TDS Challan refers to tax deducted at source. It is a form of indirect tax collected by the Indian authorities in accordance with the Income Tax Act, 1961. It is managed by the Central Board of Indirect Taxes. Under TDS, the person responsible to make certain specific payments like salary, interest, commission, rent, etc. shall be liable to deduct tax at a certain percentage (as specified) before making full payment to the payee.
Who needs to deposit TDS?
Every person liable to deduct TDS under the Income Tax Act is also liable to deposit this TDS amount to the Income Tax Department.
Due dates for depositing TDS:
TDS deducted by a payer for any month has to be deposited with the government by 7th of the succeeding month, but for March, it shall be 30th of April. For all TDS deducted and deposited, a statement has to be submitted on quarterly basis. TDS certificate shall be issued to the payee. ‘TDS challan’ shall be used for depositing TDS with the government. A single challan can be used to deposit tax collected under various sections of Income Tax Act. If the government wants or the assessee wishes to make payment of TDS without using a challan, the due date for depositing TDS shall be the same day on which TDS has been deducted.
Challan to be used:
Challan ITNS 281 is used to file Tax Deducted at Source from corporate as well as non-corporate assessees.
Pre-requisites for deducting TDS
Every person responsible for deducting tax at source shall obtain Tax Deduction and Collection Account Number (TAN). It is a 10 digit alpha-numeric number that can be obtained on depositing Form No. 49 B, available on NSDL website, along with the specified fee. Failure to quote TAN on all communications relating to TDS with the Income Tax Department would attract a penalty of Rs. 10,000 for all assessees liable to deduct TDS.
- TDS deducted from company and non-company deductee shall be deposited using separate challans. For instance, if you have deducted TDS from XYZ Ltd. and ABC & Sons (a partnership firm) u/s 194c, then separate challans will have to be used. Code0020 is used in case of company deductees, whereas, code 0021 is used for non-company deductee. To distinguish company deductee from non-company deductee, PAN card can be referred to. If the fourth letter in PAN card is ‘C’ it would mean company deductee. All other cases would mean non-company deductees.
- TDS deducted under different clauses/sections of Income Tax can be deposited using a single challan. For example: TDS deducted on salary and commission can be deposited using a single challan; separate challans need not to be filed.
- Tax deducted in different quarters should not be deposited using a single challan as it would attract problems at the time of filing quarterly returns.
- TAN of assessee should be correctly quoted.
- If you are depositing tax after a demand has been raised by the department, apply code 400. For other cases use code 200.
For making online payment of TDS, follow the given procedure:
- Log on to e-tax payment system.
- Select Challan ITNS 281 from the given list.
- Enter the PAN\TAN as applicable. An online validation would be done for its correctness.
- If the entered PAN\TAN is found valid, other details would be allowed to be filled by the tax payer. These details include name, address, accounting head under which payment has been made, bank through which payment would be made, etc.
- A confirmation screen would appear on submission of the data entered. On confirming the data entered in the challan, the tax payer will be directed to net banking site of the bank for payment.
- The tax payer would make the payment using net banking.
- A challan counterfoil would be displayed on successful payment. It would contain CIN, payment details and name of the bank through which the payment has been made. This would serve as a proof of payment.
A processing logic has been established by CPC (TDS) in the system to make TDS deposit convenient for the deductors. This logic enables reporting of Tax Deposited using a Single Challan under the following circumstances:
Payment of Tax Deducted under various sections of the Income Tax Act,1961: Even though a specific section might not have been quoted in the challan, the CPC (TDS) system would give credit of TDS against different sections of the Act.
- Payment of Tax Deducted pertaining to different Assessment Years: If the deductor deposits higher amount of tax than the required tax deducted at source for a specific Assessment Year, the excess amount of tax deposited can be claimed in the subsequent quarters of that year. The balance amount (if any) is permissible to be carried forward and claimed in the TDS Statement in the next year. For example: If tax has been paid in excess in the 1st Quarter of Financial Year 2016-17, it can be used for Quarter 2, 3 & 4 of F.Y. 2016-17 andfor 1st to 4th Quarter of F.Y. 2017-18 as well. Also, payment of tax default of Quarter 1 to quarter 4 can be made using this excess amount of Tax paid in Quarter 1 of F.Y. 2016-17.
The Physical Challans of all direct payments that are received from the taxpayers or deductors are digitized on daily basis under the On Line Tax Accounting System i.e. OLTAS. Presently, the banks are authorized to rectify data relating to only three fields i.e. name, amount and major head code. The other errors can be corrected by the assessing officers only.
All the fields of challan are entered by the assessee at the time of payment whether online or physical payment. But it is probable that some information has been erroneously filled at the time of online payment of TDS or that the network bank might have made a mistake or error at the time of uploading the tax related information.
The procedure to correct all such errors & mistakes has been provided below:
Corrections by Banks
In order to make correction of mistakes made in physical TDS challans, a TDS Challan Correction Mechanism has been laid out. Under the said Challan correction mechanism, the following fields can be rectified through payment bank branch in the income tax payments made on or after 1st September 2011:
- Assessment Year
- Major Head Code
- Minor Head Code
- TAN or PAN
- Total Amount
- Nature of Payment (Tax Deduction Scheme Codes).
The taxpayer needs to make a request to the payment bank branch for rectification. On receiving the request, the branch bank officer can make the correction. The timelines specified for making the modification request by the assessee is as follows:
|Field requiring rectification||Time for correction request from challan deposit date|
|TAN or PAN||7 Days|
|Assessment Year||7 Days|
|Other fields (Minor head, Major head, Nature of payment)||Within three months|
The time limit for bank to modify the errors is seven days from the date of receiving correction request from the Assessee.
There are a few conditions subject to which modifications can be done by banks. These conditions have been stated below:
- No change in Assessee’s name is permissible.
- Simultaneous correction in any combination of Minor Head & Assessment Year is not allowed.
- Correction in PAN or TAN shall be authorized only if the name in the challan coincides with the name specified in the new Permanent Account Number or Tax Deduction Account Number.
- The change in challan amount is permissible subject to the condition that such rectified amount shall be indifferent from the actual amount received by the bank and subsequently credited to the Government Account.
- No partial acceptance of change correction request shall be made. In other words, if all the requested changes pass the validation, all these requested changes shall be allowed, otherwise if any of these requested changes fails the validation test, then none of these requests shall be allowed to be processed further.
- Modification of a single challan is permissible only once. Nevertheless, where first request for correction is made only for amount, a second correction request can be made only for changes in other fields.
Process for correction of TDS Challan
The process for physical correction of TDS Challan has been defined below:
- The request form for correction shall be submitted in duplicate by the taxpayer to the concerned bank branch.
- A copy of original challan counterfoil is also required to be attached by the assessee.
- A copy of PAN card is also required to be attached if correction is desired for challans in Form 280, 282 or 283.
- Where the corrections are desired to be made for payments made by a taxpayer other than an individual, the authorization (in original) of the non-individual taxpayer along with the seal is required to be attached with the request form.
- Each challan shall be supported by an individual request form.
Procedure for correction of TDS challan by Assessing Officer (A.O.)
A request for correction of TDS challan can be made by the taxpayer to his/her Assessing Officer, after the window period available to banks for such correction. The deductor is required to visit AO at his TDS ward for correction in challan.
The following documents are mandatorily required to be submitted by the taxpayer to AO, in order to get the challan rectified:
- A copy of the paid challan
- Indemnity bond of Rs 100
- Correct TAN number of deductor
- NOC from the deductor whose TAN was wrongly specified in the TDS challan
In order to get the information regarding AO (as to which AO is authorized as per the area) visit Income tax India e-filing website. There is an option- ‘Know your TAN’ available on the homepage. Provide the details of deductor to get the information regarding AO. Address and phone number of the AO can be availed from this website.
A correction application can be made by the assessee to the concerned Assessing Officer in the following format:
The Branch Manager,
………………………… (Address of Branch)
Name of Authorized Signatory (in case of a non-individual tax payer):
Sub.: Request for correction in Challan No. 281
Sir/Madam, I request you to make rectifications in the challan data as per the following details:
BSR Code Challan Tender Date (cash/cheque deposit date) Challan Sl. No.
|Sl. No.||Fields requiring correction||Please Tick||Original Details||Modified Details|
|1||TAN/PAN (10 digit)|
|3||Major Head Code (4 digit)|
|4||Minor Head Code (3 digit)|
|5||Nature of Payment (3 digit)|
|6||Amount (13 digit)|
Note: Kindly tick against the fields where changes are required to be made.
Tax payer/Authorized Signatory
- Attach a copy of original challan counterfoil.
- Attach a copy of PAN Card when corrections are required in challan 280,282 or 283.
- Original authorization with seal of the non-individual tax payer is also required to be attached in case of a non-individual tax payer.
- The request form for correction is required to be submitted in duplicate to the concerned bank branch.
- For each challan, a separate request form needs to be submitted.
The deductor can visit the AO for any kind of amendment in TDS challan. Although, the AO should majorly be called out by the deductor for any of the following two reasons:
- Incorrect AY where the difference is greater than one year, or
- Wrong TAN number has been updated in challan.
Corrections in AY or TAN number can’t be done by banks if the challan has been paid, since the banks are neither authorized nor do they possess the required tool for correction. The correction in challan is usually done within a period of about 10 to 15 days. However, it may even take a little longer.
Online correction can also be done by the deductor by visiting TRACES website. Only amendments in unmatched and overbooked challans can be made through this online correction facility. No online correction in AY or TAN number can be made by the deductor. Only AO possesses the rights to do so.
It must be noted that no challan correction is required if any section code has been wrongly filled in challan. It is only required to enter the correct section code in the deductee row, and it shall be consumed. Payment of TDS with wrong section code shall not attract any issues. Relaxation has been provided by TRACES in this context.
There is a relaxation of one year available in TDS challans. If a challan has been paid for any AY, it can be used for next year and for previous year only. For eg: if a challan has been paid for AY 2017-18 then it can be used by the deductor for AY 2016-17 & AY 2018-19 only.
Points to remember while updating TDS Challan
- The TDS challan to be rectified can be identified by the following:
- Sequence number of challan as per the regular statement.
- CIN i.e. Challan Identification Number, deposit amount as per the regular account.
- Update the details in TDS challan as required.
- The correction statement should also contain the value of the Challan Identification Number and deposit amount as per the regular statement along with the updated values.
The facility of enquiring about the status of challans by the taxpayers has been provided by TIN, using which the status can be checked online. This facility can also be used by the collecting banks to enquire about the status of challans uploaded by them.
The receiving bank uploads the details specified in challan to government via NSDL through its OLTAS (Online tax Accounting System) return within a period of 3 working days from the date of receipt of amount. The amount and CIN uploaded by the receiving bank to NSDL should be cross-verified by the deductor after making the payment. This cross verification shall be done by the deductor with either his CIN or TAN as provided by bank against each challan.
Steps for challan verification:
- Visit www.tin-nsdl.com and click on ‘Challan Status Enquiry’
- Select from the following:
- CIN Based View- On specifying CIN and amount (optional), following details can be reviewed by the deductor:
- BSR Code
- Date of Deposit
- Serial number of challan
- Major head code with description
- Tax payer’s name
- Date of receipt by TIN
- Where the amount has been entered- confirmation that the said amount is correct
- TAN based view- The following details can be viewed by the deductor by providing TAN and financial year:
- Nature of payment
- Major head code with description
- Minor head code
If the amount has been entered against a CIN, the system would also confirm whether the details of amount uploaded by the bank matches with this specified amount.
- On obtaining the above details, the result generated can be considered by the deductor, irrespective of the details entered in challan by the bank.
- If after 3 working days from the date of issue of counter foil, the entry is missing, the deductor should contact the bank branch to know about any issue.