How to Rectify the Mistake of Not Deducting TDS from the Payment Made to the Seller?

If you have made a payment to a seller and failed to deduct TDS (Tax Deducted at Source) as required by Indian tax regulations, you can rectify the mistake by following these steps:

• The first step is to calculate the TDS amount that should have been deducted from the payment made to the seller.

• In addition to the TDS amount, you may be liable to pay interest for the period during which the TDS was not deducted. Interest is typically calculated at the rate of 1% per month (or part thereof) from the date on which the TDS should have been deducted until the date of actual deduction.

• Once you have calculated the TDS amount along with the interest, deposit the total sum to the government treasury using the appropriate challan.

• After depositing the TDS amount, file the TDS return using Form 26Q or Form 27Q, depending on whether the payment was made to a resident or non-resident seller, respectively.

• Once the TDS return is filed and processed by the Income Tax Department, issue a TDS certificate to the seller.

• If you have already filed TDS returns without deducting TDS, you can rectify the error by filing a correction statement using the TRACES portal within the prescribed time limit.

If the TDS return was filed late, you may be liable to pay a late filing fee. Ensure that any applicable late filing fee is paid along with the corrected TDS return.