TDS processed with defaults u/s 200A

Hello Folks,

I and my wife recently purchased a property in Noida worth 1.05cr. I paid 1% TDS accordingly. After paying TDS we got the defaults notice u/s 200A. We were shocked to see the short deduction amount. After downloading the justification report from traces, we learned that seller PAN was inoperative. Means he didn’t link PAN with Aadhar. It was not our fault in any way. Any way we got his PAN and Aadhar linked and raised Correction request in TRACES. But we again got defaults u/s 154 with the same short deduction amount. I called the TRACES customer care and they said that if PAN was inoperable when TDS was filed, we have to pay the short deduction amount which is 20% of the 1.05cr. :frowning: We have taken a plot loan and we are left with nothing. No one seems to help us. Could someone please help? I am ready to pay the fees.

Hey @ankursing10,

Since the PAN was inoperative at the time of deduction of TDS, you were primarily required to deduct TDS @ 20%. You will have to make the payment for the amount of short deduction to solve the default.

You can ask the seller to pay you the amount of TDS at 20% and you can deposit the same against his PAN by revising the TDS return. The amount recovered from seller will eventually reflect as TDS in his 26AS, the credit of which can be claimed by him at the time of ITR filing.

Here’s how you can file correction for 26QB Form

Hope this helps!

Hi Nitati,

We have no money left. Also seller will not co-operate in this case. Besides why this is the issue if we filed correction after linking the PAN. This is really absurd. Income tax site should have shown this while filling TDS. What we can do now?

Hello @ankursing10,

I understand your situation, but the department is considering the PAN status of the date TDS was deducted. When you deducted the TDS, PAN was inoperative, hence TDS @20% was required to be deducted.

There is no other option available to resolve the demand but to pay the same.

Ankur, you are not alone who is impacted. I know 4 people who including myself who got same notice and following up with CPS TDS.

Mail you contact # on and we can exchange details.

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What if seller denies to return 19%. Can buyer take legal action?

CBDT Notification No.15/2023 dated 28th March, 2023 for details:

The Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems) shall
specify the formats and standards along with the procedure for verifying the operational status of permanent
account number under sub-rule (1) and sub-rule (2).

TDS Dept did not make changes in portal to reflect 20% TDS, why to penalise buyers now.

@Vishal_Verma I have mailed you with my contact no. Lets connect when possible.

Hi @Vishal_Verma Hope this reaches to you. I have provided you my contact no. Could you please call ? This is a very stressful situation for my whole family.