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CPC automates default identification process in respect of TDS statements

The Centralized Processing Cell (TDS) automated the Default identification process in respect of TDS statements submitted. CPC (TDS) has highlighted the need for correct and complete reporting of data in the TDS statements and has therefore, implemented processes to enforce compliance.

With the above functionality made available by TRACES, intimations have been sent to the deductors, wherever applicable, through SMS and e-mail services and through Registered/ Speed Post. Further, TRACES has also provisioned for easy access to this information by way of display in Deductor’s Dashboard and by availability of electronic copies of Justification Reports for the defaults generated with respect to relevant TDS statements.

In view of the close of the month approaching fast, you are advised to pay the outstanding demand at an early date to avoid Penal Interest u/s 220(2)of the Actread with Rule 119A, apart from intimation of other recovery proceedings as per Income Tax Act, 1961. If the demand has already been paid, you are requested to file a Correction Statement by tagging the challan and the Justification report can be verified for closure of demand, if the revision has already been submitted and processed.

The following steps shall help you analyze and pay the demand:

1. Download the Justification Report from our portal TRACES to view your latest outstanding demand.
2. Use Challan ITNS 281 to pay the above with your relevant Banker or use any other Challan, which has adequate balance available.
3. Download the Conso File from TRACES portal.
4. Prepare a Correction Statement.
5. Submit the Correction Statement at TIN Facilitation Centre.
6. If the demand is due to mismatch of challan(s), the Online Correction facility on TRACES can be used for tagging the same.

 

 

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Important points to consider while submitting Corrections

Following are some useful information to adhere before submitting Corrections, with special reference to C3 & C9

What are C3 & C9 Corrections?

C3 Correction involves Updation  or Addition of Deductee details in the TDS statement.  The facility to delete Deductee records has now been discontinued for the purpose of correct reporting and is no longer permissible in the TDS statements.

Revision of TDS Statement by way of Adding a new Challan and underlying Deductees is referred to as C9 Correction. 

Important points to adhere while submitting Corrections are as follows:

1. Correct and Complete Reporting: It is very important to report correct and valid particulars (TAN of the deductor, Category (Government / Non-Government) of the deductor, PAN of the deductees and other particulars of deduction of tax) in the TDS statement. Please ensure that records are corrected for all deductees reported in the corrections to avoid multiple submissions.

2. Addition of new deductee rows and thereby, challans is not encouraged by CPC (TDS), except for inadvertent errors. Please ensure that complete data is reported in the first instance, while quarterly TDS Statement is submitted.

3. Validate PAN and name of fresh deductees from TRACES before quoting it in correction statement. Download  from TRACES and use the same to file new statement to avoid quoting of incorrect and invalid PAN

4. TDS statement cannot be filed without quoting any valid challan and deductee row

5. Quote correct and valid lower rate TDS certificate in TDS statement wherever the TDS has been deducted at lower / zero rate on the basis of certificate issued by the Assessing Officer

6. Download the Justification Report to know the details of TDS defaults, if any, on processing of TDS statements and submit corrections accordingly

7. File correction statements promptly in case of incomplete and incorrect reporting.

Please ensure  that data for all deductees reported in TDS Statements are duly corrected which will help the deductees in claiming correct TDS Credits, besides generating correct TDS Certificates.

 

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Penalty for non furnishing of PAN in TDS statement

In case, the PAN Numbers are not furnished by the deductees, the respondent-assessee cannot be penalised under Section 272B. Section 139A also imposes the obligation on the deductees to furnish PAN Number to the deductor.

The Board in the letter dated 5-8-2008 vide No. 275/24/2007-IT(B) has clarified that penalty of  10,000/- under Section 272B is linked to the person, i.e., the deductor who is responsible to deduct TDS, and not to the number of defaults regarding the PAN quoted in the TDS return.

Therefore, regardless of the number of defaults in each return, maximum penalty of Rs. 10,000/- can be imposed on the deductor. – CIT(TDS) vs. DHTC Logistics Ltd. ITA 314 of 2013 Order dated 26-7-2013 (Delhi High Court).

In the case given above The assessing officer had imposed penalty of Rs.10,000/- in each case where PAN Number was not provided by the deductee. There were in all 30706 cases in which the PAN Number was missing or was incorrectly stated. The assessing officer, accordingly, imposed penalty of Rs.10,000/- in each case. Thus, penalty of Rs.30,70,60,000/- was imposed.

Board in the letter dated 5.8.2008 vide No.275/24/2007-IT(B) has clarified that penalty of Rs.10,000/- under Section 272B is linked to the person, i.e., the deductor who is responsible to deduct TDS, and not to the number of defaults regarding the PAN quoted in the TDS return. Therefore, regardless of the number of defaults in each return, maximum penalty of Rs.10,000/- can be imposed on the deductor.

Penalty cannot be imposed by calculating the number of defective entries in each return and by multiplying them with Rs.10,000/-.

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