(Q1.)What is the method for calculating period of default in case of Short Deduction?
- From the date on which tax was deductible + 1day to the date of the processing of statement. (Whole or part of the month will be considered)
(Q2.)I have received an Intimation of Short Deduction but Payment amount is not eligible for the TDS deduction as the amount is below the threshold limit. What should I do?
- You can file correction statement and raise threshold flag ('Y') for 'Reason for no/lower deduction'.
(Q3.)I have received intimation of Short Deduction u/s 194C however deductee is a transporter, what should I do?
- You can file correction statement and raise transporter flag (T) for the particular deductee, who is a transporter.
(Q4.)I have received an intimation of Short Deduction however reported deductee has a lower rate certificate what should I do?
- You can file correction statement and raise 'A' flag for respective deductee.
(Q5.)What should I do in case of Short Deduction intimation received? -
- The default amount (along with the interest applicable till the date of deduction of short deduction amount) will have to be deposited through challan number ITNS - 281 by ticking minor head '400'.
- Download conso file from TRACES for filing correction and update the challan details. While filing correction, fill up principal amount in TDS column. - C9 correction is stopped in Offline Correction. Deductor can do Online Correction for adding a challan
- After adding the new challan, you will have to add new deductee rows for which short deduction was raised and map to the corresponding challan
(Q6.)What is the procedure to correct the Short Deduction default? -
- Amount to be shown in TDS column
- Make payment for the Section Code for which You got the demand
- Can be company or non-company depends on the deductee or firm
- After making the payment, file correction in order to set off the demand raised
(Q7.)If deductor changes more than 2 Alphabets/Numeric in an invalid PANS by filing correction again? Will he get short deduction default?
- Default will be generated if deductor changes more than two alpha and numeric in correction statement.
(Q8.)If a deductor gets short deduction default (PAN error) for F.Y 2007-08, does he need to pay it?
- Section 206AA is applicable from F.Y 2010-11 onwards. If deductor has deducted TDS as per section rate, then deductor is not required to pay this default. Further, deductor can raise Online Grievance using "Request for Resolution".
(Q9.)If a deductor gets Short Deduction Default (PAN error) for NIL return and if no TDS return has been filed yet with this TAN? How would a deductor get Conso file to rectify as he is not able to register?
- Deductor will not get Conso File. He needs to go to Assessing Officer.
(Q10.)If a deductor gets short deduction default due to an Invalid PAN where flag for No Deduction has been raised against this entry (Flag T, Flag B) and if deductor rectifies more than 2 Alpha or 2 Numeric, will he still be liable to pay default @ 20% ?
- Yes, deductor has to pay the default amount.
(Q11.)Deductor has already done Valid PAN to Valid PAN Correction once. Can he do the Correction again for the valid PAN?
- Valid to Valid Correction is allowed Only Once
(Q12.)For Non-Resident, PAN is invalid, so, which higher rate will be applicable: 20% or Section Rate or whichever is higher?
- Whichever is higher.
(Q13.)Deductor makes a payment of INR 10,000 and deducts TDS INR 500 as per lower deduction certificate and quotes wrong section (194J) instead of 194C (as per certificate) calculate Short deduction to be raised?
- No, Short Deduction will generate as TRACES is giving relaxation of section code for form type 27EQ & 26Q
(Q14.)I have got the Short Deduction Notice; however the Deductee has already paid the tax and filed Income Tax Return as well. What should I do to close the demand? - In case if any Deductor/ Collector has received Short Deduction/ Short Collection demand notice, where the Deductee has paid the tax and filed his Income Tax Return, Deductor can raise Request for 26A/27BA (Short Deduction/Collection transactions) for removing the default of Short Deduction/Collection from F.Y 2007-08 onwards on TRACES website.
Note: Once request of Form 26A/27BA will be processed, Short Deduction will be re-calculated and Late Deduction interest will be generated accordingly.
For further details, Please refer E-tutorial- Request for 26A/27BA: (Q15.)I have corrected the Invalid PAN in Annexure - I of 24Q, Quarter4, but still demand not removed and though Annexure - 1 showing no PAN in red.?
- Please check Annexure-2 and correct the PAN in Annexure-2 also for removal of default.
(Q16.)I have got the Short Deduction Notice in regards to 197 certificates; however the 197 Certificate is genuine? Why have I got the Intimation? - The defaults can arise due to any one or more combination of the following reasons:-
- The Flag A is not raised in the Deductee detail of the statement.
- The Period of certificate has already expired.
- The Certificate is not for the PAN, Section and Rate which has been mentioned in the statement filed.
- Threshold limit for the above certificate has been exceeded in previous quarters.
- Certificate Number is not mentioned/Wrongly mentioned in the Deductee details of the statement.
- Certificate has been cancelled by Assessing Officer. (Deductor needs to contact to Assessing Officer)
(Q17.)From which year 206 (AA) section is applicable (20% higher rate if Pan is not available.) ?
- Financial Year 2010 onwards 206 AA is applicable (20% higher rate if PAN is not available)
(Q18.)I have got the Short Deduction Notice regarding less TDS deducted against deductee u/s 192 (24Q), however, I have deducted as per the slab rate. Why I have received this Demand Intimation?
- Deductor is required to update tax details against deductee on which default has been raised in Annexure 1 and 2 both
(Q19.)I have got the Short Deduction Notice regarding Surcharge not Paid, however, I have deducted the TDS as per DTAA and PAN is also correct. Why I have received this Demand Intimation?
- Login to TRACES. Go to Communication Tab. Raise a "Request For Resolution". We will investigate the Issue and Resolution will be provided
(Q20.)What is the procedure to correct the short deduction default?
- Illustration of short deduction default closure:
Example: U/s 194J Payment of Rs. 300000 has been made to PAN 1. Rate at which TDS should be deducted is 10% i.e. Rs. 30000 (300000*1%).
However, TDS Rs. 3000/- has been deducted on payment/credit amount Rs. 300000 on 01/03/2014 Screen shot 1 Amount Paid/credited in Original:Screen shot 1 Steps for correction:Step 4 Enter the difference amount i.e. 270000(300000-30000) in the column Amount paid/credited and Short deduction amount of Rs 27000(10% of 270000) in the TDS column. Follow the Correction procedure for the default interest amount as per the e-tutorial named as 'Default Correction' (Q21.)From which year 206 (AA) section is applicable (20% higher rate if Pan is not available.)?
- Financial Year 2010 onwards 206 AA is applicable (20% higher rate if Pan is not available.)
