Reason for Non-deduction/Lower deduction/ Higher deduction

The deductors who prepare TDS return himself should read below detailed information regarding FLAG's used in TDS return.  In case deductor do not enter below codes or entered wrong codes in TDS return, Income Tax Department will raise demand for the same.  For example if flag wrongly selected as C and TDS deducted @ 2%,1% or 10% etc. Income Tax Department will charge higher rate @ 20% (due to selection of  Flag C) and will issue demand for the balance amount.

Sr. No.	Particulars	Code	Whether PAN mandatory
1	In case of lower deduction/no deduction on account of certificate under section 197	A	Yes
2	In case of no deduction on account of declaration under section 197A. Allowed only for section 194, 194A, 194EE and 193	B	Yes
3	In case of deduction of tax at higher rate due to non-availability of PAN	C	No
4	In case of Transporter transaction and valid PAN is provided	T	Yes
5	Transaction where tax not been deducted as amount paid/credited to the vendor/party has not exceeded the threshold limit (as per the provisions of income tax act). Applicable for sections 193,194, 194A, 194B, 194BB, 194C, 194D, 194EE, 194G, 194H, 194I, 194J, 194LA.	Y	Yes
6	For software acquired under section 194J (Notification 21/2012). Applicable from FY 2012-13   onwards.	S	Yes
7	In case of no deduction on account of payment under section 197A (1F). Applicable from FY 2013-14 onwards	Z	Yes