These certificates, like Form 16 for instance, represent the taxes that have already been deducted from payments (like salaries) received by tax payers and which would be available to them as adjustment against the total tax they have to pay.
In that sense, the TDS certificate is a very important document. But there has to be an element of caution applied as a TDS certificate needs to have the right details. This will ensure that it is a valid certificate which can be submitted for claiming tax benefits. Here are some of the things that need to be checked for this purpose:
Permanent Account Number (PAN)
The first requirement for a correct and proper TDS certificate is to check the PAN of the tax payer that is present on the document. This is important because of the fact that the tax needs to be credited to the right place in the tax records of the Income Tax Department. This will be possible only when the right PAN is quoted.
If the PAN is not correct, then remedial steps will need to be taken because, either, the certificate itself does not present the right details, or the tax might have wrongly been credited to some other account.
This is a very vital component of the entire TDS certificate because it is the base on which benefits are claimed. Efforts to ensure that this number is correct have to be taken right at the time of the PAN being submitted by the tax payer to the deducting entity. Only then will this number be properly entered into the certificate.
Unique Transaction Number (UTN)
There is a new number in the form of the Unique Transaction Number for individual tax payers. While there is no requirement to quote this at present (for filing of tax returns for the financial year 2008-09), it will be an important factor in the future.
Every transaction where tax is deducted at source would be given a unique transaction number and this would have to be quoted on the TDS certificate. This number will then be matched with the details that are present with the tax authorities.
The tax payer has to be aware that this number will be a vital part of the certificate, especially in the current financial year (2009-10) and, hence, it will have to be present on the TDS certificates.
This will ensure that all the required details are available and this number will have to be quoted on the actual Income Tax Return (ITR) in the future. This increases the importance of this number.
Amount deducted and deposited
There is a specific payment that is made to the tax payer and it is important that the details of this are displayed properly on the TDS certificate. This means that the amount paid as well as the tax deducted along with the education cess has to be properly shown and this has to tally with the actual payments that are made during the year.
This is important because the actual income earned and what is shown by the TDS certificate has to tally. If it does not, then there could be a denial of the benefit that should actually be available to the tax payer. This kind of cross-check has to be made so that the correct details are properly shown and the process in the aftermath of filing an income tax return is completely smoothly.
Internal details
All the internal details that are present on the TDS certificate have to properly match with actual facts. This means that the name and the address of the tax payer, as well as the deducting entity, have to be properly and correctly mentioned. In addition, the rate of tax deducted on the amount earned has to be appropriate and, at the same time, the figures in words and numbers also have to match.
Also required are the details of when the taxes were actually deposited with the government and these also need to be checked properly. A TDS certificate can be completed and made available only after all these facts are correct.
This can then be used without any worry by the individual, in the sense that this would be accepted and the necessary tax credit would be available for the year.
The author is a certified financial planner.
