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Healthy Practices for Error-Free TDS Returns

Healthy practices for error – free TDS returns has been given below:
  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.
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TDS Default Types & Tips to avoid it

One can avoid defaults in the TDS statements, by way of adherence to the following basic principles:   

• Timely Payment of total taxes deducted/ collected
• Correct Reporting with regard to PANs, Tax Rate and Challans
• Complete Reporting for all Deductees
• Timely filing of TDS Statements

One needs to understand the different reasons & types of TDS Defaults and steps to avoid getting defaults notices.

Summary explanation is as under:

Late Payment Defaults:

Short Payment Defaults:

  • All the taxes deducted must be deposited with challan 281 quoting correct TAN, Assessment Year, Minor Head etc.
  • Challan details/BIN details quoted in the statement should be correct. Challans can be validated by using Challan Status Inquiry(CSI) file. Correct details can also be verified at TRACES in “Challan Status” menu under “Statement Status” after login.
  • There should not be any difference in the amounts quoted in “Deducted” and “Deposited” columns of the deductee rows.
  • Challans quoted in the statement must have balance available for consumption against specified deductee rows. Available balance can be verified at TRACES in “View Consumption Details” under “Statements/ Payments” menu after login.
  • Government Deductors need to report Book entry flag as “Y” in challan details.   

Short Deduction Defaults:

  • Taxes must be deducted at correct rates specified in the Act. The Rate table can be accessed at TRACES for correct tax rates.
  • Correct flags (A, B, C, T and Y) must be raised for no deduction/ lower deduction/ higher deduction, as appropriate.
  • The PAN for deductees must be valid and correct. TAN-PAN Master can be downloaded from TRACES and be used to file statement to avoid quoting of incorrect and invalid PANs.
  • Correct and valid 197 Certificates must be specified. E-tutorial can be referred to for the purpose of validation.
  • For 24Q statements, correct flags should be raised for Woman/ Man/ Senior Citizen/ Super Senior Citizen deductees, as may be appropriate.
  • DTAA flag “B” must be raised under section 195 of the Act, at the time of filing 27Q  statements.

Late Deduction Defaults:

  • Taxes must be deducted at the time of Payment or Credit, whichever is earlier.   

Late Filing Defaults:   

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CPC (TDS) communication: TDS Defaults exist in all Six preceding Quarters, “No Correction TDS Statement filed as yet”

As per the records of the Centralized Processing Cell (TDS), there exist outstanding Defaults in “all six preceeding Quarters” with respect to the TDS Statements filed by deductors, relevant to the Financial Years 2013-14 and 2014-15.

CPC (TDS) has issued a communication to deductors in this regards which has been given below:

Dear Deductor,(TAN: XXXXXXXXXXXX)

As per the records of the Centralized Processing Cell (TDS), there exist outstanding Defaults in “all six preceeding Quarters” with respect to the TDS Statements filed by you, relevant to the Financial Years 2013-14 and 2014-15.

Please note that you have “not filed” any Correction Statements as of December 31, 2014 for closure of the TDS Defaults.

Immediate Attention:

  • CPC (TDS) facilitates downloading of TDS Certificates (Forms 16/16A) in accordance with section 203 of the Income Tax Act, 1961 read with Rule 31(1) of the Income Tax Rules, 1962 for issuance of the same to the deductees. The deductor duly verifies to the effect that the amount due has been deducted and deposited to the credit of the Government and the information provided in the said certificate is true, correct and complete
  • However, as per the records of CPC (TDS), it is observed that the amount of tax deposited / remitted mentioned by you in the TDS Statements is not correct due to insufficient or unmatched challans (owing to possible data entry errors).
  • To take care of the above and to facilitate non-intrusive TDS Compliance, Online Correction facility has been made available at TRACES for closure of Short Payment defaults due to challan errors. CPC (TDS) processes such statements within 24 hours of submission of such corrections.
  • In view of the above, Short Payment Defaults ought to be closed at the earliest , failing which you may not be able to submit requests to download TDS Certificates from the web portal TRACES

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.

Actions to be taken:

  • Use Challan ITNS 281 to pay the above demand with your relevant Banker, if there are no challans available for consumption
  • Please download the Justification Report from our portal TRACES to view your latest outstanding demand. Please click here for assistance on downloading the Justification Report.
  • Please use the Online Corrections facility on TRACES to submit corrections, to payoff/ close 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.
    • In case of Short Payment Defaults due to Unmatched Challans, please use Tag Unmatched Challan facility using Online Corrections.
    • In case of Short Payment Defaults due to Insufficient Challans, please use Move Deductee facility using Online Corrections
  • Alternatively, you may also download the Conso File from our portal provided there are no Short Payment Defaults.
    • Prepare a Correction Statement using the latest Return Preparation Utility (RPU) and File Validation Utility (FVU).
    • Submit the Correction Statement at TIN Facilitation Centre.

For any assistance, you can 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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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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