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Useful Handbook on TDS/TCS deductors or collectors by TRACES for AY 2015-16

The TDS - Centralized Processing Cell has been published a Hand Book for TDS deductors or TCS Collectors which is very useful for AY 2015-16.

Tax Deduction at Source is one of the means of collection of direct taxes. TDS constitutes nearly 40% of the direct tax collections. In the legacy system, the deductees claimed TDS credits on based on manual TDS Certificates, issued by the Deductors. There was no correlation between tax deductions, tax payments and issuance of TDS certificates. Verification from the deductor was limited & restricted. Thus, the conventional practice of giving credit of tax deductions, based on manual TDS Certificates was open ended leading to tax frauds.

The tax deductors electronically report TDS to the Income Tax Department through quarterly TDS Statements. The deductors is oblized to report the following details:

1. PAN & Name of the deductee
2. Nature, Extent & the date of transaction
3. Amount, rate & the date of tax deducted/ collected at source
4. Details of tax payment including the amount & date

Based on the information submitted by the deductors, the deductee is given credit of taxes. Therefore, a robust mechanism that ensures correct, reliable flow of data to the department's database and its collation on the basis of taxpayer identifier(s) (PAN) prevents revenue leakage.

Centralized Processing Cell for TDS (CPC(TDS)) has been conceptualized to ensure a seamless flow of data for tax credits. It leverages technology to provide efficient services. CPC (TDS) introduces transparency in the processes through online display of information. Thus, it forms the backbone of overall TDS administration of the Income Tax Department.

Concepts of HANDBOOK
  • Centralized processing Cell (TDS) is a technology driven transformational initiative on Tax Deduction at Source that provides a comprehensive solution through "Tax Deduction, Reconciliation, Analysis and Correction enabling System (TRACES) - its core engine"
  • CPC (TDS) undertakes bulk processing of TDS Statements to generate Annual Tax Credit Statements for each taxpayer (PAN Holder) in Form 26AS, TDS certificates in Form 16/16A & identifies TDS Defaults of short payment, deduction and interest etc.
  • CPC (TDS) reconciles and co-relates information from various sources including banks (tax payment), deductors (reporting tax deduction), Assessing Officers (mapping no tax/ low tax deductions) and tax professionals (reporting international transactions).
The users stakeholder interact with the CPC (TDS) system and with each other through multiple channels of communication including Call Center, email, website etc.

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