NEW INCOME TAX FORM 71 FOR CORRECTING TDS ERRORS
The introduction of Form 71 by the Central Board of Direct Taxes (CBDT) is a significant development aimed at simplifying and streamlining the process of correcting errors in tax deduction at source (TDS) in India. Let's delve into the details and implications of this new form:
1. Background: The CBDT introduced Form 71 as part of the Income Tax Rules, 1962.
It becomes effective from October 1, 2023.
The primary issue it addresses is the mismatch between the year in which TDS is deducted and the year in which income is reported.
2. Purpose of Form 71:
Form 71 serves to correct errors in TDS credit, specifically addressing situations where TDS is deducted in one year, but income is reported in another.
Many individuals report income when it is due to them, not when it is actually credited to their bank account, leading to discrepancies in TDS credits.
This form simplifies the process of rectifying such errors, making it easier for taxpayers to seek assistance from tax authorities.
3. Rule 134:
Rule 134 is a new addition to the Income Tax Rules, 1962, which deals with applications related to TDS credit.
Form 71 is now mandated for submitting requests to correct TDS credit discrepancies.
4. Submission Process:
To submit Form 71, individuals can visit the Income Tax Department's e-filing portal at https://www.incometax.gov.in/.
They can either download the form or fill it out online when it becomes available.
The form requires details such as name, PAN (Permanent Account Number), address, tax year (the year in which income is declared in the tax return), tax year (the year TDS is deducted), TDS amount deducted, and the reason for claiming TDS credit.
The form must be signed and submitted for verification, which can be done using an Electronic Verification Code (EVC) or Digital Signature Certificate (DSC).
5. Processing and Refund:
If tax authorities find the claim submitted through Form 71 to be correct, they will take the necessary action to refund the taxpayer's money.
6. Time Limit:
Taxpayers have a two-year window to use Form 71 to correct TDS credit errors under the Income Tax Act, 1961.
This provision allows for corrections to be made within a reasonable timeframe.
7. Electronic Issuance:
Form No. 71 will be issued electronically by the Director General of Income Tax (System) or the Director General of Income Tax (System).
Proper security and record-keeping procedures will be established to safeguard the use and processing of this form.
8. Submission to Assessing Officer:
Form No. 71 must be submitted to the Assessing Officer by the competent tax authority or an authorized person.
This step ensures that the correction process for TDS errors is carried out systematically and efficiently.
In summary, Form 71 is a welcome addition to the Income Tax Rules, as it provides a structured and straightforward means for taxpayers in India to rectify errors in TDS credits. This simplification should lead to a smoother and more efficient tax payment experience for individuals dealing with such discrepancies.