BackAre you getting credit for TDS?
Are you getting credit for TDS?
PremiumShyamal Banerjee/Mint
Over the last six or seven years, the tax department has been computerizing its tax system. The system is supposed to capture all taxes paid by you or deducted from you and give you credit for such taxes. But many taxpayers are discovering that they are not getting credit for all their taxes and are facing enormous difficulty in ensuring that their rightful tax credits are given to them. On the contrary, they find that incorrect tax demands are being recovered from subsequent refunds and demands that are being paid continue to be shown as outstanding. What has gone wrong and what is the remedy for this?
The problem
The biggest problem that taxpayers face is that the Central Board of Direct Taxes (CBDT) has prescribed that credit for taxes is now to be given as per the taxpayers’ online tax ledger, form 26AS. Very often, taxes deducted from taxpayers or taxes paid by them do not appear in their form 26AS, though they have tax deduction certificates or tax payment challans for such amounts. The reason for this is that many tax deductors, particularly government departments, banks and government-owned undertakings, are careless in filling up their tax deduction statements and do not give the full and correct details of the persons from whom tax is deducted at source (TDS). In such a situation, CBDT has prescribed that no credit for taxes is to be given to the taxpayer, unless such TDS statements are amended by the tax deductor. It is practically impossible for a small depositor to get such TDS statements rectified by banks or such entities, effectively ensuring that he does not get credit for such taxes at all. The other problem has been that banks have been making mistakes in uploading details of taxes paid, requiring taxpayers to approach banks to rectify the details uploaded, again a mammoth task.
Ineffective solution?
The only alternative that a taxpayer has is to approach his tax officer to rectify his tax credits, and cancel the incorrect demands raised on him due to non-grant of such tax credit. Unfortunately, such rectification is not a priority for most tax officers, who are focused only on tax recovery due to the targets set for them, rather than attending to such grievances. Further, the amount of such incorrect demands is extremely large, making it difficult for the tax department with its limited resources to cope with the rectification requests. This results in piling up of tax demands, incorrect adjustment of such tax demands against genuine refunds, among other things. This suits the tax department as it shows increased tax collection and increasing tax arrears. The amount involved in such incorrect demands surely runs into a few thousand crore of rupees.
Undue harassment
It is the fundamental right of every taxpayer to get credit for all taxes deducted by him and taxes paid by him. The system of TDS, tax information network and tax credit have all been devised by the tax department and it is the duty of the tax department to ensure that no taxpayer is denied his rightful tax credit due to the faults of the system. Credit should continue to have been granted on the basis of physical certificates with a parallel run of the system, until such time as the problems in the system were sorted out.
A taxpayer cannot be made to run around from pillar to post to get credit for taxes paid. It is the duty of CBDT to ensure that this mess is sorted out at the earliest. Unfortunately, though this problem has been noticed over the last four or five years, CBDT has chosen to ignore it, hoping that it would go away. It has now reached such mammoth proportions that it threatens to undermine taxpayer confidence in the entire tax system.
Concrete action
In Mumbai, professional associations have taken up the matter with the local chief commissioners of income-tax and the chief commissioners have agreed to dispose of rectification applications relating to incorrect demand due to non-grant of taxes paid on a priority basis through a single window in the office of each chief commissioner. A special clearance fortnight has been announced in the second half of June, wherein such applications would be disposed.
In Delhi, a professional has written a letter to the Delhi high court pointing out these problems, which the Delhi high court has converted into a writ petition and asked CBDT to file its response to the various issues in this regard.
One hopes that at least this will act as a wake-up call for CBDT to ensure proper tax credit to all taxpayers and see that this undue harassment of taxpayers is stopped.
Gautam Nayak is a chartered accountant.
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