All you need to know about TDS Return Filing

Income Tax Department has facilitated an effective system of collection of taxes under which any person who is responsible for making payment of income under the Income Tax Act, shall be required to deduct tax at source and deposit the same with the government within the time mentioned under the TDS Provisions.

Tax is required to be deducted at the time when money is credited to the payee’s account or at the time of payment in cash or through cheque or draft or any other mode whichever is earlier.

There are different tax rates (10%,15%,20%,2%,1%) for various incomes like commission, professional fees, salary, dividend, interest, rent, contractor payments, insurance, remuneration paid to the director of the company, winning from lotteries or crossword puzzles or winning from card games or other games etc. which are covered under TDS.

Table of Content Overview of TDS Return Filing Benefits of Filing a TDS Return Due Dates for E-Filing of TDS Who is liable to submit TDS Return? TDS Return Forms Process of TDS Return Filing Penalty for delay in filing TDS Return Penalty for not filing TDS Return Revised Return Filing TDS Refund Highlights of Budget 2021 Takeaway

Overview of TDS Return Filing

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.

Benefits of Filing a TDS Return

Filing TDS Return is mandatory for an individual or any business entity and provides various benefits. A Few of them are mentioned below –

• Tracking of Records: TDS Return filing on time helps the government in tracking the records of the inflow of Income. It prevents people from evading taxes.

• Use of TDS in Nation’s Welfare: The amount received from the TDS Return filing is used for the welfare of the Nation. It ensures a steady source of revenue for the government.

• Fewer Burdens of Taxpayer: TDS is paid quarterly, so there is no burden of paying the lump sum tax at once. By that the burden of responsibility of the tax collection agencies and the deductor are lessened.

• Facilitates Smooth Collection of Tax: TDS Return facilitates a smooth collection of the tax that is used for welfare purposes. It is convenient for the Deductee as Tax is automatically deducted.

Due Dates for E-Filing of TDS

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

Who is liable to submit TDS Return?

Every person who is liable for deduction of tax will be required to submit quarterly statements for the relevant financial year.

The following persons shall be required to submit TDS Returns electronically:

• Persons whose accounts are audited u/s 44AB of the Income Tax Act.
• Company
• Person who is holding an office under the Government.

Physical return can be submitted by filing Challan No.281 in the authorized bank branch.

E-Payment is compulsory for corporate assesses i.e. companies and those on whom provisions of Sec 44AB of the Income Tax Act 1961 are applicable.

TDS Return Forms

Various statements are used for filing TDS returns like 

• Form 24Q is for TDS on Salary, 
• Form 27Q is used when deductee is a non-resident, 
• Form 26QB is used when TDS is deducted on payment on transfer of immovable property and 
• Form 26Q is used in other cases.

But if tax is deducted under section 194-IA and 194-IB, the deductor shall submit Form 26QB and Form 26QC respectively which shall act as a mix of challan and statement within a period of 30 days from the end of the month in which deduction is made.

Process of TDS Return Filing 

First of all, before beginning with the process it is important to understand Form 27A.

This is a physical form which is to be submitted to the respective centres approved by the Income Tax Department along with electronic TDS Return only when the TDS Statement is furnished physically.

Now starting with the process:

• Assesses are required to mention their TAN in Form 27A.
• The totals of amount paid and TDS Deducted at source has to be filled correctly.
• It is necessary to quote the Bank Branch Code which is a 7-digit number provided by the Reserve Bank of India.
• E-TDS Returns can be filled through the requisite software’s.
• Besides the Bank Branch Code, the deductor needs to mention the Challan Number which is generated by the bank once the TDS deducted is deposited.
• The Taxpayer needs to fill the deductee details which requires the amount of income tax deducted, rate of tax, PAN Number of the deductee.
• Once filled after verification of challans the Physical returns can be submitted in the respective NSDL Centres.
• But if returns are filled online, they can be submitted directly on the NSDL Website, through digital signature.

The TDS Return once filled is validated through a utility available at the NSDL Site.

Penalty for delay in filing TDS Return

If an assessee fails to submit his/her TDS Return before the due date, a penalty of Rs 200 per day shall be charged until the time default continues but such an amount should not exceed the TDS amount.

Penalty for not filing TDS Return

If the assessee fails to file, the TDS Return within 1 year from the due date of filing or submits incorrect information then the penalty shall range from Rs 10000 till maximum Rs 100000.

Revised Return Filing

In case of any error being detected in the original return like incorrect challan details, incorrect PAN, the tax amount credited in the account of government will not be reflected in Form 16,16A,26AS for which one needs to file revised return by submitting a correction request.

Such return is prepared through most recent TDS Statement which can be downloaded from the TRACES Website.

TDS Refund

 If the tax deducted is more than the actual tax liability the difference results in Refund. If the assessee has filled the return on time, refund shall be processed within 3 to 6 months, but if the refund is not processed within specified time period, interest is charged at 6% p.a. on the refund amount.

Highlights of Budget 2021

It has been put forward to exempt the senior citizens from filing income tax returns if their only annual income source is through pension income and interest income. Also, Section 194P has been newly introduced to enforce the banks to deduct tax on senior citizens more than 75 years of age who have a pension and interest income from the bank.

Takeaway

Kindly utilize the steps given above to integrate legally and securely TDS Return Filing and get the benefits in the form of better-quality tax deduction and smooth collection of tax. Our Legal Window experts will be at your disposal for assisting you with guidance concerning TDS Return Filing and its compliance for the smooth functioning of your business in India. Legal Window professionals will assist you in planning everything seamlessly at the least cost, confirming the successful conclusion of the process.