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TDS or Tax Deducted at Source is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments.
Usually, the person receiving income is liable to pay income tax. But the government with the help of Tax Deducted at Source provisions makes sure that income tax is deducted in advance from the payments being made by you. The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against his final tax liability. The recipient takes credit for the amount already deducted and paid on his behalf.
Starts at 1999/- per Quarter
Starts at 1999/- per Quarter
Starts at 1999/- per Quarter
Prevents Evasion of Taxes: Timely TDS Return Filing helps the government track the records of the inflow of Income which prevents people from evasion of taxes.
TDS isused for the welfare of the Nation: The TDS Return filing amount is utilized for the welfare of the Nation. It ensures a steady source of revenue for the Government.
Less Burden of Taxpayer: TDS is paid quarterly, so there is no burden of paying the lump sum tax at once. Due to this, the burden of the taxpayer as well as the tax collection agencies is reduced.
Facilitates Smooth Collection of Tax: TDS Return facilitates a smooth collection of the tax used for welfare purposes. It is convenient for the Deductee as Tax is automatically deducted.
The Tax Deducted at Source must be deposited to the government by the 7th of the subsequent month
Tax Deducted at Source has to be deposited using Challan ITNS-281 on the government portal.
Form 27A must be duly filled.
Verification of form with the e-TDS return filing
Particular of the amount paid and the TDS must be correctly filled in all the forms, including Form No. 27A, Form No. 24, Form No. 26 and Form No. 27.
Do not forget to mention the Tax Deduction Account Number (TAN) in Form No. 27A.
Ensure that particulars relating to the depositing of TDS have been mentioned accurately.
Mention all the details recommended by the authority.
TDS return has to be filed properly
TDS returns forms are submitted at any TIN-FCs managed by NSDL.
Filing Tax Deducted at Source returns is mandatory for all the persons who have deducted TDS.
TDS return is to be submitted quarterly and various details need to be furnished like TAN, amount of TDS deducted, type of payment, PAN of deductee, etc.
Also, different forms are prescribed for filing returns depending upon the purpose of the deduction of TDS.
Various types of return forms are as follows: Form 26QTDS on all payments except salaries Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May
| Form No | Form No Transactions reported in the return | Due date |
|---|---|---|
| Form 24Q | TDS on Salary | Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
| Form 27Q | TDS on all payments made to non-residents except salaries | Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
| Form 26QB | TDS on sale of property | 30 days from the end of the month in which TDS is deducted |
| Form 26QC | TDS on rent | 30 days from the end of the month in which TDS is deducted |
Form 16, Form 16A, Form 16 B and Form 16 C are all TDS certificates. TDS certificates have to be issued by a person deducting TDS to the assessee from whose income TDS was deducted while making payment.
For instance, banks issue Form 16A to the depositor when TDS is deducted on interest from fixed deposits.
Form 16 is issued by the employer to the employee.
| Form No | Certificate of | Frequency | Due date |
|---|---|---|---|
| Form 16 | TDS on Salary payment | Yearly | 31st May |
| Form 16 A | TDS on non-salary payments | Quarterly | 15 days from due date of filing return |
| Form 16 B | TDS on sale of property | Every transaction | 15 days from due date of filing return |
| Form 16 C | TDS on rent | Every transaction | 15 days from due date of filing return |
A TDS (Tax Deducted at Source) return form is a document used to report tax deductions made from an individual's or organisation's income. It is filed with the Income Tax Department of India and is used to ensure that the individual or organisation pays the correct amount of tax.
The TDS return form consists of details such as the taxpayer's name and PAN (Permanent Account Number), the tax deductor's name and TAN (Tax Deduction and Collection Account Number), the period of tax deduction, and the total amount of tax deducted. It also includes details of the tax deductible at sources, such as the nature of the payment, the amount paid, and the rate at which the tax was deducted.
TDS return forms can be filed electronically or through a physical form. It is important to file the TDS return form on time to avoid any penalties or fines
Step 1: Go to the website of the Income Tax Department (https://eportal.incometax.gov.in/iec/foservices/#/login) and log in to your account using your PAN and password
Step 2: Click on the 'e-File' tab on the top menu and select 'Prepare and Submit TDS Return'
Step 3: Select the appropriate financial year and form (Form 26Q for TDS on salaries, Form 24Q for TDS on non-salaries, Form 27Q for TDS on foreign companies, etc.) and click 'Continue'
Step 4: Enter all the required details, including the TDS amount, PAN of the deductee, and the tax deducted at source
Step 5: Verify the details and click on 'Submit'
Step 6: You will receive an acknowledgement receipt of TDS return filing, which you can save or print for future reference
Step 7: If you have made any errors or omissions in the TDS return, you can file a revised return by following the same process. Just select the 'Revised Return' option
In the case of online TDS return, if there are any errors committed due to incorrect challan details, incorrect PAN details or lack of PAN card details, the amount which is credited as the tax will not be reflected in the Form 16A/Form16/Form 26AS. In such cases a revised TDS return must be filed.
To file a revised TDS return, you need two files - a consolidated file containing the details of the deductions made in the quarter; and the one is the justification report containing the information on the errors filed in the return.
While filing online TDS returns, if you pay in excess of the actual tax amount payable, you will be eligible to claim TDS refund. The time within which the refund is done depends on whether you have made the income tax return filing before or after the due date. If the returns were filed on time, you will receive the refund of the excess amount within 3-6 months.
In online TDS return, if there is a case of late filing or failure to file the returns, the individual or the company will have to face two types of penalties:
The late filing fee- U/s 2 and 234E
Non-filing penalty - U/s 271 .
If an individual or entity fails to file, the TDS Return by the due dates as prescribed has to bear the below-mentioned penalties.
Rs. 200 every day for such TDS return filing failure continues. However, the late fees shall not exceed the amount of the TDS Return filing.
Note: Before filing the TDS Return, the late return filing fee must be deposited.
The authority has the power to issue orders to the defaulter to pay the penalty, which can be a minimum of Rs. 10,000 up to the maximum of Rs.1 lakh.
Note-This penalty is in addition to the late TDS return filing fees mentioned above.
For quick and efficient collection of taxes, the Income-tax Law has incorporated a system of deduction of tax at the point of generation of income. This system is called as “Tax Deducted at Source”, commonly known as TDS. Under this system tax is deducted at the origin of the income. Tax is deducted by the payer and is remitted to the Government by the payer on behalf of the payee.
The provisions of deduction of tax at source are applicable to several payments such as salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. In respect of payments to which the TDS provisions apply, the payer has to deduct tax at source on the payments made by him and he has to deposit the tax deducted by him to the credit of the Government.
A payee can approach to the payer for non-deduction of tax at source but for that they have to furnish a declaration in Form No. 15G/15H, as the case may be, to the payer to the effect that the tax on his estimated total income of the previous year after including the income on which tax is to be deducted will be nil.
Form No. 15G is for the individual or a person (other than company or firm) and Form No. 15H is for the senior citizens.
A deductor would face the following consequences if he fails to deduct TDS or after deducting the same fails to deposit
it to the credit of Central Government’s account:-
a) Disallowance of expenditure
As per section 40(a)(i) of the Income-tax Act, any sum (other than salary) payable outside India or to a non-resident, which is chargeable to tax in India in the hands of the recipient, shall not be allowed to be deducted if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.
However, if tax is deducted or deposited in subsequent year, as the case may be, the expenditure shall be allowed as deduction in that year.
Similarly, as per section 40(a)(ia), any sum payable to a resident, which is subject to deduction of tax at source, would attract 30% disallowance if it is paid without deduction of tax at source or if tax is deducted but is not deposited with the Central Government till the due date of filing of return.
However, where in respect of any such sum, tax is deducted or deposited in subsequent year, as the case may be, the expenditure so disallowed shall be allowed as deduction in that year.
As per Section 58(1A) (as amended with effect from the assessment year 2018-19), the provisions of section 40(a)(ia) and 40(a)(iia) shall also apply in computing the income chargeable under the head “Income from other sources”.
b) Levy of interest
As per section 201 of the Income-tax Act, if a deductor fails to deduct tax at source or after the deducting the same fails to deposit it to the Government’s account then he shall be deemed to be an assessee-in-default and liable to pay simple interest as follows:-
(i) at one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and
(ii) at one and one-half percent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.
c) Levy of Penalty
Penalty of an amount equal to tax not deducted or paid could be imposed under section 271C.
A deductor who fails to deduct the whole or any part of the tax on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee-in-default in respect of such tax if such resident—
(i) has furnished his return of income under section 139;
(ii) has taken into account such sum for computing income in such return of income; and
(iii) has paid the tax due on the income declared by him in such return of income,
and the deductor furnishes a certificate to this effect in Form No.26A from a chartered accountant.
In such a case, the payee can claim the refund of entire/excess amount of TDS (as the case may be) by filing the return of income.
It is the duty and responsibility of the payer to deduct tax at source. If the payer fails to deduct tax at source, then the payee will not have to face any adverse consequences. However, in such a case, the payee will have to discharge his tax liability. Thus, failure of the payer to deduct tax at source will not relieve the payee from payment of tax on his income.
Following are the basic duties of the person who is liable to deduct tax at source.
• He shall obtain Tax Deduction Account Number and quote the same in all the documents pertaining to TDS.
• He shall deduct the tax at source at the applicable rate.
• He shall pay the tax deducted by him at source to the credit of the Government (by the due date specified in this regard*).
• He shall file the periodic TDS statements, i.e., TDS return (by the due date specified in this regard*).
• He shall issue the TDS certificate to the payee in respect of tax deducted by him (by the due date specified in this regard*).
*Refer tax calendar for the due dates.
To know the quantum of the tax deducted by the payer, you can ask the payer to furnish you a TDS certificate in respect of tax deducted by him. You can also check Form 26AS from your e-filing account at https://www.incometax.gov.in/iec/foportal
You can also use the “View Your Tax Credit” facility available at www.incometaxindia.gov.in
PAN stands for Permanent Account Number and TAN stands for Tax Deduction Account Number. TAN is to be obtained by the person responsible to deduct tax, i.e., the deductor. In all the documents relating to TDS and all the correspondence with the Income-tax Department relating to TDS one has to quote his TAN.
PAN cannot be used for TAN, hence, the deductor has to obtain TAN, even if he holds PAN.
However, in case of TDS on purchase of land and building (as per section 194-IA) as discussed in previous FAQ, the deductor is not required to obtain TAN and can use PAN for remitting the TDS.
Further in case of TDS on rent (as per section 194-IB) and TDS on payment of certain sums by Individuals of HUFs (as per section 194M), the deductor can use PAN instead of TAN for remiiting TDS
To see the FAQs from TDS – Centralized Processing Cell, please visit at http://contents.tdscpc.gov.in/en/top-faq.html
Yes, u/s 195. In case you have any doubt regarding the amount on which TDS is to be made, you may file an application with the officer handling non-resident taxation who will pass an order determining the TDS to be made. Alternatively, if the recipient feels that the TDS is more he may file an application with his Assessing Officer for non-deduction.
As per the section 194IB, an individual or HUF whose books of account are not liable for audit u/s 44AB, paying rent to a resident exceeding Rs. 50,000 per month or part of the month for land or building, liable to deduct tax @ 5% at the time of credit of rent, for the last month of the previous year or last month of the tenancy in case property is vacated during the year, as the case may be, to the account of the payee or at the time of payment thereof in cash or by cheque or draft or any other mode, whichever is earlier.
Therefore, limit of Rs. 50,000 is applicable for each co-owner separately, if rent is paid to co-owners of the property.
For Example: Mr. A is making payment of rent of Rs. 1,00,000 per month to Mr. B &Mr. C who are co-owners of the property, where in rent paid to Mr. B is Rs. 70,000 and to Mr. C is Rs. 30,000 ; A is liable to deduct tax @ 5% under section 194IB on rent paid to Mr. B as the amount of rent paid exceeds Rs. 50,000 and is not required to deduct tax on rent paid to Mr. C as the amount of rent paid does not exceed Rs. 50,000.
As per Rule 37BB, any person responsible for paying to a non-resident, not being a company, or to a foreign company, any sum chargeable to tax under the provisions of Income tax Act, 1961, shall furnish such information in Form 15CA and Form 15CB:
As per section 206C (1) every person, being a seller shall, at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, collect from the buyer. Hence, amount debited to the account of buyer or payment shall be received by seller inclusive of VAT/ excise/GST. TCS to be collected on inclusive of GST.
Sec 194J levies TDS on technical and professional services. As per the provisions of the Companies Act, director of the company is also a manager and thus, a technical personnel. As per Section 194J(1)(ba), any payment made to director in the nature of sitting fees, remuneration or any other sum other than those on which tax deductible under section 192 is to be considered for deduction of tax at source @ 10% under section 194J. Further, there is no threshold limit for deduction of tax at source.