August 2019

IS IT FAIR TO MAKE OBTAINING VALID TDS CREDITS TEDIOUS?

Sai Bhosale
Chartered Accountant

BACKGROUND

Getting credit for TDS has become a prickly point in many of the intimations issued u/s 143(1) of the Income tax Act, 1961 and even in the case of assessments. The Government has tried to automate the process, which was expected to simplify the grant of credit for TDS and issue of refunds. However, the computerised system is unable to solve certain issues to the required extent, which gives a substantial headache to the assessee. She needs to tackle the demands that are created due to non-grant of correct credit of the TDS entitlement or issue of incorrect refunds. The process becomes more complicated, especially because the assessee has to deal with a Centralised Processing Centre (CPC) which does not entertain any human interaction!

 

Some of the major issues faced by an assessee in respect of TDS credit are as follows:

 

Non-payment of TDS by the deductor to the Government or non-filing or incorrect filing of relevant TDS return by him is a major problem.

 

A different system of accounting followed by the deductee and the deductor, resulting in a different year of deduction by the deductor and the claim of TDS by the deductee, is another one.

 

Statutory postponement of claim of TDS as per Rule 37BA of Income-tax Rules, due to which TDS is not allowed to be claimed unless the relevant income is offered to tax by an assessee. In many cases this results in non-grant of TDS credit to the assessee in the year of such claim.

 

Deduction and payment of TDS being made in a subsequent year by the deductor as compared to the year of accrual of the relevant income as per the accounting system followed by the deductee, more often than not results in deprival of TDS credit to the deductee in the relevant year.

 

WHY IS IT UNFAIR?

After TDS has been deducted, the deductee remains at the mercy of the deductor for securing the credit for th

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