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Excessive deduction of TDS

My daughter is a non-resident Indian and has got gross total income of about Rs. 2.84 lakh as income from property and interest on bank deposits. She avails herself of the maximum benefit of Sec. 80C in approved investments of Rs. 1 lakh, so that her taxable income is Rs. 1.84 lakh. After minimum exemption limit of Rs. 1.35 lakh, tax on net income of about Rs. 49,000 works out to about Rs. 7,500. She is not able to file Form 15G because she has taxable income. But the tax that is deducted from these two sources works out to about Rs. 50,000 giving rise to heavy refund of Rs. 48,000, which gets locked up year after year further aggravated by delay in refund. What is the remedy?

Since the reader's daughter is a non-resident, she is not eligible for the higher exemption limit of Rs. 1.35 lakh available for women, so that tax payable after exemption of Rs. 1 lakh will be at 10 per cent for first the Rs. 50,000 and 20 per cent on the balance, so that tax on Rs. 1.84 lakh will be Rs. 11,800. Even so, the reader's complaint is correct in that deduction of tax at source at Rs. 50,000 is abnormal with an amount of about Rs. 38,000 locked up till refund is obtained. However, it is possible to get a certificate of deduction at a lower rate on an application under Sec. 195(3) to the assessing officer to grant a certificate of tax deduction at such a lower rate after specification of the incomes and the sources. Rule 29B prescribes Form 15D for such application for authorisation in Form 10E from the assessing officer. From October 1, 2003, the Form is discontinued, so that such authorisation need not be in any particular Form. Armed with such certificate, the assessee can present it to the deductors, who are obliged to reduce tax deduction as per the certificate.

The tax rate so certified can match liability. But then, the Income-tax Department is not geared for prompt attention for issue of such certification, though there are some diligent officers, who do respond to such applications in time, as expected by the statute. But a recent Circular of the Board by way of Instruction No.8 of 2006 dated October 31, 2006, cautioning the Officers about issue of certificates "indiscriminately" with the further requirement of administrative approval from Joint Commissioner would render it more difficult for assessees to get such certificates in time. Probably the Ombudsman should help to get timely compliance with such request.

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