TDS Default Types & Tips to avoid it

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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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