Advisory for Deductors
1. Deductors deduct tax at lower rate on payment/credit to
deductee on production of certificate duly issued by assessing officers under
section 197. Deductors quote such certificate number in quarterly TDS
statement. Instances of huge default of ‘Short Deduction’ have been observed
due to wrong quoting of 197 certificate number. The scenario of wrong 197
certificate generally arises when the deductor accepts from deductee a manually issued lower
deduction certificate by assessing officer & quotes the same in TDS
statements.
2. CPC(TDS) has provided the facility
of validating the 197 certificate to the deductors on www.t. (TRACES). This
enables a deductor to first validate the 197 certificates given to him by their
deductees and then furnish the same in the TDS/TCS statement.
3. If the 197 certificate is not
valid as per TRACES validation, the deductor should always insist upon an ITD
system generated certificate having a unique 10 digit alpha numeric number.
This would minimize the generation of default of “Short Deduction due to 197
certificate”.
4. This also applies to certificates
issued under section 195(2) & 195(3) by LTU & international taxation
officers.
5. Instruction
to field authorities to issue only system generated certificate were issued
vide instruction No. 36 through F.No. SW/TDS/2/2/08-DIT(S)-11[Vol.II]
dated July 15th, 2009 (copy enclosed).
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