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Department to give excess TDS refund to Deductor


Finance Act - 2 of 2009 brings in a system of TDS reconciliation for each TAN holder. This is made through introduction of a new section 200A under Income Tax Act.

As per the new section, TDS statement(s) of every TAN holder will be processed after the Financial year, by following steps:

  1. Any arithmetical mistakes/incorrect claims in the statement will be adjusted and the actual TDS deductible will be calculated.
  2. Interest, if any will be calculated on based on the details provided in the statement for deductions and challans.
  3. Then the computed total will be matched with the Total challans paid by the TAN holder for that financial year and the difference will be identified as Balance Payable / Refundable.
  4. Department will then send an intimation to the TAN holder, mentioning the balance amount payable / refundable.
  5. If such an amount is refundable, department will grant the refund to the Deductor.

This change will be implemented from April 2010. So, this would also be effective for returns filed in 2009-10 Financial Year. For the purpose of same, department is automating the TDS return processing internally.


The copy of Section 200A is provided below for reference.

Section 200A.

  1. Where a statement of tax deduction at source has been made by a person deducting any sum (hereafter referred to in this section as deductor) under section 200, such statement shall be processed in the following manner, namely:—
    1. the sums deductible under this Chapter shall be computed after making the following adjustments, namely:—
      1. any arithmetical error in the statement; or
      2. an incorrect claim, apparent from any information in the statement;
    2. the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement;
    3. the sum payable by, or the amount of refund due to, the deductor shall be determined after adjustment of amount computed under clause (b) against any amount paid under section 200 and section 201, and any amount paid otherwise by way of tax or interest;
    4. an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (c); and
    5. the amount of refund due to the deductor in pursuance of the determination under clause (c) shall be granted to the deductor:

Provided that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the statement is filed.

Explanation.—For the purposes of this sub-section, “an incorrect claim apparent from any information in the statement” shall mean a claim, on the basis of an entry, in the statement—

    1. of an item, which is inconsistent with another entry of the same or some other item in such statement;
    2. in respect of rate of deduction of tax at source, where such rate is not in accordance with the provisions of this Act;

2. For the purposes of processing of statements under sub-section (1), the Board may make a scheme for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under the said sub-section.

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