It is reported that as much as 30 per cent of income-tax collected is in the form of Tax Deducted at Source (TDS). Under Section 203 of the Income-Tax Act, 1961, anyone deducting tax at source is obliged to issue a certificate of TDS in evidence of tax having been paid pro tanto by the assessee. The insertion of Section 203AA with effect from April 1, 2005 has, however, queered the pitch. It casts upon the Income-Tax Department the duty of providing to the assessees an annual consolidated statement of TDS. To be sure the insertion of a parallel system under Section 203AA was a sequel to the department's inexorable desire for going virtual i.e. making income tax administration amenable to intranet and Internet operations though the section itself does not concede this in so many words.
Briefly, anyone deducting tax at source is required to file a quarterly return of tax deducted to Director General of Income tax (Systems) who in turn banks upon NSDL, to digitalise the information in the form of a statement called 26AS that can be accessed by assessees by logging on to the Net by first registering their Permanent Account Numbers (PAN). Though the mandate of Section 203AA is that the department should furnish a consolidated statement of TDS to assessees , the onus has been shifted to the assessees look up the Net and obtain the information.
What if they don't
Ever since the parallel regime was ushered in, the Department has been telling taxpayers not to file their returns blindly but to do so after verifying whether the money claimed to have been deducted at source is indeed reflected in the NSDL database in the form of Statement 26AS. Implicit is the threat that if the NSDL data and the income-tax return data are at variance, the Department would set store by the former.
Let us say an assessee finds to his chagrin from the Tax Information Network (TIN) maintained by the NSDL that tax deducted from his income is only Rs 15,000 whereas the individual TDS certificates obtained from various payers of income to him aggregate to say Rs 28,000, the Department would implicitly give him credit for only Rs 15,000 though he is in possession of TDS certificates aggregating to Rs 28,000. The fault usually lies with tax deductors as well with those operating TIN.
There is a considerable time lag in updating the bird's eye view or consolidated and up-to-date position of tax deducted at source relating to an assessee. Can the go ahead and file his return despite knowing that the TIN does not reflect the up-to-date status of his tax position? It seems he can. Because the lynchpin Section 139, the pivot of, and trigger for, an assessee's interface with the department, clearly says that his returns can be based on the individual certificates obtained by him under Section 203. Therefore the department's attempt to pass the buck by shifting the onus onto the assessee is likely to come unstuck. Indeed, it would be manifestly unfair to penalise the assessee for the shenanigans or slackness of someone else.
If a net-savvy assessee chooses to file his return online as indeed he can, he is in for trouble because the income-tax department's Web site is linked to that of TIN maintained by NSDL and while the return is being filed online the information relating to TDS is automatically imported from TIN and remains impervious to mutation. In other words, an assessee filing his return online will willy-nilly have to fall in line with the figure of consolidated TDS available with NSDL and he would not be able to claim credit for the higher tax actually deducted at source.
Till the Department is able to narrow the time gap between deduction of tax at source and updating of digital consolidated records of TDS, the assessee must be given the liberty to disregard the figures imported by the system automatically from a twin system. Otherwise there is likely to be a progressive disenchantment with online return filing. Of course companies and others for whom its is mandatory to file online returns have to chafe, grin and bear but others will continue to file hard copies of returns in their own enlightened self-interest.
The danger of parallel systems is the need for reconciliation if they are at variance with each other. The aggregate of hard-copied TDS certificates often adds up to more than the consolidated figure of TDS appearing in 26AS maintained by NSDL, giving a new twist to the concept of synergy!
(The author is a Delhi-based chartered accountant.)
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