Friday, December 10, 2010

Senior citizen fights the system to claim tax refund

MUMBAI: A senior citizen overcame bureaucratic indifference to claim refund for wrong tax deduction carried out on his investment under a scheme floated by the Government of India. His successful fight will help scores of investors who may have lost their hard-earned money to faulty tax deduction.

P H Sampat, a 76-year-old resident of Cuffe Parade, had invested several lakhs under the department of post's Senior Citizen Savings Scheme (SCSS). Sampat said, "Somewhere in 2005, the Central Board of Direct Taxes issued a directive that the postal department should deduct tax at source while paying quarterly interest."

Sampat, who began investing in the scheme in 2004, said, "On the scheme's maturity, the postal department paid me the principal amount, but after deducting Rs 5,266, which they claimed had to be adjusted towards non-deduction of tax for the interest paid during financial years 2004-05 and 2005-06."

Sampat said the postal department did not entertain his protests. Finally, he approached income tax officials.
Vindicating Samapat's stand, income-tax officer (TDS) Dilip M Sale, in his order, ruled, "As per the provision of Section 194 A(1) of the I-T Act, TDS has to be deducted at the time of credit of such income to the account of payee or at the time of payment thereof in cash or by issue of cheque or draft or by any other mode, whichever is earlier. Thus, the TDS deducted on May 25, 2010, on payment made during financial years 2004-05 and 2005-06 on account of Taj Mahal post office is found to incorrect/ wrong." Sampat said he flashed this order before postal department officials, who then agreed to refund the deducted amount.

M S Badwe, assistant director, postal services, said, "We will only refund the amount to those who approach us with their documents, which can prove that their case is similar to Sampat's."
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