CA. Naveen Bhat (CA) (175 Points)
29 October 2013One of my client has received a default notice for short deduction of TDS. The client has received a certificate issued U/s 197 from Vendors for lower TDS rate. The same is correctly provided in the ETDS return with 'A' as the reason for short deduction. However, CPC has not considered the Certificate and issued a demand for differenial tax.
Now as all data in correct in the ETDS return, what is the solutions to nullify the demand.
Please help
Naveen
Shriram Gupta
(Practicing Professional)
(236 Points)
Replied 31 October 2013
Dear Navin,
Many people are facing same kind of issue.. In recent time almost every client of mine has got default notices from TDS CPC for no reason... Now, The only way with you is to contact the local jurisdiction officer administering the TDS section. Either he will nullify the said notice or will suggest you the way to do same...
In few cases, we have represented letters to TDS CPC with necessary documents available with us and got notices cancelled but replies are still pending from them for few more cases...
Ankur
(Professional)
(95 Points)
Replied 24 March 2014
This is due to technical fault from tds. Hence will get rectified automatically. No need to revise or complaint . Same problem has happened with tcs also where pan is not necessary but got rectified automatically and hence removed the default.
I talked to tds they themselves told that there is mistake for sec 197 lower deduction.
PARMINDER SINGH
(EXECUTIVE)
(21 Points)
Replied 07 May 2014
Dear sir, We are receiving notices from TRACES for shor payment in TDS, We pay to bills to outsourced staff providing company and deducted amount at 1.133% now we r receiving notices from IT deptt, kindly guide At what rate we should deduct the balance and what will be the interest rate to be deducted and what from should we use?
Shriram Gupta
(Practicing Professional)
(236 Points)
Replied 07 May 2014
Dear Parminderji,
As per section 194C of the Income Tax Act, If the payments pertaining to a contract is being made to person other that Individual and HUF then TDS needs to be deducted at the rate of 2.00% and in case of payments made to Individual and HUF the rate is 1.00%..
So first of all confirm the status of the payee to whom the payment is made.. If it is other than Individual and HUF then tds rate shall be 2.00%.. Please also confirm the said default from the justification report downloaded from the TRACES system in which the exact nature of default and the rates at which TDS was supposed to be deducted will be given..
If the justification report is correct then you shall pay the balance of amount and recover it from the party...
In case your problem persists, you can send me mail on shriram.ca @ gmail.com
Ankur
(Professional)
(95 Points)
Replied 07 May 2014
dear parminder ji,
if short deduction relates to previous years and assumed that tds has been claimed by other party then you cannot rescue yourself from receovring additional tds from third party since it is your fault. So you have to consider loss for short deduction. Best way is fill the challan u/s 194a which will automatically consume shortfalls in any other section.
Now a days, Traces generate default for .50 paise also so better to avoid such defaults one should deposit say Rs100/- challan u/s 194a to get consumed automatically.
CAclubindia
