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Claiming TDS for Income under clubbing provisions

Claiming TDS under rule 37BA

Assessment Year 2018-19 has brought up new ITR forms with some major changes which were the pressing need of the hour. One of them is claiming TDS by the assessee other than the deductee himself.

According to rule 37 BA(2), income on which tax has been deducted at source is assessable in the hands of the 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 the deductee.

Previously the deductee was required to file a declaration to the deductor informing him the name of the other person in whose name the income shall be taxable and then the TDS should be credited in that other person's account.

Now from A.Y. 2018-19, the information on TDS for current financial year has to be bifurcated as:

  1. TDS deducted in own hands

  2. TDS Deducted in the hands of the other person as per rule 37 BA(2)

In the same way TDS claimed column is bifurcated as:

  1. TDS claimed in own hands

  2. TDS claimed in the hands of the other person as per rule 37 BA(2)

Now let us understand it with a simple example:

Mr X is a salaried employee. His salary is Rs. 1,00,000/- per month. He transferred this amount of Rs. 1,00,000/- to his wife's account. Wife X invested this amount in Bank's fixed deposit. At the end of the year (till 31st March 2018), she has earned an interest income Rs. 5,000/- on this fixed deposit and TDS of Rs. 500/- @ 10% was deducted on it. According to the clubbing provision of the Income Tax Act, this income of Rs. 5,000/- should be taxable in the hands of Mr. X as the source of funds for this FD was from his account. Now, as per rule 37BA(2), TDS of Rs. 500/- should also be claimed by Mr. X only. But in this case deductee was wife X.

Therefore, wife X should file the return as:-

Deducted in own hands

Claimed in the hands of spouse as per section 5A or any other person as per rule 37BA (2) (if applicable)

 

Mr. X will file the return as:-

Deducted in the hands of spouse as per section 5A or any other person as per rule 37BA (2) (if applicable)

Claimed in own hands

This change has made the life easy for the assessee who are associated with the clubbing provisions of the Income Tax Act.

 

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