LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Tds when pan not provided

kiran (service) (51 Points)

26 December 2011

Vendor has not provided the PAN

Payment is made to a vendor & TDS is deducted at 10% u/s 194 I (Rent)

The yearly payment to the vendor does not exceed Rs. 1,80,000/- (i.e. TDS was not required to be deducted at all)

Now the AO has raised the query that the TDS was to be deducted @ 20% for non availability of PAN.

Is the action of AO correct ?

What are the repercussions of short deduction of TDS; when it was not liable to be deducted at all.

Reply
Follow
Share

9 Replies

SRIKAR BABU (AM) (102 Points)
Replied 26 December 2011

Hai,

Yes, Contention of AO is correct. Actually you should not deduct TDS as the payment not exceeded limit. But, you have deducted TDS. However, If you opt to deduct TDS than you have to follow Act.

My suggestion is, change the gross amount paid to the party to appropriate value which is equivalent to your tds amount by reverse calculation. Do this change by filing revised etds return. In case of query raised by the AO regarding non deduction of TDS for other payment, you can explain him that Annual payment not exceeded limit.

I think you got my point.

1 Like

CA Vanamala Phani Kumar (Proprietor of M/s Vanamala and Co) (972 Points)
Replied 26 December 2011

NO... its not correct method buddy..!!!

If you hide gross amount paid then you didn't claim expenditure for that financial year. ...!!!!!!!!!!!!!

My advice is

You did n't pay any amount( extra @ 10%) by deleting record..!!!!!!!!!!

CA LOVELY ARORA (C.A. B.Com (H) Graduate) (2151 Points)
Replied 26 December 2011

agree with Srikar Babu.....

Sunil (Internal Auditor) (334 Points)
Replied 26 December 2011

The problem here is when you file the return with out pan number of a duductee the software of ITD will automatically calculate the short duduction and will automatically produce the notice to you.

In my point of view what remedy available with you is to give reply to the AO stating the facts and revise the return by deleting the records as per the direction of the AO

Madhusudan Kabra (knowledge seeker) (1779 Points)
Replied 26 December 2011

Agreed with Mr. Srikar but this is possible when it was not a case of 143(3),144,147,153A. i.e. revised return can be filed at any time

(i) within a period of One Year from end of relevent AY

(ii) Before completion of Assessment

Whichever is earlier. thus now point is whether above limit has expired or not.

And what you are saying Mr. Phani??? can you make it more clear????? somwhere i am disagree with your answer.

Regards

Madhusudan

CA Mudit Agarwal PGDFM,MCP,IFR (Dy. Manager (Taxation)) (289 Points)
Replied 26 December 2011

If you are deducting the TDS whether or not it is required to deduct, you have to follow the rules of the income tax act. You have to deduct TDS @ 20% if PAN is not provided by the supplier.

Hence in my opinion, the action of AO is correct

CA Kiran Sutrave (CA) (428 Points)
Replied 26 December 2011

I think you should write to the AO asking for a solution and present all the facts to him.

According to me, Section 206AA of the Income Tax Act, 1961 is not at all applicable to the Company since it states that Section 206AA of the Act is applicable only when tds is deductible under Chapter XVIIB.

In your case, tds is not deductible since the payment of TDS is less than Rs. 180,000/- and in consultation of the AO you can file Revised E-TDS Return.

Trivedi Vipul S. (A/C MANAGER) (26 Points)
Replied 27 December 2011

when vendor not provided pan , you deducted 20% tds

praveen (Chartered Accountant) (6971 Points)
Replied 27 December 2011

Yes, if your vendor does not have a PAN then ask him to obtain one.

All it takes is around a week's time to get the PAN (number atleast if not the card).

Then file a revised return stating the changes as to the PAN.

But your case sound very stupid to me. When it was not required to deduct tax then why deduct the tax at the first place. And if deducted couldn't you have verified whether there is a proper PAN or not.