951. Procedure for regulating refund of amounts paid in excess of tax deducted and/or deductible
Circular No. 285 was issued by the Central Board of Direct Taxes on 21 October 1980. Its subject is 951. Procedure for regulating refund of amounts paid in excess of tax deducted and/or deductible.
Lays down how a deductor gets back money paid to the Government over and above the tax deducted or deductible under sections 192 to 194D. The Board takes the view that such an excess is refundable to the person who paid it independently of the Income-tax Act, subject to administrative safeguards, and supersedes the earlier instruction. The excess is measured as the difference between the actual payment and the tax deducted or deductible, whichever is more; it is first adjusted against the deductor's existing liability under any of the Direct Tax Acts and only the balance refunded. Where a branch office deducted, paid and filed its own quarterly statement or annual salary return, that branch is treated as a unit separate from the head office and is refunded by the Income-tax Officer who receives its statements.
The Board had been considering how to deal with amounts a deductor pays in excess of what he has deducted or ought to have deducted, for which the Act provides no refund route.
951. Procedure for regulating refund of amounts paid in excess of tax deducted and/or deductible
1. The Board have been considering the manner of refunding the amount paid in excess of the tax deducted and/or deductible (whichever is more) under sections 192 to 194D of the Income-tax Act. The Board are advised that such excess payment can be refunded, independently of the Income-tax Act, to the person responsible for making such payment subject to necessary administrative safeguards.
2. In supersession of the earlier instruction on the subject, the following procedure is laid down to regulate the refund of such excess payments.
3. The excess payment would be the difference between the actual payment made by the deductor and the tax deducted at source or that deductible, whichever is more. This amount should be adjusted against the existing tax liability under any of the Direct Tax Acts. After meeting such liability the balance amount, if any, should be refunded to the assessee.
4. Where the tax is deducted at source and paid by the branch office of the assessee and the quarterly statement/annual return (in case of salaries) of tax deduction at source is filed by the branch, such branch office would be treated as a separate unit independent of the head office. After meeting any existing tax liability of such a branch, which would normally be in relation to the deduction of tax at source, the balance amount may be refunded to the said branch office. The Income-tax Officer, who will refund the amount, would be the one who receives the quarterly statement/annual return (in case of salaries) of tax deduction at source from that branch office and keeps record of the payments of tax deduction at source made by that branch.
5. The adjustment of refund against the existing tax liability should be made in accordance with the present procedure on the subject. A separate refund voucher to the extent of such liability under each of the direct taxes should be prepared by the Income-tax Officer in favour of the "income-tax department" and sent to the bank along with the challan of the appropriate type. The amount adjusted and the balance, if any, refunded would be debitable under the sub-head "Other refunds" below the minor head "Income-tax on companies"—major head "020—Corporation Tax" or below the minor head "Income-tax other than Union Emoluments"—major head "021—Taxes on incomes other than corporation tax" according as the payment has originally credited to the major head "020—Corporation tax" or the major head "021—Taxes on incomes other than corporation tax".
6. Since the adjustment/refund of the amount paid in excess would arise in relation to the deduction of tax at source, the recording of the particulars of adjustment/refund should be done in the quarterly statement of TDS/Annual return (in case of salaries) under the signatures of the Income-tax Officer at the end of the statement, i.e., below the signatures of the person furnishing the statement.
Circular: No. 285 [F. No. 275/77/79-IT(B)], dated 21-10-1980.
When a deductor asks the Assessing Officer for return of an excess TDS remittance that no assessee can claim credit for.
Source: the Income Tax Department’s own published text — its page for this instrument.