Amendment in the process of issue of TDS Certificate

The Department of Income Tax of India make amendment in the process of issue of TDS certificate by CIRCULAR NO. 3/2011 [F. NO. 275/34/2011-(IT-B) DATED 13-5-2011. Section 203 of the Income-tax Act 1961 ("the Act") read with the Rule 31 of the Income-tax Rules, 1962 ("the IT Rules") provides for furnishing of certificate of tax deduction at source (TDS) by the deductor to the deductee specifying therein the prescribed particulars like amount of TDS, permanent account number (PAN), tax deduction and collection account number (TAN), etc The relevant form for such TDS certificate is Form No.16 in case of deduction under section 192 and Form No.16A for deduction under any other provisions of Chapter XVII-B of the Act. TDS certificate in Form No.16 is to be issued annually whereas TDS certificate in Form No.16A is to be issued quarterly.

Through the above amendment a step is taken to make easier the process of issue of TDS certificate and now the  Deductor has the option to authenticate the TDS certificate in form 16 but having no option for form 16A which require manual signature for authentication which is time consuming and the Department receive representation to allow this form also. Department also allow the viewing facility of form 26AS by the Deductee contain the details of the deductee based on the e-TDS statement. There should not be any mismatch of records between the TDS certificate issued by the Deductor and the Information in form 26AS generated on the basis of e-TDS statement. To overcome the challenge of mismatch a common link has now been created between the TDS certificate in Form No.16A and Form No.26AS through a facility in the Tax Information Network website (TIN Website) which will enable a deductor to download TDS certificate in Form No.16A from the TIN Website based on the figures reported in e-TDS statement filed by him. As both Form No.16A and Form No.26AS will be generated on the basis of figures reported by the deductor in the e-TDS statement filed, the likelihood of mismatch between Form No.16A and Form No.26AS will be completely eliminated .

For proper administration of the system  the CBDT in exercise of the power given in section 119 of the Act decide the following:

I) Issue of TDS certificate in form 16A

i) For deduction on or after 1-4-2011

a) In case the deductor is a company including a banking company to which the Banking Regulation Act, 1949 applies and referred to in section 51 of that Act or a cooperative society engaged in carrying the business of banking, shall issue TDS certificate in Form No.16A generated through TIN central system and which is downloaded from the TIN Website with a unique TDS certificate number in respect of all sums deducted on or after the 1st day of April, 2011 under any of the provisions of Chapter-XVII-B other than section 192.

b) In case the deductor other than mention above may, at his option, issue TDS Certificate in Form No.16A generated through TIN central system and which is downloaded from the TIN Website with a unique TDS certificate number in respect of all sums deducted on or after the 1st day of April, 2011 under any provisions of Chapter-XVII-B other than section 192.

 ii) For deduction of tax at source made during financial year 2010-11

The deductor, may, at his option, issue the TDS certificate in Form No.16A generated through TIN central system which is downloaded from the TIN Website with a unique TDS certificate number in respect of all sums deducted during the financial year 2010-11 under any of the provisions of Chapter- XVII-B other than section 192.

2) Authentication of TDS Certificate in Form No. 16A

(i) The deductor, issuing the TDS certificate in Form No.16A by downloading from the TIN Website shall authenticate such TDS certificate by either using digital signature or manual signature.

(ii)  The deductor being a person other than a person referred to in item 4.1(i)(a) above and who do not issue the TDS Certificate in Form No.16A by downloading from the TIN Website shall continue to authenticate TDS certificate in Form No.16A by manual signature only.

3) The Director General of Income-tax (Systems) shall specify the procedure, formats and standards for the purpose of issuance of TDS certificate in Form No.16A which is downloaded from the TIN Website and shall be responsible for the day-to-day administration in relation to the procedure, formats and standards for issuance of TDS certificate in Form No.16A in electronic form.

4) It is further clarified that TDS certificate issued in Form No. 16A by the deductors covered by para 4.1(i)(a) in accordance with this circular and procedure, format and standards specified by the Director General of Income-tax (Systems) shall only be treated as a valid TDS certificate in Form No. 16A for the purpose of section 203 of the Act read with Rule 31 of the IT Rules, 1962.

According to me government has taken very good step which will help both Deductor as well as Deducteein speeding the process of issue of TDS certificate.