Immediate Attention:

  • Online Correction facility at TRACES should be used for closure of Short Payment defaults. CPC (TDS) processes such statements within 24 hours of submission of such corrections.
  • To facilitate non-intrusive TDS Compliance, Short Payment Defaults ought to be closed at the time of submitting requests to download Conso Files and TDS Certificates from the web portal TRACES.

  • Since the due date for Q4 filing of TDS statements and subsequent distribution of TDS Certificates is approaching fast, you are requested to close the above defaults without any further loss of time.

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.

Action to be taken:

  • Use Challan ITNS 281 to pay the demand with your relevant Banker, if there are no challans available for consumption. Please wait for 2/3 days for the challan to be updated with TRACES.
  • Please download the Justification Report from our portal TRACES to view your latest outstanding demand.
  • 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. With use of this feature, a portion of the Deductee Rows can now be moved to any other Unconsumed OLTAS challan with adequate balance.

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Category : Income Tax (26778)
Type : Articles (16266)
Tags : TDS (981) TRACES (55)

3 responses to “How to close short TDS Payment defaults and Consequences”

  1. PRAVIN SACHLA says:

    Dear Sir

    Please note that TDSCPC should give option on payment portal to pay tds default for perticular quarter and paid by this form it should directly tag and close default.

    Thanking you

  2. P Aravindhan says:

    TRACES was established during 2012 but pressure is now being put on deductors for rectification of short payment defaults from FY2007-2008.

    Rectification procedure has now only become efficient, effective and user friendly. Even TDS assessing Officers have gained knowledge about rectification only during last six months. Only after TRACES was formed default notices are served properly, assistance by way of Help Desk is given. Hence it is unfair on the part of the Govt to insist that all short payment defaults from FY2007-08 should be rectified by deductors otherwise they can not issue Form 16A to the deductees for FY2014-15.

    Traces /CBDT may kindly consider enforcing this restriction on issue of Form 16A, only from FY2013-14 i.e if there are short deduction defaults in FYs 2014-14 and 2014-15 deductee should not be allowed to issue Form 16A.

    If this is not done, many deductees in particular Public Sector Bank depositors, may not be able to get Form 16A for FY2014-15.

  3. PRAVEEN says:

    EXCELLENT ANALYSIS

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