How to claim TDS refunds if it is not shown in the ITR filed
Filing of Income Tax Return (ITR) is a prerequisite for claiming the Income Tax refund. There are cases where the actual tax liability of the taxpayers is less than the amount of TDS and the taxpayers didn’t file the ITR. There are also instances wherein the TDS is done by the payers after the taxpayers have already filed his ITR & since the recipient was not aware of any TDS, it has not been claimed in the ITR. There are also instances of non-claim in the ITR filed by the taxpayers due to inadvertence or mistake.
In all such cases, though the TDS amount is reflected in the database of the income tax department (i.e., in Annual Information Statement – AIS or Form No. 26AS), the same is not claimed through ITR.
This raises the question of how to receive credit for TDS in such situations. Typically, TDS credit can only be granted if claimed in the ITR. However, there are exceptions outlined below:
1. Filing Revised Income Tax Return:
If the taxpayers notices the mistake before the 31stDecember of the relevant Assessment Year (AY), then the taxpayers have an option to claim the TDS credit by filing revised ITR. However, this option to file the revised ITR is available only if the error/mistake is noticed within 9 months i.e., till 31st December of the Assessment Year.
2. Filing Updated Income Tax Return:
If the taxpayers notices that there was an error not only in claiming the credit towards TDS but also an error in not offering the income for taxation then the taxpayers have an option to file the Updated ITR & claim TDS thereon. However, the option to file updated ITR is only available till 2 years after the end of the relevant AY. Further, this option can only be used if the taxpayers have additional income to offer for taxation. No refund can be issued pursuant to updated ITR but TDS can be adjusted against additional tax liability. If the person has already offered the income for taxation in the original ITR and merely wishes to claim the TDS credit which was earlier then the option of updated return cannot be used by the taxpayers.
3. Option to claim TDS Credit under Section 119(2)(b):
a) The option to claim TDS credit by filing revised return or updated return has its limitation as it cannot be filed after a certain prescribed period. In such a case, the income tax law provides an option under section 119(2)(b) to claim a TDS refund, exemption, deduction or any other relief under the Act. The section empowers Central Board of Direct Taxes (CBDT) to direct income tax authorities to allow any such claim even after the expiry of all the time limits to file the ITR. However, such claims will be allowed only if the non-compliance was as a result of genuine hardship faced by the taxpayer.
b) To ease the implementation of section 119, CBDT has issued Circular No. 9/2015 prescribing the guidelines and threshold limit of various authorities to entertain the claim of refund. According to the circular, Principal Commissioners or commissioners of Income tax are assigned with the powers of acceptance or rejection of claims when the claim amount is up to ₹10 lakh for one assessment year. Similarly, the Principal Chief Commissioner of Income Tax is assigned with powers to entertain a claim between ₹10 lakh to ₹50 lakh. If the amount exceeds Rs. 50 Lakh then CBDT can only consider the claim above ₹50 lakh.
c) Condonation for claims can be filed up to six years from the end of the relevant AY.
d) Any class of taxpayer, be it individual, company, trust, HUF, etc. to whom PAN is issued and fulfils the above-mentioned conditions can file a claim.
e) The taxpayer can exercise this option to (i) claim of refund in case of excess payment of income tax (ii) claim TDS credit missed in the original ITR (iii) to give effect to any court orders in favour of the taxpayer (iv) to get the benefit of eligible loss which was not carried forward.
f) The option under section 119 can also be exercised if the taxpayers has erroneously paid the tax on exempt income or when the taxpayers has failed to claim the permissible deduction in the ITR filed.
g) One may note that the taxpayers can also file a claim of TDS refund under section 119 even if they didn’t file ITR as their taxable income did not exceed the basic exemption limit of Rs. 2.50 Lakh or Rs. 3 Lakh for senior citizens.
In short, Taxpayers can apply U/s 119(2)(b) for any benefit of the IT law that is available but couldn’t be availed due to some unavoidable circumstances or genuine hardship.
How to file a claim U/s 119:
a) Taxpayers can prepare a manual application for submission to the jurisdictional authorities. One may note that there is no prescribed format of application & taxpayers can simply mention that it is a condonation request to allow the filing of ITR after the due dates.
b) The application should elaborate the reasons & circumstances due to which the timely compliance could not be made earlier & must prove the existence of genuine hardship for not filing or claiming earlier.
c) If further information is required on the matter, then a notice will be issued by the department. The details of such notice issued will be available online as well under the ‘pending actions’ tab of the Income Tax portal.
d) If the application is approved, the ITR will have to be filed online under section 119(2) in the ‘e-filing’ tab of the Income Tax Portal.
e) If the application is rejected, the taxpayers have an option to approach the High Court with a writ petition.
[The Income Tax portal provides an online ‘condonation request’ facility under the ‘Services’ tab for filing a claim, but the specific tab mentioned is not yet updated on the portal.]
[Views expressed are the personal view of the author. Readers are advised to seek professional advice before taking any decisions. Readers may forward their feedback & queries at nareshjakhotia@gmail.com. Other articles & response to queries are available at www.theTAXtalk.com]
