What is Form No. 26A?
Form 26A provides relief to an assessee from being an assessee in default under section 201 and disallowance of expense under section 40(a)(ia) of the Income tax Act, 1961. The form includes a certificate given by an accountant as required by the provisions of the Act.
Section 201(1) & Section 40(a)(ia) in brief
Section | Description of Section |
Section 201(1) | Any person liable to deduct TDS on the sum paid to the payee and does not deduct or does not pay or after so deducting fails to pay, the whole or any part of the TDS, then, such person shall be deemed to be an assessee in default in respect of such tax. |
Section 40(a)(ia) | Any sum payable to a resident, on which TDS is deductible on the sum paid to the payee and not been deducted or after deduction has not been paid on or before the due date specified in sub-section (1) of section 139, 30% of the expense shall be disallowed. |
Relief provided by Form No. 26A
However, relief is provided to such assessee s, who have failed to deduct, failed remit the whole of part to the TDS via proviso to section 201(1) & section 40(a)(ia) of the Act. The proviso requires such deductors to submit Form 26A.
Section | Description of Section |
Proviso to Section 201(1) | · Any person liable to deduct TDS on the sum paid to the payee and fails to deduct the whole or any part of the tax, on the sum paid or credited to payee/deductee shall not be deemed to be an assessee in default as in section 201(1) if such payee/deductee of the expense: (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income These conditions are to be verified and a certified by an accountant. This certificate to be attached as annexure to Form No: 26A which shall be submitted to Director General of Income-tax (Systems) or the person authorised. · Also no penalty shall be charged for the default from deductor unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax. |
Proviso to section 40(a)(ia) | · Where an assessee fails to deduct the whole or any part of TDS and is not be deemed to be an assessee in default under the first proviso to section 201(1) of the Act, then for the purpose of section 40(a)(ia), it shall be deemed that the assessee has deducted TDS and paid the tax on such sum on the date of furnishing of return of income. · Thus, an assessee/deductor does not attract disallowance of expenses in the tax computation, if Form 26A is submitted. |
E- Filing procedure for Submission of Form No: 26A
Form 26A now by virtue of Notification No: 11/2016 dated 2nd December, 2016 can now be e-filed. Summary of steps involved in e-submission is mentioned below:
- The deductor to raise a request based on the PAN of the payee, for submission of Form 26A for non- deduction /short deduction of TDS.
- The request should be validated and digitally signed by the authorised signatory of the deductor.
- The request made, will create a trigger in the Income tax E-filing login of the deductor.
- The deductor from the Income tax E-filing login shall add details and assign the Accountant to issue the certificate that the deductee has satisfied the conditions specified in proviso to Section 201(1).
- The assigned Accountant to verify if the deductee for whom Form 26A is being submitted, has furnished return of income u/s139, has taken into account such sum for computing the taxable income and paid the tax due on the income.
- Post verification the accountant to update the details required in Annexure A to Form 26A and issues the certificate from his AR login.
- On issuance of certificate, the deductor to digitally sign and submit form 26A from the Income Tax login.
(For detailed procedure kindly refer to E-tutorial material from TRACES linked in reference documents section of the article)
Other matters:
- Interest – The assessee who has failed to deduct TDS and is not deemed to be an assessee in default by virtue of submission of Form 26A, then interest @ 1% for every month or part of a month on the amount of such tax for non-deduction and 1.5% every month or part of a month for non-remittance of deducted tax shall be paid from the date on which such tax was deductible to the date of furnishing of Income tax return by such payee.
- The format of Form No. 26A is issued is provided by Rule 31ACB of the Income-tax Rules
- Manual Form 26A along with Accountant certificate in Annexure A, are continued to be accepted by the Income Tax Authorities as of now.
- Similar to TDS, failure to deduct or remit TCS, the assessee can claim relief by filing for Form No. 27BA.
- “Accountant” shall be as defined by the provisions of the Income Tax Act, 1961.
Reference Documents:
Disclaimer: This article is presented based on as is condition and shall require modification with amendment to Law, Rules, Circulars, Notifications.