CA Pratik Anand

These days TDS has become a nightmare both for the assessee as well as the tax professional with notices being issued by the CPC (TDS) immediately on filing of the Quarterly TDS Statements.

This is an attempt to give a comprehensive list of problems and their solutions relating to short TDS payment and short TDS deduction defaults issued in the intimation U/s 200A:

A) Short TDS Deduction Defaults

Short Deduction defaults arise due to many reasons, some of which are as follows:

1. Due to PAN Errors:

One of the prime reasons for short deduction defaults is quoting the wrong PAN:

Quoting of the correct PAN is very essential in the TDS Return. Quoting the wrong PAN give rise to TDS demand of 20% less the amount of TDS already deducted. It also results in no TDS Credit being given to the deductee whose TDS has been deducted.

It also results in defaults in furnishing TDS Certificates as these days the TDS Certificates are being issued from the TRACES website, therefore if the PAN is incorrect, it results in more than one default on the part of the deductor and unnecessary trouble for the deductee who does not get the credit of his taxes paid.

Another problem with quoting of the wrong PAN is that CPC (TDS) while processing the correction statement does not correct the errors in PAN where the mistake in quoting of PAN is more than two alphabets and two numeric characters even in cases of genuine typographical errors. There are two courses of action for correcting the PAN Errors of more than 2 alphabets and 2 numeric characters:

  • To file the correction statement by making the entry with the wrong PAN at an amount equal to zero as the deductee entry cannot be deleted and then add a new deductee row for the amount paid and TDS deducted with the correct PAN.
  • To appeal against the intimation U/s 200A with the CIT (TDS)

Requirements from the client:

  • Copy of PAN card of the deductee.
  • Deduct TDS@20% in absence of PAN of the deductee.

Points to remember:-

  • Correction statement for rectifying any error in the PAN can be done by utilising the online correction facility at www.tdscpc.gov.in , this correction facility can be used by entering the correct details of the profile of the deductor with the TRACES website.
  • Online Correction can be used with or without digital signature of the authorized person.

2. Due to wrong quotation of Lower Deduction Certificate U/s 197 of the Income Tax Act’1961:

Another reason for the short deduction default is wrong quotation of the particulars of the certificate of lower deduction of tax.

Following should be correctly quoted while filing the TDS Return.

  • Certificate Number
  • Period for which the certificate is valid
  • Amount upto which lower deduction is applicable
  • Rate specified in the certificate at which tax is to be deducted

Certificate Number: Certificate Number is a ten digit alpha numeric number mentioned alongside the TAN and the name of the deductee.

Please remember that the Reference No. mentioned at the top of the certificate is not the certificate number to be quoted while filing the TDS Return which is a common mistake done by the assessees while filing the returns.

Period: Every lower deduction certificate is valid for the specified period mentioned in the certificate. Care should be taken to deduct TDS at the lower rate only for the transactions entered between the period mentioned in the Certificate.

Transactions entered before and after the specified period have to suffer tax deduction at the normal rates as prescribed under the Act.

Amount: Every lower deduction certificate is valid for the amount mentioned in the certificate.

This means that when the total amount of the transactions exceed the limit specified in the certificate, tax at the normal rates as prescribed in the Act is to be deductee on the amount exceeding the limit.

Rate: TDS should be deducted at the rate prescribed in the certificate.

3. Due to mistake in deduction of Tax at Source:

Sometimes the assessee due to ignorance or otherwise deducts TDS for such an amount which turns out to be lower than the rates prescribed in the Act.

Care should be taken while filing the return that on every payment the amount of tax deducted is not short of the amount which should have been deducted if tax were to be deducted at the prescribed.

If such a case is found then the balance tax should immediately be deposited vide a new challan.

4. Due to wrong quotation of 15G and 15H Certificates:

Many people don’t know that non deduction of tax due to receipt of Forms 15G and 15H are also to be reported in the TDS Return, this is especially relevant in the case of banks filing their tds returns.

Incorrect reporting of forms 15G/H particulars can result I short deduction defaults.

B) Short TDS Payment Defaults

Short payment defaults arise due to the following reasons:

1. Due to Challan errors:

Short payment errors also arise due to wrong quoting of the particulars of the challan through which tax has been paid.

The necessary challan particulars to be correctly mentioned in the TDS Return are:

  • Challan Number
  • BSR Code of the bank in which tax is deposited.
  • Tender date of deposit of the challan

In addition to this, the details of the payment bank and the mode by which tax is paid are also to be mentioned in the return.

Let us look at these particulars one by one.

1) Challan Number: The challan number is a five digit number which is provided in every challan by the receiving banker at the time of clearing the challan.

Whenever the challan number is not clear in the challan, the same should be reconfirmed from the bank.

The challan number can also be confirmed from the following the following link:

tin.tin.nsdl.com/oltas/index.html

After logging onto the following link there are two options:

  • Challan based view
  • TAN Based view

a) In the Challan based view the particulars of each challan can be verified by entering the following details:

  • BSR Code
  • Challan tender date
  • Challan Serial Number i.e challan number
  • Challan Amount

Note that these can be checked only if you have a rough idea of the above particulars and same are to be confirmed.

b) TAN Based view: In the TAN Based view the particulars of the challan for a particular period can be checked just by entering the TAN of the deductor and the period for which the challans are to be checked.

Note: The period to be entered here cannot exceed 24 months.

After you enter the desired period and the TAN, the list of all the challans paid during the selected time period will be visible. You will have to enter the amount of challan in order to match the particulars of the challan.

2) Challan tender date: Challan tender date is the date in which the challan is   presented with the bank for payment. This date is entered in the stamp of the bank inscribed on the challan at the time of clearing. This can also be checked from the abovementioned link.

3) BSR Code: BSR Code is a seven digit code for every branch of the bank i.e every branch has a separate BSR Code. You could check the BSR Code from the internet or by even calling the concerned branch of the bank.

4) Challan amount: The Challan amount entered should be including interest and other amounts like penalty or fee u/s 234E paid in the challan and should not merely include the amount of tax paid.

Nowadays a challan file is downloaded at the time of generating the TDS Return. This file is an indicator of whether the particulars of the challan have been correctly entered in the Return.

In case of inaccurate particulars being entered in the return, it shows/generates a warning file that the ‘Challan details are not present in the challan file downloaded.’

Another point to remember is that very often the TDS Return is to be filed or is filed on the day or a day after which the challan is deposited in the bank for clearing.

In this case since the challan is not cleared from the bank therefore it will not be present in the challan file downloaded at the time of generation which leads to a warning file as mentioned above.

In this case if there is still time left for the filing of the return, the concerned person should not file the return till the challan is cleared from the bank and is showing in the challan file downloaded. This is so because when we file the return, then the same is processed at CPC (TDS) and if at the time of processing the return the particulars of the challan are present in the challan file then CPC will raise demand for short payment of Tax which is actually not the case.

Point to remember:-

  • Correction statement for rectifying any error in the Challan can be done by utilising the online correction facility at www.tdscpc.gov.in , this correction facility can be used by entering the correct details of the profile of the deductor with the TRACES website.
  • Online Correction can be used with or without digital signature of the authorized person.

Sometimes, there is a case where the deductor mistakenly pays an amount in excess of the amount required to be paid as TDS and such amount is required to be set-off from the subsequent payments of tax.

In this case special care is to be taken while allocating the payments of TDS with the unconsumed amounts of the challan.

Other important points related to challans:

  • From the financial year 2013-14 onwards, the section code under which the challan is paid and that entered in the return does not matter. As long as the amount of tax is paid, wrong entry of the section code will not result in the short payment default.
  • The Financial year entered in the challan is also not relevant. There will not be any short payment default due to this.
  • Mistake in quoting the TAN of the deductor in the challan can only be rectified by the jurisdictional A.O of the assesse and cannot be rectified by the CPC (TDS).

Very soon the CPC TDS is going to bring a notification where it will be mandatory to close all the short payment defaults before the necessary consolidated file can be downloaded for revision of other defaults.

Following are key information to be noted in this regard:

  • CPC (TDS) mandates to close the above default by tagging unconsumed challans, if available in CPC (TDS) system, through online correction (without digital signature).
  • In case there is no available challan for consumption, the deductor is required to first deposit the due tax in the bank and then the same challan will be available for tagging in CPC (TDS) system after around 3-4 days of deposit.
  • CPC (TDS) mandates to close the above default by Matching or Payment of challans.
  • The user will not be able to download Conso file for the relevant TDS statement until the above default is closed.
  • The Online Correction facility of TRACES needs to be used for closure of the Short Payment default.
  • User will subsequently be able to download the Conso file for relevant period only after the default is closed.

Hope you find the above information relevant and useful in your daily practice.

(The author is a CA in practice at Delhi and can be contacted at: E-mail: capratikanand@gmail.com, Mobile: +91-9953199493)

Also Read:

https://taxguru.in/income-tax/tds-rate-chart-provisions-penalty-compliance-due-date-tds-return-filing.html

(Republished With Amendments)

Read Other Articles of CA Pratik Anand

Author Bio

Qualification: CA in Practice
Company: Pratik & Associates
Location: New Delhi, New Delhi, IN
Member Since: 10 Jun 2017 | Total Posts: 54
Pratik Anand is the founder of youronlinefilings.com, an online startup for business registrations, annual business compliance services, Tax filings, book keeping, legal consultancy etc. He is a Chartered accountant by profession and has special flair and expertise in the area of direct Taxation. H View Full Profile

My Published Posts

More Under Income Tax

49 Comments

  1. Rajesh Devgana says:

    Dear Sir,

    As a bank, we are filing details of deductees towards Interest income on fixed deposit Rs 15000/- in senior citizen as ” Below threshold limit” in TDS return. Although, Threshold limit is not crossed of Rs 50000/- in senior citizen we got notice from income tax department to pay 20% TDS on Rs 15000/-.
    How we resolve it ? Please suggest.

    Regards,
    Rajesh Devgana
    M : 9726959696

  2. Sumti Kumar says:

    Sir,
    the Assessee has paid an Advance Tax against his PAN.
    Hence, I have deducted less that amount from salary.
    Now I am getting Short Deduction notice.

    How to reply.

    Thanks

  3. Kanwaljit Singh Dhunna says:

    Hi Pratik,

    A return was missed and now we need to submit the same. TDS deducted and deposited is Rs. 20.

    Will the Notice for 234E for Rs. 20 be issued by department ?
    I am apprehensive due to the fact that Notice for Less than 100 Rs. default is not issued by department. But I am not aware about the situations where it is not so issued ?

  4. Dishita Patel says:

    Hi, I have received Notice for Additional late payment interest against the processing of latest correction, but while paying the challan amount i have already paid Tax + interest , as i have deposited tax after due date.
    TDS Amt: Rs1826 + Interest Rs 137
    Total Challan Amt : Rs 1963
    Date of Deduction : 31.03.2018
    Date of Tax Deposited : 16.07.2018
    Guide me,
    Thanks in Advance

    1. M V L N RAMAKRISHNA GUPTA says:

      Dear Sir,
      i AM A BANK OFFICER RETIRED ON 31.08.2018.
      LAST YEAR 2017-2018 (FINANCIAL YEAR) BANK HAS DEDUCTED INCOME TAX OF RS.54974. YESTERDAY I HAVE RECEIVED DEMAND NOTICE FOR RS.13960 DUE TO ONE QUARTER AMOUNT WAS NOT CREDITED IN ETDS PACKAGE BY HO. FOR THIS , THEY HAVE GIVEN TIME UPTO 28.02.2019 TO PAY DUE AMOUNT. HOW CAN WE RECTIFY IN INCOME TAX PACKAGE. IN TRACES PART A FORM 16 IT IS SHOWING CORRECT AMOUNT PAID BY OUR BANK. .

      PLEASE INFORM HOW TO RECTIFY IN IT PACKAGE. TOMORROW I AM CONTACTING MY BANK FOR RECTIFICATION.

      M V L N R GUPTA

  5. Vishwas says:

    Hi, we have received the short deduction notice for previous financial year. Reasion for short deduction-we have deducted the TDS in lower rate for entire financial year, total payment amount is exceeded as mentioned in lower tds certificate. For this case what is the solution. Please help me with next course of action.

  6. aarav says:

    sir, i am working in bank, i have deducted less tax from one of the vendor who have provided us which his services in fy 2017-2018. now i have found the mistake of mine how can i rectifiy it .how can i file rectified tax to central govt .

  7. Vinay kumar Jain says:

    Sir,
    I availed LFC/LTA in 2011 and my employer do not include the same in my income not only me all others who had availed the such facility. Now IT depatt. issued demand for short payment of tax( which I deposited) and interest on such short recovery.
    My question is ” is it not the liability to deduct the TDS on the salary/ faclities provided lies with Employer and if there is any delay/short deduction interest thereon it should be on employer only .

  8. P T Mohanachandran Nair says:

    While computing the tax liability there occured a mistake and hence a short fall in tax remittance.how ca i remit the balance tax with interest online before filing the it return?What is the chalan no to be used for this purpose? Can i remit the balance amt online ?i had remitted the earlier tax amt online

  9. Kanhaiya says:

    Hi, I am trying to file a correction for form 27Q, while original filing the CA didnt consider the educational cess and now it has come under defaults. Total defaults were 2561Rs. Of which 1600 were for late fees, 865 for defaults and 96 for interest I have paid the defaults using Challan 281 under the Basic Tax (865), Interest (96), and Fee Under sec 234 E(1600) and did the challan tagging in Traces. post that system correctly considered the 1600 Rs late and the defaults amount was reduced by this value. Now when i am filing the returns with changing the deductee details using RPU , the remaining challan amount showing me is 961 Rs (865+96). but when i generate the FVU file the the total tax paid and total amount under challan dont match (difference of 1600 which i cant put in the deductee details). So traces is rejecting the returns with validation that Total taxes paid and challan amount dont match. Also where should include the 96 Rs interest in the RPU? there is no column for interest. If i include the entire amount 961 in the TDS column , traces still rejects the return with different error.

  10. Kousi says:

    Sir IAM working in bank last year we paid much tds this year we paid less the income tax asking explanation what answer I have to give

  11. sushma nanda kumbhar says:

    Thanks! for valuable information

    I have one more query, I am working in one organization as professional and filed my ITR and shown income under the head PGBP, but the company has made mistake and paid TDS under the head 192 which is salary
    because of this, I have not received my refund and intimation u/s 143, after making inquiry in income tax they told me that, we have not processed your ITR because of deviation in ITR and Form 26 AS.. they will share intimation soon
    I have written a mail to a company regarding this, they made a correction in TDS and file revised TDS return

    now the question is, do I need to file revised return

  12. Gireesh Hegde says:

    Sir,

    how to make correction in classic cases of “Due to wrong quotation of Lower Deduction Certificate No. U/s 197 of the Income Tax Act’1961”

    Will there be any manual?

  13. RV. Yogeshwar says:

    Dear Sir,

    In some how employee paid advance tax. If we adjust it means, when filing TDS return in 4th quarter Annexure II, In which columns where to show this advance tax is paid by the employee and to mention it as we adjusted it accordingly. Or else I feel it furtherly this will get a liability to company and company get a demand notice from TDS department.

    I want to know in this case it is a like to show in annexure 2 as short fall in deduction, if not possible columns to show the advance tax paid by that employee. At this case will company get a demand notice to pay this short fall of amount in the column – “Shortfall in Tax deduction” – Column in TDS RPU 24Q 4th Quarter Annexure II / 2.

    Please clear my doubt.

    Regards,
    RV. Yogeshwar
    rv.yogeshwar2016@gmail.com

  14. SRIDHAR says:

    SIR OUR OFFICE IS A PAY ACCOUNTS OFFICE MAINTAINING TDS OF 30000 EMPLOYEES. WE HAVE GOT DEMAND FOR FY 2014-15 DUE TO SHORT DEDUCTION. CAN WE MAKE THEIR SALARY DETAILS TO ZERO TO REDUCE THE DEMAND?

  15. anil dhoot says:

    Dear sir
    I use rpu utility for tds return but i facing a problem How can add new challan in correction statement in rpu forfy 2008-09. So plz reply

    Thanks
    Anil
    9351914556

  16. Lokesh says:

    Hello Sir,
    We have Deducted TDS on interest payable to Non-Resident @ 10% rate as per DTAA at the time of filing i have mentioned correct PAN and DTAA option. however, i received a short Deduction stating tax has to be deducted @20 % and we paid the difference amount but i am unable to link the challan which we paid new

    Regards

  17. Gumaste says:

    Dear Sir,
    My employer entered wrong (One character) PAN number while depositing TDS. What can be done please…
    Thanks,
    +91 7028151111

  18. Srinivas Natekar says:

    There is short deduction due to wrong calculation in TDS filed. Traces has issued
    notice to pay with interest.

    Whether it has to be paid by using only challan 281 (quoting TAN) and file a correction statement or can I pay directly using challan 280 without filing correction statement?

    Please clarify.

  19. Nandakishore S says:

    Dear Sir,

    There is a short payment demand for AY 2008-09 for 24Q and we need to file correction returns for the same by updating correct challan details.

    However, we are not able to find the challans for the respective period and the details of some of the challans so found are not getting matched while entering in correction returns.

    Please guide us where can we find such challan details so as to file correction returns.

  20. Sathees Kumar says:

    Sir,
    In 26AS form, details like Short Payment, Short Deduction, etc. are mentioned with corresponding amounts. Where, can we get the details of such figures. Please clarify.

  21. vinit says:

    Dear Sir,

    I have already filed the correction statement with correcting the PAN with more than 4 letter correction and it is still showing the demand can i again file the correction statement with zero entry and adding the pan no

  22. SANJAY SHRIWAS says:

    Dear Sir,

    I prepared TDS Revised Return against Short Deduction
    Details is proper lick pan no. deducted amount and deducted percentage but by misstate i was indicate hire rate select( c ) how can i correct normal update to normal from hire rate.my request is if you have any message past & future please send the same to me.
    Regards
    SANJAY KUMAR SHRIWAS
    9770412153

  23. S P Gupta says:

    If a transaction is wrongly shown in the TDS return (statement status’processed without default’ is shown) is required to deleted, can it be done through correction statement if Form 16A is not generated from TRACES.

  24. Muniraj says:

    Hello Sir,

    We have Deducted TDS on interest payable to Non-Resident @ 10% rate as per DTAA (Pan, No PE Certificate is available), at the time of filing i have mentioned correct PAN and DTAA option. however, i received a short Deduction stating tax has to be deducted @20 % hence, balance need to be paid.

    Kindly let me know what i need to do for rectifying the above
    Regards

    Muniraj

  25. Mohit says:

    Dear sir,
    I wrongly entered same challan in Q4 which already filed by me in Q3 return now i received notice of short payment. How to rectify the same.

  26. VENKATESH says:

    Sir,

    I have some problem with payment of TDS, i have deducted tds and failed to remit the same in the month of feb, it was only came to know while finalizing the accounts. SO, kindly help how to make the payment and close the issue

    The Amount is Rs.1,200/- what will the interest that will be charged for the same.

    Regards,

    Venkatesh

  27. PVSubrahmanyam says:

    A very informative article useful for all particularly to staff working in CA office.Hope correction utility would come into practice shortly

  28. SOMNATH BANERJEE says:

    Dear Sir,
    Thanks for a super article on TDS related matter.

    Regarding PAN correction I would like to inform you that I have replaced ONE PAN with another 100% replacement…not typological correction of TWO digit or Alphabet in 26Q.Also some case of Typological error done by me in 26Q & 24Q.It was accepted & F16A generated.

    But on the other hand in 24Q for 4th Qtr it is not accepting genuine typological correction within their prescribed limit i Annex-II of SALARY details giving rise to demand at higher rate…What to do?

    Of course I have not experimented with ZORO replacement in values and ADD new record in Annex-II in Salary records,,,Shall I do that?

    Kindly advise.

    Thanks a lot for a good article

    Somnath banerjee
    9437562426

  29. Pratik Anand says:

    Respected Mr. Anshul and Mr. Rajendra,

    The CPC (TDS) is going to very soon start the facility for online correction without digital signature.
    The CPC came with the a notification/intimation in this regard recently.

  30. Rajendra Joshi says:

    Please register digital signature for the TAN to proceed with request for correction , this is what the page says after you click on ‘Request for correction’ dropdown. There is not any other option as of now.I just tried.

  31. ANSHUL GUPTA says:

    First of all , i convey my thanks to you for sharing with us such a useful information for Professionals. Secondly , i also have a doubt in one point of above article which is reproduced below:

    Under Point No. 1 in under heading Points to remember point No. 2 where u have written that Online Correction can be used with or without digital signature of the authorized person.I have a doubt , because when i tried in traces website for correction then it says that digital signature of the authorized person is mandatory for online correction .which means Online correction is only possible with digital signatures.

    You are requested to please review and suggests.

    Anshul Gupta
    Sr Accounts Officer
    Thdc India Limited
    Contact: 07500242449

    1. PARASURAMAN says:

      You Can make online correction for challan mismatch, addition of challan for short payment, Interest & Late filing fee payment without registration of DSC. whereas DSC is mandatory for PAN Error correction, short deduction.

  32. S.CHANDRAMOULI says:

    Dear Sir,

    Thanks for valuable information and in want to convey my countless thanks to you. my request is if you have any message past & future please send the same to me.

    Regards

    S.CHANDRAMOULI
    9003289896

Leave a Comment

Your email address will not be published. Required fields are marked *