Duties of person deducting tax at source and rights of tax payers

The duties of person deducting tax at source and the rights of the tax payers has been given below:

Duties of person deducting tax at source

Deduct Tax at Correct Rate and deposit in Government Account-Sec 200

Every person responsible for deducting tax at source shall at the time of payment or credit of income, whichever is earlier, verify whether the payment being made is to be subject to deduction of tax at source. If it is so, he must deduct such tax as per the prescribed rates. Further he is required to deposit such tax deducted in the Central Government Account within the prescribed time as specified in Rule 30.

Issue a TDS certificate

Further, such person is required to issue a certificate of tax deduction at source u/s 203 to the person from whose income the TDS has been done, in the prescribed proforma i.e. Form No.16A within prescribed time(as discussed earlier).

File Prescribed Return/Quarterly Statement

A return of TDS is a comprehensive statement containing details of payments made and taxes deducted thereon along with other prescribed details. For deductions made prior to 01.04.2005 earlier every deductor was required as per the provisions of Section 206 (read with Rule 36A and 37) to prepare and deliver an annual return, of tax deducted at source. However w.e.f. 01.04.2005 there is no requirement to file annual returns and instead Quarterly statements of TDS are to be submitted in form 26Q by the deductors.

Rights of Tax Payers

Credit of TDS – If tax has been deducted at source u/s 192 to 194 A/B/BB/C/ D/E/EE/F/G/H/I/J/K, 195, 196A/B/C and D, the person from whose income (payment) the tax has been deducted i.e. Payee or assessee shall not be asked upon to pay the tax himself to the extent tax has been deducted (Sec.205). Moreover u/s 199 such tax deducted at source shall be treated as payment of tax on behalf of the payee (assessee).

TDS Certificate – U/s 203 payee (tax payer) is entitled to obtain a certificate from the payer (tax deductor) in Form 16-A specifying the amount of tax deducted and other prescribed particulars.

Form 26AS – As per section 203AA the prescribed income tax authority or the person authorized by such authority (as referred in section 200(3))will be required to deliver to the person from whose income the tax has been deducted/paid, a statement of deduction of tax in the prescribed form. Such statement as per rule 31AB will be required to be furnished in Form no.26AS by the 31st July following the financial year during which the taxes were deducted/paid (also refer Notification no. 928 E dt. 30.6.2005 of CBDT).