HIGHER TDS demand even though seller Aadhar and PAN are linked

TDS
1

Hi ,

Seller aadhar pan got linked on September 28 , tds was paid on October 2 .Still I got tax short deduction notice .

What should I do in this case , please help

Any remedies available.

2

Hey @Sandeep_Jha

If the seller’s PAN and Aadhar were not linked on the date of the agreement, the income tax department would issue a short deduction notice for TDS.

In this case, you can cancel the agreement, request a refund of the TDS paid to the Assessing Officer, and then create a new sale agreement.

Here’s the detailed read for the same: Correction for 26QB

3

Hi @CA_Jayni_Bhavsar,

In my case, the registration was completed on April 22, and the TDS was paid after linking the PAN and Aadhar. Similar to other cases, I received a notice for short deduction of TDS and was asked to pay the remaining 19%.

If I pay the 19% of the short-deducted TDS, will the seller still be able to claim a refund?

The seller is a housewife and does not have any other income apart from this capital gain.

Example:

  • TDS Paid by Seller: ₹5,13,573 (20%)
  • Taxable Income: ₹8,47,665 (Capital Gain)

Under the new tax regime:

  • Total Tax Liability: ₹34,767

Refund Calculation: Since TDS was deducted at 20%, but the actual tax liability is much lower:

  • TDS Paid by Seller: ₹5,13,573
  • Actual Tax Liability: ₹34,767
  • Refund Amount: ₹5,13,573 - ₹34,767 = ₹4,78,806

Will the seller receive the refund as calculated above? Kindly assist.

4

Hey @Balakumar

Yes, the seller will receive TDS credit for the entire 20% amount deducted by the buyer. When filing a return, they can claim a refund for the same.