Wednesday, March 18, 2009

EXCESS TDS DEPOSIT-REFUND VS ADJUSTMENT


on Wednesday, March 18, 2009

1.Can TDS Paid in the last Financial year can be adjusted in the next financial year. 
2. If not then what is the remedy
                                   Ronak

Excess TDS deposit is now a days is common problem ,the reason may be any thing from E payment double click  to dispute by deductee .But after the excess deposit Of TDS ,Its adjustment is a big problem for the Deductor.If TDS has been deposited in excess in early part of the year then it can be adjusted in the rest of the year .As I have explained earlier post that single challan can be entered in Two or more quarterly return .Means Advance tax with in the year can be adjusted with TDS to be deposited during the same year .

But the problem is arises when we have no adjustment available with the year ,the question now is

  • can TDS paid for earlier Year(s) can be adjusted in current years or in coming years
The answer is "NO" there is no such provisions in the Income tax Act /rules to adjust the same by assesee himself .But assessee can apply for a refund for excess TDS deposit subject to that we have not issued a TDS certificate to deductee(s) in respect of excess amount deducted.After getting application department can adjust the TDS against tds Deductible or can issue refund order  Department has issued a Circular 285 dated 21.10.1980 in this regarding procedure for excess TDS refund ,which is reproduce here under for your ready reference.

Deduction of tax at source-Payment in excess of the amount actually deducted or deductible from salaries and other types of payments under sections 192 to 194D of the Income-tax Act-Refund/Adjustment of.

The Board have been considering the manner of refunding the amount paid in excess of the tax deducted and/or deductible (whichever is more) under sections 192 to 194D of the Income-tax Act, 1961. The Board are advised that such excess payment can be refunded, independently on the Income-tax Act, to the person responsible for making such payment subject to necessary administrative safeguards.

2. In supersession of the earlier instruction on the subject the following procedure is laid down to regulate the refund of such excess payments.

3. The excess payment would be the difference between the actual payment made by the deductor and the tax deducted at source or that deductible, whichever is more. This amount should be adjusted against the existing tax liability under any of the Direct Tax Acts. After meeting such liability, the balance amount, if any, should be refunded to the assessee.

4. Where the tax is deducted at source and paid by the branch office of the assessee and the quarterly statement/annual return (in case of salaries) of tax deduction at source is filed by the branch, such branch office would be treated as a separate unit independent of the head office. After meeting any existing tax liability of such a branch, which would normally be in relation to the deduction of tax at source, the balance amount may be refunded to the said branch office. The Income-tax Officer, who will refund the amount, would be the one who receives the quarterly statement/annual return (in case of salaries) of tax deduction at source from that branch office and keeps record of the payments of TDS made by that branch.

5. The adjustment of refund against the existing tax liability should be made in accordance with the present procedure on the subject. A separate refund voucher to the present procedure on the subject. A separate refund voucher to the extent of such liability under under each of the direct taxes should be prepared by the Income-tax Officer in favour of the "income-tax department" and sent to the bank along with the chalan of the appropriate type. The amount adjusted and the balance, if any, refunded would be debitable under the sub-head "Other refunds" below the minor head "Income-tax on companies"-major head "020-Corporation tax" or below the minor head "Income-tax other than union emoluments"-major head "021-Taxes on Incomes other than Corporation-Tax" according as the payment has originally credited to the major head "020- Corporation Tax" or the major head "021-Taxes on Incomes other than Corporation Tax".

6. Since the adjustment/refund of the amount paid in excess would arise in relation to the deduction of tax at source, the recording of the particulars of adjustment/refund should be done in the quarterly statement of TDS/annual return (in case of salaries) under the signatures of the ITO at the end of the statement, i.e. below the signature of the person furnishing the statement.

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Dear friends,I would like to inform you that I am receiving 10-15 mail regarding clarification about various subjects/act.And due to Limited Resources ,I am not able to answer all The queries Raised.So person who's queries have not been answered, kindly excuse me.To release pressure ,I have earlier ,opened a TAX CLUB INDIA (forum site),where you can ask your query and Other can answer that question.So with knowledge sharing we can help each other.

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