How To Eliminate Tedious TDS Errors

Moneylife Digital Team 01 December 2017

Economy & Nation

Why are depositors plagued by mistakes banks commit in deducting tax on fixed deposits (FDs)? Banks are mandated to deduct tax at source (TDS) on annual interest income of Rs10,000 and above, when a depositor has no permanent account number (PAN) or has not submitted Form 15G or 15H (applications to ensure no deduction of tax if income is not taxable). In practice, although banking operations have been computerised, customers find that TDS is wrongly computed, or wrongly deducted, despite submitting the relevant forms, or wrong deductions happen, especially when FDs are being renewed. This is a serious harassment, because banks cannot refund the wrong deduction; the tax refund can only be claimed by individuals filing a needless tax return to claim it, even when the income is below the tax threshold.

An internal newsletter of the Corporation Bank Officer’s Organisation (CBOO) reveals that TDS compilation is done by each branch with very little time given to the officers to verify and remit the tax collected. This leads to errors, which not only anger customers but have stressed out bank officials as well, because, if collections from customers fall short, or TDS remittance is delayed, it attracts a penalty. The draconian tax rules are leading to mistakes and haunting bank officials when wrong deductions are made. A further twist arises from the fact that bank branches are burdened with the job of compiling TDS and transferring it to a temporary current account which has its own issues in remittance through netbanking.

The CBOO general secretary, Satish Shetty, has now demanded that TDS must be compiled and remitted from the head office, which has all the data in the core banking software. He also wants a resolution to the issue of TDS being deducted with relevant forms submitted, without holding officers responsible for the error which are not really their fault. Why this has not been done, despite TDS issues being faced by customers of all banks is the big question. The problem is not limited to Corporation Bank. For instance, State Bank of India’s (SBI’s) customers, especially those whose bank was merged with the giant SBI, find that bank officials are not familiar with the software and are making mistakes in TDS compilation and deduction. A few banks harass senior citizens by making it mandatory to submit Form 15H online when they are unfamiliar with computers. Between draconian and impractical tax rules and bankers working on faulty systems, it is the ordinary customer, especially the senior citizen, who is the scapegoat. But who is listening?

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