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 circular “However, instances have come to the notice of the Board that these directions are not being strictly followed by the field officers “.
Board has once again instructed the tax official not not to enforce demands created on account of mismatch of credit due to non-payment of TDS amount to the credit of the Government by the deductor.
Circular on TDS Mismatch
F.No. 275/29/2014-IT (B) Government of lndia Ministry of Finance
Central Board of Direct Taxes
New Delhi, Dated: 11th March, 2016
Sub: Non-deposit of tax deducted at source by the deductor- Recovery of demand against the deductee assessee.
Vide letter of even number dated O 1.06.2015, the Board had issued directions to the field officers that in case of an assessee whose tax has been deducted at source but not deposited to the Government’s account by the deductor, the deductee assessee shall not be called upon to pay the demand to the extent tax has been deducted from his income. It was further specified that section 205 of the Income-tax Act, 1961 puts a bar on direct demand against the assessee in such cases and the demand on account of tax credit mismatch in such situations cannot be enforced coercively.
- However, instances have come to the notice of the Board that these directions are not being strictly followed by the field officers.
- In view of the above, the Board hereby reiterates the instructions contained in its letter dated 01.06.2015 and directs the assessing officers not to enforce demands created on account of mismatch of credit due to non-payment of TDS amount to the credit of the Government by the deductor. These instructions may be brought to the notice of all assessing officers in your Region for compliance.
This issues with the approval of Member (Revenue &TPS).
Under Secretary (Budget)