Tds (fy 2010-11)

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Shreya (Querist)
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05 November 2011 The Assessee has defaulted in the Deductee Codes for TDS, what would be the Statutory Implications & Consequences, which they would have to bear?

Thanks

CS Bijoy

CS Bijoy (Expert)
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09 November 2011 Can you please clarify the Default, if you mean the PAN number than revised return can be made after modification.

Shreya

Shreya (Querist)
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09 November 2011 My question is related to the Deductee code and not PAN

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Good question! Here’s a detailed answer regarding **default or error in Deductee Codes for TDS (FY 2010-11)**:

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### What are Deductee Codes?

* Deductee codes classify the type of payment or deductee under which TDS is deducted (like salary, contractor payment, professional fees, etc.).

* These codes are essential while filing TDS returns (e.g., in Form 26Q, 27Q) for proper categorization.

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### Statutory Implications of Wrong or Default in Deductee Codes

1. **Return Rejection or Error in Processing**
The TDS return may be **rejected or flagged with errors** by the NSDL/TIN portal or the CPC (Centralized Processing Cell) if deductee codes do not match the payment type or are invalid.

2. **Mismatch in TDS Credits**
Wrong deductee codes may cause **mismatch in Form 26AS** of the deductee, leading to the TDS credit not being properly reflected against their PAN.

3. **Demand or Penalty Risk**

* The Assessing Officer may treat it as **non-compliance or error**, which may lead to penalty under **Section 271H** (penalty for incorrect information in TDS return).
* The penalty can be **₹10,000 per default** or as deemed appropriate.

4. **Delay in Refund or Credit to Deductee**
Deductees may face problems in claiming the credit of TDS or refunds due to classification issues.

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### Consequences for Assessee (Deductor)

* **Liability to rectify errors**: The deductor must file a **correction statement** (correction return) correcting the deductee codes.

* **Penalty risk**: If errors persist or cause misinformation, penalty can be imposed.

* **Interest on Late Deduction/Deposit**: Separate from deductee codes, if TDS deduction or deposit is delayed, interest under Sections 201(1A) may apply.

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### How to Remedy?

* File **correction statements** in TDS return software with correct deductee codes.

* Cross-check entries before filing to ensure correctness.

* Inform deductees about the correction for their own records.

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### Summary

| Aspect | Implication |
| -------------------------- | --------------------------------------- |
| Wrong Deductee Code | Return rejection, mismatch in Form 26AS |
| Penalty under Section 271H | ₹10,000 per default or as assessed |
| Rectification | File correction statements |
| Impact on Deductee | Delay in TDS credit/refund |

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If you want, I can guide you step-by-step on how to file correction statements or draft a communication to deductees explaining this issue.

Would that help?

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