Unmatched / Miss-matched challans' correction mandatory to download Consolidated file from TDSCPC.

Income Tax Department has communicated through email to their deductos regarding TDS on 09/08/2014 that deductors have to deposit Short Payment before allowing to download Conso File.

The information is very difficult and shocked for all. Now in case TDS Return is submitted with error and Income Tax Department has raised demand on account of Short Payment, the Default amount will have to deposit with in 30 days from the demand and then deductor will be above to download Conso file after needful tagging of unconsumed challans on TRACES.

In our opinion , before implementation of below circular, It is strictly required that all errors in TDS return should be displayed before uploading any FVU file.

The Centralized Processing Cell (TDS), in its endeavour to enforce TDS Compliance, is shortly mandating closure of “Short Payment defaults” in the quarterly TDS statements due to Unmatched Challans, before the Conso files can be downloaded from TRACES for the relevant statements. Following are key information to be noted in this regard:

• CPC(TDS) mandates to close the above default by tagging unconsumed challans, if available in CPC(TDS) system,through online correction (without digital signature).
• In case there is no available challan for consumption, the deductor is required to first deposit the due tax in the bank and then the same challan will be available for tagging in CPC(TDS) system after around 3-4 days of deposit.
• CPC(TDS) mandates to close the above default by Matching or Payment of challans.
• The user will not be able to download Conso file for the relevant TDS statement until the above default is closed.
• The Online Correction facility of TRACES needs to be used for closure of the Short Payment default.
• User will subsequently be able to download the Conso file for relevant period only after the default is closed.

Why the Short Payment needs to be paid:
CPC (TDS) intends to enforce compliance towards payment of taxes to the Government.

In accordance with provisions of section 201(1) of the Act, where any person, including the principal officer of a company, who is required to deduct any sum in accordance with the provisions of the Act; 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 be deemed to be an assessee in default in respect of such tax.

As per the provisions of section 220 of the Act,

• Any amount, specified as payable in a notice of demand shall be paid within thirty days of the service of the notice.
• If the amount specified in any notice of demand 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 comprised in the period commencing from the day immediately following the end of the period mentioned in sub-section (1) and ending with the day on which the amount is paid.
• If any person fails to deduct or pay the whole or any part of the tax, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay under Section 271C of the Act.
• Failure to pay tax to the credit of Central Government is punishable with fine as per the provisions of section 276B/ 276BB.
• Section 278A of the Act prescribes for punishment for second and subsequent offences, if any person has been convicted of an offence under section 276B.

What Actions to be taken:

• During submission of request for Conso File, a message will be displayed, if there are Short Payment defaults in the TDS statement and instructions will be provided to submit Online Correction.
• Details of defaults will be provided during Online Correction process.
• In case of insufficient challans, please use Challan ITNS 281 to pay the demand or use any other Challan, which has adequate balance available.
• Submit an Online Correction using the functionality on TRACES to tag the challans with deductee rows. Login to TRACES and navigate to "Defaults" tab to locate "Request for Correction" from the drop-down list. You can refer to our e-tutorial for necessary help.

Online Challan Corrections:

• A list of all Matched and Unmatched challans can be viewed by clicking the appropriate tab.
• Unmatched challans can be corrected and tagged to Deductee rows in the statement.
• The corrections in TDS statements can be raised even without Digital Signature.
• Correct KYC information needs to be submitted for the purpose of validation.
• All previous corrections pertaining to the statement should have been processed and the processing status can be verified from the Dashboard.