Dear Sir,
We pay TDS as mentioned below in three steps:
1. TDS deducted in FCRA books of a/c and paid through FCRA designated bank a/c into a local account.
2. TDS deducted in Local books of a/c paid through non-FCRA bank a/c into a another local account.
3. TDS is finally paid from local account to government (either through online payment or physically (cheque) to a bank through single challan for each section (such as 194J, 194C, 194I, 194C)
Please clear whether it is ok to pay from FCRA bank account to Local bank account to pay TDS, since it is not a expenses and is directly traceable to payment of a statutory obligation.
Thanks & regards
S P Gupta
Mr Gupta,
I feel the issue is not whetehr it is permissible to transfer from FCRA to non-FCRA. Generally FCRA authorities are not concerned if for technical reasons, we have to transfer funds from FCRA to non-FCRA account. This was the case earlier with PF, where only single challan was generated and often NGOs (particularly the large ones) transferred from FCRA to non-FCRA for making single payment.
In case of TDS, now only online payment is allowed (except in case of individuals where physical payment is still allowed). One can generate as many challans in case of TDS, thus you could pay directly from FCRA or from non-FCRA bank accounts.
warm rgds
Dear mr. mittal
As I wrote earlier that the matter has again came into fore due to recent advisory by ITD that single chalan should be used irrespective of sections and deductees.
Regards
Mr. Gupta, kindly note that CPC (TDS) is not prohibiting us for the use of multiple payments. It says we can use single challan for multiple sections of 94C/I/J etc. Hitherto we were using different challans for different sections.
Mr. SP Gupta, the said arrangement made for what purpose is not clear. You can issue as many cheques as required. Eventually you will be reporting all of them in your TDS Returns. Therefore the question of transferring funds from one account to another does not warrant.
Dear Mr. Gupta,
Greetings from Hyderabad!
The first step mentioned by you of transferring the TDS to the non FC account is a violation of FCRA as funds are being transferred from FC to NFC account where the utilization is not proved. The second step is not an issue as there is no such restriction on the NFC accounts but still there is no need to transfer funds from one NFC account to another NFC account for TDS purpose.
As I said the process followed by you is a violation of FCRA. Similarly some of the organizations also follow the process of transferring the TDS amount to the auditor’s account and then the auditor deposits the TDS in the bank. This is also not a correct process in so far as the FCRA provisions are concerned.
Please note that in of the outreach workshops organized by MoHA in Hyderabad in August 2013, it was clarified by the additional secretary and joint secretary that in case of refund of the income tax, the MoHA will not object to the apportionment of the refund from FC to NFC or vice versa (by this I mean physical transfer of such refund from FC to NFC or vice versa) but it is necessary for the organization to have proper documentation in case the justification is sought. This is allowed as an organization can only give one account number to the IT department for refund purposes.
I hope the query is answered.
Thanks and regards,
B V Soma Sastry
Dear Shri Sastry,
The issue has again got revived in view of TDS authorities advising organizations to use single challan for all sections, deductees. When transactions are clearly traceable, every month particular account receives and pay equal amounts there should not be any problem as there is no problem in receiving IT refunds.
Dear Friends,
There could be only one local Account named “TDS-(name of the NGO) into which both FCRA and Local components could be deposited and a single check presented to the Authorities concerned with details followed by submission of one return.
Same is the case with PF contributions – from both FCRA sources and local sources could be credited into one separate PF-(NGO name) Bank Account and one check is issued to PF commissioner with details.
The above mentioned separate Bank Accounts, different from the general Bank Account for LC, are viewed as transparent process of statutory compliance.
Udayashankar
Greetings.
I don’t see any problem in the transaction. Transfer from a FCRA designated bank account to a local account for paying TDS is permissible.
Best,
Shekar
IFA, Bangalore