TDS ON SALE OF PROPERTY IN RESPECT OF INOPERATIVE PAN

This query is : Resolved

C.S.MADHURANATH

C.S.MADHURANATH (Querist)
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05 March 2025 SIR, A DEFAULT NOTICE WAS RECEIVED FOR NOT DEDUCTING TDS AT 20% INSTEAD IF 1%. THE ASSESSEE APPLIED FOR CORRECTION OF DATE IN TRACES WHICH WAS APPROVED BY THE SELLER AND HAS GONE TO THE ASSESSING OFFICER WHO HAS ASKED FOR SOME DOCUMENTS . NOW THE SELLER HAS AGREED TO APY THE BALANCE DEMAND TDS ALONG WITH INTEREST AS PER NOTICE.
1. WHETHER IT CAN BE DONE? SINCE HE WAS UNABLE TO PAY THROUGH E-TAX SINCE BUYER'S PAN IS BLOCKED
2. WHETHER HE HAS TO APPLY FOR CANCELLATION OF CORRECTION REQUEST?
3. ONCE CANCELLATION IS DONE AND DEMAND PAID, WHAT HAPPENS TO THE NOTICE GIVEN NY THE ASSESSING OFFICER? WILL IT BE CLOSED OR NOT?
THANKS

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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12 August 2025 ✅ 1. Can the Seller Pay the Balance TDS (19% + Interest) Now?
Yes, the seller can pay the balance demand, even if the PAN of the buyer is inoperative or blocked. However, for the seller to pay:

Payment must be made using Challan ITNS 281.

Buyer’s PAN is required for this, but if it's inoperative, then:

Approach AO with a manual request to allow the payment offline or allow reactivation temporarily for compliance.

Alternatively, seller may deposit TDS under their own PAN with reference to the default notice, but this needs AO's permission.

Important: In many cases, CPC will accept the payment as long as the demand raised is cleared, even if made via alternate means.

✅ 2. Does Seller Need to Cancel the Correction Request?
Not necessarily.

If the correction request is no longer relevant or conflicts with the current payment path, you can request withdrawal or cancellation of the correction.

But if the correction was only for date or minor fields, and is unrelated to the rate/TDS amount, you can let it proceed.

You should consult the AO before cancelling to avoid duplication or confusion.

✅ 3. What Happens to the Default Notice After Payment?
Once the full demand (TDS + interest) is paid and reflected in TRACES, the default is considered resolved.

AO can mark the case as closed after verifying the payment.

You should:

Submit proof of payment to the AO.

File revised Form 26QB if required (to show corrected TDS amount).

Wait for TRACES portal to show updated status — usually within 7–10 working days.

AO’s notice will not automatically close — you or your tax consultant should inform AO with documentary proof once payment is done.

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