Tax Deduction Account Number (TAN) Registration & TDS Advisory in Raipur

TAN Application Workflow & Statutory Deductor Mandate (Form 49B)

Quoting TAN is mandatory on all TDS/TCS returns, payment challans, tax deduction certificates, and correspondence with the Income Tax Department. Operating without TAN or failing to quote TAN carries a statutory penalty of ₹10,000 under Section 272BB.

Quarterly TDS / TCS Return Filings & Due Dates

Deductors must compile quarterly statement files using official e-TDS FVU (File Validation Utility) software and file electronic returns within prescribed statutory timelines:

Core TDS Sections: Thresholds, Rates & Compliance Mandates

Proper tax withholding requires precise application of statutory thresholds and rates under key Income Tax sections:

• Section 194C (Payments to Contractors & Sub-contractors): Deduction at 1% for Individuals/HUF contractors and 2% for Corporate/Firm contractors. Single transaction threshold is ₹30,000, or aggregate annual threshold of ₹1,000,000.
• Section 194J (Professional & Technical Fees): Deduction at 2% for Technical Services, Call Center Operations, or Royalty (cinematographic film), and 10% for Professional Fees, Director Fees, or Non-Compete Fees. Threshold is ₹30,000 per annum per payee.
• Section 194IA (TDS on Immovable Property Purchase): Buyer must deduct 1% TDS on total consideration when purchasing property valued at ₹50 Lakhs or more. Requires filing Form 26QB (Challan-cum-statement) using buyer's PAN without needing a TAN.
• Section 194IB (TDS on Rent by Individuals / HUF): Individuals or HUFs not subject to tax audit paying monthly rent exceeding ₹50,000 must deduct 5% TDS annually or at tenancy end using Form 26QC.
• Section 194Q & 206C(1H) (Goods Purchase & Sale TDS/TCS): Buyer with turnover exceeding ₹10 Crore must deduct 0.1% TDS under Section 194Q on purchase of goods exceeding ₹50 Lakhs from a seller in a financial year. Coordinates priority with 206C(1H) seller TCS.
• Section 194I (Commercial & Machinery Rent): Deduction at 2% for Plant, Machinery & Equipment rent, and 10% for Land, Building, or Furniture rent exceeding ₹2,40,000 per annum.

TRACES Operations: Form 16 / 16A Generation & Correction Statements

The TRACES (TDS Reconciliation Analysis and Correction Enabling System) portal managed by CPC-TDS processes returns, generates certificates, and issues demand notices:

• Form 16 Generation (Part A & Part B): Downloading digitally signed Form 16 certificates annually for employees, integrating Part A (TRACES salary TDS details) with Part B (salary breakdown and chapter VI-A deductions).
• Form 16A Quarterly Issuance: Downloading Form 16A certificates from TRACES for contractors, professionals, landlords, and service providers within 15 days of return filing.
• Online Correction Statements (C1 to C9): Executing online and offline correction statements to rectify defaults without penalty:
• • C1 Correction: Rectifying invalid or mismatched deductee PANs.
• • C2 Correction: Correcting challan details or unconsumed challan matching.
• • C3 Correction: Adding missing deductee records or adjusting deduction amounts.
• • C5 Correction: Updating PAN ref-numbers or salary particulars in Form 24Q.
• • C9 Correction: Adding new challan deposits to clear short payment defaults.

Penalties, Late Fees & Disallowance Risks for Default

Failure to adhere to TDS timelines triggers severe monetary penalties and income tax disallowances under the Act:

• Section 234E Late Fee: Mandatory late fee of ₹200 per day for every day of delay in filing quarterly returns, calculated from the due date until actual filing, subject to a maximum cap equal to the total TDS amount.
• Section 201(1A) Interest on Late Deduction / Deposit: Interest at 1% per month for delay in deducting tax from payment date to deduction date, and 1.5% per month for delay in depositing deducted tax into government treasury.
• Section 40(a)(ia) 30% Expense Disallowance: Failure to deduct or deposit TDS on payments made to residents results in 30% of the entire expenditure being disallowed as a deduction in computing business income, leading to higher tax liabilities.
• Section 271H Penalty for Non-Filing: Mandatory penalty ranging from ₹10,000 up to ₹1,000,000 levied by the Assessing Officer for failure to submit quarterly statements within one year from the due date.

End-to-End CA Retainership & Managed TDS Advisory

Our firm provides complete managed retainership services to protect businesses from TDS defaults: