FY 2021-22 TDS TO CLAIM IN FY 2022-23

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This discussion addresses a common issue where TDS is deducted in one financial year (FY 2022-23) based on cash basis, but the corresponding income was already declared in an earlier year (FY 2021-22) under the accrual basis. This creates a mismatch in Form 26AS, showing TDS without corresponding gross receipts for the current year. The content explains that while a new provision (Section 155(20)) allows for amending past assessments to claim TDS credit, it takes effect from October 2023 and requires a specific application. For immediate filing of the FY 2022-23 return before the December deadline, the advice suggests manually filing Form 3 and accounting for the TDS, acknowledging the potential for a defective return but outlining the necessary steps to claim the refund.

swetha

swetha (Querist)
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09 November 2023 I maintain books of accounts in accrual basis and one of my party has uploaded tds on cash basis in fy 2022-23 but i have showed the turnover of this party in fy 2021-22 and sales of fy 2022-23 is nil for the whole year . Now in 26AS of fy 2022-23 gross receipts and tds is showing and i have no sales in this year. Now in filling form 3 in tds schedule the gross receipts and tds only i can mention in which head it should be accounted but not the year in which it was accounted. I have to claim the tds amount as refund. will the return show defective as its appearing in 26AS but by Gross receipts for fy 2022-23 is zero.
How to file the form 3 for fy 2022-23 so that the return will be processed.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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11 November 2023 TDS credit for income already disclosed in the return of income of past year – Budget 2023 Representations have been received that in many instances, tax is deducted by the deductor in the year in which the income is actually paid to the assessee. However, following accrual method, the assessee may have already disclosed this income in earlier years in their return of income. This results in TDS mismatch, since the corresponding income has already been offered to tax by the assessee in earlier years, however, TDS is only being deducted much later when actual payment is being made. The assessee cannot claim the credit of TDS in the year in which tax is deducted since income is not offered to tax in that year. It may also not be possible to revise the return of past year in which the corresponding income was included since time to revise the return of income for that year may have lapsed. This results in difficulty to the assessee in claiming credit of TDS. 2. In order to remove this difficulty, it is proposed to insert a new sub-section (20) in section 155 of the Act. This new sub-section applies where any income has been included in the return of income furnished by an assessee under section 139 of the Act for any assessment year (hereinafter referred to as the “relevant assessment year”) and tax has been deducted at source on such income and paid to the credit of the Central Government in accordance with the provisions of Chapter XVII-B in a subsequent financial year. In such a case the assessee can make application in the prescribed form to the Assessing Officer within two years from the end of the financial year in which such tax was deducted at source. Then Assessing Officer shall amend the order of assessment or any intimation allowing credit of such tax deducted at source in the relevant assessment year. It has been further provided that the provisions of section 154 of the Act shall, so far as may be, apply thereto, and the period of four years specified in sub-section (7) of that section shall be reckoned from the end of the financial year in which such tax has been deducted. Further, credit of such tax deducted at source shall not be allowed in any other assessment year.
Amendment has also been proposed in section 244A of the Act to provide that the interest on refund arising out of above rectification shall be for the period from the date of the application to the date on which the refund is granted. 4. These amendments will take effect from 1st October, 2023.

swetha

swetha (Querist)
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11 November 2023 But Form 71 is not yet released online. i need to file fy 2022-23 returns before 31st december so how should i file the return and claim the refund

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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11 November 2023 Form available in the link through search.
You have to manually file the form.

https://incometaxindia.gov.in/Pages/downloads/forms.aspx

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