TDS return processed with defaults

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525 Points Joined April 2018

We filed Form 27Q for TDS on a foreign company who doesn't have a PAN in India. Hence we wrote PANNOTAVBL. Deduction was made as per rate in DTAA. Hence higher rate was not required. Now we have received a notice saying that there is an error in the return as PAN number is not mentioned for 1 deductee. How to reply to this notice?

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On 12 November 2024 at 12:06 Report
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Master in Accounts & high court Advocate
8756 Points Joined December 2011

To reply to the notice, follow these steps:

 1. Verify the details: Double-check that the deductee is indeed a foreign company without a PAN in India.

2. Explain the situation: In your response, explain that the foreign company does not have a PAN in India, and hence, you mentioned "PANNOTAVBL" in the Form 27Q.

3. Reference DTAA: Mention that the deduction was made as per the rates specified in the Double Taxation Avoidance Agreement (DTAA) between India and the relevant country.

4. Clarify no higher rate applicable: Confirm that the higher rate of TDS is not applicable in this case, as the deduction was made as per DTAA rates.

5. Request clarification: Politely request clarification on why the PAN number is being insisted upon when the deductee is a foreign entity without an Indian PAN.

6. Attach supporting documents: Attach a copy of the Form 27Q, proof of the foreign company's registration, and any other relevant documents supporting your explanation.

7. Submit your response: File your response online or through the authorized representative, ensuring you adhere to the specified format and timelines.

Example response:

"Dear [Authority], We acknowledge receipt of the notice regarding the alleged error in our Form 27Q submission. We clarify that the deductee is a foreign company without a PAN in India, and hence, we mentioned 'PANNOTAVBL' in the form. The deduction was made as per the DTAA rates between India and [relevant country]. We request your clarification on why a PAN number is being insisted upon in this case. Please find attached supporting documents for your reference. Thank you for your attention to this matter. Sincerely, [Your Name]" 

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On 12 November 2024 at 13:47


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