As a general practice in filing of Income Tax Return (ITR), an assessee reports its income which was earned by it during the previous year and claims credit of TDS deducted on such income. However, for all these years there is some flaw in this process of claiming the credit of TDS. The flaw is where an assessee has reported its income on accrual basis in one year, however TDS has been deducted in subsequent year or when no TDS has been deducted till the filing of ITR of deductee and same has been deducted and deposited belatedly or TDS return was being revised by the deductor subsequent to the filing of ITR by deductee, etc.; there comes a mismatch in TDS credit claimed in the ITR and TDS reflected in 26AS due to which assessee has to face a lot of problems.
Earlier, as a solution to the above problem, assessee was supposed to revise its ITR (if due date was not surpassed) or to file an offline rectification application with the jurisdictional assessing officer (AO) to claim the refund of the excess TDS which was not reflecting in 26AS at the time of filing of ITR but reflecting after it due to various possible reasons as mentioned above. However, due to lack of infrastructure, most of these applications filed by the assessee remains unresolved and assessee’s were not getting back their due refunds from the department.
To curb this flaw, the CBDT has proposed to inserte a new provision in the Income Tax Act, 1961 (the Act) vide Finance Act 2023. A new clause had been inserted under Section 155 of the Act read with relevant income tax rules to enable the assessee to make application to the AO for amending the assessment order/intimation and allowing the credit of such TDS.
Following the above amendment, CBDT vide notification dated 30.08.2023 has inserted a new Rule 134 and notifies Form no. 71 to enable the assessee to make an application for rectifying the assessment or intimation order and for allowing the TDS credit. This application has to be made within a period of two years from the end of the financial year in which TDS has been deducted.
