October 14, 2013


Tax Deduction At Source was introduced by the Income Tax Department in the year 2004. As per the Income Tax Department:
Tax deducted at source (TDS) and Tax collection at source (TCS), as the very names imply aim at collection of revenue at the very source of income. It is essentially an indirect method of collection tax which combines the concepts of “pay as you earn” and “collect as it is being earned.” Its significance to the government lies in the fact that it prepones the collection of tax, ensures a regular source of revenue, provides for a greater reach and wider base for tax. At the same time, to the tax payer, it distributes the incidence of tax and provides for a simple and convenient mode of payment.

But the scheme of TDS is having some major drawback:
1. Deductor is not depositing the TDS on correct PANs
2. Deductor is not filing TDS returns
3. Deductor is not paying TDS collected from the Deductee.

Due to all these problem, only one person who is mainly suffering is the deductee. Deductees are having immense problem in claiming their TDS and getting their refunds. Income Tax Department are also not getting correct data about Tax being deposited on deductee's PAN and hence they are also not able to issue refunds.

In this post we are going to put some light on certain steps that can be taken in order to get your correct refund:

1. Ask Deductor To File or Correct their TDS return- First and one of the most important step that a deductee can use is to, ask deductor to file or correct already filed TDS return. The benefit would be that deductee' tax details would be correct in 26AS and thus refund will be easily generated.
If the deductor does not file even after that, show them the relevant sections and penalty:
a) Section 271H- Penalty of Rs. 10,000-100,000
b) Fine of Rs. 200 per day beyond specified date
c) Interest from 1 - 1.50%

2. Write a letter to Income Tax (TDS)- Write a letter to the Income Tax (TDS) regarding not filing of TDS at your PAN by the deductor and attach the copies of communication with the deductor. the IT officials will take necessary action against the deductor.

3. Write a letter to Assessing Officer- If the Deductor does not rectify or file his return, ask them to give your TDS certificate. File your return and after the return is processed write a letter to assessing officer with TDS certificate as attachment. The assessing officer will give you the claim and will take necessary action against the Deductor. The relevant notification of Income Tax Department in this regards are attached herewith.

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