directive on tax credit mismatch due to default of deductor
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Dated New Delhi, the 1st June,
Non-deposit of Tax Deducted at Source regarding
have been received by the Board from many taxpayers that in their cases
the deductor has deducted tax at source from payments made to them in
accordance with the provisions of Chapter-XVII of the Income-tax Act,
1961 (hereafter ‘the Act') but has failed to deposit the same into the
Government account leading to denial of credit of such deduction of tax
to these taxpayers and consequent raising of demand.
As per Section 199 of the Act credit of Tax Deducted at Source is given
to the person only if it is paid to the Central Government Account.
However, as per Section 205 of the Act the assessee shall not be called
upon to pay the tax to the extent tax has been deducted from his income
where the tax is deductible at source under the provisions of Chapter-
XVII. Thus the Act puts a bar on direct demand against the assessee in
such cases and the demand on account of tax credit mismatch cannot be
This may be brought to the notice of all the assessing officers in your
region so that if the facts of the case so justify, the assessees are
not put at any inconvenience on account of default of deposit of tax
into the Government account by the deductor.
This issues with the approval of Chairperson, CBDT.
Under Secretary to the Govt. of India
Zonal Members, CBDT
PPS to Chairperson, CBDT
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