Refund of TDS deducted under Section 195 AY 2026-27

By | May 9, 2026
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Refund of TDS deducted under Section 195

Introduction

A deductor may claim a refund of TDS deducted under Section 195 on any income (other than interest) by filing an application under Section 239A before the Assessing Officer if no tax was required to be deducted on such income.

Eligibility for Refund under Section 239A

The following conditions must be met:

  • The tax should be deducted on any income (except interest) underSection 195.
  • The deductor should bear the tax liability under a written agreement or arrangement.
  • The tax must have been paid to the Government.
  • The deductor claims that no tax was required to be deducted.
  • The refund application is filed with the AO within 30 days from the date of tax payment.

Refund Process Under Section 239A

  • The application for refund must be filed inForm 29Dwithin 30 days of the tax payment.
  • The Assessing Officer (AO) may conduct an inquiry and must pass an order within six months from the end of the month in which the application is received.
  • If the refund is rejected, the deductor may file an appeal before the Commissioner (Appeals).

Interest on Refund

  • If a refund is granted, interest is payable underSection 244Afrom the date of tax payment [Circular No. 11/2016, dated 26-04-2016].

Refund under CBDT Circulars (Other Cases) [Circular No. 7/2007, dated October 23, 2007 and Circular No. 7/2011, dated September 27, 2011]

If the case is not covered under Section 239A, refund claims can be made as per CBDT Circulars in cases such as:

  • Full cancellation of contract (if no remittance is made).
  • Partial cancellation of contract (if no payment is made for the non-executed part).
  • Exemption is provided to the remittance by any law or Government notification (after tax was deducted).
  • Order by appellate authority, reducing tax liability.
  • Excess deduction due to DTAA applicability or mistaken duplicate deductions.
  • Time Limit for Refund Application

o Within two years from the end of the financial year in which TDS was deducted.

  • Filing Undertaking for Refund

o Refund is granted only if no TDS certificate has been issued to the non-resident.

o If a TDS certificate was issued, the deductor must either retrieve it or indemnify the Income-tax Department.