Time limit of six years to file TDS/TCS correction statement w.e.f. 01.04.2025

Time limit of six years has been proposed to file TDS/TCS correction statement.

The Union Budget 2024-25 has proposed a time limit of six years to file TDS/TCS correction statement. Currently, there is a time limit for furnishing statements detailing the TDS/TCS, however, there is no time limit for furnishing correction statement. However from 01.04.2025 you can not revise a TDS/TCS Statement beyond 6 years.

Section 200 of the Income Tax Act 1961 lists the duty of the person deducting tax under the provisions of Chapter XVII-B. Sub-section (3) of this section requires that a deductor after paying the tax deducted to the credit of the Central Government, shall prepare statements detailing the TDS deducted and furnish it within the prescribed time to the prescribed authority.

The proviso to section 200 states that a person may also deliver to the prescribed authority a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under this sub-section in such form and verified in such manner as may be specified by the authority.

Similarly, section 206C of the Act provides for the collection of tax at source (TCS) on business of trading in alcoholic liquor, forest produce, scrap etc. Proviso to sub-section (3) of section 206C of the Act requires that a person collecting tax after paying the tax collected to the credit of the Central Government, furnish statements detailing the TCS collected within the prescribed time. Sub-section (3B) of the said section requires that the person collecting tax may also deliver to the prescribed authority, a correction statement for rectification of any mistake or to add, delete or update the information furnished in the statement delivered under the proviso to sub-section (3) in such form and verified in such manner, as may be specified by the authority.

Due to no time limit being prescribed for correction of the TDS/TCS Statements/returns they may be revised multiple times indefinitely and thus these misused for tax evasion and fraud with deductees / collectees.

Accordingly, with effect from the 1st day of April, 2025, it has been proposed to amend section 200 and sub-section (3B) of section 206C to provide that no TDS/TCS correction statement shall be delivered after the expiry of six years from the end of the financial year in which the statement was delivered.

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