TRACES means TDS Reconciliation Analysis and Correction Enabling System. It is the online portal for administration and implementation of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source). When a tenant pays rent exceeding Rs. 50,000 per month to the landlord, he/she deducts TDS u/s 194IB. The tenant files Form 26QC and issues Form 16C to the landlord. The TDS Return i.e. Form 26QC is processed by CPC-TDS.
If there are any defaults or errors, the taxpayer can view the summary under the option ‘Form 26QC – Default Summary’ in the TRACES account. The tenant can view the ‘Default Summary’ for Form 26QC from FY 2017-18 onwards. For detailed information on the defaults or errors and file a Correction Statement, the taxpayer should download the ‘Form 26QC – Justification Report’ from the TRACES account. Once the taxpayer views the errors, he/she should file a correction TDS return to rectify the same.
Steps to View or Download Form 26QC Default Summary from TRACES
- Log in to TRACES
- Navigate to view default summary
Go to Statements / Forms > View Default Summary
- Select Form 26QC
Select Form Type – 26QC to view ‘Default Summary’
- Enter the required details
Select the ‘Financial Year’ from the drop-down list. Enter ‘Acknowledgement Number‘ and ‘PAN of Landlord‘. Click on ‘Proceed‘
- View the default summary
You can view the ‘Default Summary‘ for the selected Acknowledgement Number
Yes, you can make an online correction on the basis of the default summary. However, it is advisable to download the updated Justification Report from TRACES. Justification Report provides detailed information about the defaults/errors that needs to be rectified by filing a Correction TDS Return
As per section 194IB of the income tax act, tenant of the property being an individual/HUF (not liable to tax audit under the income tax act) is required to deduct and deposit TDS on monthly rent if rent paid exceeds INR 50,000 and the landlord is a resident of India.