Reclaim tds @ excess of prescribed rate

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C K THAKKAR (Querist)
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08 May 2012 My friend is M.D. of his Pvt Ltd. company. The company has Fixed Deposits with SBI. The SBI deducted TDS on interest on FD @ 20 % instead of 10 %. The excess amount of TDS comes to Rs. 55000. The bank issued Memo to concerned staff but has regretted to reverse the deduction. Now the company has paid all tax liabilities in full. The company has to claim refund which may come after very long time. The bank refuses to make immediate refund of excess deduction. Isn't it illegal for bank to deduct such exces TDS ? How to force bank to refund the amount of Excess TDS forthwith ? What is the legal remedy other than claiming refund while filing return ?

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Guest (Expert)

08 May 2012 TDS once deducted is deposited by the bank. We cannot term it illegal as we have recd tds credit. The only remedy is to complain to banking ombudsman for defeciency in service and make a claim. In case excess tds for one client can be adjusted against oder client but for banks it may be difficult bcz they have strict internal controls. Still bank can be asked to adjust it against other TDS liabilty of some oder clients .

There have been instances where clients deduct higher tax as advised by auditor and we take the hit as business is imp

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Amol S Joglekar

Amol S Joglekar (Expert)
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08 May 2012 A small curiosity please. Excess amount of INR 55.000 suggests that interest income must be INR 5,50,000. A person earning such an amount of interest must be having handsome SALARY as well. He must be falling in the 30% slab. Although SBI has done a WRONG thing, no doubt about that... but you need to pay another 10 %. The question, at the most could be of CASH FLOW hamper.

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C K THAKKAR

C K THAKKAR (Querist)
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08 May 2012 The assessee has cleared all tax liabilities and no further payment is required. The point here is when there is no legal provision to take action against the deductor, the principle of natural justice should apply. Suppose I give you a contract for Rs. 1.00 lakh and you earn Rs. 5000 in that contract. While making payment I give you cheque for Rs. 75000 and TDS Certificate for Rs. 25000 (@ 25% instead of 1%) and still I go scot free and you suffer. Why you CAs are not looking into remedy under principle of natural justice. The amount of interest which will be received from IT on refund will also be at a lower rate then what the bank charges on OD Account. To me such things seem to be clear breach of trust and bank must compensate and make available the fund to the assessee and recover the interest received on refund, to be secured under an indemnity bond. I await some more opinions and contemplate taking legal action against bank. I do not agree that the TDS can be deducted at wish and will and the payee may be made to suffer without any remedy.