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It's your responsibility just as much as your employer's. By Makarand K Herwadkar
TDS holds out no carrots for compliance, but sticks there are aplenty for those who default. Of course, the penalty provisions are directed mainly towards the errant payer (that is, the tax deductor). But the payee who files or submits a wrong declaration or statement is not spared either. TAKE PROPER CREDIT. The tax deducted is not money lost forever, but merely an account payment of tax on behalf of the payee. Any excess deduction can always be claimed as a refund by filing the income-tax (it) return. When the income on which tax is deducted is disclosed in the payee's return of income, she is given credit for TDS on production of the TDS certificate (in Form 16 for salaried people, and Form 16A for others) furnished by the payer. Thus, the payee has to ensure that wherever tax has been deducted, the relevant TDS certificate is obtained from the deductor in time for furnishing it (in original) along with the it return. If the TDS certificate is lost, the payee can obtain a duplicate from the deductor. However, credit for tax on the basis of a duplicate certificate is granted by the assessing officer only on the furnishing of an indemnity bond, the format for which can be obtained from the it Department. Where any property or investment is owned or held jointly as co-owner (not in partnership), credit for TDS is given to each of the co-owners in proportion to their respective shares in the income. However, to avail of this benefit, the payee should ensure that the certificates of deduction are obtained from the deductor separately for each of the joint owners for their shares in the income. KNOW YOUR RESPONSIBILITY. Wherever tax has to be deducted from the income or payment received by the payee, and the payer fails to deduct such tax, the payee cannot escape the tax liability for tax, if any, on that income or payment. However, in case the tax has been actually deducted by the payer, but the payer fails to issue the TDS certificate (because he has not paid the tax, or for any other reason), no demand can be raised against the payee to the extent of such actual deduction of tax. DON'T BLOCK YOUR MONEY. To avoid unnecessary blocking of money by way of TDS, the Income Tax Act of 1961 has provided for situations where the payee can seek a lower, or nil, deduction. In the following cases, the payee can prevent deduction of TDS by furnishing to the payer a declaration, in duplicate, stating that the tax on her estimated total income will be nil:
Alternatively, if the payee's case is not covered by any of the provisions mentioned above, she can make an application in the prescribed form to the Assessing Officer to obtain a certificate for deduction at a lower rate. The Assessing Officer issues the certificate if he is satisfied that the total income justifies deduction of tax at a lower rate, or nil deduction. Some of the incomes for which this benefit is available are mentioned here.
THE PENALTY. If the payee knowingly makes a false statement or declaration, she is punishable:
It's best to understand TDS at its source. (In arrangement with the Bombay Chartered Accountants' Society) |
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Ignorance can neither be bliss, nor an
excuse, when it comes to Tax Deduction at Source (TDS). And with the TDS net being cast
wider every year, I thought I would remind you about your rights and responsibilities as a
payee. 