QUESTIONS & ANSWERS
Complying with new system of tax credit
A new system of tax credit which was introduced from April 1, 2009, has been deferred till July 1, 2009. It is explained in Board Circular No. 2 of 2009 dated May 21, 2009, that tax deduction work is now outsourced to NSDL. The Income-tax Department has made it clear in the Circular that it would not give credit merely on the claim of the assessee or any evidence, including tax deduction certificates, as long as the claim of the assessee is "unmatched" with the information of tax credit from deductors with particulars of deposit of tax deducted with Government along with deductees visible in web-site or from nearest TIN Centre.
It is admitted that there is
no proper compliance even
on the part of State and Central
Government and banks
of the TDS requirements in
that they either do not file
TDS return or do not deposit
the amount collected or
make errors in citing PAN. It
is stated that the Department
is unable to ensure
compliance due to lack of resources.
The new system also proposes
to allot Unique Transaction
Number (UTN)
without which tax credit
cannot be passed on to the
deductee's account. Will the
deductors now take necessary
steps to comply with the
new rules and forms?
As a practitioner I feel
that this is going to create
more difficulties for refundees.
It is necessary to warn
the tax administration that
it has made compliance
more difficult both for deductors
and the Income-tax
Department without any
steps for expediting refunds
for deductees.
The new scheme referred
by the reader to be effective
from July 1, 2009, requires
compliance on the part of
the deductors under substituted
Rule 30 and 37CA of
the Income-tax Rules, 1962,
and the new Forms 16, 16A
and 27B.
Deductors are to remit the
tax deducted electronically
along with Form No. 17 simultaneously
furnishing to
the Taxpayer Information
Network (TIN) system
maintained by NSDL with
basic information relating to
PAN, name of the deductee
and the amount. On such
transmission, every record
will be assigned with a UTN
with NSDL creating a facility
to e-mail the UTN file to the
deductor and also facilitate
the deductee to view the tax
credit information .
But all this means that
there will be no credit for the
deductee unless "matching
credit" is available to the Income-
tax Department.
When there had been no
compliance from the deductors,
when the Income-tax
Department itself was undertaking
the task, it is too
much to hope that NSDL will
be able to get all the information
for matching credit,
when it has no power to enforce
the law.
As pointed out by the
reader, it is too much to hope
that the new system will
help the deductees in any
manner to get expeditious
refund.
Remedy lies in the Income-
tax Department organising
itself to ensure
enforcement of TDS provisions
in respect of statement
for tax deducted to be filed
on the basis of every complaint
filed by the deductees
instead of driving them from
pillar to post, pleading inability
on its own part and
requiring the refundees to
fend for themselves with the
deductors.
It is better that the Income-
tax Department takes
notice of the widespread
grievance of delayed refunds
and activises itself, if it cares
for public relations.
S. RAJARATNAM
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