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TDS Return Filing

TDS Return filing is mandatory for deductors to submit to Income tax department every quarter. Filing of TDS Returns requires a PAN of the deductor and deductee. It also requires TAN of the deductor and Digital Signature Certificate of deductee.

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Introduction to TDS (Tax Deducted at Source)

Tax Deducted at Source or commonly referred as TDS is the amount of tax deducted from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest, etc. The TDS amount is deducted at the time of making payments. Here, the tax is deducted when the money is credited to the payee’s account or at the time of payment, whichever is earlier.

TDS is deducted at the time of payment of salary or life insurance policy. The amount deducted as TDS is then deposited to the Income - tax department. By way of TDS, some portion of the tax is automatically paid to the Income Tax department. Thus, TDS is considered as a means of reducing tax evasion.

Who is Liable to Deduct TDS as per Income Tax Act?

The list of the deductors who can deduct TDS is mentioned below:

  • Individuals
  • Hindu Undivided Family or HUF
  • Limited Companies or organisations
  • Partnership Firms
  • Body of Individuals
  • Association of Individuals
  • Local Authorities

Deduction Rate of TDS

On salary income, TDS is deducted depending upon the income tax slab rates applicable to a person. For other types of income such as rent, interest on securities, insurance commission, dividend, etc. the TDS rates are fixed and vary between 10% and 20%.Some of them are shown in table below:

Section

 

Nature of Payment

TDS Rate of Individual/HUF in percent

TDS Rate for NRI

192

 

Payment of salary

As per category in income tax

As per category in income tax

194B

 

Income earned by winnings from card games, lotteries, and other games

30%

30%

194BB

Income from winning of horse races

30%

30%

194EE

Payment made into National savings scheme (NSS) deposit

10%

10%

194F

Payment made towards repurchase of units by Unit Trust of India or Mutual Funds

 

20%

20%

194G

 

Income that arises from sale of lottery tickets/commissions and/or other transactions

5%

5%

194LBB

 

Investment fund which pays income to the unit holder [except for incomes that are exempted under Section 10 (23FBB)]

10%

30%

194LBC

 

Income generated from investments made in securitisation trust as per Section 115TCA

25%

30%

Advantages of TDS

The benefits of TDS are as follows:

  • It prevents the assessee from defaulting in paying taxes.
  • It ensures that the source of the Government’s revenue remains stable.
  • It widens the scope of base tax collection.
  • The system of TDS is suitable for both the deductor and the deductee because the tax is deducted automatically.
  • It reduces the burden of paying huge amount of taxes. By distributing the total amount of tax over months, tax payment becomes easy.

Eligibility Criteria to file TDS Returns

Employers and organisations having a valid Tax Deduction and Collection Account Number or TAN can file TDS returns. As specified in the Income tax Act, TDS returns must be filed for the points mentioned below:

1

Payment of salary

2

Any profit made by winning lotteries, puzzles and similar types of games.

3

Commission made from payment of insurance

4

Any income made from Income on securities.

5

Profit generated by winning horse races.

6

Payments made in the National Savings Scheme and any other similar schemes.

Due Dates for Filing of TDS Returns

The following are the due dates for filing TDS returns:

Quarter

 

Quarter Period

Last Date of Filing of TDS Returns

 

1st Quarter

 

From 1st  April to 30th June

31st July

2nd Quarter

 

From 1st July to 30th September

 

31st October

3rd Quarter

 

From 1st October to 31st December

 

31st January

4th Quarter

 

From 1st January to 31st March

31st May

What is TAN?

The main purpose of the Tax Deduction and Collection Account Number which is commonly known as TAN, is related to deduction or collection of tax at source. As prescribed in Section 203A of the Income Tax Act, 1961 obtaining TAN is mandatory for individuals or businesses who are authorized by the government to deduct or collect tax. In case of any failure to quote TAN Number in documents can result in a penalty of Rs. 10,000.

TDS Return Filing

TDS return filing is a quarterly statement which must be submitted to the Income Tax Department by the deductor (i.e. all persons responsible for deducting TDS). TDS Return contains the details of TDS deducted and deposited by deductor, PAN of deductor and deductee, TDS challan information, type of payment, amount of TDS deducted, etc. The TDS return filing must be done by every assessee who has deducted TDS at prescribed intervals.

An investment proof may be submitted by an employee to his/her employer for the purpose of claiming deductions and, therefore, his taxable income falls below the maximum amount not chargeable to tax. In such cases, no TDS should be deducted by the employer.

Types of TDS forms

The deductor being liable to deduct tax and to fileTDS Return form as the supporting document, it is important to note that there are different types of TDS Return Forms available for different situations. The type of TDS Return Form which must be submitted is based on the nature of income of the deductee or the type of deductee who pays the TDS.

Types of TDS Return Forms

Particulars of the Form

 

Form 24Q

 

TDS statement of salaries

Form 26Q

 

TDS statement on all payments other than salaries

Form 27Q

 

TDS statement on income received from interest, dividends, or any other sum payable to non residents.

Form 26QB

TDS on payment for transfer of immovable property

 

Form 27EQ

 

Statement of collection of tax at source.

 


The return statement of quarterly TDS needs to be accompanied with a signed in Form 27A, which is a control chart of all the quarterly TDS or TCS statements. Such form is to be filed by those deducting or collecting tax along with quarterly TDS/TCS statements. It acts as a summary of TDS return filing or TCS returns that are containing the totals of amount that’s paid and the income tax that’s deducted at source.

TDS Credit certificate

The deductor of TDS issues a Form to the deductee which is called a TDS certificate. It shows the details of payment, TDS date and the date of its credit to the Income tax Government.

The assessee claims the credit and refund on the basis of TDS certificate. TDS Certificates are Form 16 and Form 16A.

TDS certificate can be downloaded from TRACES (TDS Reconciliation Analysis and Correction Enabling System) of the Income tax department. The deductee should check the details on the certificate and also verify the digital signature certificate (DSC).

TDS deductions are linked to PAN numbers for both the deductor and deductee. The Tax Credit Form 26AS is a consolidated tax statement which is available to all PAN holders. Since all TDS is linked to your PAN, Form 26AS gives the details of all TDS deducted by each deductor for all kinds of payments made to a person – whether those are salaries or interest income.

Process of TDS Return Filing online

Online filing is more convenient method for TDS Return Filing. For this purpose one has to register to NSDL before. Following are the steps on how to file income tax return online:

First, Form 27A, which has multiple columns, must be filled completely.


In case the hard copy of the form is filled, it must be verified along with the e-TDS return that has been electronically filed.


Next, the TDS and the total amount that has been paid must be correctly filled and should be matched in their respective forms.


The TAN of the organisation that is filing the TDS returns must be mentioned on Form 27A.


The appropriate challan number, the mode of payment, and the tax details must be mentioned on the TDS returns.


The basic form that is used for filing e-TDS must be used as it would bring consistency. The 7 digit BSR should be entered so that the tallying becomes easy.


Physical TDS returns must be submitted at the TIN-FC. The NSDL manages all TIN-FCs.


A level 2 digital signature must be used by the deductor in case TDS returns are filed online.


In case all the information that has been provided is correct, a token number or provisional receipt will be received.


This acknowledgement works as a confirmation that the TDS Returns have been filed.


In case the TDS Returns are rejected, a non-acceptance memo along with the reasons for the rejection is issued.


If TDS Returns are rejected it must be filed again.

Penalty for Delay in Filing TDS Return

As prescribed in Section234E, if any taxpayer fails to file his/her TDS Return before the due date, a penalty of Rs 200 per day shall be paid by the individual until the time the  of default continues. However, the total penalty shall not exceed the TDS amount.

Requirements for Filing TDS Returns

The following are the requirements for filing TDS Returns:

  • You must have a TAN that is registered for filing TDS Returns online.
  • Prepare the TDS statement using RPU Return Preparation Utility or RPU.
  • Validate the TDS statement using FVU File Validation Utility or FVU.
  • You must possess a valid Digital Signature or DSC which is registered for e-filing.
  • You must also provide the Bank Account Details of the Principal Contact.

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Frequently Asked Questions

As per S.203 of Income Tax Act, 1961, every individual Deducting Tax at Source (TDS) needs to issue a certificate to the payee (a person to whom money is paid or is to be paid). The amount of tax deposited by the deductor is shown in TDS Certificate.

Any individual making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such specified payment. But no TDS needs to be deducted if the person making the payment is an individual or HUF whose books are not required to be audited.

Yes, you can get TDS Refund. At first you will have to declare it in your IT return form and the income tax department will automatically compute the refund and then will credit it in your bank account.

Yes, there is a penalty for non-filing of TDS Return. In case the return is not filed within 1 year from the due date of filing return or providing of any incorrect information, a penalty would be charged which should not be less than Rs. 10,000 or more than Rs. 1,00,000.

Yes, PAN of both the deductor and the deductee is mandatory in filing of TDS Returns.

If there is any error in filing of TDS returns for instance incorrect PAN or any other detail which is not correctly filled, the tax amount that was paid to the Government will not show under Form 16 or 16A or 26AS. Under such circumstances, the TDS Returns needs to be filed again.

The people who are liable to file tax returns are as follows:

  • Persons whose accounts are audited as per section 44AB
  • Government officials
  • Company

Any excess TDS amount paid by the assessee gets refunded. The time period of TDS refund amount depends on when you have filed your income tax return that is on due date or before the due date . In case the TDS amount is filed on time then the excess TDS amount will be refunded between three to six months.

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