TDS Return Filing
TAX DEDUCTED AT SOURCE (TDS)
Introduction
The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.
Rates for deduct of tax at source
Taxes shall be deducted at the rates specified in the relevant provisions of the Act or the First Schedule to the Finance Act. However, in case of payment to non-resident persons, the withholding tax rates specified under the Double Taxation Avoidance Agreements shall also be considered
Tax deducted or collected at source shall be deposited to the credit of the Central Government by following modes:
1) Electronic mode: E-Payment is mandatory for
a) All corporate assesses; and
b) All assesses (other than company) to whom provisions of Section 44AB of the Income Tax Act, 1961 are applicable.
2) Physical Mode: By furnishing the Challan 281 in the authorized bank branch
Note:-
Where tax is deducted/collected by government office, it can remit tax to the Central Government without production of income-tax challan. In such case, the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person by whatever name called to whom the deductor reports the tax so deducted and who is responsible for crediting such sum to the credit of the Central Government, shall submit a statement in Form No. 24G.to NSDL with prescribed time-limit.
Key Points on TDS
- TDS is to be deducted at the time of making payment
- 7th day of next month is the last date of TDS Payment
- TDS needs to be deducted at double rate if deductee does not have PAN number
- Section under which TDS is deducted must be mentioned in the TDS challan
- The Form 16/ 16A must be issued within 30 days of filing the TDS Return.
Payment of TDS deducted
The due date for deposit of TDS deducted from parties is 7th of next month. The TDS payment can be made through online banking, by cheque or cash by presenting the challan at designated banks. The challan contains date of deposit, BSR Code of the collecting banker, Serial Number of transaction and the amount deposited. The challan also mentions the section under which the TDS is being deducted and the assessment year for which the TDS is being deposited.
Filing of TDS Return
Every deductor who have been applied a TAN number shall file quarterly return of TDS. In case there is NIL deduction then a declaration need to be filed. The deductors shall obtain pan number of deductee and file the TDS Return clearly specifying the amount which was deducted against a particular PAN Number. The TDS return is a quarterly exercise and is of two type, viz one for deductions while making payment of Salary. while other is for all other cases.
Consequence of Non Compliance
The Non Compliance of TDS provisions is a very serious offence and is punishable under section 271 (c ) of the Income Tax Act 1962, where minimum penalty is 10,000 which can go up to Rs. 1,00,000/-. Section 276B applies to all cases where willful default is established and the punishment is severe in nature, its minimum 3 Years rigorous imprisonment which can go upto 7 years. However, if sufficient cause is shown to the satisfaction of commissioner of Income Tax the penalty can be waived.
Interest on Non Deduction of TDS
A deductor while making payment for which he ought to have deducted TDS fails in deducting TDS or deducts an amount less than the required amount. In all such cases the deductor is liable to pay an interest @ 1% per month or part of the month, till the date on which TDS is deducted. Hence, a businessman must be very careful while making payment to parties and ensure that TDS is being deducted from all such payments at the prescribed rates.
Interest on NON Payment of TDS
The TDS deducted while making payment or otherwise shall be deposited before 7th day of succeeding month. any failure on deposit of TDS is a serious offence and the business man not only punishable under section 271 C or / and Section 276B he is also liable to pay interest on delayed payment at the rate of 1.5% per month or part thereof. There is no provision in law where the interest can be waived, hence the assesse should be very careful.
Other Consequences of Default on TDS
The expenses on which TDS was supposed to be deducted shall be disallowed as an expense under section 40(a) while computing the taxable income. Each deductor is required to obtain a TAN number which need to be quoted on all TDS payment Challans, on Form 16 /16 A. The late filing of TDS Return attracts a penalty of Rs. 200 per day till the day default continues. The punishment can be upto Rs. 100,000/- In case the return is filed beyond 1 years from the due date.
Key Differences Between TDS and TCS
The difference between TDS and TCS can be drawn clearly on the following grounds:
- TDS implies the amount deducted from the recipient’s income in the form of tax. TCS refers to an amount accumulated by the seller or company as a tax.
- While TDS is like expense for the company, TCS is income.
- Tax deduction at source is to be paid when specified expenses overreach the prescribed limit. On the contrary, Tax collection at source needs to be collected when the sale of specified items takes place.
- The payer or buyer deduct TDS, i.e. they are required to deduct tax at source. Conversely, the payee (receiver) or seller is responsible for the collection of TCS, at a prescribed rate from the buyer.
- In general, the tax is deducted at source, at the time of crediting the account of the payee or during payment, whichever is earlier. Although, in the case of payment of salary and life insurance premium, it should be deducted, at the time of payment only. As opposed to TCS, which is collected when the buyer’s account is debited or when the amount is received whichever is earlier. However, when the sale of jewellery or bullion takes place, it should be collected when the considered is received in cash.
TDS Return
TDS return is a quarterly statement to be given to the I-T department. It is compulsory for deductors to submit a TDS return on time. The details required to file TDS returns are:
- PAN of the deductor and the deductee
- Amount of tax paid to the government
- TDS challan information
- Others, if any
Eligibility Criteria for TDS Return
TDS return can be filed by employers or organizations who avail a valid Tax Collection and Deduction Account Number (TAN). Any person making specified payments mentioned under the I-T Act are required to deduct tax at source and needs to deposit within the stipulated time for the following payments :
- Payment of Salary
- Income by way of “Income on Securities”
- Income by way of winning lottery, puzzles and others
- Income from winning horse races
- Insurance Commission
- Payment in respect of National Saving Scheme and many others
TDS Return Filing
Due dates of TDS Return :
| Quarter | Quarter Period | TDS Returns Due Date |
| 1st Quarter | 1st April to 30th June | 31st August |
| 2nd Quarter | 1st July to 30th September | 31st October |
| 3rd Quarter | 1st October to 31st December | 31st January |
| 4th Quarter | 1st January to 31st March | 31st May |
TDS Return Forms
| Particulars | Forms |
| TDS on Salary | Form 24Q |
| TDS where deductee is a non-resident, foreign company | Form 27Q |
| TDS on payment for transfer of immovable property | Form 26QB |
| TDS in any other case | Form 26Q |
Various forms are used for filing TDS return, depending on the purpose of deduction. These returns have to be in company with a signed verification in Form No. 27A. It is a form that controls the quarterly statements. This has to be filed by deductors together with quarterly statements. It summarizes the control totals of “amount paid” and “income tax deducted at source” which has to match with the totals in TDS return.
TDS Return Submission
An assesses is liable to file e-TDS return if TDS is deducted from his/her income. It is obligatory to file TDS return within the due date mentioned above. In case an assesses does not file the return within the prescribed time, he will be liable to pay a penalty. Following are the assesses liable to file quarterly TDS return electronically:(a) People whose accounts are Audited u/s44AB
(b) People holding an office under the Government
(c) Company