Rule 37BA: Credit for Tax Deducted at Source for Section 199 Purpose

Rule 37 BA of Income Tax Rules includes provisions for granting credit for Tax Deducted at Source (TDS) for the purposes of section 199 deducted by the deductor. It states that credit is given to the person to whom payment has been made or credit has been given (deductee), based on information furnished by the deductor to the income-tax authority.

Let’s dive Deeper into the Rule 37 BA Income Tax Act.

Rule 37BA of Income Tax Act (Bare Law)

(1) Credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chapter XVII, shall be given to the person to whom payment has been made or credit has been given (hereinafter referred to as deductee) on the basis of information relating to deduction of tax furnished by the deductor to the income-tax authority or the person authorised by such authority.

(2) ²⁷[(i) Where under any provisions of the Act, the whole or any part of the income on which tax has been deducted at source is assessable in the hands of a person other than the deductee, credit for the whole or any part of the tax deducted at source, as the case may be, shall be given to the other person and not to the deductee:

Provided that the deductee files a declaration with the deductor and the deductor reports the tax deduction in the name of the other person in the information relating to deduction of tax referred to in sub-rule (1).]

(ii) The declaration filed by the deductee under clause (i) shall contain the name, address, permanent account number of the person to whom credit is to be given, payment or credit in relation to which credit is to be given and reasons for giving credit to such person.

(iii) The deductor shall issue the certificate for deduction of tax at source in the name of the person in whose name credit is shown in the information relating to deduction of tax referred to in sub-rule (1) and shall keep the declaration in his safe custody.

(3) (i) Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable.

(ii) Where tax has been deducted at source and paid to the Central Government and the income is assessable over a number of years, credit for tax deducted at source shall be allowed across those years in the same proportion in which the income is assessable to tax.

(4) Credit for tax deducted at source and paid to the account of the Central Government shall be granted on the basis of—

subject to verification in accordance with the risk management strategy formulated by the Board from time to time.]

Suggested Read: Latest TDS Rate Chart

Key Takeaways

Credit for tax deducted at source (TDS) and paid to the Central Government is given to the person to whom payment has been made or credit has been given (deductee).

1. If the income on which TDS is deducted is assessable in the hands of a person other than the deductee, credit for the TDS will be given to that person upon filing a declaration with the deductor.
2. The deductor issues a certificate for TDS in the name of the person to whom credit is given, based on the information provided by the deductor to the income-tax authority.
3. The credit for TDS is granted for the assessment year in which the income is assessable, and if the income is assessable over multiple years, the credit is allowed proportionately across those years.

FAQs about Rule 37BA of Income Tax

When was Rule 37BA introduced?

Rule 37BA of Income Tax Rules which was inserted w.e.f. 01-11-2009 provides for apportionment of TDS in such situations.

What is the rule 37BA (2) of income tax rules?

Rule 37BA (2) of Income Tax explains if the income on which tax is deducted at source is assessable in the hands of a person other than the deductee, credit for the tax deducted will be given to that person. However, this is possible only if the deductee files a declaration with the deductor, who then reports the tax deduction in the other person’s name.

What is the rule 37BA of Income Tax Act read with Section 199?

Section 199 and rule 37BA of the Income Tax read together states that any deduction made and paid to the Central Government will be treated as a tax payment on behalf of the person or entity from whse income the deduction was made.

What is Rule 37BA 3 of income tax rules?

Rule 37BA of income tax rules states that the credit for tax deducted at source and paid to the Central Government will be given for the assessment year in which the income is assessable. If the income is assessable over multiple years, the credit for tax deducted at source will be allowed proportionately across those years.