and limits for allowing the expenses, but it nowhere provides that other expenses relating to earnings should not be allowed at all. In this context, the courts have held that expenditure is allowable if it is incidental to the business and is incurred in the character of a trader.
Commercial principles
Decisions in this regard are to be guided by commercial principles and expediency and if an expenditure is incurred for earning income/profit, it would be deductible eve if there is no specific provision for the same in the Act. Section 29 of the I-T Act provides that income from business/profession shall be computed in accordance with the provisions contained in Sections 30 to 43D, that is, after allowing the deductions mentioned in these sections. But it has been candidly held in many decisions that an item incidental to the business, will be deductible even if it does not fall within any of these sections (see CIT vs Chitnavis, AIR 1932 PC 178; Ramchander Shivnarayan v. CIT (1978) 111 ITR 263 (SC), and so on). In CIT vs Mysore Sugar Co. Ltd (1962 46 ITR 649 SC), the court has said that Sections 30 to 43C do not deal exhaustively with the deductions, which must be made to arrive at the true profit. The same logic should apply to Section 16 deductions. Even if an expenditure is not mentioned in Section 16, but it is necessary in the context of employment, it should be deductible in computing income under Section 15 if it has a direct nexus in earning the salary income. Hence, salary earners can claim employment-related expenses now (without any limits) if these (i) have nexus with the employment; (ii) have been genuinely incurred; and (iii) are prima facie reasonable.

NO TIME-FRAME TO TABLE CONSTITUTION AMENDMENT BILL FOR GST: FM 

The government on Tuesday said it is not possible to fix a time-frame for the introduction of the constitution amendment bill, which will facilitate rolling out the proposed Goods and Service Tax (GST). In a written reply to the Rajya Sabha, Finance Minister Mr Pranab Mukherjee said the process requires consensus among various players and such an exercise will need time. "Since developing consensus on such issues generally takes time, it is not possible to indicate any time limit by which a decision for introduction of the constitutional amendment bill in the Parliament will be taken," he said. Mr Mukherjee said a draft constitution amendment bill has been prepared and sent to the Empowered Committee of State Finance Ministers for obtaining their views. "The draft constitutional amendment bill envisages inter-alia, setting up of a GST Council which will recommend to the centre and the states, the tax rates, items to be exempted, registration threshold, etc. EC (Empowered Committee) is yet to revert back with its clear view on the draft," Mr Mukherjee said. The bill is required because as of now the Centre cannot impose tax beyond manufacturing, and states cannot levy service tax. GST will allow both the centre and states to impose tax on common goods and services separately. It will subsume excise duty and service tax at the Centre's end and value added tax (VAT) on the States front, besides local levies, surcharges and cesses. In another reply, Mr Mukherjee said a section of the textile industry has sought exemption from the ambit of GST. He added, however, that the likely impact of the proposed GST to the textile sector cannot be assessed at this stage as the Empowered Committee has not reverted to the centre. "Under the dual GST model proposed by the Empowered Committee of State Finance Ministers and agreed upon by the union government, GST will have two components, viz., Central GST to be levied and collected by the centre and State GST to be levied and collected by the states," Mr Mukherjee said.

TAX ARREARS UP 18 PCT TO RS 2.93 LAKH CR 

The government said that tax arrears rose over 18 per cent to Rs 2.93 lakh crore as on March 31, 2010 against the year-ago period. The direct tax arrears grew over 16 per cent to Rs 2.48 lakh crore as on March 31, 2010 compared to Rs 2.13 lakh crore at the end of 2008-09, Minister of State for Finance S S Palanimanickam said in a written reply to Rajya Sabha. Direct tax includes income tax, corporate tax, wealth tax, among others. On the other hand, arrears of indirect tax, which constitutes central excise, customs and service tax, increased to Rs 44,212 crore as on March 31, 2010 as compared to Rs 33,790 crore at the end of 2008-09. Thus, registering a gain of over 30 per cent. Palanimanickam further said that the target of recovery of tax arrears pertaining to direct and indirect taxes is fixed at the beginning of the respective financial year. The targets of tax arrears' recovery in respect of direct and indirect taxes for the financial year 2010-11 are fixed at Rs 13,906 crore and Rs 3,250 crore, respectively. The government has set a budget target of Rs 4.3 lakh crore for the indirect tax kitty for this financial year. Combined target for both direct and indirect tax collections for the year is Rs 7.45 lakh crore.