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Short deduction of TDS

21 February 2020

short deduction of tds was made against salary for 31.3.18.
Notice from tds CPC got regarding short deduction.
but the employee paid this short deduction of tax by self assessment tax while filling his ITR.
how do rectify salary return for this period or reply to the notice of tdscpc.

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3 Replies

(Guest)

Get form 26A certified from a CA

Kapadia Pravin (17249 Points)
Replied 21 February 2020

Not a big issue
No need of any rectification in TDS return
Write a letter to TDS CPC about short deduction briefing that it was an inadvertant error. However SA Tax had already been paid by the concerned employee in his ITR filed.
And thus the error has been addressed.

Nandakumar K Konkar (Partner) (246 Points)
Replied 23 February 2020

As per section 201, a payer who fails to deduct whole or any part of the tax at source is treated as an assessee-in-default. However, the payer/deductor/employer who fails to deduct the whole or any part of the tax on the payment made to a payee shall not be deemed to be an assessee-in-default in respect of tax not deducted by him, if the following conditions are satisfied: [1] The recipient has furnished his return of income under section 139. [2] The recipient has taken into account the above income in its return of income. [3] The recipient has paid the taxes due on the income declared in such return of income. [4] The recipient furnishes a certificate to this effect from an accountant in Form No. 26A.

In other words, in case of non deduction of tax at source or short deduction of tax, in case of a payee, if all the discussed conditions are satisfied, then the payer will not be treated as an assessee-in-default. However, in such a case, even if the payer is not treated as an assessee-in-default, he will be liable to pay interest under section 201(1A). In this case, interest shall be paid from date when TDS was deductible till date of ITR filing by deductee (employee). Interest in such a case will be levied at 1% for every month or part of the month.