Unclaimed Income Tax refund due to non filing of return

[Rajat Singhania]

Assessee had not filed Income tax return for the F.Y. 2017-18 on which there was a certain amount of TDS deducted. Assessee enjoys exemption on entire taxable income u/s 10(26) and hence there is no tax payable in assesse's case. Can this unclaimed TDS be shown in the return of F.Y. 2018-19 and the refund be claimed. If so, will that make the assessee more susceptible to receiving notice by the Income tax Department.

[DR.MARIAPPAN GOVINDARAJAN]

Definitely you have to file return and indicate the entire income and less the exempted income. The tax paid through TDS is shown in the return. Automatically refund will be given to the assessee on the basis of return filed.

[Rajat Singhania]

The return is being filed for transactions of F.Y.18-19. My question in essence is , should the TDS on the exempt income of F.Y.2017-18 (for which return was not filed) also be claimed in F.Y. 2018-19's return and the corresponding exempt income be shown and will that attract notice by the department later on.

Note: Entire income that the assessee earns is exempt under Section 10(26) of the Income Tax Act.

[DR.MARIAPPAN GOVINDARAJAN]

Once tax is deducted at source for exempted income, then the said tax can be got refunded through the return filed.

AI Summary

TDS on exempt income: claim deducted tax by filing a return to obtain refund under routine return processing.
Advisers state the assessee should file an income tax return disclosing full income and its exempt status, show TDS paid in the return, and claim a refund; TDS on exempt income can be refunded through the return process, while the question of increased departmental scrutiny is noted but not authoritatively resolved.