Tips to avoid defaults in TDS Returns

One can avoid defaults in the TDS returns, 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 return   

Following are some important facts to be adhered to, while submitting TDS return, to avoid each type of Default:   

Late Payment Defaults:

• The taxes deducted must be deposited within the due dates, as prescribed by Rule 30 of the Income Tax Rules 1962.
• Also refer: Important Guidelines for payment towards liability on account of Tax Deducted / Collected at Source   

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:   

• Quarterly TDS/TCS statements must be filed within due dates of filing statements as prescribed by Rule 31A of the Income Tax Rules, 1962. 
• Also refer: CPC (TDS) Reminder for filing of TDS Statements within Due Date and CPC (TDS) Communication-Circular 07/ 2014 for Late Fee Levy for Government Deductors in this regard.