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47. TDS TCS credit in Return on the Basic on etds return by Deductor

CBDT has issued a notification regarding ,Tax Credit of Tax deducted at source (TDS) and Tax collection at source (TCS) .As I have mentioned in my earlier post that no TDS form 16/ 16A is required to be issued for tax deduction on or after 01.04.2010.On the line of these instruction CBDT has reduce the importance of form 16/16A(tds certificate) by inserting new rules for allowing credit of TDS/TCS to assessees on the basis of Tds return filled by the deductor.

TDS credit on the basis of Deductor TDS/TCS return: As per new rules Tax credit for TDS /TCS to assessee/deductee  will be given on the basis of Information (ETDS/ETCS return) supplied by deductor to the Income Tax department .Means if deductor has not submit his return correctly or has filled your pan incorrect or have not filed the TDS return at all then no credit will be allowed to you against TDS even you have a valid TDS certificate with you. So to get the tax credit of TDS/TCS, deductee is dependent on the efficiency of the deductor/staff of the deductor.

Deductee can Transfer Credit to other in certain cases: Further as per new rules, If income of the deductee is not assessable  in the hand of another person due to

 1) provisions of section 60,61,64 or 93 and 94

2) Income assessable in the hand of members of  AOP/trust instead of  AOP/Trust

3) Asset held in the name of KARTA or partner but income is of HUF/partnership firm

4) In case of joint owner of property, deposit, security, shares, mutual funds

 The deductee must file a declaration with the deductor containing Name, Address, PAN of the person to whom credit is to be given for the TDS. And deductor after getting declaration from the deductee ,fill particulars of the person in etds Return as supplied by the deductee. Deductor shall also keep the declarations in safe custody.

For example :if a person has deposited a money in the name of his wife .TDS is required to be deducted on interest on the FDR .Then as per new rules as the income (interest) is taxable in the hands of the Husband ,wife (deductee) should file a declaration with the BANK (deductor ) giving her husband's PAN, Name and address detail and Bank will fill detail of her Husband in etds return .

And if any of the above step is missing then Husband will not be eligible to get the TDS credit thought the interest remain taxable in his hands under clubbing provisions. So by inserting this new provisions tax credit of TDS to some genuine person may be denied.

Misuse of new Clause :Further, Misuse of the above new clause can not be ruled out also .The reason behind it that if deductee file a declaration to deductor  for TDS credit to another person pan then deductor has no medium/source to verify the deductee's declaration or has no right to reject his declaration even he has some doubts, so deductee can easily divert his TDS credit to another person Pan by giving a simple declaration and then get the refund from the another person .

 Annexure less return: The whole new rules are a step towards annexure less return in actual manner and digitization the Income tax assessment process which a right step for a such a large number of taxpayers .Though in beginning their may be some lapse, bottleneck, hurdle in the process but overall it will be beneficially for the assessees in long run as the human involvement /inspector RAJ will be reduced by passage of time.

 Online PAN Ledger is now More Important: The new rules has increased the importance of the PAN Ledger (form 26AS) or we can say TAX ledger. Online Tax ledger (Form 26AS) is available to all assessee to view their detail of following taxes 

1)Advance Tax/Self Assessment tax

2)TDS by deductor

3) TCS by deductors

after one time registration with tax authorities. So by viewing your online ledger ,you will be able to know whether Deductor has filed their return correctly and intimated your PAN in Etds return and if you found any discrepancies in your online ledger then you have time to got it corrected from deductor in timely manner so that you have no problem in availing tds credit in your assessments .