Circular No. 749 — 1183. Clarification regarding certificate for deduction of tax made by Central Government

What this is

Circular No. 749 was issued by the Central Board of Direct Taxes on 27 December 1996. Its subject is 1183. Clarification regarding certificate for deduction of tax made by Central Government Departments who are making payments by book adjustments.

This is a clarification. The Board is stating how it reads a provision. That reading binds the department; it does not bind a court, and where the section says otherwise the section wins.

What it does

Tells Assessing Officers to accept TDS certificates from Central Government Departments that pay the tax over by book adjustment. Such certificates carry no challan number or date of payment into the Government account, and were being rejected for that reason. The Board directs that they be accepted if they state that credit has been afforded to the Income-tax Department by book adjustment and give the date of that book adjustment, and are genuine. Where the officer doubts genuineness he may write to the Drawing and Disbursing Officer, who is bound to offer facility to examine the payments made into the Central Government account by book adjustment. Every such Drawing and Disbursing Officer must obtain a Tax Account Number from the jurisdictional authority, quote it on the certificates and file the annual TDS return.

Why it was issued

Rejection of these certificates for want of challan particulars was creating hardship for the assessees who held them.

Who it reaches

Employees and contractors paid by Central Government Departments
Drawing and Disbursing Officers of those Departments
Assessing Officers giving credit for tax deducted at source
Officers in charge of TDS matters allotting the Tax Account Number

The provisions it speaks to

Left, the provision of the Income-tax Act, 1961 as the instrument itself names it. Right, the section of the Income-tax Act, 2025 that the department’s own concordance maps it to — which is where the same ground is now covered.

Under the 1961 Act	Now
s.203	s.395

The instrument, as the Board published it

The words below are the department’s own, reproduced from its published text. Where the department’s copy carried a publisher’s notes after the instrument, those are not reproduced.

1183. Clarification regarding certificate for deduction of tax made by Central Government Departments who are making payments by book adjustments
Under the provisions of section 203, the Drawing and Disbursing Officers (DDOs) of various Central Government Departments are deducting tax from payments made to its employees, contractors, etc. The taxes so deducted are being paid into Government account by book adjustment. Consequently, the TDS certificates issued by such DDOs do not carry details like challan numbers, dates of payments into Government account, etc. For these reasons, the same are being rejected by the Assessing Officers and this is creating hardship for the assessees.
The Board has considered the issue and decided that the TDS certificates issued by Central Government Departments should be accepted by Assessing Officers if it indicates that credit has been afforded to the Income-tax Department by book adjustment and the date of such book adjustment is indicated therein. The certificate, in any case, should be genuine.
In case of doubt about genuineness of such TDS certificates, the Assessing Officers are free to correspond with the DDOs of such Central Government Departments and the latter are bound to offer facility for examination of their payments made to Central Government account by book adjustment.
Further, all such DDOs issuing certificates where credit is shown by book adjustment, must obtain a TAN (Tax Account Number) from the jurisdictional I.T. authority/Officer in-charge of TDS matters; and must also file their Annual Return of TDS to the jurisdictional officer in charge of TDS. The TAN must be quoted on the TDS certificates issued, showing payment by book adjustment.
Circular: No. 749, dated 27-12-1996.

What to watch

The certificate must itself say credit was given by book adjustment and must carry the date of that adjustment; a certificate silent on both is not saved by this circular.
Genuineness is still open to check, and the Department may correspond with the Drawing and Disbursing Officer.
The obligations it puts on the Drawing and Disbursing Officer, the Tax Account Number and the annual TDS return, are separate from the assessee's right to credit.
This is written for the era of paper certificates and annual returns; credit for tax deducted now runs through the electronic statement and the tax credit statement, so the mechanics here no longer describe how credit is matched.

Where you meet it

When credit for tax deducted is refused in an intimation or assessment because the Government certificate carries no challan particulars.

On the same provision

Other instruments in this library that name the same provision of the 1961 Act. They are not necessarily still operative, and a later one may have replaced an earlier one without saying so.

Circular No. 2/2026 — Order under section 119 of the Income-tax Act, 1961 for extension of timeline for issuance of tax deducted at source (TD 25 March 2026
Notification No. 09/2019 — Procedure format and standards for issuance of certificate for tax deducted at source in part b of form no. 16 in accord 6 May 2019
Notification No. 48/2017/F. No. 370 142/16/2017-TPL / GSR 561(E) — Ministry of Finance 8 June 2017
Circular No. 42/2016 — Circular No. 42 of 2016 23 December 2016
Circular 4/2013 — Issuance of certificate for tax deducted at source in form no. 16 in accordance with the provisions of section 203 of th 17 April 2013
Circular No. 2/2007 — 2/2007 dated 21 05 2007 21 May 2007

← Circular No. 750 · Circular No. 748 →

A circular binds the department, not you and not a court. The Board issues a circular to its own officers. An assessee may hold the department to a circular that helps him; the department cannot hold an assessee to one that hurts him, and the Tribunal and the courts decide the law for themselves.

Source: the Income Tax Department’s own published text — its page for this instrument.