eTDS Return Corrections – AN OVERVIEW
Income Tax – e-TDS Returns – Impact on Filing of Correction Statements
The mechanism of allowing credit of TDS to the Deductees, like employees, depositors, shareholders, contractors, professionals, etc., works with on-line Filing of e-TDS (quarterly basis – Form24Q and 26Q) Returns by the Deductors through the portal, TRACES. This is like allocating the tax deducted and paid to the Government on behalf of various Deductees into their respective of accounts (PAN). For this, the Deductees are required to inform their correct PAN and the Deductors are to file those eTDS returns on quarterly basis within the prescribed time line as per Sec 200 and issue a Certificate of Tax Deducted as per Sec 203.
In this process, the Deductees are sometimes not able to get their due credit owing to various issues like wrong PAN being furbished by the Deductees, incorrect PAN filled in the Form by Deductors, omission of any Deductee, swapping of PAN between Deductees, etc. As the process of filing involves human intervention at the time feeding the inputs into the portal, it results in denial of due credits to the Deductees. This denial leads to raising demands with interest in the hands of Deductees. To overcome this, as a rectifying step, the mechanism allows revising of those returns (eTDS) by the Deductors subsequently.
Now in the recently passed Finance Act 2025, the time limit for revising/rectifying the eTDS returns have been fixed at six years from the end of the financial year, in which the eTDS return is required to be filed. However, when such corrections happen beyond the time limit for filing return of income even belated one, there arises the question of claiming the credit. When a Deductee omits to claim in his return due to either non-reflection or absence of knowledge, then he naturally losses the credit if corrections are filed belatedly. This is more so especially in the case of non-filer of return, the tax payers cannot file return or must pay additional tax for filing updated returns, of course with late fee u/s 234F. Now the income department started issuing SMS/emails to those non-filers with TDS credits in their PAN for earlier years for filing updated returns.
In this process of rectification of returns, there are few more issues remaining unanswered. When a person claims his TDS in his return and the same is processed by CPC allowing the credit and subsequently the deductor removes while rectifying the same in his PAN, what would be the position of person who claimed originally. Would the CPC/IT Dept rectify the Intimation for earlier years of 6 years old sent to the tax payers and raise demand? With the advent of technology, now the deductees are getting SMS while getting TDS credits on quarterly basis (whenever eTDS return is filed) alerting them for checking its correctness. When the CPC is issuing emails to the tax payers for their objections while adjusting refunds against their old tax arrears u/s 245, why not the same mechanism is followed here while the TDS credits getting changed/removed from their PAN to alert them and to raise demand against them if the original claim is not rightful one. This will be a win-win situation for the department vis a vis tax payer.
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