Advisory for Deductors

1. Deductors deduct tax at lower rate on payment/credit to deductee on production of certificate duly issued by assessing officers under section 197. Deductors quote such certificate number in quarterly TDS statement. Instances of huge default of ‘Short Deduction’ have been observed due to wrong quoting of 197 certificate number. The scenario of wrong 197 certificate generally arises when the deductor accepts from deductee a manually issued lower deduction certificate by assessing officer & quotes the same in TDS statements.

2. CPC(TDS) has provided the facility of validating the 197 certificate to the deductors on www.t. (TRACES). This enables a deductor to first validate the 197 certificates given to him by their deductees and then furnish the same in the TDS/TCS statement.

3. If the 197 certificate is not valid as per TRACES validation, the deductor should always insist upon an ITD system generated certificate having a unique 10 digit alpha numeric number. This would minimize the generation of default of “Short Deduction due to 197 certificate”.

4. This also applies to certificates issued under section 195(2) & 195(3) by LTU & international taxation officers.

5. Instruction to field authorities to issue only system generated certificate were issued vide instruction No. 36 through F.No. SW/TDS/2/2/08-DIT(S)-11[Vol.II] dated July 15th, 2009 (copy enclosed).

Download Instruction No. 36 through F.No. SW/TDS/2/2/08-DIT(S)-11[Vol.II] dated July 15th, 2009

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  1. Ram Babu B. Com says:

    this is all un necessary – useless – intellectual perversion etc.etc.,
    I got notice as I did not choose the appropriate option – though the No is correct.
    Why this option A, B C etc. In 1 case PAN no is entered. but option ‘C’ was also chosen. Now I could not change PAN No. …..

  2. Sekaran says:

    Clearly CBDT’s systems are getting more and more complicated and bureaucratic.This is a sure way to avoid the tax department, as it is not only going to worry the overloaded ITOs and the simpleton Tax payer. The regime is suited only for computer savvy tax payers and dalaals specialising in such work. The tax payer is once again at the mercy of the Dalaals(form fillers) and the ITOs!! What is gained by such Hi Fi computerisation? A BIG NOTHING. CPC is a big Post Office and is not doing its job. If these tasks are not in their activity THEY MUST BE NOW INCLUDED.
    Once the tax is deducted, Tax payer should be free more tax or less tax. If it is less tax then CBDT should bar the company doing such tactics including Govt Bodies like Indian Post and Banks to task severely and punish them. Whay should tax payer be held responsible! Ridiculous systems of CBDT indeed.
    Hope the Finance Minister at Centre is listening. PM Modi wanted to make the Indian Tax System simple and uncomplicated. But the Babus will not allow such functioning any time until next general electiolns it seems!

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December 2020