NEW DELHI: To the disappointment of most salaried taxpayers, the Union Budget for 2022-23 did not bring down tax rates, increase standard deduction or widen the scope of tax deductions. However, the budget has proposed several other changes related to personal tax that aim to boost compliance and lead to stronger redressal mechanism for taxpayers.
In one such change, getting a refund on a wrongfully tax deducted at source (TDS) on transactions of a non-resident Indian (NRI) is set to get easier. Certain payments made to NRIs require tax be deducted at source and submitted to the income tax department. For instance, rent paid on a property that is owned by an NRI requires that the tenant deduct 31.2% TDS on it and deposit it online with the tax department through Form 15CA. However, this is not applicable if the NRI landlord’s income from India falls below the exemption limit.
In a case where the tenant has deducted tax at source but the landlord furnishes a certificate that proves his income is below the exemption limit, the tenant will have to file an appeal under section 248 with a deputy commissioner or a commissioner to seek refund on TDS. Section 248 does not allow making an appeal to an assessing officer, which makes the process tedious and long.
Budget 2022 has simplified and fastened this process of seeking refund on a wrong TDS. An assessee can now make an appeal before the assessing officer, and will be required to approach deputy commissioner or commissioner only if he/she is not satisfied by the assessing officer’s order.
“It is proposed that a new section 239A may be inserted in the Act to provide that such a person, who has made the deduction of tax under such an agreement or arrangement and borne the tax liability, when no tax deduction was required, may file an application for refund of such tax deducted before the Assessing Officer," as per memorandum to the Finance Bill. There are many other payments besides rent which attract TDS on transactions done with NRI.
This will take effect from 1 April. “Accordingly, the provisions of section 248 of the Act will not apply in cases where the date of tax payment, to the credit of Central Government is on or after 01.04.2022," said the memorandum to the Finance Bill.
