Intimation re TDS nullification /error for our past filings.
This query is : Resolved
04 June 2020
Note for Forum
We have recd intimation re TDS nullification /error for our past filings.
The problem is:
We have wrongly deducted and paid a short amount of TDS for our vendor in a previous year; Now this difference amount needs to be paid.
Do we need to file a revised return for that year? Is there a limit to how far back TDS return can be revised?
Also, the Vendor will now receive an extra TDS credit for a previous year (assuming he filed his return on the earlier TDS dedcuted basis); How can the vendor CLAIM THIS BENEFIT in his IT returns;
IS THERE AN ALTERNATE WAY TO DEAL WITH SUCH A NULLIFICATION?
We have recd intimation re TDS nullification /error for our past filings.
The problem is:
We have wrongly deducted and paid a short amount of TDS for our vendor in a previous year; Now this difference amount needs to be paid.
Do we need to file a revised return for that year? Is there a limit to how far back TDS return can be revised?
Also, the Vendor will now receive an extra TDS credit for a previous year (assuming he filed his return on the earlier TDS dedcuted basis); How can the vendor CLAIM THIS BENEFIT in his IT returns;
IS THERE AN ALTERNATE WAY TO DEAL WITH SUCH A NULLIFICATION?
05 June 2020
Yes you have to file revise TDS return rectifying all errors. There is no time limit & no restriction on no of TDS returns filled.
11 June 2020
Thank you for your feedback; We were planning to revise our TDS return, however we were uncertain on how to deal with how to deal with this additional TDS (tax payment) that will accrue to our account since our returns are already assessed for that year. Will this TDS be refunded in any way?
ALso, the Vendor will now receive an extra TDS credit for a previous year (assuming he filed his return on the earlier TDS deducted basis); Can the vendor claim this benefit of a previous year in the current year?
How will the IT dept deal with this?
ALso, the Vendor will now receive an extra TDS credit for a previous year (assuming he filed his return on the earlier TDS deducted basis); Can the vendor claim this benefit of a previous year in the current year?
How will the IT dept deal with this?
01 August 2024
When dealing with issues related to TDS (Tax Deducted at Source) nullification or errors in past filings, there are several key steps and considerations:
### **1. **Filing a Revised TDS Return**
- **Revised Return Filing:** Yes, you should file a revised TDS return for the financial year in which the error occurred. This will correct the TDS amount deducted and paid.
- **Limit for Revision:** Generally, you can revise TDS returns for the financial year up to the end of the financial year in which the original return was filed. For instance, if the original return was for FY 2022-23, you can revise it until the end of FY 2023-24. However, the exact time limit can be subject to updates in regulations, so it’s advisable to consult the latest guidelines or your tax consultant.
### **2. **Handling Additional TDS Payment**
- **Payment of Shortfall:** Pay the shortfall amount in TDS along with interest, if applicable. Ensure that this payment is made through the designated government portal or authorized banks.
### **3. **Vendor’s Extra TDS Credit**
- **Impact on Vendor:** If the vendor receives an extra TDS credit due to the revised return, this will reflect in their Form 26AS. The vendor should be able to claim this additional credit while filing their Income Tax Return (ITR) for the relevant financial year.
- **Claiming Credit:** The vendor should:
- **Check Form 26AS:** Verify the TDS credit reflected in Form 26AS.
- **File ITR:** File their Income Tax Return for the financial year in which the TDS was originally deducted and claim the TDS credit as shown in Form 26AS.
- **Rectification/Adjustment:** If the ITR for that year has already been filed, the vendor can request a rectification of their return using Form 16/16A or through the e-filing portal.
### **4. **Refund of Extra TDS**
- **Refund to Deductor:** If the additional TDS payment results in an excess tax payment by the deductor, it can generally be refunded. You would need to file a revised return and ensure that the excess payment is properly recorded.
- **Refund Process:** The refund will be processed based on the revised return and can typically be claimed through the e-filing portal or by approaching the assessing officer.
### **5. **IT Department’s Handling**
- **Assessment Impact:** If the returns have already been assessed, the additional TDS credit will be considered during the assessment of subsequent returns or rectification.
- **Documentation:** Maintain proper documentation of the revised return, additional payments, and communication with the IT department.
### **Summary of Actions:**
1. **File Revised Return:** Correct the error by filing a revised TDS return for the relevant financial year.
2. **Pay Shortfall:** Make the additional TDS payment along with any applicable interest.
3. **Vendor Actions:** The vendor should claim the additional TDS credit in their ITR for the relevant financial year. If already filed, they should seek rectification.
4. **Refund Process:** The excess TDS payment made by the deductor should be claimed as a refund after revising the return.
5. **IT Department Coordination:** Ensure that all corrections and additional payments are documented and communicated to the IT department if required.
By taking these steps, you will address the TDS shortfall, correct past errors, and ensure proper tax credit and refund handling for both your company and the vendor.
### **1. **Filing a Revised TDS Return**
- **Revised Return Filing:** Yes, you should file a revised TDS return for the financial year in which the error occurred. This will correct the TDS amount deducted and paid.
- **Limit for Revision:** Generally, you can revise TDS returns for the financial year up to the end of the financial year in which the original return was filed. For instance, if the original return was for FY 2022-23, you can revise it until the end of FY 2023-24. However, the exact time limit can be subject to updates in regulations, so it’s advisable to consult the latest guidelines or your tax consultant.
### **2. **Handling Additional TDS Payment**
- **Payment of Shortfall:** Pay the shortfall amount in TDS along with interest, if applicable. Ensure that this payment is made through the designated government portal or authorized banks.
### **3. **Vendor’s Extra TDS Credit**
- **Impact on Vendor:** If the vendor receives an extra TDS credit due to the revised return, this will reflect in their Form 26AS. The vendor should be able to claim this additional credit while filing their Income Tax Return (ITR) for the relevant financial year.
- **Claiming Credit:** The vendor should:
- **Check Form 26AS:** Verify the TDS credit reflected in Form 26AS.
- **File ITR:** File their Income Tax Return for the financial year in which the TDS was originally deducted and claim the TDS credit as shown in Form 26AS.
- **Rectification/Adjustment:** If the ITR for that year has already been filed, the vendor can request a rectification of their return using Form 16/16A or through the e-filing portal.
### **4. **Refund of Extra TDS**
- **Refund to Deductor:** If the additional TDS payment results in an excess tax payment by the deductor, it can generally be refunded. You would need to file a revised return and ensure that the excess payment is properly recorded.
- **Refund Process:** The refund will be processed based on the revised return and can typically be claimed through the e-filing portal or by approaching the assessing officer.
### **5. **IT Department’s Handling**
- **Assessment Impact:** If the returns have already been assessed, the additional TDS credit will be considered during the assessment of subsequent returns or rectification.
- **Documentation:** Maintain proper documentation of the revised return, additional payments, and communication with the IT department.
### **Summary of Actions:**
1. **File Revised Return:** Correct the error by filing a revised TDS return for the relevant financial year.
2. **Pay Shortfall:** Make the additional TDS payment along with any applicable interest.
3. **Vendor Actions:** The vendor should claim the additional TDS credit in their ITR for the relevant financial year. If already filed, they should seek rectification.
4. **Refund Process:** The excess TDS payment made by the deductor should be claimed as a refund after revising the return.
5. **IT Department Coordination:** Ensure that all corrections and additional payments are documented and communicated to the IT department if required.
By taking these steps, you will address the TDS shortfall, correct past errors, and ensure proper tax credit and refund handling for both your company and the vendor.
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