Note on Correction of TDS Statements in view of amendment in Section 200(3) of the Income Tax Act vide Finance Act, (No. 2) 2024
Summary: The Finance Act (No. 2) 2024 introduced changes to Section 200(3) of the Income Tax Act, restricting the filing of correction statements to six years from the end of the relevant financial year. Consequently, correction statements for FY 2007-08 to 2018-19 will only be accepted until March 31, 2025. Unresolved demands for earlier years, along with accrued interest, will become payable. Filing corrections for pre-FY 2011-12 periods often requires applications to TIN Facilitation Centres due to unavailable data on the TRACES portal. This process involves submitting specific details, including TAN, PAN, and acknowledgment numbers, to cancel old returns and file corrected ones. The updated return must be filed through TIN Facilitation Centres with applicable fees, not via the Income Tax portal. Deductors are advised to maintain accurate TDS filings to avoid complex correction procedures and additional penalties. TDS corrections are categorized into six types: C1 (deductor details), C2 (challan details), C3 (deductee details), C4 (salary details), C5 (PAN updates), and C9 (addition of challans/deductions). These corrections can be combined in a single statement. Deductors should periodically review the TRACES portal for outstanding demands and act promptly to ensure compliance.
*As per amendment in section 200(3) of the Income-tax Act vide Finance Act, (No. 2) 2024, no correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement referred to in sub-section (3) is required to be delivered. In view of the above, correction statements pertaining to Financial Year 2007-08 to 2018-19 shall be accepted only up-to 31st March 2025. The outstanding demand up to financial year 2018-19 shall become final and payable along with applicable interest even if that can be corrected. In such cases the demand shall become huge and payable due to interest till the date of payment. If the outstanding demand pertains to financial year 2011-12 or earlier years the corrected statement can’t be filed by normal method by downloading conso file and justification file. The traces site gives a message that the data is not available. In some cases, only justification file is available and, in some cases, we are asked to contact jurisdictional assessing officer. The jurisdictional assessing officers are also not able to help as they also don’t have the necessary data. In such cases we have to file an application on letter head to TIN Felicitation Centre giving details of such paper return and get this return cancelled. Only few TIN Felicitation centres accept application for cancelling old TDS statement. The following particulars are to be given:
Name of the person:
Address:
Name of Authorised person:
Email ID and Phone Number:
TAN:
PAN:
Period for which Paper return is to be cancelled:
Acknowledgement Number:
Form No.:
Reason for Cancelling the return:
Thereafter fresh return can be filed with necessary corrections. The fresh return cannot be filed through Income Tax Portal. The same needs to be filed through TIN Felicitation Centre only with necessary fee. Some parties do not have the required data to file a fresh corrected return which is also a cause of concern. The data can only be gathered from books of account of deductor. The challans can be collected from OLTAS and fresh return can be prepared. It is also a general advise to all the concerned persons while preparing and filing TDS returns to be very accurate and prepare the TDS returns very carefully. If due care is taken at the time of preparation and filing, the tedious task of correction shall not be there. The interest and late filing fee if any must be deposited before filing the TDS statement. The deductors must check the traces portal periodically and if any demand is showing payable then necessary action must be taken immediately. The TDS work if done carefully and accurately is not TEDIOUS.
In all There are 6 types of corrections namely C1, C2, C3, C4, C5, C9. The following table
briefly talks about each correction type:
Type Corrections in:
C1: Deductor details: All details of deductor except the TAN No. can be modified.
C2: Challan details: All details of the challan can be modified. C2 can include C1 type correction
C3: Deductee details: All details except the PAN number of the Deductee can be modified. One may add/delete/modify a deductee in the existing challan.
C4: Salary Details: This type of correction is only applicable to correction of 4th Quarter statement of Form 24Q. All the details of the salary can be modified here except the PAN number of the employee. Here there is no provision of updating the record, a record has to be deleted and a new record has to be added with updated details.
C5: PAN: In this type of correction deductee PAN is updated. When Pan is updated for Salary record the same will also get updated in the deduction record. PAN has to be updated quarter wise i.e. a separate correction return needs to be filed for each quarter where the PAN number is mentioned incorrectly.
C9: Addition of new Challans and/or Deductions: Any new addition of Challan and/or deductions forms Correction type C9. When a deduction is added with Tax amount zero then automatically a NIL challan is generated
Please not that C1, C2, C3, C4, C5 and C9 type of correction can be made in the same single correction.
I hope the above information shall be useful for all the concerned persons.
Author Bio
Accurate TDS filing from the start saves both time and penalties—prevention is always better than correction when dealing with tax compliance.
Regularly monitoring the TRACES portal can prevent last-minute surprises and ensure smooth TDS processing without unnecessary hassles.