Credit Adjustment

Tax Glossary Definition

Credit Adjustment

Credit adjustment refers to the process of utilizing excess tax paid, such as TDS (Tax Deducted at Source) or advance tax, to offset a taxpayer’s current or future tax liability. This ensures that overpaid taxes are effectively applied against outstanding dues, reducing the need for separate refund claims.

Example: If a taxpayer has excess TDS or advance tax in a financial year, the amount can be adjusted against the next year’s tax liability instead of requesting a refund.

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