CBDT issues instructions on TDS Credit
YOUR employer or whoever pays you, deducts TDS and even gives you a TDS certificate, but how are you sure that he has paid the TDS amount to the Government?
In a letter, which was treated as a PIL by the Delhi High Court, Anand Prakash, Chartered Accountant submitted,
2. The Income tax assessees filing Income Tax returns, on receipt of intimations u/s 143(1), generally are required to pay huge demands which are created because of mismatch of TDS as claimed in the Income Tax return. This is primarily because of the fact that department gives credit of TDS which stands reflected in their online computer records i.e Form No.26AS.
3. Whenever any Department/Govt Office/Bank deducts TDS on behalf of the assessee he has to file quarterly statement of TDS deducted, along with PAN of deductee and other details. Even if there is slightest of mismatch in reporting the particulars of deductee, the TDS deducted by the Department will not reflect in the Form 26AS and as such, no credit of TDS will be allowed to the assessee resulting in unnecessary demands and hassles of getting the rectifications done.
4. To get the rectification done, at first the assessee has to request the concerned department to file a revised statement with correct particulars of deductee and only after revised statement is filed, the same will start reflecting in the 26AS and thereafter, the rectification is possible which is a very lengthy procedure. In many cases the concerned department refuses to revise the statement.
The Delhi High Court in Court On its Own Motion v. UOI and Ors - in its judgement dated 14.03.2013 directed
that when an assessee approaches the Assessing Officer with requisite details and particulars, the said Assessing Officer will verify whether or not the deductor has made payment of the TDS and if the payment has been made, credit of the same should be given to the assessee. These details or the TDS certificate should be starting point for the Assessing Officer to ascertain and verify the true and correct position. The Assessing Officer will be at liberty to get in touch with the TDS circle in case he requires clarification or confirmation. He is also at liberty to get in touch with deductor by issuing a notice and compelling him to upload the correct particulars/details. The said exercise must be and should be undertaken by the Revenue, i.e. the Assessing Officer as an assessee who suffers in such cases is not due to his fault and can justifiably feel deceived and defrauded .
The Board has now decided to implement the above direction and states that the manner laid down by the Delhi High Court may be one of the methods of due verification.
Mismatch in TDS will be the biggest IT worry during this year. How many mistakes are they going to correct?
Here is a typical case.
A deductor credits the TDS of an assessee in the PAN of another assessee. There are three persons here. Let's call them A, B and C.
A deducts TDS from B and credits it into C's PAN account. Now B finds that TDS had been deducted from him but that does not figure in his Form 26AS. C finds that he is given credit for the TDS deducted from B. Both B and C approach A to get this rectified. A can ask them to go to hell, but he rectifies it. But the rectification does not figure in the FORM 26AS of B and C. B will not be able to claim the credit of TDS already deducted from him because his Form 26AS does not show the credits. C is in a more dangerous position - he can ignore the credit in his FORM 26AS, but after a few years, the AO may tell him that he has not shown the income for which TDS was deducted and paid to the department as shown in the FORM 26AS.
Should we blame the computers? Computers can do no wrong, it is the idiots who sit before it who can.
The Delhi High Court in the above referred case, started with these words,
Whether computerisation and Central Processing of Income Tax Returns is a boon or bane is rather simple to answer, as benefits of computerisation easily outweigh and outscore any argument to the contrary. Computerization does away with human or manual element and the frailties attached and ensures transparency besides being quick and fool proof. Alas, it is a human element and frailties which have resulted in the present Public Interest Litigation.
Thank God if your FORM 26AS is correct - even HE can't help if it is wrong!
CBDT Instruction No. 5/2013 [F.NO.275/03/2013-IT(B)], Dated: July 08 2013