Defective Return - Tds on advance

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A contractor's Income Tax Return (ITR) was filed as defective because TDS was deducted on the full payment of £6 crore, while the contractor declared turnover inclusive of GST at £5.08 crore. The contractor claimed TDS on the entire £6 crore, leading to the defect. The contractee refuses to revise the TDS, stating the payment was an advance. Advice suggests filing a rectified return to claim TDS based on the declared contract value in the ITR, and understanding that the excess TDS credit cannot be claimed directly by the deductee.

Faisal Mohammad

Faisal Mohammad (Querist)
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30 October 2024 The assessee is a contractor. The contractee has done the tds on the whole amount paid 6cr. Where as the assessee has considered the amount as inclusive of GST and filed the GST and ITR on 5.08cr turnover the same has also been considered in the audited financials and TAR. The ITR has been filed by claiming the tds for the whole of 6cr and it became defective. Any suggestions on how to proceed further.

Note: The contractee is not willing to revise the tds by saying that he has paid the whole amount as advance.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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31 October 2024 File rectified return and claim TDS as per your contract value declared in the ITR.

Faisal Mohammad

Faisal Mohammad (Querist)
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31 October 2024 ok sir. and what to do with the remaining credit of tds

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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31 October 2024 Actually, you do not have rights to claim it. Deductee can claim it from the deductor, as he has to deduct as per rules. For that you can argue with reference to GST return and the TDS deduction rules.

Faisal Mohammad

Faisal Mohammad (Querist)
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31 October 2024 ok. Thanks a lot sir for your precious advice and time.

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Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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31 October 2024 You are welcome.

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