TDS CREDIT

[vsaiyar]

Discretionary Trust - Income distributed to the beneficiaries.  Tax deducted from the income of the trust.  The distributed income is taxable in the hands of the beneficiaries.  TDS in the name of the trust.  No taxable income shown in the name of trust.  Hence no credit to trust.  Since the TDS is in name of Trust no credit to the beneficiaries of the trust of the TDS.  In such circumstances how to get refund of the taxes paid by way of TDS.

[vsaiyar]

The rules (rule 37BA) have been amended to provide that in all such cases, the person who will be receiving the income should file a declaration with the payer of the income, stating that such income is taxable as the income of the specified persons who are supposed to be taxed on such income. There is no specific form prescribed for such declaration. Though the rule does not require it, the PAN and address of such other persons should be given with their respective shares of income. The payer of the income is then required to give details of such other persons in his TDS quarterly return, and such TDS will then be reflected in their respective form 26AS.

THE INCOME TAX RULES, 1962
RULE 37BA
289b[Credit for tax deducted at source for the purposes of section 199.
(1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority.
(2) 289c[(i) where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee:
Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).]
(ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person.
(iii) The deductor shall issue the certificate for decuction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.
(3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.
(ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.
(4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of –
(i) the information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorized by such authority: and
(ii) the information in the return of income in respect of the claim for the credit,
subject to verification in accordance with the risk management strategy formulated by the Board from time to time.]
289b. Ins. by Income-tax (Sixth Amendment) Rules, 2009, vide Notification No. 28 of 2009, dt. 16-3-2009 (w.e.f. 1-4-2009)
289c. Subs. by Income-tax (Eight Amendment) Rules, 2011, vide Notification No. 57 of 2011/S.O. 2429(E), dt. 24-10-2011 (w.e.f. 1-11-2011) for the following :
"(i) If the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for tax deducted at source shall be given to the other person in cases where—
(a) the income of the deductee is included in the total income of another person under the provisions of section 60, section 61, section 64, section 93 or section 94;
(b) the income of a deductee being an association of persons or a trust is assessable in the hands of members of the association of persons, or in the hands of trustees, as the case may be;
(c) the income from an asset held in the name of a deductee, being a partner of a firm or a karta of a Hindu undivided family, is assessable as the income of the firm, or Hindu undivided family, as the case may be;
(d) the income from a property, deposit, security, unit or share held in the name of a deductee is owned jointly by the deductee and other persons and the income is assessable in their hands in the same proportion as their ownership of the asset:
Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1)."