Friends, Deductors have received demand notices from Income Tax Department on account of short deduction or short payment etc. Now, processing of TDS returns is very fast and intimations are being sent to deductors in short period. Generally it has been found that after correcting PAN numbers, demand has not been removed by the Income Tax Department. On inquiry from TRACES, it is clarified that deductor can not update all digits of PAN. He may correct only two characters of PAN which were expected typographic error while preparing tds return. After submitting correction return with Correct PAN's, Income Tax Department is charging 20% TDS on payments/credit as the deductor should have correct PAN at the time of payment / deduction of tax.
Now, question is that Can a deductor remove selection of Flag C available under "Remarks (Reason for non-deduction / lower deduction / higher deduction / threshold) through regular statement ?.
Row, once selection with Flag C can not be deleted in correction TDS return in Annexure I, however data updation is possible. Example for effected deductors are given below :-
Amount of Payment / Credit Rs. 1,00,000.00
Section Code 94C
TDS deducted 2% Rs. 2000.00
PAN status PANNOTAVBL or PANAPPLIED
Flag used in Regular Statement C
Demand raised by I.Tax Deptt 20% =20000-2000=18000 + interest etc.
The above position is complicated in the hand of deduction. Neither he can delete row already selected with Flag C in annexure I nor can pay Rs. 18000+ interest for removal of demand.
In case anyone have any solution of the above problem, he should share his experience with this article so that others can avail benefit of the same.
Mukesh Mittal :-
YES, YOU CANL UPDATE AMOUNT PAID & TDS WITH ZERO AMOUNT & ADD NEW ENTRIES WITH VALID DETAIL WITHOUT SELECTING FLAG C FOR HIGHER RATE