Budget 2022 proposes to make it easier to get refund on wrong TDS

In one such change, it has become easier to get refund on Wrongful Tax Deducted at Source (TDS) on transactions of a Non-Resident Indian (NRI). Certain payments made to NRIs require deduction of tax at source and submission to the Income Tax Department. For example, rent paid on a property owned by an NRI requires the tenant to deduct 31.2% TDS on it and submit it online with the tax department through Form 15CA. However, this is not applicable if the income of the NRI landlord from India falls below the exemption limit.

In a case where the tenant has deducted tax at source, but the landlord produces a certificate proving that his income is less than the exemption limit, the tenant has to approach the Deputy Commissioner or the Commissioner for refund on TDS under section 248. Appeal has to be filed under , Section 248 does not allow an Assessing Officer to prefer an appeal, which makes the process tedious and lengthy.

Budget 2022 has simplified and accelerated this process of seeking refund on incorrect TDS. An assessee can now prefer an appeal before the Assessing Officer, and will need to approach the Deputy Commissioner or the Commissioner, if he is not satisfied with the order of the Assessing Officer.

“It is proposed that a new section 239A may be inserted in the Act so that a person who has deducted tax under such agreement or arrangement and has been liable to tax, when no tax was required to be deducted, According to the Memorandum of the Finance Bill, “an application for refund of such tax deducted before the Assessing Officer. Apart from rent, there are many other payments which attract TDS on transactions done with NRIs.

It will be effective from 1st April. “Accordingly, the provisions of section 248 of the Act shall not apply in cases where the date of payment of tax is to the credit of the Central Government on or after 01.04.2022,” the memorandum of the Finance Bill said.