• Jan
  • 10
  • 2014

TDS/ TCS cheques tendered in bank – Date of Deposit will be date of clearing

Important Guidelines for payment towards liability on account of Tax Deducted / Collected at Source (in accordance with CGA Rules and Rule 125 of Income Tax Act)

Your attention is drawn towards some relevant guidelines related to payment of TDS/ TCS liability.

A. Central Government Account ( Receipts and Payments ) Rules, 1983:

Date of Receipt for Cheques or Drafts: The Central Government Account (Receipts and Payments) Rules, 1983 contain, inter alia, regulate public moneys received by or on behalf of the Government of India. As per clause 20 of Part I (Preliminary and General Principles), the Date of receipt of Government revenues, dues etc. is determined as follows:

20. Date of receipt of Government revenues, dues etc.-
Government dues tendered in the form of a cheque or draft which is accepted under the provisions of rule 19 and is honoured on presentation, shall be deemed to have been paid-

i. where the cheque or draft is tendered to the bank, on the date on which it was cleared and entered in the receipt scroll;

B. Rule 125 of Income Tax Rules, 1962:

Electronic Payment of Tax: Rule 125 of Income Tax Rules, 1962 relates to Electronic Payment of Tax. The relevant provisions are as under:

  • The following persons shall pay tax electronically on or after the 1st day of April, 2008:
    •   a company; and
    •   a person (other than a company), to whom the provisions of section 44AB are applicable.
  • For the purposes of this rule :
    • “pay tax electronically” shall mean, payment of tax by way of-
    • internet banking facility of the authority bank; or

In the light of the above, it is suggested that the payments towards TDS may kindly be made through e-payment mode. This helps in better reporting of challan by deductors and consequential matching of such challans.

It shall help the deductors in reduction of late payment interest that may arise due to delay in date of tendering of cheques and date of credit to the Government account.


4 Responses to “TDS/ TCS cheques tendered in bank – Date of Deposit will be date of clearing”

  1. Rajesh Kothari says:

    Why such rule is made for TDS/TCS only – while for Income tax (advance tax etc) cheuque deposit date is considered at Tender Date?

    This different method adopted by Income tax department for TDS/TCS is totally unfair and works against common men.

    In fact, in other words makes cheque a non-acceptable instrument – when only 7 days are given to the TDS deductor to pay the TDS. What happens when payment is made by cheque on say 4th / 5th / 6th or 7th of the month? If said cheque is cleared after 7th – it’s not the fault of the depositor.

    Time has come to demand from Income tax a separate last date for payment made by cheque. It could be 5th of the month.

    All concerned people including CA association should write to TRU (Tax Research Unit) and RBI that this policy on TDS/TCS is working against those tax payers who are making payment by cheque; and Cheque Tender Date should be considered as Tax payment date. Tax payer should not be penalised for Bank’s late clearing of cheque. Particularly public sector banks like State Bank of India takes 5 to 10 days due to heavy work load.

  2. rashid ali says:

    Sir please tell what’s the procedure in the case of above query regarding CDD And CTD

  3. Rajesh Kothari says:

    Challan Tender Date is taken. Received date is no relevance.

    When TDS payment is made by the assessee by cheque say on 7th of the month to the bank, the “Challan Tender Date” is generally 10th to 15th of the month in the OLTAS Challan Status Inquiry system setup by NSDL. It has been noticed that certain banks take their own time ranging from 3 to 7 days to report payment on NSDL system as Challan Tender Date.

    In such cases, although TDS payment is made by the tax payer within due dates by cheque, TDS department issues Notice u/s 200A for Interest on late payment of TDS. Answering such unnecessary notices and getting correction done by the concerned officers has become almost an impossible task, leading to unnecessary harassment and litigation.

    Correction required to the Procedure
    NSDL’s OLTAS system should provide for “Cheque Deposit Date (CDD)” apart from “Challan Tender Date (CTD)” for cheque payments. And NSDL system should consider CDD instead of CTD for calculation of payment default.

  4. CA Hitesh Tatiya says:

    NSDL Challan Status Report shows 2 dates – Challan Tender Date and Received Date, so which date TRACES consider for calculation of interest ?

Leave a Reply