As all of us know the greatest source of Guaranteed Revenue for Central Govt. is Direct Tax – TDS.

Having said that we as Professional Consultants feel that Income Tax Dept is using TDS as a mode of Punishment for us Business Entrepreneurs.

TDS is deducted on Bills even without knowing whether Payments are going to be made or not.  The Deductor deducts & pays the Govt., but he does not pay the Deductee the bill itself.

The deductee on the other hand not only pays the penalty of TDS but also ends up writing off this Income.The proverbial last straw on the camel’s back happens when he claims this TDS as refund in his Income, and the authorities refuse this refund, stating this Income has not been declared, hence it is not allowed, and there is no proof for this.

Let us assume the deductor will not issue a Debit Note, he keeps quiet. Of course, the Deductor can adjust the deduction paid to IT in other payments if the transaction continues. The Deductee need not prove this as proof of his cancellation or writeoff as it is available in his Bank Statement.

Second Refusal of TDS is TDS deducted by deductor on Advance Payments, when he claims this TDS as refund in his Income. We have seen authorities refusing this refund, stating this Income is not declared, hence it is not allowed. It should be claimed in the year in which the income was declared. If say, the Income is declared after five or ten years, will not the Income Tax authorities say it is not in 26AS? Should the Deductee only go for appeal for his legitimate claim? Thus Deductee needs to go through the trouble for no fault of his, just wasting time on proving. Let the Authorities & Govt. come with Clarification/Circular simplifying this. This should not be a problem for the Income Tax Dept to refund on the year it is Paid & claimed, as it is after all appearing in 26AS. There is no chance of wrong or double claim —– Just A Thought!