Adjustments of excess cess

[madhavvan n]

as per finance bill 2009, the effective date of removal of surcharge and cess is from 1st april, 2009, however it is only after receipt of presidential assent to the finance bill that it becomes an act. ( the finance bill has received the presidential assent today ie 19th august 2009 ) and thereafter it is notified in the gazette. As far as our tds deductions are concerned we can now deduct tds without considering surcharge and cess for all domestic payments to individuals / hufs and domestic companies, once we receive the gazette notification, which will come within 2/3 days. The rates prescribed in the Schedule refer to the whole year and not with reference to October 1, 2009, so that on the date on which the Bill becomes law, surcharge is not leviable for payments made during the year. While reduction in the rate of tax deductible at source is effective from October 1, 2009, omission of surcharge and cesses is inferred from the Schedule, which applies for the entire income during the financial year 2009-10. hence according to my view one can adjust excess sc and cess deducted and deposited till august 19th in future payments by way of reduced rate viwers enlighten.

[Dinesh Gupta]

In my view, it would depend upon filing of return and presentation of details therein. IF you have shown the TDS inclusive of surcharge in the TDS return, there is no question of adjustment of the same in future period. In these circumstances the the filing of revised return is not a good proposition. You may let the deductee to claim the refund /adjust his / her tax liability with the TDS inclusive of surcharge. Alternatively, you may file a claim of refund. But where returns are yet to be submitted, no particulars have been furnished, I consider it as a good chance to treat the amount of surcharge as excess deposit and adjust the same with the subsequent liability.

AI Summary

Removal of surcharge and cess requires TDS without surcharge after notification; excess surcharge may be refunded or adjusted. Once the Finance Bill received presidential assent and is notified in the gazette, TDS on domestic payments for the financial year must be deducted without surcharge and cess; if surcharge/cess was already deducted and returns are not yet filed the deductor may treat it as excess deposit and adjust against future liability, but where TDS returns showing surcharge have been filed the amount cannot be adjusted later and the deductee must claim refund or adjust in their return or the deductor may file a refund claim.