Taxpayers Risk Paying Twice: Expert Flags TDS Credit Anomalies in New Income Tax Act 

Taxpayers Risk Paying Twice: Expert Flags TDS Credit Anomalies in New Income Tax Act

The article highlights expert concerns regarding anomalies in the new Income Tax Act that could force taxpayers to pay tax twice due to systemic failures in claiming Tax Deducted at Source (TDS) credit.

Key Issues Flagged by Experts

• TDS Credit Mismatch and Loss: The central concern is that the current Income Tax return (ITR) forms do not always accurately reflect the TDS deducted and paid by the deductor, leading to mismatches. If the taxpayer cannot claim the full credit appearing in their Form 26AS/Annual Information Statement (AIS) due to technical errors or a dispute with the deductor, the taxpayer is effectively denied the credit.
• Forced Double Payment: When the full TDS credit cannot be claimed in the ITR, the taxpayer is often forced to pay the balance amount in cash to avoid interest and penalties on the supposed outstanding liability. This results in the taxpayer having paid the tax twice: once when the amount was deducted by the payer (TDS) and again while filing the return.
• Lack of Resolution Mechanism: Experts argue that there is currently no efficient and timely mechanism for the taxpayer to get the excess tax (the portion paid twice) refunded quickly. The lengthy refund process leaves the taxpayer out of pocket and unfairly burdened.
• Need for Systemic Fix: The underlying issue stems from procedural gaps that have carried over into the new tax regime, necessitating urgent amendments to the ITR filing process and credit reconciliation mechanism to prevent undue hardship to compliant taxpayers.