'15% surcharge on total income of Rs 50 lakh is wrong'

Mihir Tanna, Associate Director, S K Patodia & Associates (external link), a chartered accountants firm that offers consultancy, audit and tax services, answers your queries.

Sagar Saxena: I filed my IT return before end of Jul 2022 and have been waiting for my refund since then. I have raised grievances thrice but no action. The status is showing as Return verified and is processing.

Please suggest, what is required to be done to expedite the refund.

Mihir Tanna: I understand that you have validated your bank account at the Income Tax Web site ('My Bank Accounts' appearing under profile) and do not have outstanding demand of earlier years, still you have not received refund claimed in Income Tax Return (ITR) filed for AY 2022-23.

One of the reason for non-issue of refund is mismatch of data available with income tax department and amount shown in ITR.

Therefore, it is advisable to check Annual Information Statement (AIS) from Compliance Portal [option available under 'Pending Actions' at income tax portal] and make sure that all the transactions appearing in the AIS are correctly shown in ITR.

In case AIS shows any transactions which are not carried out by you or wrong information is appearing; you can file feedback at the portal. Also check refund status at https://tin.tin.nsdl.com/oltas/refund-status-pan.html (external link) just to make sure that refund is not failed in bank processing system.

LALIT BADHWAR: I have two pan cards -- one for HUF and one Personal.

By mistake the HUF pan number was given to a tenant for deposit of TDS, where as it should have been the personal Pan Number, as ownership of rented property was in personal name and not HUF as well as the tenancy agreement. The mistake was discovered at the time of filing of returns at the year end.

The tenant, an MNC, has refused to petition the Tax Dept. saying they have paid as per the Pan detail provided to them by us.

Can we request the tax authority to transfer and credit the Personal account from the HUF account, with the TDS amount?

Kindly guide and advice.

Mihir Tanna: As per provision of Rule 37BA of income tax rules, if income on which tax has been deducted at source is taxable in the hands of a person other than the deductee (payee), credit for the whole or any part of the tax deducted at source, shall be given to the other person and not to the deductee. However, deductee is required to file declaration with the deductor (payer). 

Considering above provision in the given case, you can try to take credit of TDS by showing amount in appropriate column of Schedule TDS of ITR of HUF as well as Individual.

However, you may face practical challenges in getting credit as there is no appropriate guidelines from income tax for such cases.

Chaman Lal Sehgal: Fintech, Registrar for Hindustan Unilever has deducted tax 23.92% (includes 20% base tax, 15% surcharge and 4% health cess) on my Non-resident dividend of Rs 8.94 lakh. I wrote to them to clarify how they have levied a 15% surcharge on income tax on my dividend of above amount. 

They have stated: 'Since the dividend payment to you at PAN level exceeds INR 1 million, the company has applied the TDS rate of 23.92% (20% base rate + 15% surcharge capped for dividend income + 4% cess). The same is done on a conservative basis.

'If the company deducts TDS at a lower surcharge rate and eventually if the total income of the payee exceeds the threshold limit in the FY 22-23, then it would be non-compliance on the part of the company as per the provisions of the Income Tax Act.'

Further they have quoted Clause (b) of sub-section (1) of Sec 115AD of Indian Income Tax Act.

I feel it is wrong to levy 15% surcharge on total income (including dividends) of more than Rs 50 lakh. They are not supposed to levy a 15% surcharge on the presumption that my total income is more than Rs 50 lakh.

I shall appreciate it if you would advise if they are correct in levying 15% surcharge on my dividend. Thanks and regards.

Mihir Tanna: Deductor is liable to deduct TDS at appropriate rate (including surcharge and cess) considering limits specified in the Income Tax Provisions (In given case, limit is Rs 50 lakh).

If multiple payments are done during the financial year, surcharge will be applicable on the entire amount paid till date as soon as cumulative amount exceeds specified limit.

TDS is deducted including surcharge, if the amount likely to be payable during the financial years exceeds prescribed limit.

In case of Dividend, practically it is difficult to estimate the amount payable in the future and thus, TDS is usually deducted without considering surcharge rate, if the amount paid till date doesn't exceed prescribed limit.

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