Volume 4, Issue 3

23rd May, 2011

Tax Alert
Procedure for Issuance of TDS Certificates

The CBDT has issued Circular No. 03/2011 dated 13th May 2011 with a view to introduce a new procedure to be adopted for issuance of TDS certificates, so as to avoid the mismatch between the TDS claimed in the return of income and the TDS credit granted by the department. The circular also intends to ease the procedure of authenticating the TDS Certificates by means of a digital signature.

Section 203 of the Income Tax Act 1961 read with Rule 31 of the Income Tax Rules 1962, requires the deductor to furnish a TDS Certificate in the prescribed forms.
The existing procedure is presented in the below flowchart :

Issues faced in the existing procedure

A. Mismatch of details

  • The department has introduced a facility of online viewing of the details of total tax credit available to a person (in Form 26AS), which is based on the TDS statements filed by the tax deductors. The details contained in the TDS certificates issued by the deductor should ideally match with those contained in the TDS statements. However presently the activity of issuance of TDS Certificates in Form 16A is distinct and independent of filing of e-TDS statement, as such it results in a gap in Form 26AS and Form 16A on account of chances of wrong data entry, non filing of e-TDS statement by the deductor, etc.
  • The above also has a direct impact in the procedure of issuing refund to the deductees resulting in a huge effort and loss of time at the department end as well as the deductor end, in mapping the inconsistencies.

Steps taken in the Circular to bridge the above gaps:

  • The department has created a common link between the TDS certificate in Form No.16A and Form No.26AS through a facility in the Tax Information Network website, which will enable a deductor to download TDS Certificate in Form No.16A from the TIN website based on the figures reported in the e-TDS statement filed by him.
  • As both the Forms 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.

Applicability of the above:

* Including a banking company to which the Banking Regulation Act,1949, applies and any bank or banking institution, referred to in section 51 of that Act.





Any deviation from the above in issuance of the Form 16A shall render it as invalid and will attract penal consequences.

B. Authentication of TDS Certificate :

  • Under the existing system since the authentication of TDS certificates in Form 16A was mandatorily required to be done manually, it became a time consuming and long drawn process especially for the deductors who had to issue a large number of certificates.
  • The deductors have now been provided with the option of authenticating the certificates digitally, provided the same are downloaded from the TIN central system.

Our Comments

The circular intends to ease the process of issuance of TDS certificates by automating their generation through TIN system, as well as by introducing digital authentication. Thereby, doing away the mismatches and curtailing the numerous correspondences on account of inconsistencies. This will surely be a welcome provision making the deductors more vigilant and responsible in filing the correct particulars in the returns.