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Widespread failure to deduct tax at source

Bank customers advised to ensure compliance

I am an income-tax assessee with pension and income from other sources (interest on deposits) as my sources of income. I have not given Form 15H to my bank.

My banker, State Bank of India, Mysore main branch, deducted tax at source at a percentage of interest paid to me. However, the bank refuses to make any deduction towards TDS with regard to pension paid through the same bank. When I pointed out that pension is to be treated as salary, the Manager disagreed. Can you please clarify, if the Manager is legally required to deduct tax from pension also under Section 192 of the Income-tax Act?

The next problem is that the bank does not issue Form 16A before March 15, the last date for paying advance income tax. The result is that I cannot compute my tax dues correctly.

Will you please clarify if there is a deadline for the bank to issue a certificate regarding TDS?

There are many taxpayers like the reader who would like to ensure that tax is deducted at source, where it is necessary. If it is not so deducted, the failure attracts consequences of interest and penalty for the payer and not the payee. Tax is required to be deducted since pension is salary liable for tax deduction at source under Sec. 192 of the Act.

When such omission on the part of the bank is spotted by the Income-tax Department, it is not unusual that deduction of tax is made by the bank for past years, debiting the tax to the savings account of the customer. Since the customer would have already paid the tax by then, it puts the assessee to difficulty in getting a refund. What is more, even the interest charged on the bank for the default of delayed deduction in such cases, which in law is to be borne by the defaulter, is debited to the customer's account, a practice contrary to law. But then, individual customers are helpless. It is for this reason that it is in the interest of bank customers to ensure that tax is deducted at source.

The instance given by the reader is not a solitary one. It is indeed regrettable that there should be such widespread ignorance in responsible quarters as regards TDS obligations, partly due to failure of the department itself to adequately publicise and enforce TDS provisions. Where no TDS is required, the assessees are often put on the rack, while glaring omissions such as those pointed out by the reader do not receive attention.

As for the expectation of the reader that he should get all TDS certificates before the due date for the last instalment of advance tax, the law provides for issue of TDS certificate for different categories of payments with reference to dates of deduction, some of which may fall well beyond March 15 or, for that matter, beyond March 31. It is for the taxpayer to take into account probable tax deduction for the year and make the payment of advance tax accordingly. The law provides a cushion in the matter of advance tax liability by ignoring obligations below Rs. 5,000 or a shortfall less than 10 per cent of tax payable, whichever is larger, as a tolerance margin of error by way of short deduction.

S. RAJARATNAM

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