TDS credit reflected in Form No. 26AS after the income tax return Filed? Here is a solution

Taxpayers can claim TDS credit if the same is not claimed in the ITR as it was deposited by Deductor after filing the ITR. There is a Notification No. 73/2023, dated 30-08-2023 issued by the CBDT pursuant to the amendment by the Finance Act 2023 which has inserted sub-section (20) to Section 155 with effect from 01-10-2023.

It may be noted that the new sub-section is applicable when an income has been reported in an income tax return for a specific assessment year, and tax was withheld by the deductor and paid to the government in a later financial year or even after the taxpayers have filed their income tax returns. .

Further even this type of situation also arises when a deductor do TDS in the year in which the income is paid to the taxpayer. However, the taxpayer has already included that income on an accrual basis in his earlier tax returns. This causes a TDS mismatch, as the income has already been taxed on accrual basis, but tax is only deducted later when payment is made. Section 199 provides that the credit for TDS is available in the year in which the amount / income is offered for taxation. Having offered the income in earlier year, getting the credit in subsequent year is a legal issue in such a case as per Income Tax Act-1961.

Here Section 155(20) comes to the rescue of the assessee whereby Assessee can apply to the AO within two years of the financial year in which the tax was withheld, and the AO will amend the assessment and allow credit for the tax. The Central Board of Direct Taxes (CBDT) has issued Income-tax (Twentieth Amendment) Rules, 2023 and inserted Rule 134. This Rule mandates the assessee to furnish an application in Form No. 71.

This form shall be furnished electronically under digital signature or through the electronic verification code. Form No. 71 seeks the following information from the assessee:

1. Personal details like Name, Address, PAN, Aadhaar, Residential Status, E-mail Id, Mobile Number and relevant assessment year, date of furnishing return of income etc. Most of the details is auto-filled when the assessee log in at income tax portal through their PAN.
2. Total income of the assessee returned in the relevant assessment year, amount of specified income and rate at which such specified income was subject to tax.
3. Amount of tax deducted, date of deduction of tax, section and rate at which tax deducted, date of payment of tax deducted to the central Government and amount of tax claimed for the relevant assessment year.
4. Name, TAN of Deductor (& PAN which is optional) .

After filing the Form No. 71, Assessing Officer can give the credit of the TDS U/s 154 r.w.s. 155(20). It is advisable to file the rectification application U/s 154 with the jurisdictional assessing Officer with the elaborated facts of the case, document in support of the fact that the relevant income is offered for taxation along with Form No. 71.