Reasons to reject the correction in challan detail by TDS-CPC

Rejection reasons pertaining to challan details are as follows:

  • Challan detail record on which correction has been filed does not exist in regular / previous statement
  • In a correction statement, verification keys from challan data should match with the corresponding fields in regular statement
    • Verification keys for Non Nil Statement-Last transfer voucher number, Last Bank-Branch Code / Form 24G Receipt Number, Last date of transfer voucher / bank Challan, Last deposit amount as per challan
    • Verification keys for Nil challan-Last date of transfer voucher number / bank challan, last total deposit amount as per challan
  • If an unmatched challan is being corrected, then the sum of deposit amount of all the active deductee rows in the regular and correction statement and corrected values of claimed TDS interest and claimed TDS Others amount should be less than or equal to Total deposit amount of challan given in statement
  • If a matched challan is being corrected, then available balance amount in the challan should be sufficient for consumption of updated sum of deposit amount of all the active deductee rows in correction and corrected values of claimed TDS interest and claimed TDS Others amount
  • In case of existing matched / partially matched challan, deductor can only update Cheque / DD Number, claimed TDS Interest amount, claimed TDS Others amount and Section code
  • If deductor updates only deductee details, then claimed TDS Interest amount and claimed TDS Others amount as given in the challan should match with the corresponding values present in regular / previous return

Interest Liability for TDS Assessee-in-Default

A TAN holder who fails to deduct whole or any part of the tax at source is treated as an assessee-in-default. But, as per provision in section 201 the TAN holder who fails to deduct the whole or any part of the tax on the payment made to a payee shall not be considered  to be an assessee-in-default in respect of tax not deducted by him, if the following conditions are satisfied:

  • Payee has furnished his return of income under section 139
  • Payee has taken into account the above income in its return of income
  • Payee has paid the taxes due on the income declared in such return of income
  • Payee furnishes a certificate to this effect from an accountant in Form No. 26A

In other words, in case of non deduction of tax at source or short deduction of tax,  if all the discussed conditions are satisfied, then the payer will not be treated as an assessee-in-default. However, in such a case, even if the payer is not treated as an assessee-in-default, he will be liable to pay interest under section 201(1A). In this case, interest shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident payee. Interest in such a case will be levied at 1% for every month or part of the month.


Section 194C – TDS on Transporter

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Section 194C of the Income Tax Act, 1961 states that any payment to a transporter is subject to a Tax Deduction at Source (TDS) at the rate of:

1% in case if the payee is an Individual or a Hindu Undivided Family (HUF), and
2% in case of other payees (i.e. partnership firm, company, trust, body of individuals or association of persons)

TDS on transporter during the course of plying, hiring and leasing goods carriage

Previously, payment to transporters carrying on the business of plying, hiring, or, leasing of goods carriages was not liable to withholding tax if the transporter furnishes her/his permanent account number (PAN) to the payer.

It seems that the intention of having this provision was to exclude small transporters from the rigors of TDS provisions. But because of the way the section was drafted transporters were excluded from the TDS provisions if they had a PAN.

With a view to bring back the big transporters back into the TDS fold, from 1st June 2015 onward, Department made an exemption. This exemption would be available only to those transporters who own ten or less goods carriages at any time during the previous year. Such a transporter would also need to furnish a declaration to that effect to the payer along with the PAN.

There was also some bit of confusion in the minds of a few people as to whether the said section (and exclusion) applied to payers engaged in the business of transport or to payees engaged in the business of transport. To remove this confusion, it has now been clarified in the Memorandum to the Finance Bill that this exemption is available whether such amount is paid by a person engaged in the business of transport or otherwise.

With this addition to the Act, reporting all deductions w.r.t Nil TDS on transporter payment in quarterly return (26Q) is made compulsory.

Following are the documents which a Deductor is supposed to collect for such transactions:
– Self-attested copy of PAN Card
– Declaration of neither the contractor is registered nor is he the owner of more than 10 goods carriages.


Interest on Late Deduction of TDS

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The due date for deduction is either at the time of giving credit or payment of the dues, whichever is earlier. Late deduction happens in the event the tax is not deducted when the deduction is due and is deducted at a later date. The interest for the delay in deduction is charged at the rate of 1% per month or part of a month of the delay. For Example if the due date for a deduction is 2nd of June and it is deducted on 8th of July in the same year, then the interest is charged at the rate of 1% for each month i.e. (June & July) aggregating to 2% interest.

Important: there is a difference between late deduction and late payment. Learn more

Interest on Late Payment of TDS

Difference between Late Payment & Late Deduction