CA Gautam Joshi
It hurts isn’t it when somebody deducts our tax monthly or quarterly even if our total income during the year does not exceed maximum exemption limit. TDS being an early collection for government becomes tedious both for employer and employee especially when employee’s total income during the year does not exceed maximum exemption limit.
Form 16 or 16A are provided by employer to employee as a proof of tax deduction. At the end of the financial year, tax payers file their income tax returns (ITR) from the income tax details provided in form 16 or 16A.
On the other side, as a part of e-governance, tax payer is provided 26AS annual statement showing his total TDS deducted during the year. This facility is available on income tax portal www.incometaxindia.gov.in.
Now, 26AS annual statement shows correct TDS only when employer has deposited the same TDS which is deducted from the tax payer’s income and filed quarterly return in time and that too correctly. The ambiguity is ITR filed by tax payer (especially amount of TDS) is assessed with 26AS annual statement and not with form 16 or 16A provided by employer. This has resulted into wrong ITR processing and delay in genuine refund claims. In line of this tax payers receive intimations for difference of TDS between form 16/16A or 26AS annual statement and finally have to file rectification under section 154 showing reasons of non-reconciliation of TDS amount between form 16/16A or 26AS annual statement.
If not amendment, government should at least strengthen the penal provisions of non-filling or filling erroneous TDS returns. Though time to time amendments has been on these issues, instances found where field officers have shown reluctance in raising inquiries to employers not filling or filling erroneous TDS returns.
It would be a revolutionary change in law if the tax payers who suffer from this non-reconciliation of TDS amount are given powers to intimate the name and details of employers to income tax officers to initiate penal provisions against them in this regard.
Tax payer before filling his ITR must reconcile his TDS certificates i.e. form 16 or 16A with online tax credit available in 26AS annual statement. If TDS amounts vary, he should first request (in writing and take an acknowledgement of receipt) his employer to correct the non-compliance on his part and if the same has not been complied; intimate this fact (in writing and take an acknowledgement of receipt) to employer’s jurisdictional income tax officer and file his ITR in time without worrying for compliance from employer. If intimation is received from the income tax office later, tax payer should rectify the error u/s 154 and provide form 16 or 16A with his written efforts to make employer comply his duties.
(Republished With Amendments)