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CBDT Prescribes New Procedure For Issuing Tax Deduction At Source Certificates

25 May 2011

The Central Board of Direct Taxes ("CBDT") has issued a Circular concerning Income Tax Rules, 1962, with respect to certificates of taxes withheld. Taxand India summarises the main features of the Circular.

Summary of the Circular

  • Form 16As can now be completed with a digital signature as opposed to a hand-written signature , thereby bringing it in line with the procedure for issuance of the certificate of taxes withheld on salary payments.
  • The Tax Deduction at Source (TDS) certificate will be downloadable from the website once the TDS statements are filed by the deductors. This will completely eliminate the issue of mismatch, which is currently faced by many corporates.
  • The new mechanism to issue Form 16A discussed above is optional in case of deductors not specifically covered. However, if the deductors chose to not opt for the new mechanism, the deductors would be required to authenticate the Form 16A by manual signature only.
  • In case of TDS made during the financial year 2010-11, all deductors are provided an option to issue TDS certificate in Form 16A under the new mechanism.
  • The Director General of Income-tax systems ("DGIT"] has been entrusted with the responsibility to specify the procedure, formats and standards for issuing TDS certificate in Form No 16A, which is downloaded from the TIN Website.

Taxand's Take

The new mechanism prescribed for issuing TDS certificate in Form 16A should benefit deductors of tax, especially from an administrative perspective, since it now allows the form to be digitally signed.

However, the Form 16A to be issued by deductors under the new mechanism, casts a greater responsibility on deductors to ensure that TDS statements filed are accurate. Failing that the Form 16A which is issued based on the TDS statements containing discrepancies may result in the deductee receiving TDS credit for the wrong amount.

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