Types of correction in TDS return

Article explains What is TDS Return, What is a Revised TDS Return, Who is required to file a TDS return, When do we need to file revised TDS Returns and Types of correction in TDS Return under Income Tax.

Introduction

The TDS idea was introduced with the intention of collecting tax at the source of revenue itself. Tax filing is a time-consuming process that is subject to unavoidable mistakes.  The TDS returns and statements must be accurate. However, the Income Tax Department has introduced a procedure for submitting revised TDS return “correction returns/statements” to correct any errors in the original returns or statements. The mistakes can be informational, computational, or human errors. In this article we will talk about the types of mistakes in TDS Return and the corrections that can be done.

What is TDS Return?

TDS stands for Tax Deducted at Source. According to this idea, a deductor who is required to make payment to another person (deductee) must deduct tax at source and submit the money to the Central Government. Based on a TDS certificate, the deductee from whose income tax source deductions have been made is entitled to get credit for the deducted amount.

What is a Revised TDS Return?  

The individual who is deducting the TDS must file a TDS Return with NSDL on a regular basis. The deductor can file a Revised TDS Return to update the previous return if he or she finds an error or necessary changes in the return.

Who is required to file a TDS return?

The following categories are required to file TDS returns.

• Every organization (including deductor and collector)
• All governmental revenue and tax collectors
• Individuals whose accounts are audited according to the Income Tax Act of 1961
• Any additional taxpayers who had TDS deducted are required to file TDS Returns.

When do we need to file revised TDS Returns?

We need to file revised TDS returns in the following cases:

• TDS statement with the incorrect PAN number
• Unexpected TDS amount deducted
• Unexpected use of the Challan quantity
• Including incorrect information in the return

Types of correction in TDS Return under Income Tax

The correction types vary according to the modifications the deductor wants in the regular return. In general, there are six types of correction returns.

C1 : All changes made to the deductor details, with the exception of the TAN number, are subject to the C1 rectification. The C1 correction is generated in cases where the PAN number, deductor name, or address are incorrect.

C2 : The C2 correction is applicable for changes in Challan or deductor details. It is required when the Challan Serial number is submitted incorrectly. But when C2 correction takes place, it also involves C1 correction.

C3 : The C3 type of correction (excluding the PAN number) is intended for any form of correction in the deductor details, challan details, or deductee details. Incorrectly mentioning an education Cess in precise detail correction. The deduction can also be applied for the additional information, such as the referring challan.

C4 : The changes to the salary details are subject to the C4 correction. It only applies if a correction is needed in the fourth quarter statement of Form 24Q. This correction can be issued if the Gross Salary or total Salary Record is incorrect.

C5 : C5 correction is required when there is a problem with the PAN number of the deductee.  Also, the PAN can be updated using Forms 26Q, 27Q, and 27EQ.

C9 : The C9 correction is issued for the errors related to a new challan addition or any deductions associated with that Challan. This is the only correction that has to be made online.

Conclusion

Companies and employers must deal with a significant amount of information while preparing TDS returns, which can result in numerous errors. The corrections to TDS return submissions are frequent. Generally, a single file is used to update C1, C2, C3, C4, and C5. You can check for modifications after 3 days of filing returns. Your TAN and receipt number are required to check your TDS Return.