1. Introduction:

A challan may remain unconsumed on the computer system under following circumstances:-

(a) In case of a deductor where demand has been raised due to short payment or; due to quoting of wrong challan particulars in TDS statement; there might be an OLTAS challan available in the account of such a deductor, which has not been utilized/claimed. Such a challan is known as unconsumed challan and, such challans can be matched against a demand thus raised. Such unconsumed challan can be force-matched and can be tagged to the TDS statement of the deductor, to which the challan pertains. Forced matching is a functionality available in TRACES-AO Portal.

(b) There may be a case where the deductor has paid the demand on account of late filing fee or; interest including late payment interest or; late deduction interest. Whereas, the same challan has not been reported through TDS statement for claim against such demand outstanding. As the particulars in TDS statement are the basis of TDS defaults, the closure of demand is possible only after the challans paid against the defaults get reflected in such TDS statement.

(c) Where the deductor has paid the taxes deducted at source but has either not reported TDS transactions through TDS statement at all or; reported incomplete transactions in TDS statement. Challan against such transactions also remain as unconsumed challans on the computer system.

2. Procedure for matching the unconsumed challan with short payments

2.1. Following steps are to be taken to match the unconsumed challan :

1. Issuing letter to the deductor immediately, intimating the deductor about the facts regarding unconsumed challan. Deductor should be advised to file the correction statement, for claiming the challan, which has remained unconsumed.

2. On receipt of letter from the Assessing Officer (TDS) (hereafter referred to as AO – TDS), the TAN holder can make online corrections, which can be advised to him. The deductor can tag the unclaimed/available (unconsumed) challan for closure of demand on account of defaults like late filing fee, late payment of interest, late deduction interest.

3. The deductor can request the AO – TDS to force match the unconsumed challan. The AO – TDS on specific request from the deductor can force- match the unconsumed challans.

4. AO – TDS to periodically monitor the default summary for the demands raised.

5. After consumption/ tagging of the challan by the AO – TDS, an e-mail should be generated from the system and be sent to the deductor, so that the deductor can use the information for filing the correction statement.

2.2. Forced Matching (functionality in TRACES – AO Portal)

To facilitate AO – TDS the view of unmatched challans in the statements filed by TANs under their charge and; to enable them to match these challans with any of the unconsumed challans available in OLTAS database, under the ownership of same TAN for the relevant period. The AO Portal provides the functionality of Forced Matching of challan.

Only unmatched challans in a statement will be shown in the output table.

At present, statements filed for F.Y. 2010-11 and 2011-12 only are available for forced matching.

Only those challans from OLTAS will be displayed whose FY is within +1/-1 year range of F.Y. of the searched statement.

Total of the amount shown in challan quoted in the statement has to be equal to or less than the available balance in a challan.

Force Matching gives credit to the statement without changing the challan details mentioned in the statement. Hence, force-matching should be done only on deductor’s request in writing and the application is to be uploaded on the portal while raising the request for such force-matching.

Challan fields “claimed interest”, “claimed others”, and “levy” are not editable during forced matching.

2.3 Linking unconsumed challans with manual demands

The challans of deductors, whose manual demand has been raised by the AO – TDS and who has paid such demand, remain unconsumed in TRACES, as the same is not claimed by the deductor against any TDS/TCS statement. Such challans are on account of regular payment under the code ‘400’ and needs to be tagged with the manual demand. The reason to link/tag the unconsumed challan with manual demand is step-wise specified, in detail, as under:

As a practice, AOs - TDS record demands in their registers & start follow-up for collection. As soon as the a counterfoil of challan is received by the AO-TDS, he records the same in the register and treats the demand as collected. The demand pending in D & CR register is generally net demand outstanding after netting off the collection made. AO – TDS must ensure that gross demand raised (even in the cases of net NIL demand due to squaring off) is uploaded. The collection made through challans must then be immediately tagged against gross demand to prevent further use of such unclaimed challan.

In cases where demand is reduced completely or in part by way of reduction, due to rectification u/s 154 of the Income-tax Act, 1961 or; order of CIT(Appeal) or; ITAT or; Courts, it is not required to upload the gross demand. Effective net demand in these cases may be uploaded. If the gross demand is uploaded in such cases, it will create problems by tagging the unclaimed challans against demand which is actually reduced.

However, in this practice, challans stay “Unclaimed” in OLTAS database, i.e., they are available for matching and consumption against TDS statements or any other demand which is outstanding as per the System which may lead to adverse consequences. Hence, it is very crucial to get the balance of these challans reduced by the appropriate amount.

2.4 Records for uploading the manual demand.

The D & CR registers in most of the charges are not available prior to FY 2008-09. In such situation it is difficult to upload gross demand in each case, as the net demand is carried forward in the current D & CR. So a cut off year should be decided for tagging of the unclaimed challan. Further, no refund should be issued for unclaimed challans prior to the cut-off year through refund portal as it may lead to anomalous claims leading to revenue loss.

It is recommended that payments made on account of compounding fee are uploaded using the bulk upload demand functionality. It is suggested to maintain the record in current D & CR, which should be uploaded periodically (say fortnightly). At present no such record is maintained at the AO – TDS level. A cut-off year/date can be decided and the information beyond these years/date can be compiled and uploaded on the system. Henceforth functionality may be enabled in the TRACES for calculating the compounding fees, which will also generate a demand notice. On payment, the demand can be tagged by the challan.

To cater to this need and root-out these possibilities, CPC-TDS has introduced two sets of functionalities as under :-

2.5 Bulk-Upload Demand

User can add/modify/delete a manual demand row by row. Manual demand created by the AO - TDS, has to be uploaded in the System. Utmost care should be taken as to what types of demands are to be uploaded. The deductor making payment on account of “Compounding Fee” should also be kept on record separately in the current D&CR and uploaded from time to time. The payment on account of such compounding fee is also being reflected as ‘unclaimed challan’ in software and is necessarily required to be tagged.

Bulk upload (using a template) facility is also available to AO – TDS.

The functionality must be used in order to make a record of the demand in System and get rid of the manual registers and to finally give the credit of collection against the demand in System so that the challans can be frozen.

2.6. Tag/Replace a Challan
Tag/Replace challan functionality has been provided to the AO – TDS to enable him to tag the challans against the uploaded demands.

On tagging of demand against a challan(s), the available balance in the OLTAS for that challan(s) gets reduced to the extent of the demand.

A separate request will have to be submitted for tagging challan against each demand.