What Should Be Done In Case TDS Certificate Is Not Issued?

There is a general grievance that in many cases the tax deductors do not issue TDS certificate despite the fact that many reminders are given by the deductees for such issue of certificates. Here is, what one should do in case of non issuance of TDS certificate

1. Check that tax was actually deducted. In case there was no deduction of tax , there is no responsibility for any person to issue you a tax certificate of deduction. For reading more , read this .
2. IF the tax was deducted , and you are not issued the certificate, write to the deductor and keep the proof of writing the letter to home, What should be written,
   i. Give details of payments which have been made and deduction of tax was made.
   ii. That section 203 of the I T Act is binding on the deductor for issue of tax certificate within one month from the date of tax deduction
3. If despite theis , the certificate was not issued, write a letter to Joint Commissioner or Add.CIT of TDS wing in your city who has jurisdiction over your deductor. In the letter, you must give
   i. Give facts about payment made to you and deduction of tax thereon.
   ii. Enclose copies of letter written to the deductor for issuing TDS certificates.

Why should you write to Joint /Add.CIT ?
The reason for writing letter to officer of joint /Add.CIT (TDS ) wing is that section 272A (2) of the I T Act provides for penalty for failure to furnish certificate and the sub section 3 of section 272A makes the Add CIT /JCIT ranges as an authority to impose penalty. The said section is as under

(3) Any penalty imposable under sub-section (1) or sub-section (2) shall be
imposed-
(a) in a case where the contravention, failure or default in respect of which such penalty is imposable occurs in the course of any proceeding before an income-tax authority not lower in rank than a Joint Director or a Joint Commissioner, by such income-tax authority;
(b) in a case falling under clause (f) of sub-section (2), by the Chief Commissioner or
Commissioner; and
(c) in any other case, by the Joint Director or the Joint Commissioner.Contravention of section 203 is falling under “any other case”, therefore only an Income Tax Authority of the rank of Joint Commissioner/Add.CIT can impose penalty for non issue TDS certificate.

How Much Penalty?The quantum of penalty is fixed under section 272A as under

272A(2) If any person fails –
(g) to furnish a certificate as required by section 203 or section 206C ; or he shall pay, by way of penalty, a sum of one hundred rupees , for every day during which the failure continues:
Provided that the amount of penalty for failures in relation to a declaration mentioned in section 197A, a certificate as required by section 203 and returns under sections 206 and 206C shall not exceed the amount of tax deductible or collectible, as the case may be.

In nut shell , the quantum of penalty shall be Rs 100 x Nos of days of failure , aggregate of which can not be more than the TDS .

Last thing to know!
As per I T Act, the provision of issue of TDS certificate shall be completely stopped vide provison under section 203 . The reason for such move is that the TDS or TCS will fully digitized and there will not be any requirement for any body for issue of such certificate.Even now, there is no requirement of enclosing TDS/TCS certificate with the return , since the filing of return has been made annexure less.

Can Employer Decline To Issue Form 16?

 
Can we tell employees that from 16 cannot be issued for whom tax has not been deducted at source, since they don't fall under Income tax bracket.
 
Confusion arises among employees regarding Form 16 is on following grounds :

• That they think Form 16 is a salary certificate.
• That income tax Return can not be filed in absence of Form 16

Both the aforesaid "general impression about Form 16" are wrong. Form 16 is the prescribed form for issue of certificate of deduction of tax at source from an employee. employer can decline to issue Form 16 in case there is no deduction of tax at source.It is clear from a bare reading of section 203 of the I T Act and the relevant rule 31 of IT Rule .

Liability to give a certificate of tax deduction is given in Section 203 of the I T Act .For employer, specific provision is given in sub-section 2 of section 203 of the I T Act. The said subsection is given as under

203. (1)Every person deducting tax in accordance with the foregoing provisions of this Chapter]shall, within such period as may be prescribed from the time of credit or payment of the sum, or, as the case may be, from the time of issue of a cheque or warrant for payment of any dividend to a shareholder, furnish to the person to whose account such credit is given or to whom such payment is made or the cheque or warrant is issued, a certificate to the effect that tax has been deducted, and specifying the amount so deducted, the rate at which the tax has been deducted and such other particulars as may be prescribed.

(2) Every person, being an employer, referred to in sub-section (1A) of section 192 shall, within such period, as may be prescribed, furnish to the person in respect of whose income such payment of tax has been made, a certificate to the effect that tax has been paid to the Central Government, and specify the amount so paid, the rate at which the tax has been paid and such other particulars as may be prescribed.

It is clear from the aforesaid provision that an employer shall furnish the certificate only if any tax has been paid to central govt. on behalf of the employee. Rule 31 of IT Rules states that employer has to issue TDS certificate in Form 16 . The said Rule states as under

31. (1) The certificate of deduction of tax at source or, the certificate of payment of tax by the employer on behalf of the employee, under section 203 to be furnished by any person deducting tax in accordance with the provisions of

(a) section 192 shall be in Form No. 16