Common Mistakes while filing TDS returns

Last Updated On: July 23, 2020, 11:48 a.m.


Tax Deducted at Source was introduced to collect tax when an individual’s income is generated. This is benefited to government, as they use TDS as a tool to collect tax in order to minimize tax evasion by taxing the income (partially or wholly).

TDS is applicable to all various incomes such as Salaries, Interest received, Commission received, dividends, etc..A Deductor/payer is responsible to deduct tax on specified types of payments as prescribed in the Income Tax Act,1961. The tax deducted has to be deposited in the government account. Deductor also has to report the tax deducted in a statement within the prescribed time


Here are the Common mistakes while filing TDS:

NON-UPDATION OF TAN: Tax deduction and Collection Account number is issued to persons who are required to deduct and collect tax on payments as prescribed under Income-tax Act, 1961. TAN needs to be valid and updated as per TDS CPC. In case TAN is incorrectly mentioned or not updated in the system any payment made shall not be reflected and the return shall not be validated by the department.

INCORRECT CHALLAN DETAILS: TDS Challan requires the following important details like date of payment, amount of tax paid, a section under which tax is deposited, and BSR code of the bank through which payment is made. The payer needs to enter these fields correctly to avoid mismatch of data and intimation from TRACES. 

QUOTING INCORRECT PAN: The PAN of the deductee should be verified before quoting it in the TDS return.  Quoting the wrong PAN gives rise to the TDS demand of 20% less than the amount of TDS already deducted. This will result in deductee not getting TDS credit in 26AS.

SHORT PAYMENT OR SHORT DEDUCTION OF TDS: If the deductor has mentioned the wrong Challan details or has made short payment including interest on the late deduction if any or has claimed more amount than the available balance of Challan amount.  It might also be due to clerical errors like mentioning different amounts in both columns of TDS deducted and TDS deposited.

INCORRECT REPORTING OF 197 CERTIFICATES: Section 197 provides the facility of NIL deduction or lower deduction of TDS. The deductor before the filing of TDS return needs to verify that the certificate provided by the deductee is not expired, it is valid during the period for which it is quoted, it is mentioned in return incorrect format, a threshold amount of the certificate has not exceeded and it should be ensured that TDS certificate should be for same PAN, section rate and section code mentioned in the TDS return.

INCORRECT FINANCIAL/ASSESSMENT YEAR: The most common mistake made in selecting a financial year. A financial year is a year in which TDS is paid and Assessment year is the year in which tax is processed and filed. These details should be properly furnished otherwise it will result in error 2034 and an intimation from TRACES.

SELECTION OF THE WRONG DEDUCTOR: The deductor details must be properly filled as to the status of the deductor i.e. whether government or others Companies, persons required to get their accounts audited u/s 44AB of the Income Tax Act, 1961 otherwise it will result in error code 2076 and intimation from TRACES.

INCORRECT RESPONSIBLE PERSON DETAILS: TDS return requires all details for a representative of the entity such as Name, address, and contact details. These details should be correctly furnished to avoid errors in return.

INCORRECT INCOME DETAILS:  In TDS return, the TDS actual deposited and paid must match TDS to be deducted on specified income under respective section and respective rates. The return is rejected due to mismatch in details which requires revising the respective return with correct details and file again.


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