Refund Order
This query is : Resolved
23 January 2009
First of all My client started business with propritor to work job work (F.Y. 05-06). so he give the PAN for self to give Deductor company. Now(F.Y. 06-07) he started partnership firm the Deductor company deduct tax in Propritor PAN and qtr statments of tds is also Propritor.
So Partnership firm not get refund order in his return for the f.y. 06/07. how can i adusted this refund order in partnership firm.
So Partnership firm not get refund order in his return for the f.y. 06/07. how can i adusted this refund order in partnership firm.
20 July 2025
Here's a summary and guidance on your situation with the TDS refund order:
Situation Recap:
FY 2005-06: Client was a proprietor doing job work and provided proprietor’s PAN to the deductor.
FY 2006-07: Client started a partnership firm.
Deductor continued deducting TDS under the proprietor’s PAN for FY 2006-07.
TDS quarterly statements (TDS certificates) are in the proprietor’s name, not the firm.
The partnership firm is not getting the refund of TDS deducted in its return because TDS credit is linked to the proprietor’s PAN.
What to do to adjust/refund the TDS for partnership firm?
TDS is linked to PAN — not business entity:
TDS deducted against proprietor’s PAN is credited to proprietor’s account, not the firm.
The partnership firm’s TAN/PAN is different, so it cannot claim TDS deducted on proprietor’s PAN.
No adjustment possible directly to partnership firm:
The refund due for TDS deducted against proprietor’s PAN will go to the proprietor, because the deductor did not update the TDS details after the partnership was formed.
Possible solutions:
Option A: Proprietor files ITR for FY 2006-07 and claims refund for excess TDS deducted in his name.
Option B: Request deductor to correct TDS statements:
Deductor can file correction statements (TDS returns) to reflect TDS deduction against partnership firm’s PAN.
This is often difficult retrospectively.
Accounting Treatment:
If refund is received by the proprietor for TDS deducted on partnership’s behalf, the proprietor can transfer the amount to partnership firm as capital or loan.
Alternatively, reflect this in the firm’s books as "Receivable from proprietor" and adjust accordingly.
Future Compliance:
After formation of partnership, ensure deductor deducts TDS against firm’s PAN and issues TDS certificates accordingly.
Summary:
Refund for TDS deducted under proprietor PAN will go to proprietor only.
Partnership firm cannot claim that refund directly.
Proprietor should claim refund and then adjust funds with partnership firm.
Deductor should be advised to update PAN for future deductions.
Situation Recap:
FY 2005-06: Client was a proprietor doing job work and provided proprietor’s PAN to the deductor.
FY 2006-07: Client started a partnership firm.
Deductor continued deducting TDS under the proprietor’s PAN for FY 2006-07.
TDS quarterly statements (TDS certificates) are in the proprietor’s name, not the firm.
The partnership firm is not getting the refund of TDS deducted in its return because TDS credit is linked to the proprietor’s PAN.
What to do to adjust/refund the TDS for partnership firm?
TDS is linked to PAN — not business entity:
TDS deducted against proprietor’s PAN is credited to proprietor’s account, not the firm.
The partnership firm’s TAN/PAN is different, so it cannot claim TDS deducted on proprietor’s PAN.
No adjustment possible directly to partnership firm:
The refund due for TDS deducted against proprietor’s PAN will go to the proprietor, because the deductor did not update the TDS details after the partnership was formed.
Possible solutions:
Option A: Proprietor files ITR for FY 2006-07 and claims refund for excess TDS deducted in his name.
Option B: Request deductor to correct TDS statements:
Deductor can file correction statements (TDS returns) to reflect TDS deduction against partnership firm’s PAN.
This is often difficult retrospectively.
Accounting Treatment:
If refund is received by the proprietor for TDS deducted on partnership’s behalf, the proprietor can transfer the amount to partnership firm as capital or loan.
Alternatively, reflect this in the firm’s books as "Receivable from proprietor" and adjust accordingly.
Future Compliance:
After formation of partnership, ensure deductor deducts TDS against firm’s PAN and issues TDS certificates accordingly.
Summary:
Refund for TDS deducted under proprietor PAN will go to proprietor only.
Partnership firm cannot claim that refund directly.
Proprietor should claim refund and then adjust funds with partnership firm.
Deductor should be advised to update PAN for future deductions.
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