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Notices for Recovery of TDS U/S 201 (1)

CA Pramod Jain 
on 08 February 2010

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The Income Tax Department has recently started processing the TDS Returns filed for the Financial Year 2007-08 and issuing notices u/s 201 (1) of the Income- tax Act,1961

Each notice gives reference of financial year, quarter , Form No and RRR No.

The Notices are being issued in cases where any TDS is found recoverable from the Tax Deductor on the basis of the TDS Returns filed by the Tax Deductors.

The three broad heads under which TDS is found recoverable are as under :


1. Section wise amount deducted but not paid

Under this head the total amount of challans which have not matched online are mentioned section wise.


Response


  • In reply to this head the Tax Deductor will first have to ascertain the reason for the online mismatch of the challan.
  • After ascertaining the reason of the mismatch he will have to file a correction statement for rectifying the mismatch.
  • The copy of the Correction Return alongwith the copy of the paid challan should be enclosed in the reply in response to this head of the notice.

2. Total Interest on late payment till date

Under this head the total amount of interest payable is worked out based on the date of payment of the challans forming part of the TDS Return.


Response


     
  • In reply to this head the Tax Deductor needs to verify his TDS Return and find out the cases of late payment of TDS and work out the interest payable thereon.
  • If interest is payable on account of late payment of TDS then the same should be paid and a copy of the challan attatched alongwith the reply to the notice.

Interest Calculation

  • The interest is calculated as per the provisions of Section 201(1A) and Rule 119A.
  • The current rate of interest is 12% p.a
  • Interest will be calculated from the date on which tax was deductible to the date on which such tax is actually paid.
  • Interest is to be calculated for every month or part of a month comprised in a period, any fraction of a month shall be deemed to be a full month and the interest shall be so calculated.
  • The amount of tax, in respect of which such interest is to be calculated shall be rounded off to the nearest multiple of one hundred rupees and for this purpose any fraction of one hundred rupees shall be ignored and the amount so rounded off shall be deemed to be the amount in respect of which the interest is to be calculated.

3. Section wise short Deduction

Under this category each and every transaction is matched with the rate mentioned against the said transaction any the total tax that is short deducted is mentioned section wise.


Response


  • The notice does not specify the transaction wise working of the short deduction. Hence it becomes very difficult to match the amount.
  •  
  • The notices are issued by the TDS Officers based on the TAN wise reports received by them from the Regional Computer Centre (RCC). Hence they are also not in a position to specify the working of this figure to the Tax Deductor.
  •  
  • In the absence of the transaction wise working of this figure it becomes very difficult for the Tax Deductor to comprehend the basis of arrival of this figure mentioned in the notice and consequently reply thereto.



Category Income Tax
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CA Pramod Jain 

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