Banking
TDS certificates should be sent to customers: RBI to banks

The banking regulator today announced 10 points that banks must work on to improve services for customers

The Reserve Bank of India (RBI) today announced that banks must issue certificates for tax deduction at source (TDS) duly completed, for account holders, and dispatch to their mailing addresses.

This was one of the decisions taken at its annual conference on banking ombudsman that was held on Monday. The RBI also listed nine other action points to improve bank customer services, which includes pre-payment charges on floating rate mortgages, providing customers a view of account using technology and creating awareness of the banking ombudsman scheme.

TDS has been a big harassment for customers and not too long ago Moneylife Foundation had sent a memorandum on the TDS matter to the finance ministry and the RBI on the issue. The memorandum to the RBI highlights the TDS problem for bank depositors and suggests that income from fixed deposits should be exempt from tax. It also proposes that banks found to be deficient in services, wrongful deduction of tax, not providing accurate tax certificates, or uploading inadequate or wrong information, should be awarded exemplary punishment either by the banking ombudsman or the RBI. (Read, ‘Moneylife Foundation sends memorandum on TDS to the FM, RBI’.)

Among the other issues that have been listed is the need to provide a long-term fixed rate housing loan, compensation for loss due to unauthorised transactions through ATM/Internet and proper monetary compensation for mental harassment suffered by the customer.

The RBI stated that "banks must not recover pre-payment charges in floating rate loans. Banks may offer long-term fixed rate housing loans to their customers and address their asset liability mismatch (ALM) issues by recourse to the interest rate swaps market.  Floating rate loans pass on the interest rate risk from banks which are much better placed to manage it, to borrowers and, thus, banks only substitute interest rate risk with potential credit risk. The bank will, however, be free to recover / charge appropriate pre-payment penalties in the case of fixed-rate loans."

The Indian Banks' Association (IBA) has been asked to standardise the most important terms and conditions of at least 10 important banking transactions and circulate among banks for adaptation. It also said that banks should initiate the process of providing one view of the bank account, including deposits, loans, etc, using technology such as core-banking solutions and complete this within a year.

The RBI said that "under the Banking Ombudsman Scheme, banking ombudsmen will annually share with the local media, information regarding complaints received and resolved, including important cases and awards given," towards creating awareness.

On disputes in ATM/Internet-based transactions, the RBI said, "In the event of any monetary dispute involving the customer and the bank, the onus should be on the bank to prove the customer's negligence or mistake. The customer must be compensated for losses arising out of customers' non-authorised transactions."

The action points lists the need for creating awareness of customer services in banks through a series of events to be conducted by the RBI, in which bank customers, bank officials and banking ombudsmen will participate.

The RBI also highlighted the issue of monetary compensation for mental harassment suffered by bank customers and it is examining the issue along with the IBA. "Issues that may receive attention in the analysis would be whether only actual loss should be considered for compensation, whether mental harassment issues can be codified for compensation, and whether compensation should be capped, or whether the policies of the banks' boards on compensation should include mental harassment as a ground for compensation," the RBI stated.

It has also asked banks to initiate steps to incorporate in their code of 'Fair Practices to Customers', insurance of some reasonable amount on their customers' credit and debit card transactions, providing periodical loan statements to small borrowers, and conveying to borrowers information on the annualised all-in cost (annual effective rate) on their loan accounts.

The RBI has also asked banks to give their views on the recommendations of the Damodaran Committee for immediate implementation.

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COMMENTS

Sameer Thekedar

5 years ago

I have a cumulative FD with State Bank of Bikaner & Jaipur ,Pune Laxmi Road Br. The interest for Q1has crossed Rs.10000/- and inspite of reminding them to deduct tax, they are not doing so. They do not answers my numerous emails or phone calls.How can I resolve this issue.Please guide me.

REPLY

sameer

In Reply to R Nandy 5 years ago

Yes your point is valid. But my real worry is that the bank makes the deduction and due to their mistake it does'nt get reflected in TIN form 26AS. I have had many such experiences in the past and its a big hassle to follow up and get it rectified.

R Nandy

In Reply to Sameer Thekedar 5 years ago

I don't think it is an issue.You can pay the appropriate tax as Self Assesment Tax during the filing of IT return.It is much easier than following up with the bank.

a v moorthi

In Reply to Sameer Thekedar 5 years ago

Normally Bank software is tailor made to recover TDS on interest half yearly in Sept/ March and other times as and when it matures for payment. So can wait till Sept end. If you are having PAN TDS will be @ 10% - ensure for your customer ID PAN is updated. If you are a senior citizen tender form 15G then Bank will not recover TDS, but then you can remit advance Tax say before Sept 15 or subsequently based on your own calculation of interest and other income if any.

mukesh

5 years ago

IT SHOULD ALSO BE ONUS OF BANKS & INCOME TAX DEPT. TO ENSURE THE CORRECTNESS, CORELATIONS & WHATEVER OTHER PARAMETERS IT SETS SUCH THAT THE ONUS OF MATCHING TDS TO TAX PAID/MISMATCH SHOULD NOT BE ON CRORES OF INVESTORS/CUSTOMERS - INCOME TAX'S POST-RETURN STUPID EXERCISE & MONSTEROUS HEADACHE/HASSLES WASTING ENTIRE COUNTRY'S TIME & MAKING PEOPLE SUFFER HELL DUE TO NEGLIGENCE BY BANKS/OTHERS

REPLY

a v moorthi

In Reply to mukesh 5 years ago

Income Tax Dept is not to be blamed. Rather by allowing us to view AS26 they have ensured transparency. It is the Tax deductor who is to penalised, it is Deductor who is not updating TDS properly. Once a few of the affected persons make it an issue , deductors will fall in line. Money life should file a RTI query with I.T.Dept some time in January every year
1. No of persons who had filed e- returns and of these how many had refunds and how many refunds have been credited using ECS/NEFT. it should be made mandatory that IT Dept make refunds with 180 days from the date e-return is filed directly into Tax Payers bank account using ECS/NEFT etc. as this will be a big step in eliminating corruption of minor nature in I.Tax Dept as it is often observed Refund Order cheques are despatched more than 75 days after issuing cheque with RO's having a 3 months validity after the month of issue, where by more than 15% of ROs become stale and needs to get revalidated costing the Tax Payer. it is also wastage of Manpower and stationery for thr IT Dept.

Ramesh B

5 years ago

to: a v moorthy..incontinuation...the brnach wil hv to do,as u rightly said.but the problem is Punjab National Bank,
P Road,Baroda(Vadodara)is not interested to do it. I told them the method for rectification where theTDS data is not transmitted properly to IT deptt for missing details of PAN etc.I hv 30 yrs useful relationship with the Bank,ideally I was too cool till now.

REPLY

R Nandy

In Reply to Ramesh B 5 years ago

Please complain in writing using this form https://www.pnbindia.in/Upload/English/G... and submit it to the branch manager and get a photo copy sealed and signed from him. Most probably problem will be solved.In case problem is unsolved,send scanned copy of complaint form to zonal head with adequate proof of 26AS and 16A and the mismatch. You can approach Ombudsman with all the documentary evidence if this is still unsolved.

Ramesh B

5 years ago

MY bank-Punjab National Bank,has given me TDS certi.But the TDS details are on
available in AS26 of ITR.it shows NIL TDS.This is for FY 2007-08 and 2008-09 in two cases.I wrote to PNBank three times and personally complained,but nothing has happened.My Refund is held up by IT deptt since last three years.This is the quality and customer service standard of No.1 nationalized bank!

REPLY

a v moorthi

In Reply to Ramesh B 5 years ago

actually error rectifications have to be carried out and software allows it.. once the same is carried out by the Bank, in the remark column of AS26, it is displayed "A" meaning rectification of error in challan uploaded by Bank. Complain over e-mail to customer service Dept of PNB at their Head Office, give subject line as misappropriation of Tax Deducted. When something is recovered but not reflected in your AS26 it means that only. it is very like your credits might have been accounted The PNB branch will have to do.

a v moorthi

In Reply to Ramesh B 5 years ago

actually error rectifications have to be carried out and software allows it.. once the same is carried out by the Bank, in the remark column of AS26, it is displayed "A" meaning rectification of error in challan uploaded by Bank. Complain over e-mail to customer service Dept of PNB at their Head Office, give subject line as misappropriation of Tax Deducted. When something is recovered but reflected in your AS26 it means that only. it is very like your credits might have been accounted The PNB branch will have to do.

Dr Vaibhav Dhoka

5 years ago

Improvement in banking service is need of hour though late RBI has taken step for investor as TDS certificate which is major loos to depositors.Banks have increased service charges to extreme levels but has never bothered to improve standard of service towards customer.

NIRMAL BHAUWALA

5 years ago

I FACE ANOTHER PROBLEM.I AM AGENT & BANK ASK TO PROVIDE DETAIL(DEDUCTION TDS ON MY COMMISSION) FOR ISSUE TDS CERTIFICATE.

REPLY

Govind Shanbhag

In Reply to NIRMAL BHAUWALA 5 years ago

NIRMAL Jee - How bank comes in the picture for issuance of TDS certificate ? The unit/person who has deducted TDS has to give the certificate.

Bhalachandra Singde

5 years ago

Very many thanks for pursuing the matter with RBI to introduce new systems in TDS certificates and making the Banks more responsible to the customers. I find that the emails sent by me are just not replied by Banks. You may see that these emails be answered by the Banks on priority and replied by emails immediately. Valuable information I need from the Banks, but even on phone calls I don't get the information. Even when I refer such matters to their HOs, no action seems coming.

Prakash

5 years ago

One of the problems in connection with TDS on bank deposits is TDS on accrued amount instead of paid amount. Kotak Mahindra Bank has been deducting TDS on the assumed accrued interest in case of sweep / Flexi FD, even when the net amount earned is below TDS threshold. The sweep FD is generally utilised for a temporary period to earn little higher interest than on Savings a/c. The same amount may be withdrawn at any time based on the need. But the bank deducts TDS on the total amount calculated for the entire tenure of the deposit even though the amount may be withdrawn in full or part during the financial year. This is unjust and unfair on the bank's part. The TDS certificates were also issued by the bank after continuous follow up with RM. Rather I was told that the TDS certificates have already been sent long back which I never received for any of the eight accounts. How can all 8 certificates go missing. The probability is that they were never sent. When asked for the proof of delivery, I was told they had been sent by ordinary post.

REPLY

a v moorthi

In Reply to Prakash 5 years ago

inform them to show you the despatch register where there will be entry of what is put inside the envelope, because if they try to fake any record today they can be caught as there will not a corresponding debit in their postage expense account for that day/ month. don't leave Kotak Mahindra Bank like that. Even a bank like HDFC was caught when an enquiry was conducted to ascertain what is their guidelines for returning back to the customer a cheque tendered for collection which was returned unpaid by the paying bank.

dipak ranjan das

5 years ago

here is another problem faced by the depositors of banks. banks issues TDS cert.on interest earned on TERM DEPOSIT but the same has not been credited to tax credit a/c of the depositors in most of the cases resulting non-refund of tax claimed by the tax payer by filing return with the TDS issued by the deductor.

REPLY

a v moorthi

In Reply to dipak ranjan das 5 years ago

this due to 2 reasons one when PAN of account holder is not available when tax is recovered @ 20%. When TDS is recovered @ 10%, means PAN of the account holder is available Bank is duty bound to update your recovery so that same is visible in your AS26. Usually this step is not taken care , Bank is bound to get when this is bought to branch notice by the account holder. however experience is that there is no misappropriation under TDS recovery in Public Sector Banks

Sanjay

5 years ago

Kudos to RBI. Another point - Banks never inform a customer that Nomination is not done for his account. Bank will call customer with numerous telemktg calls to sell banking products but the same relationship manager will never call a customer to caution him for including nomination in his account. Nomination must be made mandatory as a part of kYC so that the customer's next of kin don;t run from pillar to post in case of a tragedy.

REPLY

a v moorthi

In Reply to Sanjay 5 years ago

Nomination is one area when even Bank staff are not adequately educated. actually now account opening forms do have a column for Nomination and their a counterfoil for account holder. Unfortunately in more than 50% cases the counter foil is not returned to the customer because most of the Banks have centralised location for data entry of customer information and what happens is bank branches open account with basic information and forward the application to their back offices where issues like nomination and signature scanning etc are updated and applications are returned back , it here the branch is expected to see whether Nomination is updated and registration number is alloted and counterfoil is sent to the account holder but in majority of cases this aspect is neglected and application is filed. This only customer needs to follow up as there is no fool proof that branch carries out this faithfully, even though in Andhra Bank account opening forms have appropriate place in the form where the officers have to affix signature with date so that entire too and fro movement of the application between the branch to back office and back can be examined for enquiry purpose. Money Life may look into account opening aspects of different banks and suggest RBI to go for a standard application in all banks and conduct periodical inspections on above issue whether rules are there and whether the same is adhered to

R Nandy

In Reply to Sanjay 5 years ago

The whole nomination process itself is cumbersome.A fixed deposit can be booked online but nomination can't be made online.As suggested by you a compulsory nomination process can be made mandatory for the banks as well as rolling out a simpler process of nominating.
As regards Relationship Managers,they are solely kept for the purpose of selling high margin products like ULIPS and 'structured products'.Expecting any meaningful service from them will only dishearten us.

deepaksb

5 years ago

To:Moneylife Team-Congratulations for taking up customer oriented issues with Banks.

One major pending issue is enhancement of Insurance COVER for depositor's funds with banks.I presume its Rs.1 Lac per depositor(for all single/joint accounts) which is VERY small in today's scneario.

About 5 years back SBI-Mumbai - had cancelled my overseas study loan OF RS.4 LACS-on pretext of not availing LOAN for over ONE year for a TWO year education course.

( I FOUND OUT THAT EDUCATION LOAN NEVER EXPIRES through SBI's Zonal officer at Bandra Kurla Complex-Mumbai)

LOAN SANCTIONING OFFICER/MANAGER probably wanted me to BRIBE HIM for reactvating my education loan.

On protesting-SBI CHAIRMAN just refunded my loan processing fee and no action was taken against local bank official-IN SPITE OF MAKING COMPLAIN IN WRITING.

I had asked SBI to terminate services of conscerned Bank Manager and slap fine for causing mental and financial harrassment ( ALL COMMUNICATIONS WITH SBI CAN BE PROVIDED ON ABOVE CASE )

REPLY

DEEPAKSB

In Reply to Govind Gopal Shanbhag 5 years ago

Dear Mr.Shanbhag,

You appear to be closely associated with SBI or any other bank.

SBI employees-for that matter all PSU and private bank employees in spite of receiving FAT pay package-PSU bank employees are STILL under union and does SHOODY customer service-a bank customer-even in metro cities - feel that he is dealing with a GOVERNMENT ORGANISATION.

I do not agree with you that BANK EMPLOYEES DO NOT TAKE BRIBE.

Student education loan - even if its not availed till education term ends-DOES NOT LAPSE-INFORMATION WAS PROVIDED BY A SENIOR OFFICIAL OF SBI -ZONAL OFFICE AT BANDRA KURLA COMPLEX,MUMBAI.

HAD I OFFERED SOME MONEY TO THE LOAN SANCTIONING SBI MANAGER-MY LOAN SANCTION MIGHT HAVE BEEN VALIDATED / EXTENDED.

Since I was able to take loan from my friends/relatives-I did not require LOAN from SBI.

However for persons who are in absolute need of finance-will be forced to pay bribe to avail / extend such loans.

EVEN REPLY FROM SBI-CHAIRMAN OFFICE WAS VERY VAGUE AND CONFUSING-TAKING SIDE OF HIS EMPLOYEES.

I hope I have clarified the actual situation I had faced with SBI.

Few days back-a officer of DENA BANK-was insisting me to give an application in WRITING if I need a TDS certificate.

I TOOK THIS OFFICER TO TASK INCLUDING BRANCH MANAGER-AND TDS CERTIFICATE WAS GIVEN IN FIVE MINUTES.

Govind Gopal Shanbhag

In Reply to deepaksb 5 years ago

Deepaksh Jee - I think your comment about probable bribery is unwarranted. Have u come across any time having paid a bribe for handling any of your banking needs with any banks in general and state bank group in particular. Bank officials are well paid and they need not depend on such bribery. For your information, any loan sanctioned has to be availed in a reasonable time and if the person has not availed the loan and/or does not intend, at least he could have dropped a small letter to the bank stating that he will use the funds in second year/semester and do not expect banks to keep the funds held up, without earning any interest and/or passing on the funds to some other needy person. By the way which branch of SBI you have faced this problem ???

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