Refund of Excess TDS Deposited or Adjustment of TDS

In case of excess deduction of tax at source, claim of refund of such excess TDS can be made by the deductor. The excess amount is refundable as per procedure laid down for refund of TDS vide Circular No.285 dt.21-10-1980.

The difference between the actual payment made by the deductor and the tax deducted at source or  deductible, whichever is more will be treated as the excess payment made. This amount is to be first adjusted against any existing tax liability under any of the Direct Tax Acts.  After meeting such liability, the balance amount is to be refunded.

    Circular: No. 285 [F. No. 275/77/79-IT(B)], dated 21-10-1980.

951. Procedure for regulating refund of amounts paid in excess of tax deducted and/or deductible
1. The Board have been considering the manner of refunding the amount paid in excess of the tax deducted and/or deductible (whichever is more) under sections 192 to 194D of the Income-tax Act. The Board are advised that such excess payment can be re­funded, independently of the Income-tax Act, to the person re­sponsible for making such payment subject to necessary adminis­trative safeguards.
2. In supersession of the earlier instruction on the subject, the following procedure is laid down to regulate the refund of such excess payments.
3. The excess payment would be the difference between the actual payment made by the deductor and the tax deducted at source or that deductible, whichever is more. This amount should be adjust­ed against the existing tax liability under any of the Direct Tax Acts. After meeting such liability the balance amount, if any, should be refunded to the assessee.
4. Where the tax is deducted at source and paid by the branch office of the assessee and the quarterly statement/annual return (in case of salaries) of tax deduction at source is filed by the branch, such branch office would be treated as a separate unit independent of the head office. After meeting any existing tax liability of such a branch, which would normally be in relation to the deduction of tax at source, the balance amount may be refunded to the said branch office. The Income-tax Officer, who will refund the amount, would be the one who receives the quarterly statement/annual return (in case of salaries) of tax deduction at source from that branch office and keeps record of the payments of tax deduction at source made by that branch.
5. The adjustment of refund against the existing tax liability should be made in accordance with the present procedure on the subject. A separate refund voucher to the extent of such liability under each of the direct taxes should be prepared by the Income-tax 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 sub-head “Other refunds” below the minor head “Income-tax on companies”—major head “020—Corporation Tax” or below the minor head “Income-tax other than Union Emoluments”—major head “021—Taxes on incomes other than corporation tax” according as the payment has originally credited to the major head “020—Corporation tax” or the major head “021—Taxes on incomes other than corporation tax”.
6. Since the adjustment/refund of the amount paid in excess would arise in relation to the deduction of tax at source, the record­ing of the particulars of adjustment/refund should be done in the quarterly statement of TDS/Annual return (in case of salaries) under the signatures of the Income-tax Officer at the end of the statement, i.e., below the signatures of the person furnishing the statement.
Circular: No. 285 [F. No. 275/77/79-IT(B)], dated 21-10-1980.


     Total result regarding refund of excess TDS deposit is that adjustment of excess amount of TDS deposited can be done with in Financial Year or in quarters of same financial year.    Excess amount of TDS of a particular Financial Year can not be adjusted in next Financial Year. 

        FVU (File Validity Utility)  shows below error code in cash challans do not match with concerned Financial Year.


TDS/TCS - ERROR FILE

Line NoRecord TypeStatement TypeField NameChallan Details Record NumberDeductee/ Salary Detail No.Error Code & Description
7ChallanRegularDate of 'Bank Challan No / Transfer Voucher No'3-T-FV-3076 Invalid Date Of Bank Challan No, Date prior to Financial Year


FVU Version : 3.4    Input File Name : 26QRQ3.txt

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