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Tds return - lower deduction code?

Lalit Sangani (M.Com. Asst. Manager Account) (731 Points)

23 July 2012

Dear All,

In TDS return please specity the code given below "

"A" :-

"B - in cash of 15G or 15H" :-

"C" :-

"Y" :-

"T" ;-

please specify the above code use for which reason.

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· Guidelines for reporting TDS transactions not exceeding / exceeding threshold limit in quarterly TDS statements (as issued by Directorate of Income Tax - Systems).

Below guidelines may be referred, if deductor wishes to report the transaction in the quarterly TDS statement where no tax is deducted as threshold limit (as per the provisions of the Income tax Act) of amount paid/credited to deductee has not exceeded in the initial quarter (s) but has exceeded in subsequent quarter.

1) Flag “Y” may be selected in the field of ‘Reason for non deduction/ lower deduction/ higher deduction’ to highlight transactions where TDS is not deducted as the threshold for deducting tax has not exceeded.

2) Threshold flag can be quoted only against the following section codes in corresponding challan details:
193, 194, 194A, 194B, 194BB, 194C, 194D, 194EE, 194G, 194H, 194I, 194J, 194LA

3) Following approach may be referred for reporting threshold transactions in quarterly statements:

1. In case there is no deduction of tax in the first two quarters of a F.Y. where the prescribed rate of deduction as per Income Tax Rules is 10%. In the third quarter the threshold limit exceeds.

Lalit Sangani (M.Com. Asst. Manager Account) (731 Points)
Replied 24 July 2012

dear ram babu

which code we use for lower deduction, I think It may be "A", but I am not sure, if you know please write.

William Peter.a (CA Final ) (179 Points)
Replied 30 April 2014

Dear All

pls find below

Sr. No.	Particulars	Code	Whether PAN mandatory
1	In case of lower deduction/no deduction on account of certificate under section 197	A	Yes
2	In case of no deduction on account of declaration under section 197A. Allowed only for section 194, 194A, 194EE and 193	B	Yes
3	In case of deduction of tax at higher rate due to non-availability of PAN	C	No
4	In case of Transporter transaction and valid PAN is provided	T	Yes
5	Transaction where tax not been deducted as amount paid/credited to the vendor/party has not exceeded the threshold limit (as per the provisions of income tax act). Applicable for sections 193,194, 194A, 194B, 194BB, 194C, 194D, 194EE, 194G, 194H, 194I, 194J, 194LA.	Y	Yes
6	For software acquired under section 194J (Notification 21/2012). Applicable from FY 2012-13 onwards.	S	Yes
7	In case of no deduction on account of payment under section 197A (1F). Applicable from FY 2013-14 onwards	Z	Yes

2 Like

Kartikey Jain (Intern) (2377 Points)
Replied 04 July 2018

In a TDS Return, Code 'A' is to specify that TDS has been deducted on lower rate due to application of Section 197 while Code 'B' is to specify that TDS has not been deducted due to application of Section 197A.

Mitali (Finance Professional) (11046 Points)
Replied 25 November 2023

Reason where code used for Lower / Higher / No Deduction in TDS Returns

Code A - Lower / No Deduction due to Certificate under Section 197: If the deductor has received a certificate under Section 197 allowing for a lower or no deduction of TDS.

Code B - No Deduction due to Declaration under Section 197A: Allowed only for specific sections (194, 194A, 194EE, 193, 194DA & 192A). If the deductor has received a declaration under Section 197A, allowing for no deduction of TDS.

Code C - Higher Rate of TDS due to Non-Availability of PAN: If the deductee does not have a PAN (Permanent Account Number), higher TDS rates may apply.

Code T - Exemption for TDS on Payments to Transporters under Section 194C: TDS is exempted on payments to transporters if certain specified conditions are fulfilled under Section 194C.

Code Y - No Deduction due to Amount Below Threshold Limit: If the payment to the vendor/party does not exceed the threshold limit, no TDS is required, and it may be reported with the 'no-deduction' code 'Y' in the remarks. These remarks are typically used in the context of deducting tax at source in various financial transactions, and they provide information on the specific reasons for lower, higher, or no deduction of TDS.