The rate of TDS Sec.194J is reduced to 2% instead of 10% under section 194J from 01-04-2020 by the Finance Act, 2020: 1. Fees for technical services (not being in the nature of professional services). 2. Royalty where such royalty is in the nature of consideration for sale, distribution or exhibition of cinematographic films. For others, the 10 per cent rate of TDS shall continue to apply.
*** As per this changes We have deducted TDS & deposited as per applicable rate of 2% for Technical services, Filed 26Q for Q1 F.Y.2020-21. But 26Q is processed with defaults of short deduction of TDS. Default summary details shows payable amount of short deduction of TDS with Interest. Kindly suggest , What to do ?
06 July 2024
1. Review the Calculation: • Double-check the calculation of TDS deducted at 2% against the amount payable for technical services. Ensure that you have applied the correct rate as per the Finance Act, 2020. 2. Verify the Defaults: • Verify the details of the short deduction shown in the default summary. Ensure that it accurately reflects the discrepancy and the interest calculation. 3. Rectification Process: • If you find that there was indeed a short deduction, you should rectify the TDS return (26Q) for the relevant quarter (Q1 F.Y. 2020-21). • Login to the TRACES portal and navigate to the “Request for Correction” functionality under “Defaults” to initiate the rectification process. 4. Steps for Rectification: • Download Consolidated File: Download the Consolidated File from the TRACES portal for the relevant quarter which includes the details of deducted TDS. • Correction Statement: Prepare a correction statement (revised 26Q) using the downloaded file, making sure to correct the TDS amount to reflect the 2% rate for Section 194J. • Upload and Submit: Upload the corrected file on the TRACES portal and submit it for processing.
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