TDS

TDS On Sale Of Property: Tax Deducted at Source (TDS) is the tax that is to be deducted on some expenses and payments. It is the tax that is deposited with the government annually and systematically. Immovable property is any land (other than agricultural land) or any building or part of a building. Read on the article to find more about How TO Claim TDS On Sale Of Property

Meaning of Agricultural Land

The land is not treated as agricultural land when:

• It has a population of less than 10,000 within the jurisdiction of the Municipality or
• It is situated in any area within below given distance measured:

The population of the Municipality	Distance from Municipal limit
More than 10,000 but does not exceed 1,00,000	Within 2 km
More than 1,00,000 but does not exceed 10,00,000	Within 6 km
Exceeding 10,00,000	Within 8 km

TDS Rate On Sale Of Property Applicability

On the 1st of June 2013, the Finance Act 2013 inserted the Section194-IA. An individual purchasing any immovable property (except agricultural land) from a resident is required to pay TDS on sale of property @ 1% of the amount payable. This means that the TDS rate for the sale of immovable property is deducted at 1%.TDS is exempted when the property value is below Rs.50 Lakhs. In addition to this, TDS is required to be deducted from every immovable property like commercial property, industrial property, and residential property.

Exceptions

• Section 194-LA regarding compulsory acquisition is applicable when provisions of this section are not.
• TDS is to be deducted under Section 195 based on capital gains if the seller is a non-resident or NRI and not under this section.
• TDS is deducted on installments paid on or after 1st June 2013 for construction buildings properties and no TDS is deducted on installments paid before 1st June 2013.

Rate of TDS

TDS on sale of a property is deducted @1% on the amount payable to the seller of the property. TDS is deducted @20% if the PAN number of the seller is not available.

Threshold Limit

No TDS on sale of a property is deducted when the value of the property is below Rs.50 Lakhs. When the value of a property is Rs.50 Lakhs or more then the TDS is deducted on the whole amount and not just the exceeding amount. TDS On Sale Of Property reduced.

Time of Deduction

Tax is to be deducted at the time of the credit of such sum to the account of the transferor or at the time of payment of such sum in cash or issued cheque or draft or by any other mode whichever comes first.

TDS on sale of a property is to be deducted from the first installment if the value of the property is more than Rs.50 Lakhs and then each and every installment. The buyer should not wait for the aggregate value of installments to exceed Rs.50 Lakhs as it is not right. If the buyer took a loan to pay the seller, it is still considered as tds on sale of property payment and TDS is to be deducted. The EMI payment date of the buyer to the bank is irrelevant.

TDS On Sale Of Property Due Date and Form 26QB

The buyer of the property has to file Form 26QB which is a declaration statement within 30days from the end of the month in which the payment has to be made. A separate TDS deduction is not to be filed. Form 26QB is filled online and manual submission is not allowed.

Other Points

• TDS on sale of a property is to be deducted on each installment and for each deduction a separate Form 26QB is to be filled.
• Form 26QB is filled for one seller and one buyer combination.
• Tax Deduction and Collection Account Number (TDCAN) is not required by a person deducting tax under this TDS On Sale Of Property section.

How to Pay TDS and File Form 26QB?

Form 26QB is a declaration statement and hence, it’s not possible to pay TDS without filling this form and vice versa.

These are the steps on how to fill the Form 26QB;

1. Search for the link –  https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
2. Now click on Form 26QB and if you have a demand notice from the income tax department then click on it for TDS on property.

Sections of TDS and File Form 26QB

Here, the form will have various sections as follows:

• Tax Applicable: If the buyer is a company select corporate tax if not then income tax.
• Type of Payment: TDS on sale of the property will be selected by default.
• Status of seller: Option resident is to be selected here and in case the seller is an NRI, form 27Q is to be filled.
• Pan and Address: The PAN and address of the buyer and seller is to be entered along with the complete address of the transferred property.
• Amount Paid: The total amount paid to the seller is entered in the form. If the payment is made in installments, the amount of installments is entered in Form 26QB.
• TDS @1% will automatically be filled on the amount paid based on PAN the number entered above.
• If the payment is to be made by internet banking or debit cards, select the e-tax  Option. Select the following date for payment using authorized bank branches.
• Enter the confirmation code and then proceed by clicking on the proceed button.
• The name of the purchase and seller will be shown on the next page along with all the details shown on the previous screen. Cross-check all the information and then click on confirm.
• In case any changes are to be made in the challan filed, an acknowledgment number will be generated. You will be redirected to the internet banking site if you immediately select the e-tax option or else a challan will be generated which can be deposited in any authorized bank.
• When the TDS will be deducted then only the return can be considered as submitted.

TDS Certificate in Form 16B is to be Seller

Now, within 15 days from filing Form 26QB, the TDS certificate in Form 16B is to be provided to the seller by the buyer. The form is to be downloaded from the website of traces.

Consequences of Non-Payment and Non-Filing of Form 26QB

• Interest for TDS not deducted: Interest @1% is charged per month for the period from the date on which TDS is deductible to the date on which TDS is collected. Interest on Late Payment of TDS on Sale of Property.
• Interest for TDS deducted but not paid: Interest @1% is charged per month for the period from the date on which TDS is collected to the date on which TDS is paid.
• Penalty for late filing of Form 26QB: Penalty for late filing of Form 26QB is payable @Rs.200 along with the interest penalty. The penalty amount cannot exceed the number of TDS to be deducted. Under Section 271-H, an additional penalty of Rs.10,000 to Rs.1,00,000 is to be paid if the default continues for more than one year.

What is Section 194J (1) (ba)?

Section 194J now features a new provision 1(ba) that expands the gross TDS calculation to include every remuneration granted to a company’s directors.

This provision came into effect on July 1, 2012. TDS At 10% is to be charged from any payment made to Directors of companies with the notice on July 1, 2012, as according to newly included clause 1(ba) in Section 194J. This provision is as described in the following:

Section 194J(1)(ba) states explicitly that any remuneration, fees, or commission payable to a corporation’s director other than those eligible for deduction of taxes under Section 192, is subject to TDS.

• What is Section 194J (1) (ba)?
• What are the Key Points of this Section’s Assessment?
• What are the Different Types of Payments Covered by this Section?

What are the Key Points of this Section’s Assessment?

• This provision will extend solely to payments made by a corporation to its directors and therefore will not extend in any other situations.
• This section does not pertain if the tax is deductible under Section 192, i.e., wage income. When there is an employer-employee link, such remuneration falls under Section 192. For example, executive directors are given remuneration and are not legally entitled to any other expenses such as sitting fees, etc.
• If a director is a non-resident director, TDS should be collected following Section 192 if it is deductible under the category salaries; alternatively, TDS must be charged under Section 195.

What are the Different Types of Payments Covered by this Section?

This section 194J(1)(ba) includes the following categories:

• Fees for attending meetings
• Remuneration
• Commission
• Brokerage
• Sitting Fee

What is a Sitting Fee?

Sitting fees are the charges levied to directors for having attended board meetings or committee meetings, as the occasion may be suitable.

What is the TDS Rate?

TDS Rate on Salary to directors is levied at 10percent of the total amount.

What Exactly is the Threshold Limit for this Clause?

There is no possible option of a threshold limit. Since there’s no threshold limit, the tax must always be collected even when the total payment for the year is as meager as Rs 100.

For Greater Comprehension, Consider The Following Example

XYZ Ltd. paid Rs. 40,000/- per month to Mr. A, the company’s executive director, and Rs. 20,000/- each year for sitting fees. Given Mr. A is an executive director of the firm, no TDS is deemed necessary to be collected from his monthly compensation payment.

Consequently, TDS of Rs.2,000/- would be deducted under Section 194J for the director’s sitting costs.

Section 194D: According to Section 194D, any payment made as remuneration in the form of commission or for procuring insurance business which includes renewal, the revival of policies, or continuation of insurance business. TDS must be deducted while crediting the money to the payee’s account or while making payment in cash, draft, cheque, or any other modes.

The amount of TDS is deductible only when the payable amount or the amount paid or the aggregate amount of such income paid or credited exceeds ₹15,000 during the financial year.

Time And Limit of Deduction

Under Section 194D Threshold Limit And TDS Rate

Time And Limit of Deduction

TDS is to be deducted whichever is earlier, which are as follows:

• While the commission is credited to the payee’s account.
• While the payment is made in the cheque, draft, cash, or other modes.

There are different rates based on the type of payee. According to section 194D, the rates are as follows:

• For individuals, tax is to be deducted at 5%
• For domestic companies, tax is to be deducted at 10%.

Under Section 194D Threshold Limit And TDS Rate

Basis	Before June 1, 2016	From June 1, 2016
Threshold limit	₹20,000	₹15,000
When PAN is furnished	10%	5%
When PAN is not furnished	20%	20%

 

Understanding Form 26AS: Annual Statement or in short, Form 26AS, is a record that includes all tax-related information such as TDS, Tax Refund, and more linked with PAN. Tax Credit Statement illustrates how much of tax government has received and merged from numerous sources like pension, interest, salary, and others. The new format of Form 26AS involves more details like the Aadhaar card, email ID, and address. It is one of the vital documents that one needs to submit while filing the income tax return. So before filing ITR, the taxpayer should check the Form 26AS adequately for a certain financial year as it acts as a record that accurate taxes are deposited into the government account. Readout below to know more about the purpose of Form 26AS, its structure, and how to download it online.

What is the Objective of Form 26AS?

Form 26AS is an annual statement issued under Section 203AA of the Income Tax Act. It gets updated when tax-related transactions like Advance Tax paid, TDS Deducted, or others are reported for the financial year. The tax credit statement serves as one of the crucial income tax documents as:

• It captures information regarding taxes paid and other transactions conducted by the taxpayer.
• It gives a record of the tax paid by an individual in the annual income tax return (ITR).
• It provides proof concerning deduction and collection of tax on the behalf of the taxpayer.
• It confirms that accurate tax has been deducted by multiple entities and deposited into the account of the government.
• With Form 26AS, it is not essential to attach the TDS certificate photocopy along with ITR.

Parts of Form 26AS Structure

Annual Tax Statement or Form 26AS involves the following parts:

PART A- Details Regarding Tax Deducted at Source (TDS)

This section provides the information regarding the TDS deducted from pension income or salary and TDS deducted on interest income by banks. The deductions are shown as a distinct table. Entries in these tables follow reverse chronological order. It is vital to verify that all the entries match the entries in Form 16/16A along with the transaction date and booking status. If the entry in booking status is F signed then it means payment details of TCS/ TDS deposited in the bank have matched with the payment details provided in TCS/TDS statement filed. On the contrary, U entry in the status of booking shows details are unmatched.

The deductor refers to the entity that deducts tax on the behalf of the taxpayer while making the payment. If one has any query regarding entry in Part A, then they have to contact the deductor for clarification and required correction. Part A has further two sections namely Part A1 and Part A2.

PART A1- Details Regarding Tax Deducted at Source (TDS) for 15G/ 15H

This section demonstrates transactions in those financial institutions where one has submitted Form 15G/ 15H such as banks. As one has submitted 15G/ 15H, which means TDS would be zero. This part allows taxpayers to keep a track of all the interest gain that has not been taxed. If an individual has not submitted the 15G/ 15H form, then it will illustrate No Transactions Present as there is null entry in this section. One should contact the buyer or deductor if find any discrepancy to make essential corrections.

PART A2- TDS Details on Sale of Immovable Property

This section involves the details of TDS on the sale of immovable property under the Income Tax Act Section 194(IA). The details provided in this part are beneficial for the property seller as proof that the exact TDS has been deducted and deposited.

PART B- Details Regarding Tax Collected at Source

The seller collected the TCS from the buyer for certain categories. It involves scrap, Toll plaza, Parking Lot, and others. The rate of Tax Collected at Source is different for each category, and one has to submit it to the government. If the seller has not collected any tax, then this part will display No Transactions Present as there are no entries.

PART C- Details of Tax Paid

This section covers the paid Advance Tax or Self Assessment Tax. Whenever the taxpayer deposits their Advance Tax or Self Assessment Tax directly to the bank, the bank upload this information within three days once a cheque is cleared. For the Advance Tax, 0021 is used as individual major code and 100 as minor codes. 300 code is for Self Assessment Tax.

PART D- Details of Paid Refund

This section involves the details regarding any tax refunds received by an individual in that assessment year. If the taxpayer has not received any tax refund, then this part will display No Transactions Present due to null entries in this section.

PART E- Details of Transaction Regarding Annual Information Return 

When anyone makes some high-value transactions such as mutual funds or property investment, then banks report it to the income tax department and other authorities through AIR. Earlier the transaction limit to get reported in Form 26AS was 2 lakhs; however, after June 1, 2020, it has been increased to 10 lakhs.

PART F- Details of Tax Deducted on Sale of Immovable Property Under Income Tax Act 

This section offers a record of tax transactions for the property buyer. One has to contact NSDL or the concerned bank branch if find any discrepancy between the amount deposited and displayed in Form 26AS.

PART G- Details of Tax Defaults

This section displays the information about the tax defaults and processing of statements. It involves the details regarding the interest of TDS payments defaults, deduction default, financial year, interest under Section 220(2), and total default.

Latest Format of Form 26AS

• Personal Details: The earlier format of Form 26AS involved only the address picked from the PAN Card. However, the new format shows information regarding data of birth, Aadhaar number, mobile number, email ID, and address of the individual.
• Taxes and Proceedings Information: The Income Tax Department provides outstanding demand details. This type of information helps taxpayers determine whether the same demand is disputed or outstanding. Apart from it, ITD offers details of all income tax proceedings which have been completed and those which are pending. Such information is helpful for individuals to remain updated about the appeals.
• Financial Transactions Details: The updated Form 26AS involves the details related to stated financial transactions. It covers selling and buying of shares, payment of credit card bills, real estate, cash deposits, pre-paid instruments by RBI, and more.

How to Download Annual Tax Statement (Form 26AS)?

One can download Form 26AS online on the TRACES website or through the net banking facility of official banks. Visit the income tax filing website and log in by entering ITD login and password. In case, if anyone does not have an account, then they have to register first.

• Enter the User ID, password, the captcha code in the box provided, and then hit on Login.
• Click on the ‘My Account’ section appearing on the right side and then tab the ‘View Form 26AS’ option in the dropdown.
• Once clicked on the ‘Confirm’ option, it will redirect to the TRACES website.
• Select the box appearing on the screen, which asks if an individual agrees to the usage and acceptance of Form 16/16A, and then hit on Proceed.
• Click on the link hyperlinked as View Tax Credit to view Form 26AS.
• Select the Assessment Year and the format to see the Form. One can choose the HTML format to see it online or PDF format for downloading. After that, enter the Verification Code in the below-given box and then tap on View/ Download.

Conclusion

Form 26AS contains a detailed report about the taxes deducted and deposited. One can open and download the form by entering the Date of Birth as a password in DDMMYYYY format. Only a registered PAN holder has the right to view their Form 26AS through their bank and income tax statement.

Form 15G and Form 15H – Avoid TDS

TDS stands for “Tax Deducted at Source.” On October 15, 2015, the Income Tax Department reported a new plan of action for Form 15G and Form 15H. This article will focus on the fundamental changes that happened in Form 15G and Form 15H.

What is Form 15G And Form 15H?

Form 15G and Form 15H forms are self-declaration forms that we have to submit to the bank. These are the requesting form for not deducting the TDS (Tax Deducted at Source) on interest income as their income is below the BEL (Basic Exemption Limit). These forms will be filled online by visiting the bank’s website.

Note-Bank would ask you for the PAN card during the form submission, either online or offline.

• A UIN (Unique Identification Number) has been allotted to the person who will make the payment by Deductor.
• TDS Quarterly statements were maintained by Deductors that whether or not any TDS will be deducted along with the UIN.
• These Deductors do not require any hard copy of Form 15G and Form 15H for submission.
• Deductors monitored form 15G and Form 15H for seven years from the financial year in which these are received.

Who can Submit Form 15H and 15G?

Form 15H is specifically for the person above or equals to age 60, and any age group can submit that of Form 15G.

Form 15G	Form 15H
Residential with age less than 60	Resident with age greater than 60 (i.e., a senior citizen)
Tax is equaled to NIL	Tax is equaled to NIL
Interest is less than BEL (which is 2.5 lakhs for the year 2021-22)	NIL
Nonresident can’t claim the benefits of Form 15G and Form 15H	NIL

When will We Have to Submit Form 15G & Form 15H?

These forms are valid for one financial year, so we have to submit this form every year. At the beginning of the financial year, these forms (Form 15G and Form 15H) have to be submitted. Submitting the form at the beginning of the financial year, the bank does not deduct any TDS (Tax Deducted at Source) on our interest.

The government has considered the pandemic situation and extended the dates for submitting Form 15G  and Form 15H from 01-04-2020 till the first week of July 2020.

Where Else can we Submit Form 15G and Form 15H?

We can submit:-

1. TDS on EPF Withdrawal.
2. TDS on Post Office
3. TDS on rent
4. LIC Premium
5. TDS on Corporate Bonds
6. TDS on Insurance Commission

EPF Withdrawal Form

We used the form to withdraw our EPF amount called EPF (Employee Pension/Provident Scheme) Withdrawal Form. We need to submit the paper for taking our EPF amount.

Documents Required: –

Aadhaar Card and PAN Card.

• If you are unemployed for at least two months, you can withdraw your EPF amount. And if you get a new job within two months, you can transfer your PF account to the new account.
• Suppose you are unable to get a new job after 36 months from leaving the company. In that case, you can apply for the settlement before 36 months because after a while, your interest will not be counted, and you gain zero interest on your EPF amount, and the account will be inoperative.
• If an employee passes away in between the terms, then his or her family can claim the EPF amount.
• You can take the claim of your EPF (Employee Pension Scheme) after retirement.

Before withdrawing the EPF, any individuals can make use of the EPF Balance SMS check option to check their EPF balance and withdraw the amount accordingly.

How to Withdraw EPF?

There are various ways to claim your EPF.

Form 19

By filling the Form 19, the employee can withdraw both EPF, employee, and employer contributions.

The employee can withdraw the lump-sum amount of his or her EPF; they can request settlement if they want.

For settlement of their respective EPF account, Form 19 has to fill by them. After that, they can withdraw all their funds from their EPF account.

This form consists of 2 pages that require your basic details:-

1. Name
2. Father’s Name/ Husband’s Name (for married woman)
3. DOB
4. Name of the organization
5. Account Number & UAN
6. Date of Joining
7. Date of Leaving
8. Reason for Leaving
9. Postal Address (Same as given in Aadhaar)
10. PAN Number
11. Mode of Payment
12. Signatures

There are some prerequisites for filling the Form 19:-

• You need to visit the EPF member portal and activate your UAN.
• Link all your essential documents with the UAN like, Aadhaar, PAN, Account, and Mobile Number.
• If Form 19 is not displayed, you are not eligible for the final settlement of your PF Account.

However, if you are not eligible for Form 19, you can find Form 10C and Form 10D as well.

Form 10C and Form 10D

As we already see, Form 10C and Form 10D will be filled in the substitution of Form 19 Unavailability.  Both Form 10C and Form 10D have different functions.

• If you are filing Form 10C, this is for pension withdrawal
• And if you are filling Form 10D, then it is for monthly pension.

2.1 Form 10C

If you have worked with an organization for more than ten years, you will get a Scheme Certificate. This Scheme Certificate helps you to get the benefits of the Pension Fund withdrawal process through Form 10C.

Form 10C contains four pages that require basic details:-

1. Name
2. DOB
3. Father’s Name or Husband’s Name (for married women).
4. Name and Address of Your last Organization.
5. Office establishment details
6. Date of Joining
7. Date for leaving
8. Reason for leaving
9. Accept Scheme Certificate instead of withdrawal benefits
10. Details of Family –
    1. Name
    2. DOB
    3. Relationship with the member
    4. Name of the guardian (for minors)
    5. Details of the member and nominee

In case of death of the member after the age of 58 years

1. Payment mode
2. Whether you are applying to avail pension under EPS, 1995
3. Signature (along with the organization’s seal)
4. Advance Stamp Receipt – settlement receipt for pension in the savings account
5. Employee Scheme Certificate

Age	EPS	FORM	Benefits
<50	<10	10C	Withdrawal + Scheme Certificate
<50	>10	10C	Scheme Certificate (No Withdrawal Benefit)
>50 & <58	>10	10C 10D	Scheme Certificate or reduced Pension
>50 & <58	<10	10C	Withdrawal and Scheme Certificate
>58	<10	10C	Withdrawal
>58	>10	10D	Pension

2.2 Form 10D

Employees have already been enrolled for EPS (Employee Pension Scheme). Form 10D is a pension withdrawal form after the age of 58. Form 10D is filling after retirement and has to submit in the office of EPFO. The employer can fill the document itself, but the only mode available for filling Form 10D is offline. In case of the death of the employer, the nominee will have to fill the form.

There are various type of pensions which can be claimed with the help of Form 10D:-

• Superannuation Pension
• Reduced Pension
• Disablement Pension
• Widow &Amp; Children Pension
• Orphan Pension
• Nominee Pension
• Dependent Parent
• Form 10D will be filled by the employer itself and has to verify with the last organization officer.
• Documents required documents are enlisted on Form 10D.
• The employer has to submit Form 10D to its regional office after that verification.
• EPF officer cross-checks the documents and initiates the process.

Form 20

If the employee dies in between the terms, then Nominee or Beneficiary or Legal applicant can apply for the EPF. In this kind of accidental case, the final settlement can be done by filling the Form 20.

Under the EDLI Scheme and EPS Scheme (for the widow, orphan pension), the family member has the insurance covered up to 6 lakhs. Somebody can also claim Form 20 in place of a minor or a lunatic.

There is only one way you can fill Form 20, and that is OFFLINE.

Note (Documents)– A death certificate is mandatory while filling the form.

How to Fill the EPF Form 20?

Any family member can fill the form and submit it to the EPF Commissioner’s office with all the required documents.

The following information does require at the time of submission:-

1. Name
2. Father’s Name or Husband’s Name (for married women)
3. Name and Address of the Organization
4. EPF Account Number
5. Date of Leaving
6. Date of Death (dd/mm/yyyy)
7. Marital status (on the day of his/her death)
8. Canceled Cheque
9. EPF Form 51 F
10. EPF Form 10C
11. EPF Form 5 ID
12. Guardianship Certificate

(It consists of a total of 3 pages)

Form 51 F or Form 5 IF

Form 51 F is filled by the employee’s family member (legal) to claim the insurance after the deceased of the active employer.

The Particulars in respect of the deceased member

1. Name of the Deceased member
2. Father’s Name or Husband’s name (for married woman)
3. Date of Death
4. Name and Address of the last Organization
5. Provident Fund Account No

Details of the Claimant/Guardian

1. Name
2. DOB
3. Relation with the deceased

Age	EPS	EPF Form	Claim Methods
<58 and working	–	10D 51 F	Monthly pension by 10D and EDLI Insurance by 51 F
<58 and not working	–	10D	Monthly pension by Form 10D
>58 and working	>10	10D 51 F	Monthly pension by 10D and EDLI Insurance by 51 F
>58 and working	<10	10C 51 f	Withdrawal by 10C and EDLI Insurance by 51F
>58 and not working	>10	10D	Pension by 10D
>58 and not working	<10	10C	Withdrawal

 

TDS, Form 26AS and TRACE: TDS or Tax Deducted at Source is one of the leading tax collection modes in India. According to the department of Income-tax, any person or organisation that executes pay must subtract tax right at the source of the payment to cross a certain limit. The tax deduction under TDS is done at prescribed rates by the department of Income-tax.

The company or person that executes the payment after deducting TDS is known as the deductor, and the organisation or person accepting the payment is called the deductee. The tax deduction under TDS is the responsibility of the deductor before any payment is made to the deductee. TDS is deducted irrespective of the payment or cash mode, cheque or credit, and is linked to the PAN of the deductor and deductee. Every individual responsible for making payment of nature incorporated by TDS provisions of the Income Tax Act is accountable for deducting tax. This article will give you information about TDS via Form 26AS.

Tax Deducted at Source

TDS, or Tax Deducted at Source, is one of the tax collection modes by which a specific percentage is deducted at the time of payments, and the deducted amount is rerouted to the Government account. The Tax Information Network (TIN) by NSDL was used till 31st Oct 2012 to collect data about Tax Deducted at Source (TDS) on account of the Income Tax Department (ITD). Presently Income Tax Department (ITD) has initiated a Correction Enabling System and TDS Reconciliation Analysis or TRACES. This new portal has been designed to improve swift communication between the deductor, deductee, income tax, and CPC. It serves in discerning challan status, downloading the reports of justification, the NSDL Conso File, and Form 16 / 16A, and inspecting annual tax credit statements (Form 26AS).

Form 26AS

Income Tax Department expedites a PAN holder to inspect its Tax Credit Statement, i.e. Form 26AS online. Form 26AS has two parts Part A & A1 which contains the tax details deducted on the taxpayer’s account by deductors. Part B of Form 26AS holds the details of the tax collected on behalf of the taxpayer by the collectors. Part C of Form 26AS contains Advance tax/self-assessment tax/regular assessment tax, etc., deposited by the taxpayers. The Part D of Form 26AS incorporates the details of the paid refund collected during the financial year. The Part E of Form 26 AS includes the details of the High-value Transactions regarding shares, mutual fund etc. The Tax Credit Statement (Form 26AS) is produced wherein a valid PAN has been reported in the TDS statements. It is a form issued under Rule 31AB.

Accessing Tax Credit – Form 26AS

The statements of Tax Credits (Form 26AS)can be accessed in the following ways :

• Tax Credit can be viewed from the website – incometaxindiaefiling.gov.in. Taxpayers can enroll at the portal “incometaxindiaefiling.gov.in” in the “My Account” tab by clicking on ‘View Tax Credit Statement’ (Form 26AS). This process is free of cost.
• From the bank site by net banking facility Access, the Tax Credit (Form 26AS)- This facility is available to a PAN holder with a net banking account with any of the approved banks.

List of Banks Registered With NSDL

The List of banks registered with NSDL to provide a view of the Tax Credit Statement (Form 26AS) is given below.

Allahabad Bank Andhra Bank Axis Bank Limited Bank of Baroda Bank of India Bank of Maharashtra Canara Bank Central Bank of India Citibank N.A. City Union Bank Limited Corporation Bank Dena Bank HDFC Bank Limited ICICI Bank Limited IDBI Bank Limited Indian Overseas Bank Indian Bank

Karnataka Bank Limited Oriental Bank of Commerce Punjab National Bank State Bank of Bikaner & Jaipur State Bank of Hyderabad State Bank of India State Bank of Mysore State Bank of Patiala State Bank of Travancore Syndicate Bank The Federal Bank Limited The Karur Vysya Bank Limited The Saraswat Co-operative Bank Limited UCO Bank Union Bank of India United Bank of India

NSDL

National Securities Depository Limited or NSDL based in Mumbai, under the jurisdiction of the Ministry of Finance, Government of India is an Indian central securities depository. NSDL was founded in 1996, in the month of August. It was a first of its kind national electronic securities depository. It is responsible for managing the majority of the securities of the Indian capital market, held and dematerialised. The Tax Information Network (TIN) founded by NSDL was a repository of tax-related information on account of the Income Tax Department (ITD).

Tax Information Network

The TIN or Tax Information Network system collects information about Tax Deducted at Source, i.e. TDS from the tax deductors; the banks assemble the TDS on behalf of the Income Tax Department and present information ITD and the people for whom the tax is deducted. TIN is designed to make tax administration more effective, furnishing returns convenient, reducing compliance costs, and bringing greater transparency. The Tax Information Network system joins the nationwide users through its combined service centres acknowledged as TIN Facilitation Centers (TIN FC) and the web-based central system. The various roles of TIN are:

• Receiving the TDS returns in electronic format (e-TDS).
• Collecting Tax Payment information.
• E-Return Intermediaries registration.
• Applications Processing for issuance of Tax Deduction Account Numbers (TAN).
• Processing of applications for allotment of PAN (Permanent Account Number)
• Assembling and processing Annual Information Return (AIR) from particularised persons for designated transactions on behalf of ITD.
• Assesses can observe the details of taxes paid and TDS deducted for them on the internet.

TRACES

The Income Tax Department (ITD) has initiated an effort to facilitate the easy filing of TDS / TCS correction statements by deductors or collectors, and similar functionalities named as the TDS ((Tax Deducted at Source)CPC (Centralised Processing Cell). TDS CPC strives to elevate the overall service levels for deductors and taxpayers. It has installed a new portal named TRACES or TDS Reconciliation Analysis and Correction Enabling System.

The portal will improve communication between the deductor, deductee, department of income tax and CPC. Deductors can register online correction records after enrolling on TRACES. Taxpayers can also register to download and view Form 26AS. TDS CPC rectifies errors to facilitate correct reporting of TDS / TCS by expediting timely filing and processing statements by looking into deductors or collectors. It gives an interface to all stakeholders connected with TDS management. The system has been created to bring clarity and effectiveness to the taxation process. The TDS-related services for ITD were arranged by TIN-NSDL.

TRACES Registration

TRACES registration is compulsory to file a Correction Statement. It helps to file online changes. Once you are registered, you can notice many facilities granted by trace TRACES. Applicants who had already enrolled at the NSDL TIN site doesn’t require to enlist again on TRACES. The registration done under NSDL TIN migrates to TRACES. The login can be done with the NSDL TIN login.

Here are the following steps to enroll in TRACES:

• Step 1: Click the tab “New Registration”, select the “user type”, and click on “Continue”.
• Step 2: Provide deductor TAN and enter the “Verification code”, and click on “Continue”.
• Step 3: Token number of the original (regular) statement needs to be entered, alongside the CIN/BIN and details of PAN for the financial year and quarter and the related form displayed.
• Step 4: The authentication code is formed after KYC information details validation. One continues with code, TAN, and the name of the deductor are prefilled; you will have to update PAN and the person’s details and address.
• Step 5: Confirm all the submitted details; the confirmation page will show all the details. Click on “Edit” to change the details and click on “Confirm” to register.
• Step 6: Lastly, the “Registration request successfully submitted” message will be received. This will be followed by the reception of an activation link and codes in the registered mobile and email address given at the time of registration.

Conclusion on TDS, Form 26AS and TRACE

TDS is one of the significant tax collection methods of the government of India. The process of deduction is essential know-how that each deductor and deductee need to understand and know. As there are many steps involved and many terminologies included, knowing the step-by-step guide and the different processes is very helpful. This article will help the reader understand the TDS process and its elements like Form 26AS. It will help both the deductor and deductee to streamline TDS.

TDS on Interest: The deduction of TDS on debt rather than interest on shares are covered by Section 194A. If the provisions are attracted, the Deductor must deduct TDS Rates @ 10%. The charge under Section 194A is in the form of interest (other than interest on securities). Interest charges such as fixed account interest, interest on any debt, and interest on revolving deposits are also included. The TDS mechanism also applies to payments given to non-residents.

TDS is Deducted From The Following Payments

Under this clause, TDS must be deducted from payments rendered to a resident individual for interest.

The rules of section 194A only apply as interest is paid to a resident; they do not apply to the amount of interest paid to a non-resident. The equivalent is covered inside the domain of section 195.

People Who Need To Deduct TDS Under Section 194A

Under section 194A, any person (i.e., the payer) who is responsible for paying interest (interest other than on securities) to a citizen, other than an entity or a Hindu undivided family (HUF) under audit under section 44AB, is at risk to deduct charge at the source.

Individuals or HUFs whose net revenue, gross receipts, or profits from their company or career exceed Rs. 1 crore in the case of a business and Rs. Fifty lakhs in the case of a profession promptly going before the monetary year in which the sum mentioned above is charged or charged are entitled to deduct tax under section 194A.

Time of Deduction of TDS

The Deductor responsible for deducting TDS according to arrangements of segment 194A is needed to deduct TDS inside prior to the accompanying dates –

• At the point when cash is credited to the payee’s record; or
• When making a payment by cash, check, draught, or some other method.

Rate of Deduction of TDS

In case the provisions of section 194A of the Income Tax Act are invoked, the Deductor is required to deduct TDS on interest on loan except for interest on securities at a rate of 10%.

In any case, if the Permanent Account Number isn’t outfitted, around there, the Deductor would be obligated to deduct TDS @20%, i.e., highest marginal rate.

The Deadline for Depositing the TDS That Has Been Deducted

The Deductor who has deducted TDS under Section 194A is expected to deposit it inside the accompanying due dates

Months	Due date
April to February	7th of the following month
March	On or before 30th April

In the Following Situations, TDS Is Not Expected To Be Deducted

Assume that an Indian resident furnishes to the payer a written declaration in Form 15G/15H, considering the circumstances, to the extent that his income is below the exemption cap. In that case, the Government shall make no tax deduction under this provision. The following are the laws in this regard:

• Statement (in copy) is to be made in Form No. 15H when the beneficiary is a senior resident and in Form No. 15G when the beneficiary is other than a senior resident.
• The assertion in Form No. 15G/15H can be made simply by an individual occupant in India.
• If the annual interest does not meet the exemption cap, an individual may file Form No. 15 G/15H. (i.e., Rs.2,50,000 or INR 3,00,000 or INR 5,00,000, as the case may be).In the case of a resident senior citizen, this requirement does not apply (i.e., a resident person of at least 60 years of age), i.e., a resident senior citizen can file a Form 15H declaration even though the annual interest likely to be paid to him reaches the exemption cap of INR 2,50,000 or INR 5,00,000, depending on the situation, provided the tax due on his net income after considering the remuneration under section 87A is nil.

The assessment payable on the full payment of the year ought to be “Nil.” The payer who collects a declaration in Form No. 15G/15H must upload information of such statements every quarter under his digital signature on the e-filing portal (www.incometaxindiaefiling.gov.in) within:

• 15 days from the finish of the primary, second, and second from last quarter
• 30 days from the finish of the final quarter.
• Section 194A would not allow the company to withhold any tax on interest credited or paid to its partners.
• At the point when the payee has acquired an authentication from the Assessing Officer for no derivation or lower charge allowance, the payee may document an online application in Form No. 13 for issuance of declaration for no funding of assessment or lower derivation of duty at the source.
• Premium paid to any bank, monetary enterprise, Life Insurance Corporation Unit Trust of India, any organization, or a co-usable society occupied with the protection business is absolved under segment 194A.
• There is no need to pay TDS if the total amount of interest paid by a bank does not exceed INR 40,000 [INR 50,000 in the case of a senior citizen].
• On account of any Co-operative Society, TDS isn’t to be deducted if a total measure of interest doesn’t surpass INR 40,000 [INR 50,000 if there should arise an occurrence of a senior citizen].
• TDS is not applied on interest charged or earned on deposits notified by the Central Government. The same rules apply to TDS on interest on a loan with a direct agricultural credit society, a primary credit society, a co-operative land mortgage bank, or a co-operative land development bank.
• Under Section 197, an assessee may request no TDS or a reduced rate of TDS from the assessing officer.

Is TDS Deductible On Interest On Late Payments On Purchase Bills?

According to section 201, if a person who is required to deduct tax at source fails to do so, or if an individual who is required to deduct tax at source fails to pay the whole tax or a portion of it to the benefit of the Government, at that point such individual will be responsible for paying a basic premium at following rates:

• From the date on which such tax becomes deductible until the date on which such tax is deducted, interest at the rate of one percent a month or half of a month shall be charged on the balance of such tax.
• The Government will collect a premium at 1.5% for consistently or part of a month on the measure of such expense from the date on which such duty was deducted to the date on which such assessment is paid to the Government’s credit.

To put it another way, interest will be charged at a rate of 1% for late deductions and 1.5 percent for late payments following deductions.

How To Deduct TDS On Contractor With Example: What is TDS? The full form of TDS is tax deducted source. Under the TDS system a person while paying in exchange for services such as brokerage, the commission is required to deduct a certain amount from the total amount. That amount is further deposited to the Government. This amount can further be claimed while filing Income Tax Return.

For example, XYZ Pvt Ltd has to make a payment of Rs. 1,00,000 to Mr. A as a professional fee under 10% TDS.

TDS deducted = 10% of 1,00,000 = 10,000

Net payment to Mr. A = Gross amount-TDS = Rs. 1,00,000- Rs, 10,000 = Rs. 90,000

TDS that ABC Pvt Ltd needs to pay the Government = Rs. 10,000

TDS Amount Deduction Under Section 194C

If you are making a payment to the contractor and the amount does not exceed Rs. 30,000, then no amount is deducted for TDS. But if the sum total of the payment to be made or already made during the same financial year exceeds Rs. 70,000 then TDS is deducted. It is explained below with the help of few examples:

Case	TDS to be deducted or not
Contract of Rs. 25000 in a year	NO
Two contracts of Rs. 25,000 in a year	NO
Contract of Rs. 69,999	YES
Contract of Rs. 69,999	NO
Contract of Rs. 69,999 in a year	YES
Two contracts of Rs. 30,000 in a year	NO
Two contracts of Rs. 70,000 in two years	YES
Two contracts of Rs.35,000 in a year	YES

Exceptions on Deduction on TDS

1. If the person does not fall under the category of paying taxes under section 44AB.
2. If the payment is used for personal use.
3. If payment is made for hiring resources, plying or leasing good carriage.
4. If payments are made to airlines or travel agencies for the purchase of air tickets.

Calculation of TDS Amount

Example 1

Service provided by an individual contractor ‘Mr. A’ to a partnership firm ‘XYZ’ and the following payment is being made to the contractor during the year:-

• First payment – Rs 40,000
• Second payment – Rs 20,000
• Third payment – 60,000

Solution

First payment – Rs 40,000

TDS is to be deducted @ 1% as the sum exceeds the limit of Rs 30,000 in a single payment. Therefore, the net payment to be made to A will be Rs 39,600 after deducting TDS of Rs 400 (32,000 * 1%).

Second payment – Rs 20,000

No TDS is deducted since the total single payment amounts less than the limit that is Rs. 30,000. Total payment made during the year will amount to Rs 60,,000 (40,000 + 20,000) which is also less than the threshold limit of RS 75,000.

Third payment – 60,000

Here, TDS is supposed to be deducted since it crosses the threshold of Rs. 30,000. Therefore an amount of 1% shall be deducted from the amount as TDS. Total TDS required to be deducted is Rs 800 (20,000 * 1% + 60,000 * 1%) at the time of making payment of Rs 60,000. Net payment to be made to Mr.  A will be Rs 52,000.

Example 2

In the above example if contractor A is a Partnership Firm in place of an individual.

Solution

First payment – Rs 31,000

It crosses the threshold of Rs. 30,000 so therefore 3% TDS is deducted. After deduction of TDS of Rs. 930, the total amount payable becomes Rs. 30,070.

Second payment – Rs 20,000

No TDS is deducted since the amount is less than Rs. 30,000 and also the total amount throughout the year is less than Rs. 75,000 (31,000+20,000=51,000).

Third payment – 61,000

2% TDS is deducted since total amount (20,000+61,000 = 81,000)

Total TDS to be deducted is Rs 16,20 (20,000 * 2% + 61,000 * 2%) at the time of making payment of Rs 61,000. Net payment to be made to A will be Rs 59,380.

Conclusion on How To Deduct TDS On Contractor With Example

TDS forms a very important and integral part of Income-tax law In India. You must always abide by the rules and regulations of the nation. You should never hide your income statements or lie about them. Pay your taxes regularly and do not forget to claim them at the end of each financial year. If you want to avoid serious complications, do get in touch with a well-known CA around your locality who will assist you and guide you on matters regarding taxes and accounting.

Section 194C TDS Contractors: Requirements To Deduct TDS Under This Section. Section 194C deals with the amount of any sum to the resident contractor (including the supply of labour) by any person to carry out any work based on a contract. The contract can be between the contractor and any one of the following:

• Any State Government or Central Government.
• Local Authority.
• Corporation established under Central, State or Provisional Act.
• Co-operative Society.
• Company.
• Firm.
• Any Deemed University or University.
• Societies registered under Society Registration Act, 1980.
• Authorities constituted in India under any law engaged in satisfying and dealing with housing accommodation, development and improvement of cities, towns, villages and planning.

Limitations for TDS Under Section 194C

• TDS shall not be deducted if payments under section 194C limit to ₹30,000 for a single contract.
• TDS shall be deducted if the aggregate payment of a contract exceeds ₹100,000.
• Payment made at any time during the previous year to any goods transporter who is in the business of hiring, plying or leasing goods and owns ten or more carriages. The contractor has to furnish PAN along with the declaration of the above.
• Personal purposes
• Section 194C limits TDS deduction if payments are made to any non-resident contractor or sub-contractor.
• Payments made to any bank listed in the Second Schedule of the RBI act excluding foreign bank for
• Cash management service charges
• Clearing charges (MICR charges)
• Bank guarantee commission
• Depository charges on maintenance of DEMAT accounts
• Underwriting service charges
• Charges for warehousing services for commodities
• Debit card or Credit card commission for transactions between the merchant establishment and acquirement bank – Notification no. 56/2012, dated 31st December 2012
• According to the payer’s specification, if payments are made for purchasing any products. TDS is to be deducted if the product is manufactured using material purchased by the payer.

Threshold Limit In Section 194C

• The threshold limit for a single payment or credit is 30,000.
• The threshold limit for the aggregate amount credited or paid or likely to be paid is ₹100,000.

Rate Of TDS Under Section 194C

Payment Made To	Contractor/Payee provides PAN	Contractor/Payee does not provide PAN
Hindu Undivided Families (HUFs)	1%	20%
Resident Individuals	1%	20%
Any party which is other than HUFs or resident individuals	2%	20%
Transporters, with not more than 10 vehicles	No TDS deduction	20%
Transporters, with more than 10 vehicles	Either 1% or 2% Depends on the recipent status	20%

Deduction Time

When the amount is credited to the payee’s account of such contract or sub-contractor by cash, draft, cheque or any other modes, tax is to be deducted. If the amount is credited in March, TDS will be deposited on or before 30th April. If the amount is credited in a month other than March, then TDS should be deducted within seven days from the end of the month.

What Is The Meaning Of Sub-contractor And Contractor?

Sub-contractor: It means a person who enters into a contract for:

• Supplying labour for all or part of work taken by the contractor.
• Performing all or part of work for which the contractor has agreed to complete.

Contractor: It means any person who enters into a contract with state/central government, corporation, local authority, company or a cooperative society to perform any form of work (including the supply of labour).

What Is The Meaning Of Work u/s 194C?

• Advertising
• Telecasting and broadcasting, including the production of programs too.
• Catering.
• Transport of passengers and goods using any mode of transport excluding railways.
• Supply or manufacturing product as per customer specification and by using materials purchased from him or her. It does not include the supply and manufacture of a product as per customer specification but materials purchased from other customers.

Other Points

• As per notification no. 01/2014, tax is deductible on the amount excluding GST if the GST amount is shown separately.
• Under section 194C, education cess, surcharge or secondary and higher education cess is not payable.
• Manufacturing or supplying product based on contract, TDS shall be deductible on the value of product excluding the value of material, if such value is separately mentioned in the invoice. TDS shall be debited on the whole amount of the invoice if not mentioned separately.

Calculation Of TDS In Case Of Composite Work Under Section 194C

Work includes supplying or manufacturing a product as per customer specification and by using the material purchased by the customer. Therefore, TDS will be deducted on:

TDS will be debited on the invoice value, excluding the material price.

When the material price is not indicated separately, TDS will be deducted from the total invoice value.

Under Section 194C, The Specified Persons Who Are Required To Deduct TDS

• Any person, being a HUF or an Individual or a body of individuals or an association of persons if such person—fails to fit into any of the preceding sub-clauses and
• Is liable to accounts audit under clause (a) or clause (b) of Section 44AB during the financial year immediately preceding the financial year in which such sum is credited to the contractor’s account. In other words, the only assessee is liable to audit due to receipts or turnover greater than ₹ 10 million or ₹ 2.5 lakh as the case may be.
• Any partnership firm
• Any company
• Local Jurisdiction
• Any corporation recognized by or under a Central, State or Provincial Act.
• The Central Government or any State Government
• Any cooperative society
• Authorities constituted in India under any law engaged in satisfying and dealing with housing accommodation, development, and improvement of cities, towns, villages, and the purpose of planning.
• Any university recognized or incorporated by or under a Central, State or Provincial Act and an institution declared to be a university under section 3 of the University Grants Commission Act, 1956 (3 of 1956)
• Societies registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India
• Any Trust
• Any foreign enterprise or any association or Government of a foreign State or body established outside India.

SMS Alerts for TDS Deduction From Income Tax Department: SMS Alert for TDS is to resolve the issue of Income Tax Return (ITR) made by individuals due to a mismatch in the TDS deducted in the salary.  The Central Board of Direct Taxes (CBDT) launched the SMS Alert service to inform the salaried taxpayers about their TDS against the PAN.

What Is TDS?

TDS refers to Tax Deducted At Source. As per the Income Tax Act, any individual or company making structured payments must deduct the TDS amount of Tax at the source if the cost exceeds certain threshold limits.

Every individual or company deducts TDS at the rates prescribed by the tax department. A company or an individual making the structured payment upon deduction of TDS is referred to as a deductor. The individual or the company receiving the deducted amount is referred to as the deductee.

The deductor’s responsibility is to deduct TDS before cashing the payment and deposit the same with the Government. It is to be noted that TDS is deducted irrespective of the mode of payment- cheque, cash, or credit. TDS is linked to the PAN of the deductor, and then the amount is deducted.

TDS amount is subtracted on the multiple types of payments:

• Salaries
• Interest payments by banks
• Commission payments
• Rent payments
• Consultation fees
• Professional fees

What Is TDS Return?

A deductor has to deposit the deducted TDS amount to the Government, and the details regarding the  TDS amount have to be filed in the form of a TDS return. A TDS return has to be completed quarterly, and the different types of TDS amount deductions have to be filed using various TDS return forms. While preparing a TDS return, the process can be done quickly using the ClearTDS software.

Features of Quarterly SMS Alert for TDS Deduction

The CBDT board stated that all employees would receive quarterly SMS alert Service for salaries regarding TDS. Through the SMS alerts, deductees can check the TDS amount through the message received. If any mismatch or errors are flagged, then immediate issues can arise with their employers or the deductors.

Simultaneously, SMS Alerts for TDS will also be sent to the deductor who have either failed to deposit taxes deducted or to e-file their TDS returns by the due date.

The SMS Alert initiative is aimed to benefit around 2.5 Crore salaried taxpayers. The Income Tax Department wishes to expand the SMS Alerts frequency to 4.4 crores for non-salaried taxpayers. The SMS Alerts frequency will be increased once the TDS returns filing process is streamlined to receive any critical information on a real-time basis.

To receive an SMS alert, deductees must update the respective mobile number in the E-filing account. Upon receiving the quarterly SMS Alert for salaried taxpayers on the TDS amount, the deductees will have to cross-check the details with the Form 26AS on priority.

What Is Form 26AS?

The Income Tax Department issues the annual consolidated statement known as Form 26AS. Form 26AS comprises the details of refund,  TDS, or TCS facility related to a particular PAN number. The Form will reflect the Government’s Tax on various income sources like Pension income, Salary, or Deposits. Form 26AS is generated on an annual basis, that is, for every Financial year. The Form will be generated whenever the TAx related transactions like Advance tax paid or TDS occurs with the salaried taxpayer.

Where To Access Form 26AS?

The primary source of Form 26AS is the e-Filing portal of the Income Tax Department. To access Form 26AS, log in
with the credentials and invoke the “My Account” tab. From the drop-down menu, select the 26AS option.

The page will be directed to the TDS Reconciliation Analysis and Correction Enabling System (TRACES) website. Upon reaching, input the relevant AY and the format of the report. This allows the deductee to view and download Form 26AS.

The process is straightforward, and the individual will receive Form 26AS in the registered mail ID seamlessly. However, the source is TRACES.

Reasons for TDS Mismatch

There are several reasons for a TDS mismatch to occur, but the most significant reason is the employer’s negligence or deductor. A few other reasons are:

• If the employer or deductor has failed to file a TDS return.
• Mention of a wrong PAN number of the employee or deductee.
• Recognition of a wrong PAN and TAN number of employers or deductors.
• Missing out the inclusion of details of TDS payment while filing TDS return.
• Mention of a wrong challan identification number.
• Error in the amount entered.
• Statement of the wrong assessment year.

The Advantages Of SMS Alerts

• Mismatches in the TDS amount deducted and details updated in Form 26AS can create errors or problems while filing Income Tax Returns. A mismatch can result in the payment of additional taxes or restriction in the refund of excess Tax for taxpayers.
• SMS Alerts helps employees or deductees remain aware of the TDS amount deducted and deposited against their PAN. This facility allows deductees to take immediate and necessary actions to rectify and correct the flagged error or mismatch.
• In case of a mismatch or an error, salaried taxpayers should consult the employer or deductor and report the error or mismatch to rectify the necessary corrections.
• As per the CBDT press release, the SMS Alert service for direct tax payment has been activated for about 2.5 million salaried employees or deductees in both the private and Government sector. The CBDT department plans to expand this facility to about 44 million non-salaried taxpayers, including professionals like doctors and lawyers and business people.
• Similar SMS Alerts will be sent to the deductors who have collected the TDS amount.
• The SMS Alerts aims to inform and remind the deductors to file the Tax if left undone and to fill the file necessary for TDS returns by the due date.
• According to Income-tax Rules, the TDS deducted needs to be deposited by the seventh day of the corresponding month in which the TDS amount was deducted.
• The Income-tax department aims to increase SMS Alerts’ frequency upon which the process for filing TDS return is streamlined, making the alerts go out on a real-time basis.
• To receive an update regarding SMS Alerts, the deductees must enter the applicable mobile number in the e-filing account.

TDS Challan Correction: If one has selected the wrong assessment year, or furnished incorrect PAN/TAN details, or entered an incorrect amount in the TDS challan, one can lose tax credit benefits or even be charged a hefty fine.

However, if one realise their error in time, they can initiate a TDS challan correction to rectify the mistakes and resubmit it with the tax authorities. This process, also known as OLTAS (Online Tax Accounting System) challan correction, provides a simple method of rectification for those filing TDS returns. Challan correction can be carried out either by the online or offline process.

TDS Challan Correction Offline Physical Challan

A new challan correction mechanism for the correction of physical challans has been prescribed for payments made on or after 1st September 2011. We have provided below a list of challan corrections that can be carried out and who is authorised for such modification:

Serial Number	Field In Which Correction Has To Be Made	Authority To Make Correction	Time Limit For Correction By Bank
1.	PAN/TAN	Collecting bank* / assessing officer in case of offline challan. The concerned assessing officer in case of online challans.	Within seven days after the challan deposit date
2.	Assessment Year		Within seven days after the challan deposit date
3.	Major Head Code		Within three months after the challan deposit date
4.	Minor Head Code		Within three months after the challan deposit date
5.	Nature Of Payment		Within three months after the challan deposit date
6.	Total Amount		Within seven days after the challan deposit date
7.	Name	The concerned assessing officer in case of both online and offline challans.	N/A

Challan Correction by the Bank

Challan correction by the bank is subjected to the following conditions:

• The bank cannot carry out name correction.
• Any combination of correction of the Minor Head and Assessment Year together is not permitted.
• PAN/TAN correction will only be allowed when the name in the challan matches with the name in the new PAN/TAN
• Change of amount is allowed only when the amount so corrected is not different from the bank’s amount and credited to Government Account.
• Correction is permitted only once for a single challan for a particular field. E.g., Where 1st correction request is made only for the amount, a 2nd correction request will be allowed for correction in other areas.
• There will be no such partial acceptance of the change correction request. Either all the requested changes will be permitted if they pass the validation, or no change will be permitted if any one of the changes fails the validation test.

Fields needed to be filled out during the TDS Challan Correction Form.

OLTAS Correction Request Form

The following are the main fields to be filled out in an OLTAS challan correction request form:

• Taxpayer details – Name, Address and PAN/TAN details
• Address of the bank branch where the form is being submitted
• Authorised signatory name (if the taxpayer is a non-individual)
• Choose the Challan number which requires correction (Challan 280/Challan 281/Challan 282/ Challan 283)
• Details of TDS challan requiring modification – Challan Tender date, Serial number and BSR Code.
• Details of correction needed for challan – choose which challan detail needs correction and provide original (incorrect) entry and correct entry.
• Signature of taxpayer/authorised signatory

Procedure for Approaching The Bank for Challan Correction

• The taxpayer needs to submit the request form for correction (duplicate) to the concerned branch of the bank.
• The taxpayer is needed to attach a copy of the original challan counterfoil.
• In the case of modification desired for challans in Form 280, 282, 283, a copy of the PAN card must be attached.
• In the case of non-individual taxpayers, the original authorization with a seal of the non-individual taxpayer is needed to be attached with the request form.
• A separate request form needs to be submitted for each challan.

Procedure for Approaching Assessing Officer for Challan Correction

Once the time limit to approach the bank for challan correction expires, a taxpayer can request a modification.

The request has to be made to the concerned assessing officer who is authorized under the OLTAS application to make any such correction in challan data in genuine cases enabling credit of the taxes paid to the concerned taxpayer. The other steps are similar to approaching a bank as mentioned above.

TDS Challan Correction Online

Online correction of TDS challan must be carried out on the website ‘TRACES’ (TDS Reconciliation Analysis and Correction Enabling System). It is mandatory to have a digital signature to register on TRACES in order to request online challan correction.

Steps for online correction on TRACES are as follows

• Login to the TRACES website with the user ID, passwords and TAN.
• Under defaults, choose ‘Request for correction.’
• Enter relevant Form Type, Financial Year, Quarter, whether Latest Accepted Token number. The correction category should be “Online”, and click on ‘Submit.’
• A request number will be generated.
• Next, click on ‘Go To Track Correction Request’ under Defaults again. Now enter Request number or Request period and click on ‘View Request’ or click on ‘View All Requests’
• When request status** shows ‘Available’, click on Available / In progress status to proceed with the correction
• Provide information on valid KYC.
• Select type of correction category from the drop-down as ‘Challan Correction.’
• Make the needed corrections in the selected file.
• Click on ‘Submit for Processing’ to submit your correction.
• A 15 digits token number will be generated and mailed to the registered e-mail ID.

Status of Correction Request

Request	The user has submitted a request for correction.
Initiated	TDS CPC is processing the request
Available	Request for modification is accepted, and the statement is made available for modification. The user can start correcting the statement. By clicking on this hyperlink, the user will be directed to the validation screen. Once the user clicks on the request with ‘Available’ status, the status of the request/statement will change to ‘In Progress.’
Failed	Request cannot be made available because of a technical error. Users can re-submit the request for the exact details.
In Progress	The user is working on a statement. Clicking on the hyperlink will direct the user to the validation screen.
Submitted to Admin User</strong	Sub-user / Admin User has submitted the correction statement to the Admin User.
Submitted to ITD	The admin user has submitted the correction statement to ITD for processing.
Processed	The statement has been processed by TDS CPC (either for Form 26AS or for defaults).
Rejected

The statement has been rejected by TDS CPC after processing. Rejection reasons will be displayed in the ‘Remarks’ column.