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TDS credit can be claimed even if it is not deposited by the Deductor


Chartered Accountant

TDS credit can be claimed even if it is not deposited by the Deductor
Query 1]
  1. I have few questions regarding TDS as under:
    What to do in case TDS, if the person/firm deducting tax is not depositing TDS with I.T. Authority? [
  2. Whether I can get the tax credit even if the TDS is not deposited by the tax deductor (i.e., payer of income)? Whether tax amount could be recovered from me for non-payment by the deductor? []
i)       The advantage of the TDS to the Government in widening tax base & raising revenue cannot be ignored. However, despite so many TDS awareness programme & seminars, still there are lot many deductor who are not depositing the TDS amount in the Government treasury. Without Quarterly TDS Return being filed by the Deductor, TDS would not get reflected in the 26AS statement of the deductee and in normal course tax credit could not be given to the deductee. Deductee are in a fix when the deductor deducts the tax but doesn’t either deposit the tax or after deposits either doesn’t file TDS return or file it erroneously without correctly mentioning the details of deductee. This is the most common grievance that is faced by many deductees across the country. The problem arises not only at the time of claiming tax credit but also arises at the time of e-filing of return. In such cases, the deductee should file the return incorporating such TDS amount also. For this, deductee has to compulsorily mention the Tax Deduction Account Number (TAN) of the deductee without which it would not be possible to file the return electronically. Further, Deductee should follow the following approach in such cases:
i. Write a letter to the Deductor incorporating:
a] The details of payments done and the tax deducted thereon
b] Provision of Section 203 read with rule 31 which requires the deductor to issue TDS certificate within 15 days from the end of the quarter in which TDS is done
ii. Keep the proof of letter issued to the Deductor
iii. If despite this, the certificate is not issued within reasonable time, write a letter to Joint Commissioner or Addl. CIT of TDS wing who has jurisdiction over the Deductor     mentioning the detailed facts elaborated above.
ii)    Readers may note that TDS wing of Income Tax department is working pro-actively and very rigorously initiating the penal proceeding against the defaulters who are illegally withholding the amount of TDS thereby causing hassles to the deductee.
iii)  There is an important instructions issued by CBDT for grant of TDS credit to the deductee even if the same is not deposited by the deductor. The copy of the same is re-produced hereunder for the benefit of masses:
“Instructions No. 275/29/2014-IT-(B), dtd.1-6-2015
1. Grievances have been received by the Board from many taxpayers that in their cases the deductor has deducted tax at source from payments made to them in accordance with the provisions of Chapter – XVII of the Income Tax Act, 1961 but has failed to deposit the same into the Government account leading to denial of credit of such deduction of tax to theses tax payers and consequent raising of demand.
2. As per section 199 of the Act credit of TDS is given to the person only if it is paid to the central Government Account. However, as per section 205 of the Act, the assessee shall not be called upon to pay the tax to the extent tax has been deducted from his income where the tax is deductible at source under the provision of Chapter- XVII. Thus, the Act puts a bar on direct demand against the assessee in such cases and the demand on account of tax credit mismatch cannot be enforced coercively.
3. This may be brought to the notice of all the Assessing Officers in your region so that if the facts of the cases so justify, the assessee are not put at any inconvenience on account of default of deposit of tax into the Government account by the deductor.
4. This issues with the approval of Chairperson, CBDT.”

[The author is a practicing Chartered Accountant from Nagpur.
Readers may send their direct tax related queries at
10, Laxmi Vyankatesh Apartment
C.A. Road, Telephone Exch. Square
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