Clarity on TDS Refund Process: Form 71 Addresses Absence in Form 26AS for Income Booking

Income Tax Form 71

Introduction

As we know as per Section 199 read with Rule 37BA of Income Tax law provides that TDS credit can be claimed in the year in which the related Income is offered to tax. However, Sometime situation arises when a deductor withholds tax in the year in which the income is paid to the taxpayer. However, the taxpayer has already included that income on an accrual basis in his earlier tax returns. This causes a TDS mismatch, as the income has already been taxed on accrual basis, but tax is only deducted later when payment is made. To resolve this problem the Finance Act inserted sub-section (20) to Section 155 in Income Tax Act, 1967 which says that where income has been included in the return of income furnished by assesse for any assessment year and tax on such income has been deducted and paid to Central Government in a subsequent financial year then assesse can make an application in the prescribed form i.e. Income Tax Form 71. to the assessing officer for allowing such TDS credit in the relevant assessment year .

Time limit

As per Section 155 (20) of Income Tax Act, 1967 Assesse has to submit Income tax form 71 within 2 years from the financial year in which tax was deducted. For e.g. if TDS is deducted in the financial year 21-22 then assesse has to submit form till 31st march 2024.

Benefits of Form 71

• Taxpayers with the help of Income tax form 71 can claim the TDS in the same year in which income is declared even though TDS is not reflecting in Form 26AS for same year
• It removes the problem faced by taxpayers in resolving TDS issues. Taxpayers are not required to approach the deductor’s and follow up with them for TDS corrections.
• Since this form is filed electronically, hence it is simple and easy way for taxpayers to claim TDS credit on income tax portal.

Required details for filing Form 71

The following details are required for filing Form 71

• Name, PAN, Address and Residential status of applicant
• Assessment Year in which the income was included
• Financial year in which the TDS was deducted
• Date on which Income Tax Return is filed
• Total Income of the relevant Assessment year
• Total amount of specified income included in Income Tax Return
• Nature of specified income and Rate at which TDS deducted
• Amount of TDS, Date of Deduction of Tax and date of payment to Govt. by deductor
• Name, TAN and PAN of Deductor

How to submit Income Tax Form 71

• First, Go to the e-filing portal of the Income Tax Department at incometax.gov.in and download the form.
• Then, Fill all the details required including the taxpayer name, PAN and address, the assessment year in which the income was declared in the ITR, the financial  year in which the TDS was deducted, the amount of TDS deducted and finally reason for claiming the TDS credit .
• The form must be duly signed by the Taxpayer and submitted to the tax authorities for verification.
• The form must be verified with an electronic verification code (EVC) or with a digital signature certificate (DSC).

• Conclusion

Section 155(20) of Income Tax Act, 1967 and form prescribed there in i.e. Income Tax Form 71   has a significant impact towards the enhancing the accuracy and efficiency of tax assessment. Generally, TDS credit can be claimed in the year in which income is offered to tax. It means when it is reflecting in our 26 AS form. However, when TDS deducted and paid to the government in later financial year then TDS would not reflect in 26AS Form in the year in which income is considered rather it would reflect in the year in which TDS is deducted. FORM 71 cover such situation and enable assesse to claim TDS credit even in subsequent financial year.