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CPC (TDS) follow up for closing Short Payment Default due to Insufficient Challans

CPC (TDS) has observed from its records that there are outstanding Short Payment Defaults with respect to TDS Statements filed by deductors.  The Short Payment Defaults are due to “Insufficient Challans”.

CPC (TDS) has released a follow up communication to deductors in this regard which has been given below:

Dear Deductor, (TAN: XXXXXXXXXXXX)

As per the records of the Centralized Processing Cell (TDS), there are outstanding Short Payment Defaults exceeding Rupees 1 Crore with respect to TDS Statements filed by you from Financial Year 2007-08 onwards.

The referenced Short Payment Defaults are due to “Insufficient Challans”. This could be due to the following reasons:

  • You have adequate balance available in OLTAS challans, however, some other challans may have been incorrectly used, which are already consumed.
  • You have tried to consume more than the available challan amount for reporting TDS deducted in the statements.

In this respect, you are requested to take not of the following provisions of the Income Tax Act, 1961:

Consequences of failure to pay the demand:

  • As per the provisions of section 220 of the Act, Any amount, specified as payable in a notice of demand shall be paid within thirty days of the service of the notice.
    • If the amount specified in any notice of demand is not paid within the period limited under sub-section (1), the assessee shall be liable to pay simple interest at one per cent for every month or part of a month comprised in the period commencing from the day immediately following the end of the period mentioned in sub-section (1) and ending with the day on which the amount is paid.
  • If any person fails to deduct or pay the whole or any part of the tax, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay under Section 271C of the Act.
  • Failure to pay tax to the credit of Central Government is punishable with fine as per the provisions of section 276B/ 276BB.
  • Section 278A of the Act prescribes for punishment for second and subsequent offences, if any person has been convicted of an offence under section 276B.

Action to be taken at the earliest:

  • Download the Justification Report from our portal TRACES to view your latest outstanding demand. Please click here for assistance on downloading the Justification Report.
  • Use Challan ITNS 281 to pay the above demand with your relevant Banker, if there are no challans available for consumption.
  • If there are unconsumed Challans available, please use Move Deductee facility using Online Corrections, as specified below
  • Download the Conso File from our portal. Please use the e-tutorials for necessary help
  • Prepare a Correction Statement using the latest Return Preparation Utility (RPU) and File Validation Utility (FVU).
  • Submit the Correction Statement at TIN Facilitation Centre.
  • You can use the Online Corrections facility on TRACES to submit corrections, to payoff the demand. To avail the facility, please Login to TRACES and navigate to Defaults tab to locate Request for Correction from the drop-down list. You can refer to our e-tutorials for necessary help

For any further assistance, you can also write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

Source: TRACES

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Basic principles of TDS Compliance

Given below are the basic principles of TDS compliance:

  1. Deduction/ Collection of Tax at Correct Rates.
  2. Timely Deposit of Tax Deducted at Source.
  3. Accurate Reporting of data related to tax deductions/ collections made.
  4. Submission of TDS Statements within the due dates.
  5. Verification and Issuance of TDS Certificates within time.
  6. CPC (TDS) is now sending “Intermediate Default Communication” for PAN Errors and Short Payments, which can be corrected during the interim period of a week of filing TDS Statements, before CPC (TDS) proceeds with computing Defaults for the relevant statement.
  7. User-friendly Online Correction facility can be used for Correction of Deductees, Tagging Unmatched Challans and Payment of Fees/ Interest. (Please navigate to Defaults tab to locate Request for Correction from the drop-down menu. For any assistance, please refer to the e-tutorial available on TRACES).
  8. Aggregated TDS Compliance Report assists the PAN of the Deductor to administer TDS Defaults for associated TANs and to take appropriate action.
  9. The Deductor’s Dashboard provides you all necessary information to assist you in “Compliance Self-Assessment” and to take appropriate action.
  10. Non-filing Self-declaration can be made by navigating to Statements / Payments menu and submit details under Declaration for Non-Filing of Statements.
  11. PAN Verification and Consolidated TAN – PAN File facility on TRACES can be used for verifying the deductees.
  12. The Conso Files and Justification Reports downloaded from TRACES help you to identify errors in submission of revised Quarterly TDS Statements.
Source: TRACES
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Significant change in processing of Quarterly TDS Statements

CPC (TDS) has issued a communication to deductors in which it has stated about a significant change in processing of Quarterly TDS Statements. The central point in the new process is identifying errors in challan/ PANs and facilitating their corrections before CPC (TDS) computes defaults in TDS statements.

The issued communication has been given below:

Dear Deductor,

Centralized Processing Cell (TDS), in its constant endeavor to improve services, is glad to update you with a significant change in processing of Quarterly TDS Statements. This change has been initiated in view of feedbacks received from deductors, to avoid defaults that may arise due to inadvertent data entry errors.

The central point in the new process is identifying errors in challan/ PANs and facilitating their corrections before CPC (TDS) computes defaults in TDS statements. Following are the salient features of the new process:

What is new?

  • Step 1: CPC (TDS) will first process Original TDS Statements till the stage of 26AS generation for deductees reported.
  • Step 2: Short Payments and PAN Errors will be identified in the preliminary check of the Original statements.
  • Step 3: The statements will be placed “On Hold” for further processing and an opportunity will be provided to correct potential defaults of Short Payment and PAN Error.
  • When the statement is placed on Hold, CPC (TDS) will intimate you through following means:
    • e-mail at the Registered e-mail address at TRACES
    • SMS at Registered Mobile Number with TRACES
    • Message will be delivered to the Deductor’s Inbox in TRACES
  • The above correction needs to be carried out by using Online Correction feature at TRACES within 7 days of above communication.

It is, therefore, advised that the deductors may ascertain status of the TDS statements within 7 days of filing with TIN Facilitation Centre.

What are the advantages:

  • You would have preliminary information of potential Short Payments and PAN Errors, before the Original Statement is completely processed for Defaults and Intimations are generated.
  • Correction of above defaults using Online Correction can be submitted before final processing of statements.
  • Above action will facilitate avoidance of multiple Correction Statement filing later, after the defaults are identified CPC (TDS) and Intimations have been sent.

What actions to be taken:

  • Please take note of the Intermediate communication from CPC (TDS) and submit Online Correction for potential defaults in TDS statement within the stipulated time frame.
  • Only “Online Correction” facility can be used for correction of above Short Payments and PANs

To avail the facility, you are requested to Login to TRACES and navigate to Defaults tab to locate Request for Correction from the drop-down menu. For any assistance, please refer to the e-tutorial available on TRACES.

Please note that Digital Signature will be required to avail the benefit of complete correction features, including PAN Corrections. In view of Q3 filing due date approaching fast, you are requested to procure Digital Signature Certificate at the earliest.

  • PAN Verification facility on TRACES can be used for verifying the deductees. You are requested to navigate to Dashboard to locate PAN Verification in the Quick Links menu.
  • You can make use of the “Consolidated TAN – PAN File” that includes all the valid PANs attached with the respective TANs. To avail the facility, please navigate to Dashboard to locate Consolidated TAN – PAN File.
  • The action requires to be completed within 7 days of Intermediate communication from CPC (TDS).

It is hoped that the deductors will avail of the time window to correct errors, if any. CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

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Impact & action to be taken in case of PANs either “Not Available” or “Invalid” in Quarterly TDS statements

Centralized Processing Cell (TDS) has observed from its records that though deductors have reported deductees with more than Rs. 50,000 of TDS in Quarterly TDS statements, but the PANs are either “Not Available” or “Invalid”. CPC (TDS) has issued a communication in this regard stating the impact & action to be taken in this situation.

The issued communication has been given below:

Dear Deductor,(TAN:_____________)

Centralized Processing Cell (TDS) has observed from its records that though you have reported deductees with more than Rs. 50,000 of TDS in your Quarterly TDS statements, but the PANs are either “Not Available” or “Invalid”. The “Invalid” PANs appear structurally valid, however, they are actually incorrect, as they are not available in the PAN Master records.

Please note the following details in reference to your TDS statements for Financial Year 2013-14 only for Form types 24Q & 26Q:

Form Type 24Q:

  PAN Not Available PAN Applied For Invalid PAN
  Instances TDS Instances TDS Instances TDS
Q1 2013-14            
Q2 2013-14            
Q3 2013-14            
Q4 2013-14            

 Form Type 26Q:

  PAN Not Available PAN Applied For Invalid PAN
  Instances TDS Instances TDS Instances TDS
Q1 2013-14            
Q2 2013-14            
Q3 2013-14            
Q4 2013-14            

Immediate Attention:

Quarter wise details of PANs and transactions, where such errors have been identified are available in the Justification Reports that can be downloaded from TRACES. Therefore, you may take immediate steps to correct Invalid/ Incorrect PANs that have been reported in the statement. In case, the PAN was Not Available / Applied For at the time of reporting the transaction, the deductee may be contacted and respective PAN may be replaced.

What is the impact:

The impact of such errors is significant in nature, in view of following:

  • You would not have been able to generate TDS Certificates for deductees with such PANs. In case, you have issued TDS Certificates outside TRACES, they will not be valid.
  • In view of CBDT circulars 04/2013 dated 17.04.2013, No. 03/2011 dated 13.05.2011 and No. 01/2012 dated 09.04.2012, it may kindly be noted that the TDS Certificates downloaded only from TRACES Portal will be valid. Certificates issued in any other form or manner will not comply to the requirements referred in the Income-tax Act 1961 read with relevant Rules and Circulars issued in this behalf from time to time.
  • Correct TDS Credits in 26AS statements to the taxpayers will not be available and they will not be able to avail the same, while filing their Income Tax Returns.
  • As per section 206AA of the Income Tax Act, the tax is to be deducted at a higher rate, in case of “Not Available/ Invalid PANs”. Therefore, Short Deduction, including Interest is charged, if the tax has not been deducted at higher rate or Section Rate, whichever is higher, as per the provisions of section 206AA.

What actions to be taken:

  • TRACES provides for a user friendly “Online Correction facility with Digital Signatures” for correction of PANs. To avail the facility, you are requested to Login to TRACES and navigate to “Defaults” tab to locate “Request for Correction” from the drop-down menu. For any assistance, please refer to the e-tutorial available on TRACES.
  • You may also download the Conso Files and Justification Reports from TRACES to identify the above errors and submit C5 Correction Statement to correctly complete the details of the deductees.
  • PAN Verification facility on TRACES can be used for verifying the deductees. You are requested to Login to TRACES and navigate to “Dashboard” to locate “PAN Verification” in the Quick Links menu.
  • You can make use of the “Consolidated TAN – PAN File” that includes all the valid PANs attached with the respective TANs. To avail the facility, Login to TRACES and navigate to “Dashboard” to locate “Consolidated TAN – PAN File”.

You can refer to our e-tutorial and FAQs on “TRACES” website for necessary help. For any further assistance, you can also write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

CPC (TDS) TEAM

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