The topic of TDS (Tax Deducted At Source) is most important now days. If the assessee does not get the Tax credit in his Income Tax Return for the TDS deducted by the deductor, this may result in additional tax burden in the hands of the assessee. The Income Tax Department too issues circulars which emphasis that unless you have a tax credit in your PAN, the TDS credit may not be considered while assessing your return of income.
This raises one important question, how to ensure that the Tax deducted is properly reflected in our Form 26AS so that the process of getting TDS credit becomes easier.
The practical issues relating to this topic is discussed as under.
As we all know that the provisions of TDS are covered under various of the Income Tax 1961 and the said sections also covers the obligation of the deductor.
So the obligation is on the part of the deductor to ensure that the whatever TDS is being deducted is not only remitted within the time to the credit of the Central Government but also to file TDS returns with NSDL so that the amount of TDS is reflected in Form 26AS.
Step 1 : Payment process
Once the TDS is deducted from the specified payments, the TDS is to be paid in the specified mode. Now a days, either through physical challan or through net banking, the TDS can be remitted.
1. Challan mode:
If you are making payment through a challan through any of the specified bank, we get a acknowledgment slip from them. You will be surprised to know that there is no TAN validation process followed in some of the banks. Either the TAN is incorrect or the name differs. If we bring these issues to their notice, they may simply alter the defects just by correcting the slip or may refuse to do it. This creates lot of problem for the assessee.
And further, the time to transfer the TDS to the Central Government pooling Account is normally 3 days. So your TDS will be credited after the period of 3 days from the date of payment.
2. Net Banking mode
Now a days all private and public sector banks offer this facility. Only thing is that you should have Net Banking User ID and password.
The advantage of using this facility is that your TAN is validated before making the payment and you can also ensure that you are making only in the correct TAN.
Another advantage is that the time for transferring the amount is 1 day from the date of payment.
Step 2 : Preparation Of E TDS Return
There are two types of TDS returns available. Form 24Q and 26Q. Both of them to filed quarterly through electronic mode.
Before preparation of the return, it is suggested that you verify the TDS payments in “Challan Status Enquiry” in NSDL website and “confirm” the amount. This process is so important that the NSDL will later on compare the data filed by you and “Book” the TDS amount.
The following data is required for preparation of the ETDS return:
1. Name of the Assessee
2. PAN
3. Amount paid
4. Date of payment
5. TDS deducted
6. Date of TDS payment
7. Challan number thr’ which the TDS remitted
8. Rate
So, all the above 8 points are required with 100 % accuracy. Any defect may lead to variety of problems.
Step 3 : Filing of E TDS Return
Once the data is uploaded in the required software, the resultant file is to be given to NSDL TIN facilitation centre for filing. Some nominal amount is charged based on the number of entries and a provisional acknowledgment slip is given. This acknowledgment bears a 15 digit number. The slip is to be preserved to file any correction statements later.
Step 4 : Validation process
Once our data is given to NSDL, they are having a matching process. In this process, our data is compared with the date of payment of TDS, the Challan number and the amount. Once all of these three is matched, our challan is “Booked” and the credit of TDS is later uploaded in Form 26AS.
Step 5 : Verification of Quarterly form Status
You go to www.tin-nsdl.com, and selected “Quarterly Statement Status” view. Enter your TAN and the provisional receipt number. This will show you whether your return has been “Accepted by TIN” or “Rejected by TIN”.
So if all of the above 4 steps are properly followed your return will be “Accepted by TIN”, otherwise may be “rejected”.
Now we will discuss some of the problems which will resulted in “Matching Pending” status of the TDS return.
Problem no: 1 – TAN not properly updated by Bankers
As I already mentioned that some of the Bankers’ do not have the facility of TAN validation process. Some of the common mistakes observed :
“0” Zero may wrongly typed as “O”
“D” may wrongly be typed as “O”
“I” may wrongly typed as “1”
“1” may wrongly typed as “I”
Whatever the mistake in TAN, the NSDL will not validate your payment and will show a error message as “Matching pending”.
It is our experience that this type of error could not be easily corrected.
Problem no: 2 – Wrongly mentioning particulars of Challan
In ETDS return, the TDS paid challans, the date of payment, the challan number and Section Codes are important data fields. Any mistake will result in “Matching pending” status. This can be corrected by filing a “Correction” statement. Any number of times the correction statement can be filed once the original return is “Accepted by TIN”.
As I already mentioned that while filing the correction statement, the TIN facilitation centre will request you to file the photo copy of the original provisional receipt.
Problem no: 3 – Invalid PAN / Wrong PAN
This will result in not getting TDS credit to the assessee PAN in Form 26AS. The “Invalid PAN / Wrong PAN”, will appear in NSDL site as “Invalid PAN” and if you click the link, it will show you PAN which is invalid.
This mistake can also be corrected by filing “Correction Statement” along with photo copy of the original provisional receipt.
Problem no: 4 – Wrong mention of Amount paid, TDS deducted and TDS rates
Here all the assesses should be careful to mention these data, otherwise the Income Tax Department may issue demand notice for the difference.
All these mistakes can be corrected by filing “Correction Statement” along with photo copy of the original provisional receipt.
As we have discussed that not only the compliance of TDS provisions is important but also filing of correct TDS returns is most important.
Thank you
Prepared by CA R. Meenakshi Sundaram
Mail : meenakshisundaramr@yahoo.com
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