default U/s 201(1)/206c(7)

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

14 January 2011 Sir

our organization received the notice for less deduction as well as for interest due to late deposite of tax.

We checked I found that we have deducted TDS at rate 5% insted of 10% for professional fees.

What will be the procedure to deposite the TDS? Did the person get the creadit for the Tax I deposite now?

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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16 January 2011 Are the person is ready for paying the balance tax amount to you?

If yes deposit the tax and issue the TDS certificate.

Querist : Anonymous

Querist : Anonymous (Querist)

17 January 2011 After paying the tax. Is it nessesary to submit correction CD?

If yes.. what will be the changes required ?

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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20 July 2024 When there is a default under Section 201(1) or Section 206C(7) of the Income Tax Act, typically related to non-deduction or short deduction of TDS (Tax Deducted at Source) or non-collection or short collection of TCS (Tax Collected at Source), here's how you can proceed:

### Procedure to Deposit TDS:

1. **Calculate the Correct TDS Amount:**
Since you deducted TDS at 5% instead of the required 10% for professional fees, calculate the shortfall. For example, if the professional fee was Rs. 1,00,000, TDS at 10% should be Rs. 10,000, but you deducted Rs. 5,000 (5%).

2. **Deposit the Shortfall:**
Pay the balance TDS amount along with applicable interest (if any) using Challan No. ITNS 281. Interest is calculated from the date of deduction to the date of payment of the correct TDS amount.

3. **Interest Calculation:**
Interest under Section 201(1A) is applicable at the rate of 1% per month or part thereof on the amount of TDS shortfall. You need to calculate this interest for the period from the date on which TDS should have been deducted till the actual date of deduction.

### Credit to the Deductee:

- Once you deposit the correct TDS amount and interest, the deductee (the person from whose payment TDS was deducted) will get credit for the TDS amount deposited in their Form 26AS. Form 26AS is a statement showing the TDS deducted on behalf of the taxpayer.

### Submission of Correction Statement (CD):

- **Correction Statement (CD)**: After depositing the correct TDS amount and interest, you should file a Correction Statement using a Form 26QB or 26QC, depending on the nature of payment (Form 26QB for TDS on sale of property and Form 26QC for TDS on rent). In the correction statement, you will mention the correct TDS amount and the details of interest paid.

- **Changes Required**: In the correction statement, you will need to correct the TDS amount and also include the interest paid. This updated information will reflect in the deductee's Form 26AS.

### Steps to File Correction Statement (Form 26QB or 26QC):

1. **Log in to TRACES**: Visit the TRACES website (https://www.tdscpc.gov.in) and log in using your credentials.

2. **Select the Appropriate Form**: Navigate to the section for correction of TDS returns (Form 26QB or Form 26QC).

3. **Enter Details**: Enter the corrected TDS amount and details of the interest paid.

4. **Submit and Verify**: After entering the details, submit the correction statement. It may require a digital signature for verification.

5. **Acknowledgment**: Once successfully submitted, you will receive an acknowledgment from TRACES.

### Conclusion:

By following these steps, you can rectify the TDS default by depositing the correct TDS amount along with interest and filing a correction statement on the TRACES portal. This ensures compliance with income tax regulations and allows the deductee to claim credit for the TDS deducted correctly.

For any specific nuances related to your case or for assistance with the correction statement filing, it's advisable to consult with a tax professional or CA who can provide guidance tailored to your organization's situation.