TDS mismatch is a big issue for Indian tax payers . Something which is already provided in the Income Tax Act is not being followed by many in the Income Tax Department. CBDT has issued an instruction dt 01/06/2015 to bring this issue in attention of all A.O that section 205 of the Income Tax Act prohibits demand of the tax on the deductee if it is established that tax was already deducted at source .
Unfortunately, neither the law nor the Board’s instruction matter for some official . This is clear from the para 2 of the fresh circularÂ Â “However, instances have Â come Â to the Â notice Â of the Board Â that these Â directionsÂ Â Â are not being strictly Â followed Â by the field officers “.
Board has once again instructed the tax official notÂ not Â to Â enforce Â demands Â created Â on account Â of mismatch Â of credit Â due Â to non-paymentÂ Â Â of TDS Â amount Â to theÂ credit Â of the GovernmentÂ Â by Â the Â deductor.
Circular on TDS Mismatch
F.No.Â Â 275/29/2014-ITÂ Â (B) Government Â of lndia Ministry Â of Finance
CentralÂ Â Board of Direct Taxes
New Delhi,Â Â Dated: Â Â 11thÂ Â Â March, Â 2016
Sub:Â Non-depositÂ of tax deducted Â at source Â by the deductor- Â Recovery of demand against the deductee assessee.
Vide Â letter Â of even Â number Â dated Â O 1.06.2015,Â Â Â the Â Board Â hadÂ issued Â directionsÂ Â to the field officers Â that in case of an assessee Â whose tax hasÂ been deducted Â at sourceÂ but not deposited Â to the Government’sÂ Â accountÂ by the deductor,Â Â the deductee Â assessee Â shall not be calledÂ Â upon Â to pay the demand Â to the Â extent Â tax has Â been Â deducted Â from Â his Â income. Â It was Â further Â specified Â that Â section Â 205 Â of theÂ Income-tax Â Act, Â 1961 puts a bar Â on direct demandÂ Â againstÂ Â Â the Â assesseeÂ Â in Â such Â cases Â and Â the Â demandÂ Â on Â accountÂ Â of Â tax Â credit mismatchÂ Â Â in such situations Â cannot Â be enforced Â coercively.
- However, instances have Â come Â to the Â notice Â of the Board Â that these Â directionsÂ Â Â are not being strictly Â followed Â by the field officers.
- In view of the above, the Board Â hereby Â reiterates Â the instructionsÂ Â Â contained Â in its letter dated Â 01.06.2015Â Â and Â directsÂ Â theÂ assessing Â officers Â not Â to Â enforce Â demands Â created Â on account Â of mismatch Â of credit Â due Â to non-paymentÂ Â Â of TDS Â amount Â to theÂ credit Â of the GovernmentÂ Â by Â the Â deductor.Â Â TheseÂ Â instructionsÂ Â may Â be Â brought Â to Â the Â noticeÂ Â of Â all assessing Â officersÂ Â in Â your RegionÂ Â for compliance.
This Â issuesÂ Â with the approvalÂ Â of MemberÂ (Revenue Â &TPS).
Under Secretary Â (Budget)