The Income-tax Department is required to give credit for TDS based on the annual information in NSDL site. The assessee can register his PAN and view the status of TDS, advance tax and self-assessment tax (annual tax statement AS 26). Credit for TDS is given to deductees based on the returns submitted by the deductor. In the event of the returns being rejected for mismatch of challans or non- quoting of PAN numbers of some of the deductees, assessees have no remedy to get credit for TDS in the absence of rectification of returns by the deductor.
Please advise the course of action the assessee can take in such circumstances so that he gets credit for TDS in his assessment. Quoting the PAN number of the deductees, in the quarterly return has become mandatory effective June 1, 2006 [139A(5B)]. What is the position of the deductee who for obvious reasons of his income being below taxable limit, is not required to obtain PAN or submit return of income. Even in such cases is it compulsory on the part of the deductor to obtain PAN of the deductee or certificate for non-deduction of the tax in Form No.13 in terms of Sec. 197.

The problem posed by the reader is one of the many issues which have so far not been addressed by the Income-tax Department while introducing the new system of tax credit from assessment year 2008-09 with reference to the statement received by it from the deductors. Primarily, no machinery has been devised, where the taxpayer finds that he is not getting credit, though tax has been deducted at source. It may be due to the deductor either failing to deposit the tax deducted at source or not reporting the same in the statement furnished to the Income-tax Department. It will be the deductee, who has to fend for himself in such cases, while the power to enforce compliance in the event of failure of the deductor is on the Department. The deductee’s return will be processed by the computer requiring him to pay tax that has been deducted, but not covered by the statement, along with interest for short payment.

As regards the problems posed by the reader because of the requirement of the Permanent Account Number (PAN) of the payee, Sec. 139A does not require a person to apply for PAN, unless he is in business or profession with total sales turnover or gross receipts exceeding Rs. 5 lakh in any previous year. The assessing officer may allot the number under Sec. 139A(2) of his own accord. Sec. 139A(3) gives freedom to any person, who is not required to file an application, also to apply and get PAN. It follows that if a person is in receipt of any income from which tax is deducted, he can apply for PAN.

There appears to be no other way, unless the Department comes out with a system for giving credit for such persons on application by following the existing system of issue of tax deduction certificate in the case of persons, who do not have a number. This will be an easier course than loading the system with too many numbers which will make it unwieldy.

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    Dear Sir,

    I am chasing my banks to get the TDS
    credits corrected in TIN-NSDL database to match with the TDS certificates issued by them. But, all banks are not able to do it due to some unknown reasons to me. This means even though banks have deducted TDS for which they have issued the certificates, I may not get the credit for all amount of TDS. If IT department does not give credit for a TDS then it should not consider the corresponding income too.

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October 2020