Section 206 of ITA, 1961 : Section 206: Persons Deducting Tax To Furnish Prescribed Returns

Explanation using Example

Imagine a scenario where ABC Pvt. Ltd., a private company, has deducted tax at source (TDS) from salaries paid to its employees during the financial year. As per Section 206(1) of the Income-tax Act, 1961, the principal officer of ABC Pvt. Ltd. is responsible for preparing and delivering a TDS return to the prescribed income-tax authority after the end of the financial year. The return must include all necessary particulars and be verified in the manner prescribed by the tax authorities.

In compliance with Section 206(2), ABC Pvt. Ltd. opts to submit their TDS return electronically. The company uses a computer readable media (like a CD-ROM) to file the return before the prescribed deadline. This electronic submission is in line with the scheme specified by the Central Board of Direct Taxes (CBDT) and is notified in the Official Gazette.

As per Section 206(3), the electronically filed TDS return is treated as a valid legal document and is admissible in any legal proceedings related to the Income-tax Act, without the need to produce the original hard copy.

However, the Assessing Officer identifies a defect in the electronic return filed by ABC Pvt. Ltd. Under Section 206(4), the Assessing Officer informs the principal officer of the defect and provides a 15-day period to rectify the issue. If ABC Pvt. Ltd. fails to correct the defect within the given time frame or any extended period granted by the Assessing Officer, the return will be treated as invalid, and the company will face the consequences of not having filed the TDS return.