10/03/2015

TDS demand may remain as such even after rectification of Return

While filing TDS returns filers/Deductors has to be extra careful as the wrong Pan once stated in the return even though amended/corrected by revising the return later on  may not discharge the deductor from the liability of penal provisions of deducting TDS @20%, as the 
 returns recently being processed by CPC is not adjusting the demand after processing of revising returns in such cases. Rectification of demand is not done if the mismatch is of more than two alpha characters and two numeric’s in Pan. Therefore, out of 10 characters in case of structurally invalid PAN, 4 characters are being considered for rectification of demand.
This is being done on the pretext of provisions of Section 206AA which apply at the time of tax deduction and this all happens prior to the filing of statement.

Thus, the deductor is expected to have a valid PAN at the time of deduction. Only a typographical error is expected at the time of filing the TDS Statement.

This sort of processing by TDSCPC is totally uncalled for and against the natural justice and needs to reviewed immediately. Section 206AA does not state that only 4 Characters of a PAN can be amended. If the intention of legislature should have been so then no  provision could have been provided in the Act for rectification of the return. What is meaning of allowing correction up to 4 Characters.

This harsh processing is only for the deductors not for the deductees as the deductee is being allowed full credit on revision of TDS returns. There may be case that the Deductee might have provided the Structurally wrong pan at the time of deduction, then why the penal provisions for Deductors only.