THE ISSUANCE OF FORM 16A/ 16 SHOULD BE DONE AWAY FOR EASE OF COMPLIANCE UNDER INCOME TAX ACT

[RAJENDRAKUMAR RATHI]

Section 203 read with Rule 31 and Rule 31A is as follows

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.

(3) [***]

As per section 203 every person liable to pay any income chargeable to tax under any head has to deduct tax under Chapter XVII of the Income Tax Act,1961. The amount so deducted as tax has to be deposited by the person with the Government within period specified in the Act. The process of tax deduction and deposit of the same to the Government completes after submission of form 26Q /24Q and issuance of valid TDS certificate in Form 16A /16 duly authenticated by the diductor. The person deducting tax under section 203 is required to issue Form 16A usually called TDS certificate to the payee to the effect that tax has been deducted along with certain other particulars. TDS certificate has to be issued within specified period.

Form No.	Periodicity	Due Date
Form 16	Annually	On or before 31st May of the financial year immediately following the financial year in which tax is deducted
Form 16 A	Quarterly	Within 15 days from the due date of furnishing TDS returns in form 26Q

From 01.04.2012, all the diductors including Government diductors depositing TDS through book entry has to issue Form 16A downloaded from TRACES website within 15 days from the due date of furnishing of Form 26Q (except in the case of form 16 which has to be issued annually). If a person fails to issue the same within the specified period, he will be liable to pay penalty of ₹ 100.00 per day under the provisions of section 272A of the Act.

All the deduction made by diductors are reflected in 26AS of the taxpayers. Form 26AS contains all tax related information of a taxpayer. Form 26AS allows a taxpayer to correlate TDS data with Government records. The details captured in 26AS play a key role in helping a taxpayer to claim credit of tax deducted at source by diductors. A person will get credit of TDS deducted against his PAN if the same is reflected in 26AS. If there is any mismatch in 26AS, he will immediately ask the diductor to rectify the same in order to get credit of TDS.

Considering the importance of 26AS, the Government should do away the provisions of issuing form 16A/16 by the diductor for ease of compliance as business organizations are already overburdened with so many compliance under different acts. It should not be mandatory to download form 16 / 16A hence no penalty. Penalty provision can be omitted.