Credit for tax deducted or collected at source

Basic rule (sub-rule 1). Credit is given on the basis of the information on deduction or collection that the deductor or collector furnishes to the income-tax authority or its authorised person:

• Tax deducted at source and paid to the Central Government under Chapter XIX of the Act goes to the person to whom payment was made or whose account was credited (the "deductee").
• Tax collected at source and paid to the Central Government goes to the person from whom tax was collected or whose account was debited (the "collectee").

Income assessable in another person's hands (sub-rules 2 to 4). Where the deductee declares to the deductor that the whole or part of the income is assessable in another person's hands, or the collectee declares to the collector that its income is assessable in another person's hands, the deductor or collector reports the deduction or collection in that other person's name, and credit goes to that other person. The declaration must give the other person's name, address and Permanent Account Number, details of the payment or credit concerned and the reasons for giving credit to that person; the deductor or collector keeps it in custody. The certificate is issued to the person in whose name credit is shown.

Which tax year (sub-rules 5 and 6). Credit is given for the tax year in which the income is assessable. Where the income is assessable over a number of years, credit for tax deducted is allowed across those years in the same proportion in which the income is assessable. For tax collected where the lease or licence relates to more than one year, credit is allowed across those years in the same proportion.

Exception (sub-rule 7). For section 393(3) [Table: Sl. No. 5] and section 394(1) [Table: Sl. Nos. 6, 7 and 8], credit goes to the person from whose account the tax is deducted or collected, for the tax year in which the deduction or collection is made, irrespective of sub-rules (1) to (6).

Verification (sub-rule 8). Credit is granted on the basis of the deductor's or collector's information and the claim made in the return of income, subject to verification under the risk management strategy formulated by the Board from time to time.