Quoting of Unique transaction Number (UTN) in ITR and practical issues

It has been directed that ITR-1 to ITR-8 shall require the quoting of the relevant UTN for every TDS or TCS claim made by an assessee and that the credit for any TDS/TCS claim will be allowed only if the assessee quotes the relevant UTN and the said UTN matches with that in the database of the Department.

In this regard it has also been noted that with a view to enabling the processing of returns relating to Financial Year 2007-08 (Assessment Year 2008-09) and enabling the assessee to receive the UTN for TDS and TCS transactions in the Financial Year 2008-09 (Assessment Year 2009-10), the following procedure will be followed:

(a) National Securities Depository Limited (NSDL) shall assign an UTN for every TDS and TCS transaction record in Financial Year 2007-08 and 2008-09 reported in the quarterly returns received by it.

(b) NSDL will create a facility to e-mail the UTN file to the deductor if the e-mail address of the deductor is available with them. In addition, they will also create a facility for the deductor to download the UTN file.

(c) Upon receipt of the UTN, the deductor will inform the UTN to the deductee. In cases where the UTNs are available to the deductor before the issue of the TDS/TCS certificate to the deductee, the deductor will indicate the UTNs on the certificate. However, if the UTNs are not available to the deductor before the issue of TDS/TCS certificate, the deductor shall, subsequently, send a consolidated statement of all TDS/TCS transactions indicating the UTNs.

(d) NSDL will also create a facility to allow independent viewing of the UTNs by the deductee. As a result, even if the UTNs are not received by the deductee from the deductor, they can be directly obtained from the NSDL database and quoted while making claims of TDS and TCS in the return of income.

In its zeal to implement something innovative, the CBDT seems to have lost sight of several practical implications of the matter as highlighted hereunder:

(i) NSDL will be required to generate UTNs for a very large number of TDS/TCS transactions for two financial years running into several crores. It is highly unpractical that this work can be completed in reasonable time and before the due date of filing the tax returns for A.Y.2009-10, i.e. 31st July, 2009.

(ii) Infact, the TDS/TCS data for the last quarter ended on 31st March, 2009 will come to be filed with the NSDL, only by the due date of filing the last quarterly return for F.Y. 2008-09, i.e. on 15th June, 2009. It is not known whether NSDL has already generated UTNs in respect of the TDS/TCS data already on record with it earlier. The data for the last quarter being substantially more voluminous in comparison to the data for the first three quarters, it would further add burden on NSDL after 15th June.

(iii) Even if NSDL is in a position to complete the generating of UTNs for all assessees, the real problem would be of communicating the same to the deductees through their respective deductors. It is a known fact that Government and Semi-Government Departments and other Public Organizations like Banks, Post Offices etc. are generally lethargic in their communications with deductees and it is apprehended that concerned deductees would find it extremely difficult to get timely information of UTNs for TDS/TCS from their respective deductors, even if the same has been conveyed to them by NSDL.

(iv) Not all deductors have E-mail and sending information of UTNs by NSDL to them through post or courier will be time consuming. Moreover, it may be too much to expect that all deductors immediately communicate to deductees their relevant UTNs. The delays arising in this process will ultimately jeopardize the timely filing of Income-tax Returns by concerned assessees, who do not receive their UTNs in time.

(v) It is very difficult to comprehend as to how NSDL will be able to create a facility for allowing independent viewing of the UTNs as mentioned in the Circular. Even the present facility of viewing credits of taxes paid by an assessee via Form 26AS through the Tax Information Network (TIN) is available, only if an assessee is registered with TIN. The registration facility involves individual authorization through the visit of TIN official and is thus time-consuming. Several practical issues such as maintaining confidentiality of TDS/TCS information, likely misuse of the same, etc. may arise, if the viewing facility is made public and not suitably monitored. It is thus highly unpractical that within the short time available before the due date of return filing, the facility for independent viewing can be effectively put in place.

(vi) It needs to be appreciated that the CBDT guidelines have come to be announced nearly two months after the end of F.Y. 2008-09 and majority of the TDS/TCS Certificates have already been issued to the concerned deductees by the respective deductors. Circular No.3 virtually attempts to introduce denovo procedural provisions with retrospective effect, which is unprecedented in the history of TDS/TCS.

(vii) Assessees are thus most unlikely to get complete information of their UTNs for claiming TDS/TCS credit in reasonable time before 31st July, 2009, being the first due date for filing their tax returns. This is bound to create grave anxiety and concern in the minds of lakhs of affected salaried tax payers, investors and senior citizens and also delay filing of their tax returns and payment of self assessment taxes, at the same time creating issues in relation to levy of penal interest under Sections 234A and 234B. Moreover, non-audit business concerns such as firms and proprietors, seeking to file timely returns with a view to avail of the benefit of claims in regard to carry forward of losses, are also likely to be seriously affected. In short, the timely return filing process for A.Y. 2009-10 is likely to be gravely endangered on account of the proposed retrospective operation of issue of UTNs for TDS/TCS credit claims.

Keeping in view the numerous practical problems and difficulties involved as highlighted hereinabove, the directions for mandatory quoting of UTNs in the Income-tax Returns for A.Y. 2009-10 should be withdrawn forthwith and assessees should be advised to file their tax returns as per the earlier provisions.