TDS (Tax Deducted at Source) aims to collect the tax on income when it is earned. However TDS returns filings can be tricky and the mistakes are common in such process. Hence the Income Tax Department allows you to correct TDS returns to address these mistakes made in original return. These corrections can range from minor typos to significant calculation errors. By correcting these errors, taxpayers ensure their TDS returns are accurate. Let’s explore the different types of correction in TDS return.
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What is TDS return?
TDS (Tax Deducted at Source) is an advance tax collected by the government before your earnings reach you. It helps to ensure the government receives its share of income on time. TDS is managed by the Central Board of Direct Taxes, under the Income Tax Act of 1961.
Basically, when you earn income, such as salary or one-time payments like rent or fees, a portion is deducted and sent directly to the government. This process ensures the government collects taxes on your earnings in a timely manner.
What is Revised TDS Return?
As a TDS deductee, you must regularly submit TDS returns to NSDL to inform the tax authorities. If you later identify errors or require modifications to the original returns filings, you can easily file the revised TDS returns to correct the information. These returns ensure accuracy and keep your records up to date.
TDS return filing is mandatory for the below person:
- Organizations (including deductors and collectors)
- Government revenue and tax collectors
- Individuals whose accounts are audited under the Income Tax Act, 1961
- Any other taxpayers whose TDS has been deducted.
When to file a revised TDS return?
You should submit a revised TDS return if any of the following occur:
- You have entered the wrong PAN (permanent account number) in the TDS statement.
- The TDS amount deducted differs from the amount that was required to be deducted.
- The currency used is incorrect.
- Any other incorrect information was included in the original return.
6 Types of Correction in TDS Return
When it comes to making the corrections in TDS returns, there are six types of correction in TDS return which are as follows:
C1 Correction in TDS Return: This covers any changes needed in the deductor’s details PAN number, name, or address of deductor, except for the TAN number of deductor.
C2 Correction in TDS Return: This covers when there is need to change in the currency used or any other deductor details. It also covers if there is a mistake with the challan serial number in the original return. Additionally, it also includes C1 correction.
C3 Correction in TDS Return: This type of correction is for fixing any errors in deductee details, deduction details, or challan details. It also covers things like sorting out education cess issues and adding additional information like different currencies.
C4 Correction in TDS Return: It is used to modify gross salary or total salary records, it is mainly required in the fourth quarter statement in form 24Q.
C5 Correction in TDS Return: It is needed when there is an issue with the PAN number of the deductee. Forms 26Q, 27Q, and 27EQ can be used to update PAN details of dedcutee.
C6 Correction in TDS Return: it is needed to add new currencies or sort out deductions related to them. And it is the only correction that is required to be done online.
These different types of correction in TDS return cover a range of issues and ensure that TDS returns are accurate and up-to-date.
Read also: All About GST on Flat Purchase – Latest Guide 2024
Conclusion
Filing TDS returns requires meticulous attention to numerous details, frequently resulting in errors. To rectify these mistakes, amendments are often necessary. Typically, a single file is used for all types of correction in TDS return: C1, C2, C3, C4, and C5. You can access updates about 3 days after submitting your return. To monitor the status of your TDS Return, remember to have your TAN and Receipt Number at hand. Proper monitoring corrections ensures the accurate and compliant returns.
Frequently Asked Questions (FAQ)
- Login to TRACE by accessing the TRACES website and enter your TAN and password.
- Under the “Defaults” tab, you should locate the “Correction” option.
- Select the appropriate correction type (like C1, C2).
- For file based corrections, upload the file with the updates. For online corrections, make the changes directly.
- Once the corrections are complete, you need to submit the revised TDS return.
- After submission, track the progress of your correction request on the TRACES website.