From: Bombay Chartered Accountants' Society <km@bcasonline.org>
Date: 23 June 2012 12:37
Subject: Credit for Taxes - Guidelines for the Assessing Officers as regards due Verification for allowing credit of TDS and Taxes Paid
To: All Members <km@bcasonline.org>
23rd June 2012
Dear Members,
Credit for Taxes
Section 199 of the Income Tax Act has been amended with effect from April 2008, whereby credit for taxes deducted at source is to be granted in accordance with rules made by the Central Board of Direct Taxes. The Central Board of Direct Taxes has been issuing instructions for the last few years, regarding acceptance of TDS claims and grant of credit for taxes paid. As per the instructions, in many cases, credit is to be given after due verification. What is the process of due verification has not been clarified by the CBDT. Each assessing officer has been taking his own view as to the process of due verification.
To reduce this problem of inconsistency in the process of due verification, BCAS and CTC have been in discussions with the Chief Commissioners of Income Tax in Mumbai. Accordingly, the Chief Commissioners of Income Tax in Mumbai have agreed upon a consistent process of due verification to be followed by assessing officers falling within their jurisdiction. The agreed upon process is given below for the benefit of members.
Guidelines for the Assessing Officers as regards "due Verification for allowing credit of TDS and Taxes Paid"
Credit for TDS
1. The Assessing Officers may allow credit in respect of claim of TDS made in the return on the basis of original TDS Certificate after verification of validity of TAN of the deductor.
It is clarified that prior to introduction of Annexure less return, the assessees were filing original TDS certificates with their returns. If the acknowledgement of return or some other evidence furnished by the assessee shows that original TDS certificate was filed with the return or thereafter, the AO may allow credit on the basis of self certified copy of TDS certificate.
2. Indemnity Bond shall be obtained from the assessee in respect of cases where amount of refund involved is Rs. 25,000 or more (no indemnity bond in a case not involving issue of refund).
Credit for Taxes paid
3. Credit for Advance Tax, Self Assessment Tax and Regular Tax may be allowed on the basis of Original Challan alone in respect of an amount of less than Rs. 10,000.
4. In a case where claim of credit of tax paid is Rs. 10,000 or more, apart from Original Challan, the claim shall be supported by some proof of payment of tax. For example, the payment could be proved by the assessee by producing copy of bank account reflecting payment or a certificate from the bank to that effect.
5. Indemnity Bond shall be obtained from the assessee in respect of cases where amount of refund involved is Rs. 25,000 or more (no indemnity bond in a case not involving issue of refund).
Regards,
Pradip Thanawala Gautam Nayak
President Chairman, Taxation Committee
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