TDS deducted in wrong FY? New income tax form to help you get it corrected Oct 1 onwards
The Central Board of Direct Taxes (CBDT) has notified Form 71 which a taxpayer can use to correct the wrong Tax Deducted at Source (TDS) credit for any financial year. The notification was issued on August 30, 2023.
Here is an example to understand this: Suppose an individual has FD interest of Rs 1 lakh in FY 2022-23 (AY 2023-24) due to which the bank will be required to deduct TDS.
However, the bank deducted tax on FD interest in FY 2023-24 (AY 2024-25). As the bank deducted tax in the wrong financial year, the individual will not be able to claim credit for this TDS in FY 2023-24 (AY 2024-25).
The FD interest was taxable in FY 2022-23 and TDS credit on this income can be claimed only for FY 2022-23.
Hence, to correct this problem, from October 1, 2023 an individual can directly contact the income tax department instead of visiting the bank branch.
This form can be used to resolve TDS mismatch issues for any income from previous financial years.
“Many individual taxpayers were facing the issue where tax is being deducted by the deductor (bank or any other deductor) in the financial year in which the income is actually paid to the assessee. However, many individuals declare income when it is due to them instead of when it is paid or credited in their bank account.
This results in a TDS credit mismatch. Since the due income has already been declared in the ITR by the individual in earlier years, but TDS is only being deducted in the financial year when actual payment is being made,” says chartered accountant (CA) Satbir Singh, founder, Taxheal.com, a Chandigarh-based CA firm.
“TDS credit mismatch issues happen when the method of accounting followed by the recipient of income (taxpayer) and the payer of income (bank
