Section 399: processing of TDS/TCS statements

Introduction

Section 399 governs processing of TDS/TCS statements, including correction statements. The department adjusts apparent errors, computes interest and the section 427 fee, then issues an intimation of net payable amount or refund.

Key takeaways

What processing can adjust

Processing covers an original TDS or TCS statement and its correction statement. It computes tax deductible or collectible after correcting an arithmetical error or an incorrect claim apparent from information in that statement. The meaning of an apparent incorrect claim is supplied by section 402(3).

Interest and late fee computation

The system computes interest on the deductible or collectible amounts reflected in the statement. It computes any fee under section 427(1) and (2); the Finance Act, 2026 specifically aligned this cross-reference to those two subsections.

Net demand or refund

The processing calculation adjusts tax, interest and fee against payments already made under sections 397(3), 398 and 427(1)–(2), and any other tax, interest or fee paid. It then determines a net amount payable by or refundable to the deductor or collector.

Intimation and refund

An intimation must specify the amount payable or refundable, and a determined refund is to be granted. The intimation must be sent within one year from the end of the tax year in which the statement was filed. The Board may provide a centralised processing scheme.

Step-by-step flow for processing a TDS/TCS statement under Section 399

1. 1

   Is it a statement of tax deducted or collected at source, including a correction statement?

   Section 399(1) applies to all such statements.

2. 2

   Adjust the amounts deductible or collectible

   Under Section 399(1)(a), correct any arithmetical error, and any incorrect claim apparent from information in the statement. Section 402(3) explains an apparent incorrect claim: an entry inconsistent with another entry, or a rate of deduction or collection not as per the Act.

3. 3

   Compute interest and fee

   Interest is computed on the amounts deductible or collectible as reflected in the statement (Section 399(1)(b)). Any fee is computed under Section 427(1) and (2) (Section 399(1)(c)).

4. 4

   Determine the net amount payable or refundable

   Under Section 399(1)(d), set the computed amounts against any amount paid under Section 397(3), 398 or 427(1) and (2), and any other tax, interest or fee paid.

5. 5

   Send the intimation and grant any refund

   An intimation of the amount payable or refundable is sent to the deductor or collector (Section 399(1)(e)) within one year from the end of the tax year in which the statement was filed (Section 399(2)). Any refund determined is granted (Section 399(1)(f)). The Board may make a scheme for centralised processing (Section 399(3)).

Practical checklist

Frequently asked questions