What is TRACES?
TRACES is the acronym of an online tax-based platform launched by the Indian government’s Central Board of Direct Taxes (CBDT). The TRACES is known for the TDS Reconciliation Analysis and Correction Enabling System. It is mainly a web-based application where the applicants register in the income tax portal by providing the details of their PAN, mobile number, and email ID and creating an account.
The activation link of the Income-tax account will be provided in the mail to the registered user ID only. By creating an account on the Income tax portal, TRACES will be activated automatically.
The TRACE portal aims to allow TDS payers and deductors to review and analyze the paid tax in detail online to file returns and seek refunds.
India’s income tax department offers TRACES whenever people register or upgrade the online platform at www.tdscpc.gov.in.
TDS Reconciliation Analysis
Why the people use the TRACES? Do they really benefit from using the TRACES? Let’s see why TRACES become important for taxpayers and deductors.
➔ Streamlined Form 16
Form 16 is a certificate issued under Section 203 of the Income Tax Act, 1961, by employers to their employees.
It is a crucial document providing details of the salary income earned by the employee during the financial year.
TRACES helps streamline the process of Form 16 issuance, providing clarity and enhancing data accuracy and a transparent system for managing TDS-related activities for employers and employees.
➔ Form 26AS
The Income Tax Department provides Form 26AS as a consolidated tax credit statement. Whenever the employees need to view taxes paid online and analyze the comprehensive summary of all tax credit account-related transactions associated with the taxpayer’s Permanent Account Number (PAN), they can visit Form 26AD. Form 26AD provides the entire annual stand of the Tax credit statement.
What TRACES do is self-assessment taxes, view tax credits streamline the process, and enable the taxpayers to access and download the statement reflecting all TDS and TCS credits against their PAN (Permanent Account Number)
➔ Viewing TDS/TCS Credit
Tax Deducted at Source as TDS and Tax Collected at Source as TCS credits refer to the amounts that are deducted from or collected from an individual’s income. It is transacted at the source itself, and these amounts are credited to the individual’s tax account with the government.
The Income Tax Department says that the TDS and TCS are mechanisms used to collect taxes in advance to ensure smooth tax compliance and prevent tax evasion.
Taxpayers can use the TRACES to get the tax information network, keeping updated with the auto-deducted amount with the tax department by the deductors (employers or entities responsible for deducting taxes).
➔ Correction of TDS Returns
Through TRACES, taxpayers can view tax credits and get the details of advance taxes like TDS and TCS. Moreover, they can analyze the TRACES justification report and review the annual tax credit statements.
Individuals can refile in case of any errors and discrepancies.
Deductors can make corrections to their TDS statements filed earlier. In case of any errors or discrepancies, they refile it again or seek refunds.
TRACES portal smooths the communication between taxpayers/deductors. The taxpayers can review and respond to various queries, notices, or demands.
➔ Communication with the Income Tax Department
Whether you have to pay taxes or not, it becomes essential for people to make a good relationship with the Income tax department.
It fosters the transparency, compliance, and efficient resolution of tax-related matters.
TRACES is a communication platform between taxpayers, deductors, and the Income Tax Department. Taxpayers can respond to any notices or communications issued by the tax authorities through TRACES.
1. How to Register on the TRACES Website?
You can register for the ‘TDS Reconciliation Analysis and Correction Enabling System’ by accessing different services including the official website and third-party websites. If you are searching for the process of registering on the TRACES website, follow the quick steps below:
➔ Visit the Official Website
First, you should visit the official website of TRACES, which is ‘Tax Deducted at Source Centralized Processing Cell (TDS-CPC) by going to: www.tdscpc.gov.in. Move your cursor to the left side of the webpage to the ‘Login’ section and select the ‘Register as New User’ menu. Select the ‘Tax Payer’ option in the pop-out menu.
➔ Provide Information
Under the ‘Taxpayer’ tab, there are six steps. You will have to complete the 6 steps:
You should submit the PAN, First name, Middle name, Last name, and Date of birth; then, click on the ‘Proceed’ button.
The next step is divided into 4 options based on different conditions. You have to select the option as per your requirements:
Step 2.A (Option 1)
Option 1 is for the deductors who have the TAN (Tax Deduction and Collection Account Number). They should fill in the deduction types, and assessment year as per the Form-16/16A/27D Certificate.
Step 2. B (Option 2)
Option 2 is for the taxpayer who has the Challan Serial Number. Using this option, taxpayers must deposit the challan details of Advance Tax, Self Assessment Tax, TDS on Property, and TDS on Rent. In this section, individuals have to fill out the Assessment Year, Challan Serial Number, and Tax Amount.
Step 2. C (Option 3)
Option 3 is for individuals who deal with the real estate business. In this section, individuals have to submit the details of the 26QB Statement filed by the buyer before correction. They have to fill out the Acknowledgement Number, PAN of the Buyer, Amount Paid / Credited, and Correction ID / Request ID.
Once you have filled in the details, you need to input the following address details in the respective area:
- Town / City / District
- State / Union Territory
- PIN Code
- Mobile Number
- E-Mail ID
Once you enter the address details, click on the ‘Next’ button to proceed further.
After filling out the address section, you can enter the preferred password, select the security question from the drop-down link, and click on the ‘Create Account’ button.
Once you get the confirmation screen, you will be able to view the details entered. If you observe andy error, click on the ‘Edit’ tab to edit and then, set up your account.
Once you complete the steps above, you will get an email and SMS with the account activation code and the activation URL.
2. How To Register With TRACES As A Deductor?
Steps to register with TRACES as a deductor:
Follow the steps above to ‘Register as New User’ and select ‘Deductor’ as the user type while registering as a new user.
Input the TAN number of the deductor, enter the verification code, and click on the ‘Proceed’ button.
In step 3, you need to verify the following details: form type, financial year, quarter option. Then you have to put the acknowledgment number, which would already be delivered to your email.
Below, you will have to fill in the challan details based on the acknowledgment number and input the entries of the TDS return. If you have one party, then you can update only one return, but in case you are connected with several parties, you have to fill details of all parties here.
Click on the proceed option for the following steps.
In step 4, you have to input your organizational details and communication details. Below, you have input the authentic mail ID and phone number so that they can send the activation link to your TRACES account.
In this step, you have to create your own ID. Keep in mind that the ID should be validated. Create your own password and enter the newly created password once again for password confirmation.
Click on Create Account.
After submitting the confirm button, A page of the entire details you have already put will be shown for review. After reviewing the entire details click on the ‘Confirm’ button.
You will get a message ‘ Registration request successfully submitted’. And you will get an activation link on your mail and mobile number. You have to click on the activation link and codes to activate your TRACES deducted account.