TDS Return Filing in India

TDS Return Filing in India

Filing a TDS Return is mandatory for all the assessees who fall under the tax slab prescribed by the Income Tax Department. It is obligatory to e-file the TDS returns, which can be done through the official Income Tax e-filing portal.

TDS is the amount of Tax that is deducted by the employer or the deductor from the taxpayer's amount and deposited to the Income Tax Department on their behalf.

TDS or Tax Deducted at Source is a precise amount that is reduced when a certain payment like salary, commission, rent, interest, professional fees, etc. is made. The person who makes the payment deducts the Tax at source (TDS), while the person who receives the payment is liable to pay the Tax. It will reduce tax evasion because the Tax will be collected when making the payment.

Rates at which taxes are deducted are already specified in the relevant provisions of the Act of the First Schedule to the Finance Act. However, in the case of payment to non-resident persons, the withholding tax rates specified under the Double Taxation Avoidance Agreements will also be considered.

TDS Return can be filed online. Once the TDS returns have been submitted, the details will appear on the payee's 26AS form. The following details are required while filing TDS returns:

  • The deductor's and deductee's Permanent Account Number (PAN) details.
  • Information on TDS challan.
  • Amount of Tax that was required to be paid to the Government.
  • Any other relevant information, if needed.

Advantages of TDS

Advantages of TDS

Some of the advantages of TDS are:

  • It ensures that people refrain from paying the payment of taxes.
  • TDS acts as a sturdy source of revenue for the Government.
  • The deductee is much more appropriate as the tax amount payable is automatically deducted.
  • The burden on Tax Collection Agencies to collect Tax reduces.

Types of TDS

Here are about of the income bases that qualify for TDS:

  • Salary
  • Amount under LIC
  • Bank Interest
  • Brokerage or Commission
  • Commission payments
  • Compensation for acquiring immovable property
  • Contractor payments
  • Deemed Dividend
  • Insurance Commission
  • Interest apart from an interest in securities
  • Interest on securities
  • Payment of rent
  • Remuneration paid to the director of a company, etc
  • Transfer of immovable property
  • Endearing from games like a crossword puzzle, card, lottery, etc.

TDS Returns

TDS Returns need to be filed every quarter. In case of late or non-filing, a fine of Rs. 200/- per day under section 234E of the Income Tax Act, 1961 until you finally file the return. However, the late fees should not exceed the amount of tax to be paid. The due dates to file TDS returns are as follows:

Quarter Quarter Period Due Date to file TDS Return
1st Quarter April – June On 31st July of same financial year
2nd Quarter July – September On 31st October of same financial year
3rd Quarter October - December On 31st January of same financial year
4th Quarter January to March On 31st May of same financial year

Penalty for Late Filing TDS Return

Penalty for Late Filing TDS Return

Failure to submit the returns: Under Section 272A (2) of the Income Tax Act, a penalty of Rs.100 will be levied for each day the returns remain un-submitted, to a maximum of the TDS amount.

Failure to file the returns on time: Under Section 234E of the Income Tax Act, a penalty of Rs.200 will be levied for each day the returns remain un-filed, to a maximum of the TDS amount.

For defaults in filing TDS statements: Under Section 271H of the Income Tax Act, a penalty of Rs.10,000 to Rs.1 lakh will be levied in case the deductor defaults in filing the TDS return within the due date.

For incorrect details: Under Section 271H of the Income Tax Act, a penalty of Rs.10,000 to Rs.1 lakh will be charged if the deductor submits incorrect information about PAN, challan particulars, TDS amount, etc.

For non-payment of TDS: Under Section 201A of the Income Tax Act, interest will be levied along with the penalty in case TDS is not paid within the due date. If any portion of the tax due is not collected in full or on time, interest of 1.5% per month will be assessed, beginning on the date the tax was due and continuing until the date the tax is collected.

Frequently Asked Questions

Yes, the tax credit will be reflected in your 26AS form. However, the TDS claimed or claimed should be strict as per the TDS credit in form 26AS. If there is any difference in TDS deducted, which is reflected in 26AS, then it should be intimated to the deductor and reconciled. The Income-tax Department will grant the credit as per form 26AS.

Yes, failure to deposit TDS in the Government's account within the specified time limit would attract a penalty, interest, and rigorous imprisonment of up to 7 years.

Under Section 195, a person can file an application with the officer for handling non-resident taxation, who will pass an order determining the TDS to be made. Otherwise, if the recipient feels that the TDS is more, he may file an application with his Assessing Officer for non-deduction.

Yes, a payee can ask the payer not to deduct the Tax at source but for that payee have to furnish a declaration in FORM 15H/15G that the effect of Tax on his projected total income of the previous year after including the income on which Tax is to be deducted will be nil.
Form 15G is for an Individual or a person (other than a company or a firm)
Form 15H is for senior citizens

Sec 194J levies TDS on professional and technical services. As per the Companies Act, 2013 director of the company is also a manager and technical personnel. As per Section 194J (1) (ba), any payment made to the director like remuneration, sitting fees, or any other sum other than those on which tax deductible under section 192 is to be taken for deduction of Tax at source @ 10% under section 194J. Moreover, there is no threshold limit for deduction of Tax at source.

As per Income Tax Act, 1961, all business and government deductors/ collectors must file their TDS/TCS returns on electronic media (i.e., e-TDS/TCS returns). However, deductors/collectors can file in a physical or electronic form other than corporate/Government.

Director General of Income Tax (Systems) has been appointed the e-Filing Administrator by the CBDT for the electronic filing of TDS/TCS returns.

National Securities Depository Limited (NSDL), Mumbai, has been appointed an e-TDS/TCS Intermediary. NSDL only has established TIN-FCs across the country to help deductors/ collectors file their e-TDS/TCS Return.

It is mandatory to mention the Tax Deduction Account Number (TAN) in e-TDS/TCS return.

Yes, PAN is mandatory for deductors and employees/deductees. It is vital to quote the PAN of all deductees failing which credit of Tax deducted will not be given.

One can file their TDS/TCS return at any TIN-FCs managed by NSDL. TIN-FCs is nothing but a set-up at specified locations across the country. All details are available on the NSDL-TIN website.

It is the duty and the responsibility of the payer to deduct tax at source and if the payer fails to deduct tax at source, then payee will have to face adverse consequences. But, in such cases payee just have to discharge his tax liability. Thus, failure to deduct tax at source by the payer will not relieve payee from payment of the tax on his income.

The basic duties of the person liable to deduct at source are as follows:

  • To obtain Tax Deduction Account Number and quote the same in all the documents pertaining to TDS.
  • To deduct the tax at source at the applicable rate.
  • To pay the tax deducted by him at source to the credit of the Government (by the due date specified in this regard).
  • To file the periodic TDS statements, i.e., TDS return (by the due date specified in this regard*).
  • To issue the TDS certificate to the payee in respect of tax deducted by him (by the due date specified in this regard).

Non-reflection of TDS credit in Form 26AS can be due to numerous reasons like:

  • non-filing of TDS return by the payer
  • citing incorrect PAN of the deductee in the TDS statement filed by the payer

However, in case of non-reflection of TDS credit in Form 26AS, the payee has to contact the payer for learning the correct reasons for non-reflection of the TDS credit in Form 26AS.