Tds refund

you can made credit to your deducted party.

CIRCULAR NO. 2/2011 [F.NO. 385/25/2010-IT(B)], DATED 27-4-2011

If a deductor has deposited excess amount of TDS , the procedure for getting refund was given in Board Circular 285 dated 21-1-1980. Now CBDT has issued new circular in this respect.

•  This Circular 2/2011 is issued in  suppression of  circular No 285 / 21-10-1980
• It covers TDS sections 192 to 194LA
• It does not cover TDS on non-resident payments i.e. section 192, 194E and 195 ( which are  separately covered by circular No. 7/2007)
• It covers refunds for the period upto 31-03-2010 .
• Refunds for period thereafter will be covered under provision of section 200A which prescribes processing of TDS Statements

Excess to be refunded :

The excess payment to be refunded would be the difference between:

•  the actual payment made by the deductor to the credit of the Central Government; and
•  the tax deductible at source

Excess payment discovered during financial year

In case such excess payment is discovered by the deductor during the financial year concerned, the present system permits credit of the excess payment in the quarterly statement of TDS of the next quarter during the financial year.

Excess payment discovered after financial year

• In case, the detection of such excess amount is made beyond the financial year concerned, such claim can be made to the Assessing Officer (TDS) concerned.
• However no claim of refund can be made after two years from the end of financial year in which tax was deductible at source.

Safeguards to avoid double claims

To avoid double claim of TDS by the deductor as well as by the deductee, the following safeguards must be exercised by the Assessing Officer concerned:

The applicant deductor shall establish before the Assessing Officer that:

(i) it is a case of genuine error and that the error had occurred inadvertently;

(ii) that the TDS certificate for the refund amount requested has not been issued to the deductee(s); and

(iii) that the credit for the excess amount has not been claimed by the deductee(s) in the return of income or the deductee(s) undertakes not to claim such credit.

Prior  approval of the Additional Commissioner  is required for refund in excess of Rs. 1 Lakh

Prior  approval of the  Commissioner  is required for refund inexcess of Rs. 10 Lakhs

After meeting any existing tax liability of the deductor, the balance amount may be refunded to the deductor.

Generally TDS paid is never refunded back...u may write it off as sundry balance written off and take benefit of it as an expense...!!!!

Originally posted by : Gunjan Tulsyan
	Generally TDS paid is never refunded back...u may write it off as sundry balance written off and take benefit of it as an expense...!!!!

The Balance W/off cannot be claimed as an allowable expenses because tds paid is one type of income tax which cannot be allowed in computing the taxable income.

I think What is the problem in this Case ? Let say for the payment of Interest Rs.10000/- u have deducted TDS of  Rs.2000/- instead of Rs.1000. Then u can make payment to Deductee Party Rs.8000. And Thereafter Deductee Party can Claim TDS in 26AS.

Regards,

Harish Bansal

Originally posted by : HARISH BANSAL
	I think What is the problem in this Case ? Let say for the payment of Interest Rs.10000/- u have deducted TDS of  Rs.2000/- instead of Rs.1000. Then u can make payment to Deductee Party Rs.8000. And Thereafter Deductee Party can Claim TDS in 26AS.   Regards, Harish Bansal

You are right. But for this treatment party should be ready to accept less payment (in your example Rs 8000/-). Sometimes party may not agree to receive the less payment and then to claim the TDS. In that case we have to apply for refund of TDS because carry forward of excess of TDS paid is possible only within the financial year.

Dear you might or might not get refund of the same amount but u will alter the year of your TDS paid as: -

1. you just break the challan in to two form

a) Break challan in the amount as equal, which you deducted the TDS of your parties & second is to the remaining Balance

b) now draft a letter to the assessing officer, who assess you TDS return, as to alter the challan amount & assessment year the previous one remain same but amount differ as TDS been deducted by you & second one the rest balance which deposited extra by you may become a new challan which contains a new assessment year & the residue balance 

this letter may be sent only u/s of RTI act i.e.; Right to Information, & post it by register AD

i hope it will help you

Dear sir,
We are paying Freight in Cash & Cheque less than Rs20,000/- for sending material to clients. Please advise us whether TDS Deduction is necessary for the Freight payment.
If it is more than 20,000  whether Tax deduction is necessary.
Please advice.

Thanking you
Accounts Department
Orientceramics
TN

Hi Parthasarathy,

Freight is indirectly contract only.... Hence tds provisions will be applicable u/s194C

For a day - limit - 30000/-

For the Year-limit  - 75000/-

Only wen it  crosses the limit u will be liable to deduct TDS as per the provisions of Income Tax Act.

Dont confuse whether u paid by Cash or cheque and all.

If it is paid by cash, beyond 35000/- ur expenditure will be disallowed u/s 40A(3) of Income tax act.

I hope it will be helpful

Originally posted by : S Jananikrishna
	Hi Parthasarathy, Freight is indirectly contract only.... Hence tds provisions will be applicable u/s194C For a day - limit - 30000/- For the Year-limit  - 75000/- Only wen it  crosses the limit u will be liable to deduct TDS as per the provisions of Income Tax Act. Dont confuse whether u paid by Cash or cheque and all. If it is paid by cash, beyond 35000/- ur expenditure will be disallowed u/s 40A(3) of Income tax act. I hope it will be helpful

Sir there is no TDS applicability if Transporter provide his PAN no. Pls refer sec. 194C. Also Limit of 30000/- is not a daywise limit. Sir 30000/- is for single payment.

you are not eligible to claim refund of the excess tds deducted and paid earlier but the deductee can claim the refund or can set-off this amount with his/her tax liability