The Finance Act 2022 added a new IT Section 239A, which provides for a refund of tax deducted (TDS) u/s 195 on any income (other than interest income) by a taxpayer if no tax (TDS) was required to be deducted.
As a result, CBDT has issued a new IT Rule 40G that stipulates the method for obtaining such a refund, as well as the structure of a new IT Form 26D designed for the purpose, vide Notification 98/2022 dt. 17/08/2022. According to Rule 40G, a TDS refund claim in Form 26D must be lodged within 30 days of the payment of TDS that was improperly deducted.
CBDT Income Tax Notification 98/2022 dt. 17/08/2022: New IT Rule 40G/ Form 29D for Refund u/s 239A of Incorrect TDS u/s 195
G.S.R. 634(E).- In exercise of the powers conferred by sub-section (1) of section 239A read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend Income-tax Rules, 1962, namely:-
1. Short title and commencement.-
(1) These rules may be called the Income-tax (26th Amendment) Rules, 2022.
(2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereinafter referred to as the principal rules),-
(I) in Part VIII, before rule 41, the following rule shall be inserted, namely:-
40G. Refund claim under section 239A.-
(1) A claim for refund under section 239A shall be made in Form No. 29D.
(2) The claim under sub-rule (1) shall be accompanied by a copy of an agreement or other arrangement referred to in section 239A.
(3) The claim under sub-rule (1) may be presented by the claimant himself or through a duly authorised agent.”;
(II) in rule 41, in sub-rule (1), after the words and figures “under Chapter XIX” the brackets, words and figures “(other than under section 239A)” shall be inserted.
3. In the principal rules, in Appendix-II, after the Form No. 29C, the following Form shall be inserted, namely:-
Form No. 29D
(See rule 40G)
Application by a person under section 239A of the Income-tax Act, 1961 for refund of tax deducted
[please refer attachment for detailed format]
Note: The principal rules were published vide notification S.O. 969(E), dt. 26/03/1962 and last amended vide notification GSR 632(E), dt. 17/08/2022.