Income tax department to pay interest on TDS refund
Posted on:27 Apr 2016 17:37:13
27 April 2016 Current Affairs GK: The Income Tax (I-T) department will now add interest amount to a delayed refund made on excess tax deducted at source (TDS) cut and will also not litigate with the deductor on this issue in the future.Central Board of Direct Taxes has issued a directive in this regard to the assessing officers of the IT department.
The decision is based on a 2014 Supreme Court order where the apex court had made it clear that the taxman is bound to pay interest on refund made under the TDS category.TDS is primarily deducted by the employer from the salary paid to an employee.In view of the judgment of the apex court, it is settled that if a resident deductor is entitled for the refund of tax deposited under Section 195 (other sums) of the Act (Income Tax Act), then it has to be refunded with interest under section 244A from the date of payment of such tax,” the CBDT communication issued on April 26,2016.
The government, there being no express statutory provisions for payment of interest on the refund of excess amount/tax collected by the Revenue cannot shrug of its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies.The state having received the money without right and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carried with it the right to interest," the apex court had said in the 2014 order.
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