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Refund of TDS to Deductor to Claim by Form 26B from TRACES

refund-of-tds-to-deductor-to-claim-by-form-26b-from-traces

Refund of TDS to Deductor to Claim by Form 26B from TRACES: A deductor can claim refund of excess payment of TDS in Form 26B from TRACES portal and is also entitled to receive interest on the refund of TDS to the deductor.

    Refund of TDS


    Where a person who has deducted income-tax (TDS) and deposited the same to the account of the government, if later finds that the tax was not deductible and thus wrongly deposited or certain tax was deposited in excess of the deducted amount or the contract is cancelled and thus the excess TDS deposited needs to be claimed from the government as refund shall be entitled to claim the refund of TDS by the deductor from the government.


    This article describes the provisions of the Income Tax Act, 1961 (“Act”) and the CBDT Circulars on the issue of the refund of excess TDS deposited by the deductor.


    Refund of TDS to a deductor may arise in the case of -

    Refund of TDS from residents,

    Refund of TDS from non-residents,

    Refund of TDS on immovable properties deposited through Form No. 26QB, and others.


    The provisions regarding the refund of the TDS is enshrined in the provisions of the Act by the Finance (No. 2) Act, 2009 when a new section 200A was inserted in the Income Tax Act, 1961 with effect from 1st April 2010.


    Section 200A  provides for the processing of statements of tax deducted at source on the computer so that liabilities on account of interest and other defaults in TDS payment are promptly calculated and intimated to the deductor. In order to process TDS statements on a computer, it is provided for electronic processing on the same lines as the processing of Income-tax returns.


    The following adjustments can be made during the computerized processing of statements of tax deducted at source under section 200A:


        (a) the sums deductible under this Chapter shall be computed after making the following adjustments, namely:—

    (i) any arithmetical error in the statement; or

    (ii) an incorrect claim, apparent from any information in the statement;


    (b) the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement;


    (c) the fee, if any, shall be computed in accordance with the provisions of section 234E;


    After making adjustments, tax and interest is calculated and the sum payable by the deductor or refund due to the deductor will be determined. 


    An intimation is then sent to the deductor informing him of his tax liability or granting him the refund due within one year from the end of the financial year in which the statement is filed.


    Unlike income-tax return where a refund of TDS can be claimed by filing the income tax return by the deductee, in case of TDS, the refund of TDS to the deductor is not given with the Intimation under section 200A. In case of a refund of TDS by the deductor, the deductor needs to claim the refund separately in Form No. 26B.


    Understanding a TDS Challan


    When a deductor deducts income-tax or TDS from the deductees, then the TDS so deposited to the government may become refundable to the deductor in the following circumstances-

    1. Upon cancellation of the contract with the deductee, or

    2. Upon excess payment of TDS by the deductor, or

    3. For any other reason.


    The deductor after depositing the TDS with the government, may or may not have furnished the statement of TDS in Form 26Q or Form 27Q or Form 24Q or Form 26QB or Form 26QC or Form 26QD under section 200(3) of the Income Tax Act, 1961.


    Before further discussion, it is pertinent to understand the TDS challan. When TDS is deposited by TDS Challan ITNS-281, the challan has the following particulars-

    1. Assessment Year

    2. Challan Identification Number or CIN

    3. BSR Code

    4. Date of Deposit of TDS

    5. Amount of TDS deposited

    6. TAN of the deductor. In certain cases, PAN of the deductor or buyer is available like in Form 26QB - TDS on purchase of an immovable property.


    Out of the above, the ‘Amount of TDS deposited’ assumes significance in the case of a refund of TDS to the deductor.


    One should also know the ‘Challan Amount Consumed’ and ‘Available Amount in a Challan’.


    The Challan status is marked as ‘Claimed’ or ‘unclaimed’. If no deductee is mapped or any deduction of tax is claimed the status is shown as ‘Unclaimed’. If any part or full of the TDS amount of the challan is mapped with deductee records, then the challan status is shown as ‘Claimed’.


    ‘Challan Amount Claimed’ refers to the amount of TDS that is adjusted with the TDS of the deductees. Initially, when TDS is deposited by a Challan, the consumed amount will be zero. The entire deposited amount will be ‘Available Amount’ in a Challan.  Once a statement of TDS is furnished and TDS of the deductees is mapped with the challan, ‘Available Amount in a Challan’ will get reduced to the extent of amount mapped with the amount of tax deducted from the deductees.  The mapped amount of TDS of the deductees with the challan is the ‘amount consumed’ and the remaining amount is the amount available in the challan.


    Please note that only the ‘Available Amount in a Challan’ can be claimed as a refund of TDS by the deductor.


    Refund of TDS to deductor - Where the deductor has furnished the statement of TDS


    The deductor files a statement of TDS under section 200(3) of the Income Tax Act, 1961 with the income tax authority mentioning the amount of deduction and maps the same with the challan.


    Let us illustrate the same with an example.


    During the 1st quarter of the FY 2019-20, Mr. Rakesh has paid professional fees to Mr. A and Mr. B after deduction of tax (TDS) as detailed below-


    Date of payment

    Particulars

    Gross Amount

    TDS

    Net Amount Paid

    10/04/2019

    Professional fees paid to Mr. A

    1,00,000

    10,000

    90,000

    16/04/2019

    Professional fees to Mr. B

    80,000

    8,000

    72,000


    Total


    18,000



    He has paid the TDS of Rs. 18,000 vide Challan ITNS-281 on 06/05/2019. On 10th July, 2019, he furnished the statement of TDS in Form No.26Q.


    In September 2019, the contract with Mr. B was cancelled and Mr. B refunded the net amount of Rs. 72,000 to Mr. Rakesh.


    In this case, the ‘Available Amount in a Challan’ is Rs. Nil. So he needs to furnish a correction statement to delete the deductee record of Mr. B from the TDS statement. Presently, the deletion of record from a furnished statement is not allowed. In this case, the TDS amount needs to be updated to ‘zero’ for Mr. B in the correction TDS statement.


    After the correction statement is processed u/s 200A, the ‘Available Amount in a Challan’ will be Rs. 8,000.


    Mr. Rakesh can claim this Rs. 8,000 as a refund of TDS amount.


    Refund of TDS to deductor - Where the deductor has not furnished the statement of TDS


    In this case, as stated earlier, the ‘Available Amount in a Challan’ will be the entire challan amount after the TDS is deposited with the government.


    In the above example, suppose the contract with both Mr. A and Mr. B is cancelled. In this case, no TDS statement is required to be filed by Mr. Rakesh. Thus the ‘Available Amount in a Challan’ will be Rs. 18,000 which Mr. Rakesh can claim as a refund of TDS. Even if TDS statement is filed, it will be a Nil statement and hence will not alter the position.


    How to claim the refund of excess TDS deposited by the deductor


    As stated earlier, the intimation processed under section 200A does not grant the refund automatically, unlike grant of refund in the case of ITR. However, after the processing of the return, the ‘Available Amount in a Challan’ can be claimed as refund.


    One can check the status of challan on TDS CPC portal in the following steps-

    Step 1. Log in to dedcutor’s account on TDSCPC portal.

    Step 2: Navigate to ‘Statements/Payments’>’Challan Status’.

    Step 3: Select ‘Challan Staus’

    Step 4: Fill the requisite details.

    Check ‘Challan Status’. If it shows ‘Unclaimed’, then the entire amount of the challan is ‘Available Amount’ in the Challan. If it shows ‘Claimed’ then click on the challan row to select the challn and then Click ‘View Consumption Details’.

    Step5: Fill the Challan amount with paise. If the challan amount is Rs. 4,771/- then fill the challan amount as 4771.00.

    Click on ‘Proceed’ to continue.

    The result will be shown. Check the ‘Available Amount’.


    Procedure to claim the refund of excess TDS by deductor


    In this context, the procedure to claim the refund of excess TDS by deductor is prescribed by the CBDT through various Circulars.


    CBDT has sofar issued the following Circulars on the issue prescribing the procedure to claim the refund of excess TDS by the deductor-


    Circular No. 285 dated 21-10-1980

    Superseded by Circular No. 7/2007

    Circular No. 7/2007 dated 23-10-2007

    Prescribes the Procedure for refund of tax deducted at source under section 195 to the Deductor.

    After section 200A, this circular has lost relevance. The conditions for claiming the refund as stipulated in this circular is still being followed by TRACES.

    Circular No. 2/2011 Dated 27-04-2011

    In view of express provisions of section 200A in 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


    After the introduction of section 200A, these circulars have lost the relevance from 01.04.2010. However, the conditions specified therein may be guiding factors for claiming the refund of TDS by the deductors.


    Further note that section 200A does not make any differentiation for granting of refund of TDS by a person deducting the tax from a resident or non-resident deductee. Further, even a buyer of immovable property can claim the refund of TDS paid under section 194-IA vide Form No. 26QB in the event the property deal is cancelled.


    The Act or Rules does not provide for any time limit to claim the refund of TDS by the deductor, though the above-mentioned circulars have mentioned a time limit of two years to claim the refund.


    CBDT has also amended Rule 31A of the Income Tax Rules, 1962 to provide for the procedures, formats and standards for furnishing a claim for refund of excess TDS deposited by the deductors. Accordingly, a sub- Rule (3A) was inserted in Rule 31A which states as follows-


    "A claim for refund, for sum paid to the credit of the Central Government under Chapter XVII-B, shall be furnished by the deductor in Form 26B electronically under digital signature in accordance with the procedures, formats and standards specified under sub-rule (5)."


    Further, sub-rule (5) of Rule 31A states as mentioned below-


    The Director General of Income-tax (Systems) shall specify the procedures, formats and standards for the purposes of furnishing and verification of the statements or claim for refund in Form 26B and shall be responsible for the day-to-day administration in relation to furnishing and verification of the statements or claim for refund in Form 26B in the manner so specified.


    Procedure of Refund of TDS to deductor on TRACES


    Refunds of challans for payment of TDS is enabled on TRACES. For this purpose, the deductor has to log-in to their TRACES account as ‘Deductor’. Then navigate to 'Statement/Payments' > 'Request for Refund'.


    Deductors can request a refund for excess TDS deposited in Form 26B on TRACES portal for TDS u/s 195 and other TDS.


    Prerequisites before filing Form 26B to claim refund of excess TDS


    Sr. No.

    Validations

    1

    Digital Signature for your PAN of Authorised Person should be register on TRACES at the time of submitting Refund request.

    2

    No Outstanding demand for your TAN should be present while processing of refund request.

    3

    PAN of Deductor as per TAN Master and TRACES profile should be same and non blank while submitting refund request.

    4

    No Total Outstanding demand against your TAN and against your TAN(s) associated with your PAN of Deductor should be present (if applicable) while processing of refund request.

    5

    No Outstanding Demand should be present against your PAN of Deductor while processing of refund request

    6

    OLTAS challans where unclaimed amount * is greater than Rs.100.00 per challan(* Maximum Refund Allowed amount will be the minimum challan balance amount in the challan history)

    7

    You cannot claim the credit of challans (used in refund request) in any statements or otherwise except the remaining available balance

    8

    Please ensure that all statements in which the challan has been claimed have been processed before claiming refund for the challan

    9

    A refund request can consist of maximum 5 challans

    10

    Refund cheque will be issued in the Name of the Deductor and Address as per TRACES Profile

    11

    Undertaking by PAN duly verified by the PAN's Assessing Officer that there is no outstanding demand against the PAN.

    12

    Maximum Refund Allowed amount can be changed by Assessing Officer in case of appeal order.

    13

    Maximum Refund Amount may be issued subject to the verification of challan consumption history by Assessing Officer.


    The present procedure for claiming the excess refund of TDS by the deductor is described in the TRACES portal and reproduced below in the form of FAQs-


    1. Which type of refund is available on TRACES website (ITR Refund or TDS Refund?

    TDS refund is available on TRACES website.

     

    2. From which Financial Year onwards can Deductor claim for refund?

    Request for Refund can be raised from Financial Year 2007-08 onwards. Note: As per CIRCULAR NO. 2/2011 [F.NO. 385/25/2010IT(B)], DATED 27.4.2011 TDS Refund will be given to those challans which are deposited 01-04-2010 onward other than section 195 (non-resident) and in case of section 195 TDS refund functionality is available from Financial Year 2007-08 onward as earlier

     

    3. What is the requirement to claim for refund?

    • It is mandatory to register digital signature on TRACES to submit the refund request.

    • Refund can be claim only if there is no outstanding demand against the TAN, associated TAN's with PAN of deductor and PAN of the Deductor.

    • PAN of Deductor should be same as per TAN Master and TRACES profile and should be non-blank.

    • A refund request can contain maximum of five challan. For claiming more challan, submit new request.

    • Maximum refund amount will be the minimum challan balance amount in the challan history.

    • Available amount per challan must be greater than Rs.100/-

    • Ensure that all statement in which the challan has been claimed have been processed before claiming refund for the challan.

    • Refund cheque will be issued in the Name and Address of the Deductor as per TRACES profile.

     

    4. Under which tab do we have the option of TDS refund?

    Under 'Statement/Payment' from main menu, from given drop down select 'Request for Refund'.

     

    5. What is the minimum amount that can be claimed as refund and what is the maximum limit?

    Available amount per challan must be greater than Rs.100/- and there is no maximum limit.

     

    6. Is there any challan limit to claim for refund at a time?

    A refund request can contain maximum of five challan at a time. For claiming more challan, submit new request.

     

    7.There is a challan in the statement which was unconsumed will I be able to claim the refund for the entire amount?

    Refund can be claimed as per 'maximum available balance' i.e. Challan amount minus maximum amount consumed in any statement for the particular Challan.

     

    Scenarios 1 Challan Amount =1000: Amount consumed / claimed amount = 500, OLTAS Available Balance = 500, Refund amount will be: 500

     

    Scenarios 2: In case Deductor modified deductee rows of Rs 100 with zero amount: In such case,

    Challan amount 1000:

    Challan consumed / claimed amount = 400,

    OLTAS Available Balance = 600,

    Refund amount will be: 500 (Rs 1000 Minus Rs 500)

     

    Scenarios 3: In case Deductor Add deductee rows of Rs 100: In such case,

    Challan amount 1000:

    Challan consumed / claimed amount = 600,

    OLTAS Available Balance = 400,

    Refund amount will be: 400 (Rs 1000 Minus Rs 600)

     

    Scenarios 4: In case Deductor again modified deductee rows of Rs 100 with zero amount: In such case,

    Challan amount 1000:

    Challan consumed / claimed amount = 400,

    OLTAS Available Balance = 600,

    Refund amount will be: 400 (Rs 1000 Minus Rs 600 (Amount consumed as per Scenario 3))

     

    8. Who can claim for the refund, authorized person or the Deductor?

    Refund can be claimed by an authorized person whose digital signature certificate has registered on TRACES.

     

    9. If I want to change the companies? address for refund claiming, can I update the address on TRACES?

    Yes, before raising the request for refund, user should change the address in the profile. After the change, submit the refund request.

     

    10. What is form 26B?

    Form 26B is an acknowledgement receipt of Refund Request on TRACES.

     

    11. I have lost the acknowledgement of form 26B, from where I can get it again?

    Once you submit the request for refund and get the request number for tracking the refund request. While tracking the same, there is an option of View/Download Form 26B Acknowledgement to get the acknowledgement of the form 26B again.

     

    12. Can I file a correction for particular challan, if my refund request is under process for the same challan?

    Yes, you can file challan correction however your refund request will be rejected.

     

    13. After giving the request for refund, will Deductor get some acknowledgement email?

    Yes, Deductor gets the request number through e-mail to track the refund request.

     

    14. Where can Deductor track the status for refund?

    Under 'Statement/Payment' from main menu, from given drop down select 'Track Refund Request'

     

    15. How can I track the status of refund?

    Request can be tracked by any of the following search criteria:

    Enter either Refund Request Number or Refund Request Date or both

    Enter BSR Code, Date of Deposit and Challan Serial Number of the challan for which refund request has been submitted

     

    16. What are the reasons of refund request getting rejected?

     

    Following are common reason for rejection of refund request:

    • Demand Outstanding against TAN or for TAN's associated with the PAN of deductor or PAN of the Deductor.

    • There is any challan correction for which refund request raised.

    • If Form 26B is submitted after the expiry of 14 days.

    • Request will be rejected by Assessing Officer

    • Request will be rejected by Additional Commissioner.

    • Request will be rejected due to invalid bank details or invalid address details.

    • Request will be rejected due to reduction in challan available balance.

    • Request will be rejected due to challan force matching by Assessing Officer in progress.

     

    CLARIFICATION ABOUT STATUS OF REQUEST OF REFUND AFTER SUBMITTING 26B (ACKNOWLEDGMENT OF REQUEST) TO A.O.

    PENDING WITH AO: Once the request is submitted and validated request will be displayed with status

    PENDING WITH TDS: Status will be pending with TDS CPC if request is approved by AO.

    PENDING WITH REFUND BANKING: Status will be pending with Refund Banker if request is with Bank.

     

    17. Can deductor give Refund Request for amount more than Rs 100,000/-?

    Yes, if refund amount is more than Rs 100,000/- the AO as well as additional AO's approval is required.

     

    18. How do I get my refund amount?

    If refund amount is more than Rs 50,000/- then only cheque is issued below Rs 50,000/- amount will be transferred in the bank account.

     

    19. What if deductor has mentioned incorrect Bank details while submitting the Refund request?

    Deductor should provide correct bank account details as these details will be verified by the AO and one time correction in bank details and communication details is allowed .

     

    20. If deductor has shown money in interest and fee column by mistake, can he claim the refund?

    If Deductor has shown money in interest and fee column by mistake, he cannot claim the refund unless correction is filed and amount is removed from this column.

     

    21. Can deductor cancel the Refund request once submitted?

    Refund request can be cancelled only before AO approval, if AO has approved the request it cannot be cancelled.

     

    22. Can government deductor claim for refund as they have no PAN?

    PAN of the Deductor should be available and should be same as TAN master, so government deductor will not be able to give the request

     

    23. TDS Refund cheque returned due to invalid address. What will be the course of action now on part of deductor and TRACES?

    Deductor needs to update the address on same request. After updating the address new 26B will be generated and deductor will submit this updated 26B to his A.O. A.O. needs to approve again this request after receiving 26B from deductor.


    E-Guide Book on Refund of TDS to deductors


    TRACES has also provided the following e-guide book on the ‘Refund Request’ by the deductors-


    Procedure to Claim a refund of excess deposit of TDS for Form 26QB


    As per Finance Bill of 2013, TDS is applicable on sale of immovable property wherein the sale consideration of the property exceeds or is equal to Rs 50,00,000 (Rupees Fifty Lakhs).


    Section 194-IA of the Income Tax Act, 1961 states that for all transactions with effect from June 1, 2013, Tax @ 1% should be deducted by the buyer/purchaser of the property at the time of making payment of sale consideration to the seller. Tax so deducted should be deposited to the Government Account.


    The online form available on the TIN website for furnishing information regarding TDS on property is termed as Form 26QB. Form 26QB is a challan-cum-return for TDS on sale of Property.


    It may so happen that the contract to buy the property is cancelled after payment of TDS to the government. Sometime, it is seen that the buyer is buying the property from a non-resident but erroneously deposited the TDS u/s 194-IA @ 1% of consideration by Form 26QB instead of deduction of TDS u/s 195.


    Under these or similar cases, the buyer of the property needs to claim the refund of excess deposit TDS from the government.


    In this case also buyers are required to claim the refund of TDS from TRACES portal in Form 26B. However, the procedure to claim the refund of TDS paid u/s 194-IA through Form 26QB is slightly different from the procedure discussed above for claim of refund by other deductors. Though, in principle, there are no major differences.


    Steps to claim refund of TDS for Form 26QB-


    In case of refund of TDS for Form 26QB, the buyer/deductor has to log-in to TRACES portal as a ‘Taxpayer’.


    Step 1: Log in to TRACES – Enter User Id, Password, PAN and captcha

    Step 2: Navigate to Statements / Forms > Request for Refund.

    Step 3: Read the Refund Checklist and click on Proceed

    Step 4: Select one of the reasons and click on ‘Add Challan‘

    Step 5: Mention the reason for raising the refund request in the space provided.

    Step 6: Enter the challan details. Click on ‘View Challan Details’

    Step 7: Click the Challan Consumption Details

    Step 8: Tick the appropriate checkbox and click on ‘I Agree‘

    On the landing page, One can Add Challan or Remove the Added Challan.

    Step 9: Click on 'Proceed' to continue.

    Step 10: Enter the Communication Address and Bank Address

    Step 11: Verify the details of Authorised Person. Click on 'Proceed' to continue.

    Step 12: On next page, Click on ‘Submit Refund Request‘

    Step 13: Validate 26QB Refund Request with DSC. Click on 'Proceed' to continue.

    Success message will be displayed on the screen. One can Preview and Print Form 26B Acknowledgment.

    Step 14: Click on ‘Preview and Print Form 26B Acknowledgment’

    One has to submit Form 26B Acknowledgement and required documents within 14 days to the Assessing Officer. On failure, the refund request will be rejected.


    FAQs on 26QB Refund


    (Q.1)How to get refund amount, if extra TDS amount (more than 1%) is paid as a TDS on Property while filing 26QB statement cum challan?

    Buyer of the property can raise refund request for excess TDS deposited amount i.e. (more than 1%) by using 'Request for Refund' functionality available on TRACES website.

    (Q2.)From which Assessment Year Buyer can raise 'Request for Refund' for 26QB statement cum challan on TRACES website?

    'Request for Refund' for 26QB statement cum challan is applicable from Assessment Year 2014-2015 onwards

    (Q3.)If I have mistakenly paid extra TDS amount on TDS on property, will that extra TDS amount reflect in Part A2 of 26AS of Buyer?

    No, extra TDS amount will be shown in Part A2 of 26AS of Buyer. Buyer needs to raise 26QB refund request from TRACES website.

    (Q4.)What are the pre-requisites before raising 26QB Refund Request?

    Pre-requisites before raising 26QB Refund Request are:-

    1. No outstanding demand should be present on Buyer's PAN/TAN associated with PAN (who are submitting refund request).

    2. Please ensure that all statements wherein the challan(s) has/have been claimed must be processed before claiming refund.

    3. Please ensure that all the details filled in 26QB statement cum challan are true and correct as correction wouldn't be able after raising refund request.

    4. Refund request can be submitted for OLTAS Challan (s) where available amount in challan is equal to or more than Rupee 1 /-.

    5. Refund request cannot be placed if correction request for the same acknowledgement is under process or initiated.

    6. Sum of maximum refund allowed amount should be greater than Rs 100.00 in a refund request.

    7. Refund request can consist of maximum 5 challans for the same Assessment Year at a time. For different Assessment Year,user needs to place a separate refund request.

    8. While raising request for refund Assessment Year should be as per 26QB statement cum challan filed.

    9. Refund request will be issued in the Name of Buyer's Address as per the TRACES profile.

    Note: If Taxpayer is giving request for refund through www.nriservices.tdscpc.gov.in . Refund request can be submitted for maximum 1 Challan for Assessment year at a time. For different assessment year user need to place a separate request for refund.

    (Q5.)What is the procedure to raise 'Request for Refund' for 26QB on TRACES website?

    Procedure to raise Request for Refund:-

    Login as a Taxpayer on TRACES website.

    Go to Statements/Forms tab and select "Request for Refund" option.

    Select at least one reason to raise refund request then click on Add Challan. Click on 'OK'.

    Provide required Challan details.

    Verify details and Select all the declarations and click on "I Agree" button.

    Provide Bank Details and click on 'Proceed' button.

    Submit refund request after signing of 26QB refund request through Digital Signature, Request Number will be generated.

    (User can check the status under 'Track Refund Request' option Available under Statements/Forms tab.)

    (Q6.)How to track 26QB refund request on TRACES?

    User can check the status under 'Track Refund Request' option Available under 'Statements/Forms' tab.

    User can check the status for refund request using below mentioned search options:

    Option 1: User must enter either request number or request date range.

    Option 2: Enter BSR Code, Date of Deposit and Challan Serial Number of the challan for which refund request has been submitted.

    (Q7.)What are the requirements to submit 26QB refund request on TRACES website?

    Digital Signature is required to submit/validate 26QB refund request on TRACES website.

    (Q8.)What to do after submission of 26QB refund request on TRACES website?

    Please print the Form 26B Acknowledgement and submit the duly signed document to your Jurisdictional Assessing officer within 14 days. Assessing Officer Details available on Track Request Screen

    Please carry the following verification documents for validation of your bank details along with Form 26QB Acknowledgement:

    1) Bank details verification documents for e.g. Bank Pass Book, Cancelled Cheque etc.
    2) Verification document for PAN of Taxpayer e.g. copy of PAN Card, copy of ITR CPC etc.
    3) Undertaking by PAN duly verified by PAN's Assessing Officer that there is no outstanding demand against the PAN.

    (Q9.)What is form 26B?

    Form 26B is an acknowledgement receipt of refund request.

    (Q10.)What will be the course of action if TDS Refund cheque is returned due to invalid address?

    Buyer needs to update the address on same request. After updating the address, new 26B will be generated and Buyer will submit this updated 26B to his Jurisdictional Assessing officer. Assessing Officer needs to approve the request again, after receiving 26B from Buyer.

    (Q11.)I have lost the acknowledgement of form 26B, from where I can get it again?

    Once you submit the request for refund and get the request number for tracking the refund request. While tracking the same, there is an option of View/Download Form 26B Acknowledgement to get the acknowledgement of the form 26B again.

    (Q12.)Can Buyer cancel the Refund request once submitted?

    Refund request can be cancelled only before Assessing Officer approval.If Assessing Officer has approved the request for refund, it cannot be cancelled.

    (Q13.)How will I get my refund amount?

    If refund amount is more than Rs 50,000/- then only cheque is issued and if refund amount is below Rs 50,000/- it will be transferred in the bank account as per provided by taxpayer while submitting refund request.

    E-Guide Book on Refund of TDS to deductors for Form 26QB


    TRACES has also provided the following e-guide book on the ‘Refund Request’ by the deductors for Form 26QB-


    E-Guide Book on Refund of TDS to deductors for Form 26QB-NRI Deductors


    TRACES has also provided the following e-guide book on the ‘Refund Request’ by the NRI deductors for Form 26QB-


    Interest on refund of excess TDS to the deductor


    Section 200A provides for the grant of refund of TDS to the deductor. This provision was effective from 01.04.2010. However, till 01.04.2017 there were no provisions to pay interest on the refund amount of TDS to the deductor. Earlier,  the above-mentioned Circular No. 7/2007 specifically mentioned that no interest under section 244A is admissible on refunds to be granted in accordance with this circular or on the refunds already granted in accordance with Circular No. 769 or Circular No. 790. Circular 2/2011 was silent on the issue.


    Finally, following the decision of the Hon’ble Supreme Court in the UOI vs. Tata Chemicals 363 ITR 658 (SC) case, CBDT issued a Circular No. 11/2016 dated 27.04.2016  to state that refund of tax deposited under section 195 of the Act shall be liable for interest under section 244A from the date of payment of tax.


    Finance Act, 2017 has amended the provisions of section 244A and inserted sub-section (1B) in the said section to provide that where refund of any amount becomes due to the deductor, such person shall be entitled to receive, in addition to the refund, simple interest on such refund, calculated at the rate of 0.5 per cent. for every month or part of a month comprised in the period, from the date on which claim for refund is made in the prescribed form or in case of an order passed in appeal, from the date on which the tax is paid, to the date on which refund is granted.


    It is also provided that the interest shall not be allowed for the period for which the delay in the proceedings resulting in the refund is attributable to the deductor.


    Hence, from 1st April, 2017, the provisions related to interest on refund of TDS to deductors shall be governed by section 244A(1B) and not by the Circulars. A deductor is entitled to receive interest on the refund of excess deposit of TDS from the date of filing of claim of refund of TDS in Form 26B and not from the date of deposit of TDS. The interest shall be granted till the date on which refund is granted.


    In case TDS is refundable after an appeal order, the interest shall be payable from the date of payment of tax to the date on which refund is granted.


    Adjustment or credit of Excess TDS deposit with subsequent TDS liability


    A deductor may instead of claiming refund of TDS may also adjust the same with the subsequent period TDS liability. This is possible when the person regularly deduct and deposit the TDS. In case a person deducts TDS on a single occasion, it is not possible for him to adjust the same with the subsequent liability, in that case, he has to claim the refund of such excess payment of TDS.


    However, 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 financial year. Thus excess deposit of TDS during FY 2019-20 can be adjusted with the TDS liability for FY 2020-21.



    Full text of the Circular No. 7/2007 dated 23-10-2007


    CIRCULAR NO. 7/2007 DATED 23-10-2007


    Procedure for refund of tax deducted at source under section 195 to the person deducting the tax-section 239 of the Income Tax 1961-Refunds


    The Board had issued Circular No. 790 dated 20th April, 2000, laying down the procedure for refund of tax deducted under section 195, in certain situations to the person deducting the tax at source from the payment to the non-resident. Representations have been received in the Board from taxpayers requesting that the said Circular may be amended to take into account situations where genuine claim for refund arises to the person deducting the tax at source from payment to the non-resident and it does not fall in the purview of the said Circular.


    2. The cases which are being referred to the Board mainly relate to circumstances where, after the deposit into Government account of the tax deducted at source under section 195,


    a) the contract is cancelled and no remittance is made to the non-resident;


    b) the remittance is duly made to the non-resident, but the contract is cancelled. In such cases, the remitted amount has been returned to the person responsible for deducting tax at source;


    c) the contract is cancelled after partial execution and no remittance is made to the non-resident for the non-executed part;


    d) the contract is cancelled after partial execution and remittance related to non-executed part is made to the non-resident. In such cases, the remitted amount has been returned to the person responsible for deducting the tax at source or no remittance is made but tax was deducted and deposited when the amount was credited to the account of the non-resident;


    e) there occurs exemption of the remitted amount from tax either by amendment in law or by notification under the provisions of Income-tax Act, 1961;


    f) an order is passed under section 154 or 248 or 264 of the Income-tax Act, 1961 reducing the tax deduction liability of a deductor under section 195;


    g) there occurs deduction of tax twice from the same income by mistake;


    h) there occurs payment of tax on account of grossing up which was not required under the provisions of the Income-tax Act, 1961;


    i) there occurs payment of tax at a higher rate under the domestic law while a lower rate is prescribed in the relevant double taxation avoidance treaty entered into by India.


    2.1 In the cases mentioned above, income does not either accrue to the non-resident or it accrues but the excess amount in respect of which refund is claimed, is borne by the deductor. The amount deducted as tax under section 195 and paid to the credit of the Government therefore belongs to the deductor. At present, a refund is given only on a claim being made by the non-resident with whom the transaction was intended or in terms of Circular No. 790 dated 20th April, 2000.


    3. In the type of cases referred to in sub-paragraph (a ) of paragraph 2, the non-resident not having received any payment would not apply for a refund. For cases covered by sub-paragraph ( b) to (i) of paragraph 2, no claim may be made by the non-resident where he has no further dealings with the resident deductor of tax or the tax is to be borne by the resident deductor. This resident deductor is therefore put to genuine hardship as he would not be able to recover the amount deducted and deposited as tax.


    4. The matter has been considered by the Board. In the type of cases referred to above, where no income has accrued to the non-resident due to cancellation of contract or where income has accrued but no tax is due on that income or tax is due at a lesser rate, the amount deposited to the credit of Government to that extent under section 195, cannot be said to be "tax".


    4.1 It has been decided that, this amount can be refunded, with prior approval of the Chief Commissioner of Income-tax or the Director General of Income-tax concerned, to the person who deducted it from the payment to the non-resident, under section 195.


    5. Refund to the person making payment under section 195 is being allowed as income does not accrue to the non-resident or if the income is accruing no tax is due or tax is due at a lesser rate. The amount paid into the Government account in such cases to that extent, is no longer "tax". In view of this, no interest under section 244A is admissible on refunds to be granted in accordance with this circular or on the refunds already granted in accordance with Circular No. 769 or Circular No. 790.


    6. In case of refund being made to the person who made the payment under section 195, the Assessing Officer may, after giving intimation to the deductor, adjust it against any existing tax liability of the deductor under the Income-tax Act, 1961, Wealth-tax Act, 1957 or any other direct tax law. The balance amount, if any, should be refunded to the person who made such payment under section 195. A separate refund voucher to the extent of such liability under each of the direct taxes should be prepared by the Income-tax Officer or the Assessing Officer in favour of the "Income-tax Department" and sent to the bank along with the challan of the appropriate type. The amount adjusted and the balance, if any, refunded would be debitable under the major head "020-Corporation Tax" or the major head "021-Taxes on incomes other than Corporation tax" depending upon whether the payment was originally credited to the major head "020-Corporation tax" or to the major head "021-Taxes on Income other than Corporation tax".


    7. A refund in terms of this circular should be granted only after obtaining an undertaking that no certificate under section 203 of the Income-tax Act has been issued to the non-resident. In cases where such a certificate has been issued, the person making the refund claim under this circular should either obtain it or should indemnify the Income-tax Department from any possible loss on account of any separate claim of refund for the same amount by the non-resident. A refund in terms of this circular should be granted only if the deductee has not filed return of income and the time for filing of return of income has expired.


    8. The refund as per this circular is, inter alia, permitted in respect of transactions with non-residents, which have either not materialized or have been cancelled subsequently. It, therefore, needs to be ensured by the Assessing Officer that they disallow corresponding transaction amount, if claimed, as an expense in the case of the person, being the deductor making refund claim. Besides, in all cases, the Assessing Officer should also ensure that in the case of a deductor making the claim of refund, the corresponding disallowance of expense amount representing TDS refunded is made.


    9. The limitation for making a claim of refund under this circular shall be two years from the end of the financial year in which tax is deducted at source. However, all cases for claim of refund under items (c) to (i) of paragraph 2 which were pending before the issue of this circular and where the claim for refund was made after the issuance of Circular No. 790 may also be considered.


    10. It has been represented to the CBDT that in Circular No. 769 dated 6th August, 1998, there was no time limit for making a claim for refund. A time limit of two years, for making a refund claim, was stipulated vide Circular No. 790 dated 20th April, 2000. Some cases covered by Circular No. 769, which were also covered by Circular No. 790, now listed in item (a) and (b) of paragraph 2 of this Circular, and filed before the issue of Circular No. 790, became time-barred because of the specification of time limit in Circular No. 790. It is hereby clarified that such cases may also be considered for refund.


    11. This Circular is issued in supersession of the Circular No.790/2000 dated 20th April, 2000.


    12. The contents of this Circular may be brought to the notice of all officers in your region.


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