TRACES - Short Deduction defaults in TDS Statements

CPC (TDS) communication regarding Short Deduction defaults in TDS Statements

Communication 41 dated 25th April, 2014

CPC (TDS) has observed from its records that the TDS statements submitted by you have Defaults on account of Short Deduction. The above default is due to the fact that tax has not been deducted at appropriate higher rate, where PAN has not been reported correctly or PAN information is "Not Available".

In regard to the above, it is requested to take note of the following facts:

There is a Short Deduction default exceeding Rs. 1,00,000 in your TDS statements.

Your attention is hereby drawn to the provisions of Section 206AA of the Income Tax Act, 1961:

(1) Notwithstanding anything contained in any other provisions of this Act, any person entitled to receive any sum or income or amount, on which tax is deductible under Chapter XVIIB (hereafter referred to as deductee) shall furnish his Permanent Account Number to the person responsible for deducting such tax (hereafter referred to as deductor), failing which tax shall be deducted at the higher of the following rates, namely:-

·         At the rate specified in the relevant provision of this Act; or

·         At the rate or rates in force; or

·         At the rate of twenty per cent.

Consequences of failure to Deduct or Pay:

As per provisions of Section 201 of the Act,

·         Where any person, including the principal officer of a company,

o   Who is required to deduct any sum in accordance with the provisions of this Act; or

o   Referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as
required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax.

·         Under Section 220(2), if the amount specified in any notice of demand under Section 156 is not paid within the period limited under sub-section (1), the assessee shall be liable to pay simple interest at one per cent for every month or part of a month.

·         Under Section 277 of the Act, if a person makes a statement in any verification under this Act or under any rule made thereunder, or delivers an account or statement which is false, and which he either knows or believes to be false, or does not believe to be true is punishable.

It is, therefore, requested to correct the records reported in your TDS statements, pay the outstanding demand and submit Correction Statement at the earliest. Please ignore, if the corrections have already been submitted.

It is also advised to refrain from repeating such instances in future.

Source:TRACES.