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Tax dept to issue Form 16

Freny Patel & K Ram Kumar in Mumbai | July 12, 2004 09:05 IST

Salaried employees will no longer have to chase their employers for Form 16 in June before filing their income-tax returns.

Instead of the employer, the income-tax department will now issue a tax-deducted at source (TDS) certificate to the salaried class.

The Finance Bill seeks to amend Section 200 of the Income Tax Act and states that any employer deducting TDS will have to file quarterly statements to the income-tax authorities.

The taxman will then prepare and deliver a statement to every person whose income tax has been deducted.

An advocate said the employer would not be in the picture and the onus would be on employees to ensure that they had the necessary TDS certificates to file their returns.

"With the limited machinery of the income-tax authorities, it is questionable whether the department will be able to deliver the statements, causing a lot of chaos and harassment to individual employees," he added.

An income-tax lawyer said that the move was aimed at making sure employers were depositing the money after deducting it from employees.

"There have been cases where companies do not deposit the money with the income-tax authorities even after deducting TDS from employees' salaries. The move will block this practice," he pointed out.

The fine print in the Finance Bill states the prescribed income-tax authority shall, within the prescribed time after the end of each financial year, prepare and deliver to every person from whose income the tax has been deducted or in respect of whose income the tax has been paid, a statement in the prescribed form specifying the amount of tax deducted or paid and such other particulars as may be prescribed.

The government also wishes to do away with TDS certificates in order to enable tax returns to be filed through the Internet. So, this move has to be seen as a first step towards facilitating the process of computerisation.

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