Section 200A of the Income-tax Act, 1961 - Deduction of tax at source - Processing of statement of tax deducted at source - Procedure for regulating refund of excess amount of TDS deducted and/or paid
Circular No. 2/2011 was issued by the Central Board of Direct Taxes on 27 April 2011. Its subject is Section 200A of the Income-tax Act, 1961 - Deduction of tax at source - Processing of statement of tax deducted at source - Procedure for regulating refund of excess amount of TDS deducted and/or paid.
Replaces Circular No. 285 dated 21 October 1980 with a fresh procedure for refunding to a deductor the amount paid in excess of the tax deducted or deductible, for deductions on residents under sections 192 to 194LA. The excess is the difference between what the deductor actually paid to the credit of the Central Government and the tax deductible at source. If the deductor finds the excess within the financial year, it can be adjusted against the quarterly statement of the next quarter of that year; if it comes to light later, a claim lies to the Assessing Officer (TDS), but no refund claim can be made after two years from the end of the financial year in which the tax was deductible. The Assessing Officer must be satisfied that the error was genuine and inadvertent, that no TDS certificate for the amount has been issued to the deductee, and that the deductee has not claimed and undertakes not to claim the credit; prior approval of the Additional Commissioner is needed above Rs. 1,00,000 and of the Commissioner (TDS) above Rs. 10,00,000. Any existing tax liability of the deductor is set off first.
After Circular No. 285 was issued, new sections were inserted in Chapter XVII-B, and references were received asking that deductions under those sections also be brought within the refund procedure.
Section 200A of the Income-tax Act, 1961 - Deduction of tax at source - Processing of statement of tax deducted at source - Procedure for regulating refund of excess amount of TDS deducted and/or paid
CIRCULAR NO. 2/2011 [F.NO. 385/25/2010-IT(B)], DATED 27-4-2011
The procedure for regulating refund of amount paid by the deductor in excess of the tax deducted at source (TDS) and/or deductible is governed by Board circular No. 285, dated 21-10-1980.
2. Subsequent to issue of circular No. 285, new sections have been inserted under Chapter XVII-B of the Income-tax Act, 1961. References have been received by the Board regarding inclusion of these sections also for the purpose of issue of refund of excess amount of the TDS deducted/deductible.
3. In consideration of the above and in supersession of the circular No. 285, dated 21-10-1980, the Board prescribes the following procedure for regulating refund of amount paid in excess of tax deducted and/or deductible in respect of TDS on residents covered under sections 192 to 194LA of the Income-tax Act, 1961. This circular will not be applicable to TDS on non-residents falling under sections 192, 194E and 195 which are covered by circular No. 7/2007 issued by the Board.
4. The excess payment to be refunded would be the difference between:
(i) the actual payment made by the deductor to the credit of the Central Government; and
(ii) the tax deductible at source.
4.1 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.
4.2 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.
5. However, 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:
5.1 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.
5.2 Prior administrative approval of the Additional Commissioner or the Commissioner (TDS) concerned shall be obtained, depending upon the quantum of refund claimed in excess of Rupees One Lakh and Rupees Ten Lakh respectively.
5.3 After meeting any existing tax liability of the deductor, the balance amount may be refunded to the deductor.
6. In view of provisions of section 200A of the Income-tax Act prescribing processing of statement of TDS and issue of refund with effect from 1-4-2010, this circular will be applicable for claim of refunds for the period upto 31-3-2010.nn
In a claim before the Assessing Officer (TDS) for refund of an excess challan payment, and in a TDS reconciliation where a challan exceeds the deduction reported in the statement.
A deductor pays Rs. 5,00,000 to the credit of the Central Government against tax actually deductible of Rs. 4,20,000. The excess of Rs. 80,000, if discovered within the same financial year, can be taken as credit in the quarterly statement of the next quarter of that year. If it surfaces only after the year is over, the deductor must apply to the Assessing Officer (TDS) within two years from the end of the financial year in which the tax was deductible; being below Rs. 1,00,000, the claim does not need the Additional Commissioner's prior approval.
It mentions. Circular No. 2/2011, Circular No. 7/2007
Source: the Income Tax Department’s own published text — its page for this instrument.
