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TDS Default Notice

Non-deduction or short deduction

TDS (Tax Deducted at Source) default notices arise when the Income Tax Department finds that you were required to deduct TDS on certain payments (salary, rent, professional fees, contractor payments) but either did not deduct or deducted at a lower rate. The depositor is treated as an 'assessee in default' and is liable for TDS amount, interest and penalty.

⏱ 30 days to respond to demand notice

⚠️ Interest at 1%/1.5% per month + penalty equal to TDS not deducted

Common Issues in This Type of Notice

Salary TDS not deducted

Contractor payments (194C)

Rent above ₹50,000/month (194-IB)

Professional fees (194J)

How We Handle It — Step by Step

Upload notice

Upload TDS intimation or demand notice

Computation check

Expert verifies if TDS was actually applicable

Correction filing

Revised TDS return filed if errors are found

Penalty waiver

Application for waiver of penalty citing reasonable cause

Demand closure

Proof of correction submitted to close the demand

Documents You Will Need

26QB / 26QC / 26QD challans

TDS returns (24Q, 26Q, 27Q) filed

Salary slips and Form 16

Payment records and contracts

Form 26AS of deductee

Bank statements showing TDS deposits

Relevant Case Laws & Precedents

Hindustan Coca Cola Beverages vs CIT

Supreme Court

Once TDS is paid by deductee, the deductor cannot be held as assessee in default for failure to deduct.

Frequently Asked Questions

What if the employee has already paid tax?

If the payee (employee/vendor) has paid the full tax, the deductor's liability to TDS is extinguished per Supreme Court ruling.

Is there penalty for late TDS filing?

Yes — ₹200 per day under Section 234E for each day of delay in filing TDS returns.

Can the interest be waived?

Interest under 201(1A) is mandatory and cannot be waived. Penalty under 271C may be waived on showing reasonable cause.