Circular No. 513-Income Tax dated 27/5/1988

Explanatory Notes

Finance (AMDT)Act, 1987

Refund of surcharge on income-tax paid by non-residents in accordance with the Finance (Amendment) Act, 1987

1. Attention is invited to the Finance (Amendment) Ordinance, 1987, promulgated on the 19th September, 1987, which provided that in the case of a person where tax was to be deducted or advance tax was payable in accordance with Part III of the First Schedule to the Finance Act, 1987, and the total income exceeded Rs. 50,000, the amount of income-tax to be deducted or the amount of advance tax payable was to be increased by a surcharge calculated at the rate of 5 per cent of such income-tax or advance tax. The provision was applicable to resident as well as non-resident taxpayers.

Finance (AMDT)Act, 1987

2. The Finance (Amendment) Act, 1987, which was assented to by the President on 16th December, 1987, however, provided that this surcharge will not be payable in the case of non-residents. This provision is applicable with retrospective effect from 19th September, 1987. As a result of this, refund has become due in the cases of numerous non-resident taxpayers on account of the payment of this surcharge made before the Finance (Amendment) Act, 1987 came into force.

Finance (AMDT)Act, 1987

3. The Income-tax Act, 1961 does not contain any provision for the refund of this surcharge. In order to avoid hardship in the cases of the above taxpayers, it has been decided by the Central Board of Direct Taxes that concerned Commissioner of Income-tax can authorise refund of surcharge in cases of non-resident taxpayers who made such payment of surcharge or out of whose income surcharge has been deducted at source under the provisions of the Finance (Amendment) Ordinance, 1987. Any demand outstanding against the concerned assessee may however be adjusted before allowing the refund.