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Jan 22, 2020
Budget 2020-21: Downloading of TDS Certificates should be optional as nobody asks for it, MSMEs suggest

As the government had sought feedback/ suggestions of people from all sectors across India for the Budget set to be presented on February 1, 2020, ideas, suggestions and requests are pouring in from industry to bring new reforms and to do away with the policies which are no longer relevant and increases "unease" of doing business in the country.
One such suggestion is related to TDS which stands for Tax Deducted at Source. It is a system introduced by Income Tax Department, under which the person responsible for making specified payments such as salary, commission, professional fees, interest, rent, etc. is liable to deduct a certain percentage of tax before making payment in full to the receiver of the payment.
In this, there is a mandatory provision to download the Certificate from TRACES Portal after the payment of the TDS, which according some MSME entrepreneurs is of no use.
On one hand when the downloaded TDS Certificate is not required for any future reference, on the other hand not downloading it invites a fine to the tune of Rs. 250 per day.
Talking to KNN India, one MSME entrepreneur based in Haryana said, "This provision irritates the employer mostly Micro Small and Medium Enterprises (MSMEs) a lot. MSME units is usually a one man show and the entrepreneur already has a lot on his platter to deal with. A penalty of Rs. 250 per day is incurred if the deductor fails to download TDS Certificates".
How it makes deductor unhappy and why is it necessary, whether the downloading of form 16 and 16 A can be made optional for the deductor or not? To get an answer of these questions KNN India spoke to a Gurugram based industrialist, S K Jain, Managing Director (MD) of Solo Components Private Limited.
Jain said if all the information is available in 26 AS of the income tax, then why is it necessary to download the form from their (Income Tax) website.
"Now, the whole process is automated in the sense that now for every PAN number there is 26 AS form which is available on the net, which is kind of an account of TDS through which we can easily come to know that who has deducted TDS and when it was deducted", he said.
He further said that "now after this there is really no need of form 16 and 16 A because it is available on the net for everyone adding that, but the rule of downloading these forms and the idea of basically giving it to the suppliers still exists is not required. The department has also associated a penalty, if the form is not downloaded within fifteen days".
Putting more emphasis to his arguments, he said no body demands but the department forces us to download and questioned that "why we need to download if you (department) is already keeping the details of the same in 26 AS".
"The department is not only charging huge amounts as a fine but also inciting people to generate papers. If my TDS is filed online and every details is online then why will I be forced to download", he asserted.
He requested that this particular provision shouldn't be mandatory rather downloading of TDS forms should be made optional.
"There shouldn't be any penalty, instead downloading should be made optional so that in case if anybody asks me for the same, I will download it and give it to them", he added.  
"At least the penalty for not downloading these forms should be eliminated", he concluded.
According to a notification by CBDT in July 2018, "It is now mandatory for all deductors to issue TDS certificates after generating and downloading the same from "TDS Reconciliation Analysis and Correction Enabling System" or TRACES Portal".

Further, it stated that, "…it may kindly be noted that the TDS Certificates downloaded only from TRACES Portal will be valid. Certificates issued in any other form or manner will not comply to the requirements referred in the Income-tax Act 1961 read with relevant Rules and Circulars issued in this behalf from time to time".

"…Certificate of tax deducted at source is to be furnished within fifteen (15) days from the due date for furnishing the statement of tax deducted at source. Failure to comply with the provisions of the Act will attract penalty under the provisions of section 272A of the Act, a sum of one hundred rupees for every day during which the failure continues", the notification added. 

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