Tds filing

Save Share

This query is : Resolved

Narayan (Querist)
Follow

16 February 2015 Sir, We have filed TDS return for 3rd Q for F.Y.14-15. TDS was deducted @20% for non available of PAN of clients & filed the return in form 26Q. After filing form 26Q we came to known that it belongs form 27Q since the clients are NRO. However, later we even filed form 27Q since we are not known the effects.now dept.has processed and we have recd Short deduction or amt not available in form 27Q & raised the demand. Kindly let us know how to come out from this & reduce the demand to NIL

CA ANILKUMAR B.COM FCA DISA

CA ANILKUMAR B.COM FCA DISA (Expert)
Follow

16 February 2015 In case of NRI , tax to be deducted @ 30.9 % ,and that is why department raised demand notice for short deduction .

Narayan

Narayan (Querist)
Follow

18 February 2015 Sir, in fact we have deducted @ 30.9% but in filing return in form 26Q we have taken the clients a/c as 20% & in form 27Q return we taken as 30.9% deduction & filed the return, now we got the demand as short deduction in form 27Q only.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
Follow

27 July 2025 Got it! Here's what's happening and how you can fix it:

---

### Situation Recap:

* You deducted TDS at **30.9%** correctly for NR clients.
* But **while filing Form 26Q**, you mistakenly used the **20%** TDS rate for those clients.
* Later, you filed **Form 27Q** with correct 30.9% TDS.
* The department processed the 27Q return and raised demand for **short deduction** due to mismatch with 26Q data.

---

### Why the demand arose?

* Form 26Q and 27Q are different returns for different types of deductees.
* When you first filed 26Q with 20%, the system considered that TDS as less.
* Though you corrected by filing 27Q, the system still raised demand due to **inconsistent information** in initial 26Q.

---

### How to reduce the demand to NIL?

1. **Submit a clarification letter** or response to the department explaining the mistake in 26Q filing, with evidence of correct deduction at 30.9% in 27Q.
2. **Request the AO or department** to consider the latest correct filing (Form 27Q with 30.9%) and drop the demand for short deduction.
3. If online facility available, you can also **file a rectification request under Section 154** explaining the discrepancy and attaching supporting documents.
4. Ensure all future filings for NRO clients are **only in Form 27Q** and that the correct TDS rates are used consistently.

---

### Additional Tips:

* Keep copies of **challans**, **TDS certificates**, and **both Form 26Q and 27Q filings** handy.
* If needed, engage with your jurisdictional TDS assessing officer to explain and resolve the issue.
* You may also consult a tax expert to draft your communication for the department.

---

Let me know if you want me to help draft the clarification letter or guide you through the rectification process!

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now