Wednesday 16 May 2012


E Filing Provident Fund

The Employees’ Provident Fund Organization, India, is one of the largest social security organizations in the world in terms of members and volume of financial transactions that it has been carrying on.

The total financial corpus managed by the EPFO is in excess of Rs. 2000 billion ($50 billion) and there are a total of about 40 million contributing and non contributing members in about 450,000 covered establishments.

The Employees’ Provident Fund Organization (EPFO) in its attempt to do a major Business Process Reengineering has introduced a system of Electronic Challan cum Return (ECR) Filing since April 2012 onwards. To automate and computerize the present system, this change will see around 450,000 establishments across the nation remitting the Provident fund contributions online.

ECR will facilitate automatic update of accounts on receipt of contribution by EPFO, download of annual accounts slips for employees from EPFO website. It will also dispense with forms 5, 10, 12A, 3A, 6A being submitted by employer of un-exempted establishment and forms 3PS, 4PS, 5PS, 6PS, 7PS, 8PS being submitted by the employers of PF exempted establishments.

This is a welcome step in the electronic age and will prove beneficial in the following ways:

* Greater convenience and ease to employers and greater transparency. Employers can not only pay online but also download Annual Accounts slips for their employees for the year 2010-2011 onwards from EPFO website.

* This will also result in better quality of service to the employees as now the employees would be able to check their balances online. They will see the detailed account statements with all credit and debit on request through the website. This will be enabled from 1st May 2012 as per the central government officials. Every year the statement of your PF account was being sent to the contributing member through the employer. The statement used to contain the opening balance (amount accrued till last year), amount contributed this year, Interest rate applied this year and the interest rate accrued this year, any withdrawal from the account if applicable.

* Automatic updation of accounts on receipt of contribution by EPFO.
What needs to be done by establishments?

For availing this facility, the establishments and authorized signatory are require to register their establishments on EPFO website www.epfindia.gov.in . They will be provided username and password for filing ECR.

This has to be done from April 2012 for the wage month of March 2012.

For further details visit
http://www.epfindia.com/Employer_eSewa.html

NEW PENALTIES IN TDS RULE (SEC 271 H and SEC 234E ) FROM SECOND QUARTER 2012

TDS process has undergone tremendous changes and stream lining since the last few years. With the help of technology ITD along with NSDL are day by day introducing systems and procedures which will ultimately help the tax payer to get the correct credit of taxes paid through the TDS system.  With this regard, some years back the department introduced the system of correction filing of regular returns. But they have also observed that number of corrections have increased since; which not necessarily easing the work of the department to get the system streamlined.

With this in mind, the department has introduced new penalty provisions. In the newly introduced clause the penalty ranges from Rs 10,000 to Rs 1,00,000 for mistakes and inaccurate details in the e-Return procedures. This amendment was introduced through budget 2012 and proposed effective date is July 1st 2012. Hence from second quarter any intentional/unintentional mistakes in the original or correction returns will fall heavily on the deductor as he/she will be charged anywhere in the range from Rs 10,000 to Rs 1 lakh!  (as per newly introduced sec 271H). The common mistakes seen today are incorrect PAN number, incorrect amount deducted and incorrect TDS remittance details like wrong challan number, date or bank information. Hence deductor will have to take an extra caution to verify each and every record in the quarterly e-Returns for TDS and TCS.

The department is positive that this charge will surely lower the scale of corrections happening and would also help in speed up the process of revenue collection through TDS which is a huge source of revenue for the government.
Another sec  234E has been introduced which proposes a fee for Rs 200 per day(subject to maximum of total amount of TDS/TCS) in case of delayed furnishing of TDS/TCS. What is important and noticeable is it is a prepaid and mandatory fee which has to be paid along with delayed filing.  Earlier there was a section 271H in which the deductor had to pay Rs 100 per day for delay in filing. But this was neither mandatory nor was it prepaid. This has been introduced to ensure timely filing and in turn can ensure timely processing of TDS returns.

Thus we have seen that day by day the TDS rules are becoming more stringent for the deductor and non compliance is becoming a very costly issue. The department on the other hand also should also take some steps to ensure easier assistance for deductor queries for easier filing of returns.