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Tax Notices & Disputes
Updated: 15th August 2026•Income-tax Act, 2025 (TY 2026-27)

TDS Defaults & Demand Resolution: TRACES Justification Report & Correction

टीडीएस डिफॉल्ट नोटिस एवं टीआरएसीईएस सुधार गाइड

Comprehensive guide to resolving TDS default and demand intimations issued by TDS CPC under Section 200A: downloading the Justification Report from TRACES, identifying error codes (short payment, short deduction, Section 234E late fees, PAN errors), filing online correction statements, and challan re-allocation.

Written by: Author Profile
Direct Tax & CA Review Panel

Chartered Accountancy Review Panel • Senior Direct Tax Review Desk

Reviewed & Fact-Checked by: Technical Review Panel
Tax Law & Dispute Review Desk

Tax Litigation & Legal Review Panel • Tax Appeal & Procedure Review Desk

Published: 1st April 2026•Last Updated: 15th August 2026•Last Reviewed: 15th August 2026

Key Statutory Highlights (FY 2026-27 (AY 2027-28))

Section 200A Intimation: Computer-generated order issued by CPC TRACES identifying mathematical and compliance defaults in quarterly TDS returns (Form 24Q/26Q).
Common Default Types: (1) Short Payment (challan mismatch or underpaid tax), (2) Short Deduction (incorrect lower rate applied), (3) Late Filing Fee u/s 234E (₹200/day), (4) Interest u/s 201(1A) (1.5%/mo).
Justification Report (.txt file): Detailed error ledger downloaded from TRACES identifying exact PANs and transaction records with defaults.
Online Correction on TRACES: Most PAN corrections and unconsumed challan tagging can be performed directly on the TRACES portal without needing third-party software.

Who is Eligible & When Does it Apply?

Applicability #1

All corporate and non-corporate deductors holding active TAN numbers.

Step-by-Step Procedure & Compliance Roadmap

1

Download Justification Report from TRACES

Log in to tdscpc.gov.in -> Defaults -> Request for Justification Report. Select Financial Year, Quarter, and Form Type.

2

Identify Default Codes & Discrepancies

Convert report using TRACES Justification Utility and review error schedules.

3

File Online TDS Correction Return

Navigate to Defaults -> Request for Online Correction. Add unconsumed challans or update PAN records.

4

Submit & Track Status to 'Processed'

Submit correction request with DSC or KYC authentication; status updates to 'Processed' within 48 hours.

Mandatory Documents Checklist

TAN login credentials, TRACES Justification Report, Unconsumed ITNS 281 Challans, Valid PAN proofs of deductees

Common Mistakes & Compliance Risks to Avoid

•Paying TDS demand via regular ITNS 281 Minor Head 200 instead of Minor Head 400 (Demand payment on regular assessment).
•Not correcting invalid PAN records in earlier quarters.

Frequently Asked Questions

Can late filing fee under Section 234E be waived by an officer?

No. Section 234E late fee is a mandatory statutory levy and cannot be waived by Assessing Officers. However, online correction statements can reduce wrongful fees if filing dates were recorded incorrectly.

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🛡️ Educational Disclaimer: FinSetu India is an independent educational guidance and calculation platform. Content is published for general citizen awareness based on applicable laws as of FY 2026-27 (AY 2027-28). We do not provide personalized legal/tax advice or file returns directly. Verify current applicable rules on official portals or consult a qualified Chartered Accountant / Tax Lawyer.