Tax deducted at source (TDS) aims to collect tax from the income source. The collector who has to make a specified payment must deduct TDS and remit this amount to the Central Government’s account.
The deductee (from whose payment the TDS is deducted) receives credit for the same amount based on Form 26AS or the TDS certificate issued by the deductor.
The taxes are deducted at the rates specified in the provisions of the Act or the First Schedule to the Finance Act. However, if you are making payments to Non-Resident Indians (NRIs), the withholding tax rates are as per the provisions of the Double Taxation Avoidance Agreements.
How to pay the tax deducted or collected at source
The taxes deducted or collected at source must be deposited in the government’s account in either of the following modes.
- Electronic payments are compulsory for all corporate taxpayers and assesses (other than corporate) under the provisions of section 44AB of the Income Tax Act, 1961.
- Physical payments using challan 281 can be made at any of the authorized bank branches.
Points to remember before collecting TDS
- You should have a Tax Deduction and Collection Account Number (TAN)
- TAN is a 10-digit alpha-numeric number available on the National Depository Securities Limited (NSDL) website
- You may apply for the TAN by submitting form 49B at a Tax Information Network (TIN) Facilitation Center along with the applicable fees
- If you fail to include TAN in any communication with the Income Tax Department, you will be liable to pay a penalty of INR 10,000
What is a TDS challan?
A TDS challan is used to deposit the TDS amount with the government. It is a single challan used by taxpayers for depositing the taxes collected under the various Income Tax Act, 1961 sections.
If the deductor wants to pay the TDS without a challan, the amount has to be deposited in the government’s account on the same day when it is collected.
Types of TDS challan
It is available on the Income Tax Department’s official website. Using this challan, deductors can pay the TDS amount either online or offline.
Challan 280 is used for payments related to advance tax, regular assessment tax, surcharge, tax on distributed income or profits, and self-assessment tax.
This challan is primarily used by corporate and non-corporate entities for depositing TDS. It is generally collected by the sellers from buyers at the time of selling specified goods. Challan 281 can be filed online or offline, and on making the payment, you receive the Challan Identification Number (CIN).
What is CIN?
The CIN is an acknowledgment identifying the tax payment. It is also required while filing the returns and for any further queries that may arise. It comprises three parts, which include the following.
- A seven-digit Basic Statistical Return (BSR) code of the bank branch where the tax was deposited
- Serial number
- Date of deposit in DD/MM/YY format
Every payment has a unique CIN and should be stamped by the bank. If there is any error or if the challan does not include the CIN, you must contact the bank immediately to get this rectified.
Procedure for TDS challan verification
For TDS challan verification, visit www.tin-nsdl.com, click ‘Challan Status Inquiry’ under ‘Services’, and select either CIN-based view or TAN-based view.
If you choose the CIN-based view, the following details are available.
- BSR code
- Deposit date
- Challan serial number
- Major heading with description
- Permanent Account Number (PAN)/TAN
- Taxpayer name
- Date of receipt by TIN
- A confirmation stating the entered amount is accurate
You can provide TAN and financial year details to view the following information.
- Payment nature
- Major heading with description
- Minor heading
You may also check the TDS challan status via the TIN website to confirm whether the taxes paid are accurately accounted for in your name.
Steps to verify TDS challan with OLTAS
The Online Tax Accounting System (OLTAS) introduced by the Income Tax Department in 2004 replaced the manual tax collection procedure previously used by the banks.
The OLTAS is now adopted by banks for managing direct tax payments. For OLTAS challan verification, you may follow the below-mentioned steps:
- Visit https;//tin.tin.nsdl.com/oltas/index.html and choose between TAN and CIN-based verifications
- Input details like the BSR code and the serial number of the challan; these are mentioned on the challan received at the time of making the TDS payment
- Click the ‘Submit’ tab and you can verify details like TDS payment, amount, name of taxpayer, and payment date
Steps to verify TDS challan with TRACES
You may also check the status online via the TDS Reconciliation Analysis and Correction Enabling System (TRACES) website by following the below-mentioned steps:
- Visit https;//www.tdscpc.gov.in/app/login.xhtml and log into your account
- Check the ‘Statement/Payment’ option at the top of the page
- Click this tab to open a drop-down menu with the ‘Challan Status’ option
- You can check the status of the TDS challan by either entering CIN or Book Identification Number (BIN)
How to make corrections in the OLTAS challan
The banks send all TDS details to NSDL. Moreover, NSDL is not authorized to make any changes to the tax collection data. In case you find any error while checking the OLTAS challan status, you must contact the bank branch where you made the TDS payment.
However, the changes need to be made within a certain time limit. PAN and TAN details can be rectified within seven days from the date on which the challan was deposited.
The rectification due dates vary between seven days and three months for various errors like TDS amount, nature of payment, assessment year, and much more.
Conditions wherein corrections in TDS are allowed
The banks can make any modifications to the challans only in certain conditions, which are listed below:
- Correction of name is not allowed
- No partial acceptance of changes is accepted; if these are validated, all requested changes are accepted or all are rejected
- No rectification of the assessment year and minor head is allowed together
- Changes in every challan are allowed only once; however, if the first request is for the TDS amount, changes related to other fields are acceptable
- Changes to PAN/TAN are allowed only if these match the details provided in the new PAN/TAN
- Any modification to the amount is permitted only if the modified amount matches the actual amount received by the bank and credited to the government account
Procedure for making corrections to the TDS challan
- You must submit the request form for corrections in the bank in duplicate
- It is important to attach the original challan counterfoil with the form
- A copy of your PAN card is also required for changes to forms 280, 282, and 283
- The original authorization along with the seal of the non-individual taxpayer should be attached to the request form for any payment-related corrections
- You must submit a separate form for every challan that needs any corrections
To avoid any errors resulting in corrections, it is recommended you verify all the payment and other details while depositing the TDS amount in the bank. In case of any mistake, ensure you raise the request for correction within the specified time frame.
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