TDS credit
This query is : Resolved
27 November 2009
Client's Bill for Mar.'09 for commission are accounted by his customer in 1st quarter of 2009-10.TDS on the same is also deducted in 1st Quarter of 2009-10.
Can my client avail TDS credit in the previous year i.e. 2008-09.As payment is recd.in 2008-09 my client has to a/c in 2008-09.
Can my client avail TDS credit in the previous year i.e. 2008-09.As payment is recd.in 2008-09 my client has to a/c in 2008-09.
27 November 2009
Since the payment is received in 08-09 he can claim TDS credit What the other party does in their accounts is not his business.
27 November 2009
Dear Mr. Menon,
Thanks for the reply.
But as per the latest tax credit statements given by the NSDL, the assessment year in which the tax has been deducted will not match with what we would be filing.
As such will the Tax Department consider the case and grant us the credit.
Regards
Thanks for the reply.
But as per the latest tax credit statements given by the NSDL, the assessment year in which the tax has been deducted will not match with what we would be filing.
As such will the Tax Department consider the case and grant us the credit.
Regards
30 November 2009
Dear Mr. Menon,
Thanks for the reply.
But as per the latest tax credit statements given by the NSDL, the assessment year in which the tax has been deducted will not match with what we would be filing.
As such will the Tax Department consider the case and grant us the credit.
Regards
Thanks for the reply.
But as per the latest tax credit statements given by the NSDL, the assessment year in which the tax has been deducted will not match with what we would be filing.
As such will the Tax Department consider the case and grant us the credit.
Regards
27 July 2025
This is a common issue in TDS credit mismatches due to **timing differences** between when **income is recorded by the deductee (your client)** and when **TDS is deducted and deposited by the deductor**.
---
### 🧾 **Your Scenario (Summarized)**
* **Your client** raised a bill in **March 2009 (FY 2008–09)**.
* The **customer booked the expense** and **deducted TDS in Q1 of FY 2009–10 (i.e., April–June 2009)**.
* Hence, **TDS appears in Form 26AS** for **AY 2010–11**.
* But your client has **accounted for the income in AY 2009–10**.
---
### 🚫 **Problem**
Under **Section 199(3)** read with **Rule 37BA of the Income Tax Rules**, **TDS credit can only be claimed in the year in which the income is offered to tax**, **provided** the TDS **also pertains to that year**.
But in this case:
* Income offered in **AY 2009–10**
* TDS deducted in **AY 2010–11**
So, **as per Form 26AS**, the credit appears only in the **next assessment year**. This creates a mismatch if claimed in the earlier year.
---
### ✅ **What Can Be Done**
#### Option 1: **Claim TDS Credit in AY 2010–11**
* Offer the income again in AY 2010–11, only to the extent of reconciling TDS (not ideal, but some have done this to get credit).
* Not technically correct if income was already taxed in AY 2009–10.
#### Option 2: **Write to Assessing Officer**
* File return for **AY 2009–10** with correct income.
* **Do not claim TDS credit** in the return.
* Separately, write a **letter to the Assessing Officer (AO)** explaining the mismatch and request for **manual credit** of TDS in AY 2009–10.
#### Option 3: **Revise income reporting to match TDS year**
* If your client hasn't filed yet or return is eligible for revision, you can consider **shifting the income to AY 2010–11** to match TDS year.
* This avoids mismatch, but must be consistent with accounting policies and commercial prudence.
---
### ⚖️ **Legal Reference**
* **Rule 37BA(3)(i)** of Income Tax Rules:
> *"Credit for tax deducted at source and paid to the Central Government shall be given to the person from whose income the tax has been deducted, and for the assessment year for which such income is assessable."*
So, if income is taxed in AY 2009–10, TDS credit **should** be given in that year. But in practice, the CPC or AO may reject it if it's not in **Form 26AS** for that year — hence manual intervention may be required.
---
### 📌 **Recommendation**
You should:
* Claim income in **AY 2009–10** (as per accrual).
* Do **not claim TDS** in that year if not appearing in 26AS.
* Claim TDS in **AY 2010–11**, OR
* File a **rectification / request with AO** for manual credit in AY 2009–10.
---
Let me know if you’d like a **draft letter** to the Assessing Officer to request TDS credit manually.
---
### 🧾 **Your Scenario (Summarized)**
* **Your client** raised a bill in **March 2009 (FY 2008–09)**.
* The **customer booked the expense** and **deducted TDS in Q1 of FY 2009–10 (i.e., April–June 2009)**.
* Hence, **TDS appears in Form 26AS** for **AY 2010–11**.
* But your client has **accounted for the income in AY 2009–10**.
---
### 🚫 **Problem**
Under **Section 199(3)** read with **Rule 37BA of the Income Tax Rules**, **TDS credit can only be claimed in the year in which the income is offered to tax**, **provided** the TDS **also pertains to that year**.
But in this case:
* Income offered in **AY 2009–10**
* TDS deducted in **AY 2010–11**
So, **as per Form 26AS**, the credit appears only in the **next assessment year**. This creates a mismatch if claimed in the earlier year.
---
### ✅ **What Can Be Done**
#### Option 1: **Claim TDS Credit in AY 2010–11**
* Offer the income again in AY 2010–11, only to the extent of reconciling TDS (not ideal, but some have done this to get credit).
* Not technically correct if income was already taxed in AY 2009–10.
#### Option 2: **Write to Assessing Officer**
* File return for **AY 2009–10** with correct income.
* **Do not claim TDS credit** in the return.
* Separately, write a **letter to the Assessing Officer (AO)** explaining the mismatch and request for **manual credit** of TDS in AY 2009–10.
#### Option 3: **Revise income reporting to match TDS year**
* If your client hasn't filed yet or return is eligible for revision, you can consider **shifting the income to AY 2010–11** to match TDS year.
* This avoids mismatch, but must be consistent with accounting policies and commercial prudence.
---
### ⚖️ **Legal Reference**
* **Rule 37BA(3)(i)** of Income Tax Rules:
> *"Credit for tax deducted at source and paid to the Central Government shall be given to the person from whose income the tax has been deducted, and for the assessment year for which such income is assessable."*
So, if income is taxed in AY 2009–10, TDS credit **should** be given in that year. But in practice, the CPC or AO may reject it if it's not in **Form 26AS** for that year — hence manual intervention may be required.
---
### 📌 **Recommendation**
You should:
* Claim income in **AY 2009–10** (as per accrual).
* Do **not claim TDS** in that year if not appearing in 26AS.
* Claim TDS in **AY 2010–11**, OR
* File a **rectification / request with AO** for manual credit in AY 2009–10.
---
Let me know if you’d like a **draft letter** to the Assessing Officer to request TDS credit manually.
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