CBDT Notifies Form 71 to Allow TDS Credit in Respect of Income Disclosed in ITR Filed in Earlier Years

Notification No. 73/2023, dated 30-08-2023

The Finance Act 2023 inserted sub-section (20) to Section 155 with effect from 01-10-2023. This new sub-section is applicable when an income has been reported in an income tax return for a specific assessment year, and tax was withheld by the deductor and paid to the government in a later financial year.

This situation arises when a deductor withholds tax in the year in which the income is paid to the taxpayer. However, the taxpayer has already included that income on an accrual basis in his earlier tax returns. This causes a TDS mismatch, as the income has already been taxed on accrual basis, but tax is only deducted later when payment is made.

Section 155(20) enables the assessee to apply to the AO within two years of the financial year in which the tax was withheld, and the AO will amend the assessment and allow credit for the tax.

To implement this provision, the Central Board of Direct Taxes (CBDT) issued Income-tax (Twentieth Amendment) Rules, 2023 and inserted Rule 134. This Rule mandates the assessee to furnish an application in Form No. 71.

This form shall be furnished electronically under digital signature or through the electronic verification code. It seeks the following information from the assessee:

• Personal details (Name, Address, PAN, Aadhaar, Residential Status, E-mail Id, Mobile Number and relevant assessment year, date of furnishing return of income etc.).
• Total income of the assessee returned in the relevant assessment year, amount of specified income and rate at which such specified income was subject to tax.
• Amount of tax deducted, date of deduction of tax, section and rate at which tax deducted, date of payment of tax deducted to the central Government and amount of tax claimed for the relevant assessment year.
• Name, PAN and TAN of deductor.

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