The full form of TDS is Tax Deducted at Source. It is the amount that is deducted as a tax from the money paid at the time of specific payments such as rents, commissions, salary, or professional fees. It is one of the tax-collection method used in India. It is governed under Income Tax Act, 1961 and managed by the Central Board of Direct Tax. By the way of TDS, some portion of the tax is directly paid to the income tax department which leads to a reduction of tax evasion in the country.
TDS must be deposited on or before the due date which is prescribed by the Income Tax Law. Along with TDS, the deductor has to file the quarterly statement summary regarding the entires of tax which is deducted by the deductor and paid to the income tax department. All the TDS deductors must submit the TDS return on or before the due date.
When TDS return can be claimed?
If the employer deducts more tax than the total taxable income.
If the income is below the tax slab and the tax is deducted from the interest of Fixed Deposite or bank account.
If the tax is deducted on the interest of Fixed Deposite of a senior citizen.
Who can deduct TDS as per Income Tax Act,1961?
Various deductors of TDS are as follows:
Hindu Undivided Family
Public or Private Limited companies or organizations
Body Of Individuals
Association Of Individuals
When TDS is not deducted?
When payment is made to the Government of India or Reserve Bank of India, TDS is not deducted. No TDS will be deducted in case of payments made or received from the following :
Interest in KVP, Indira Vikas Party or NSC
Interest received from NRE account
LIC, UIT, and other insurance or corporative society
All institutions notified under no-TDS
These are some of the institutions in which TDS is not deducted same as these institutions there are various other institutions. Before filing TDS, the Taxpayers are required to check whether TDS is applicable or not on the following institutions.
Requirements for TDS Filing
Must have TAN registration for filing TDS return online.
Prepare TDS statement by using Return Preparation Utility.
Validate TDS statement by using File Validation Utility.
Must have a Digital Signature that is registered for e-filing.
Must provide Bank Account Details of the Principal Contact.
Types of TDS forms
Form 24Q: TDS subtracted on salary
Form 26Q: TDS subtracted on payment other than salary
Form 27Q: TDS subtracted and collected from non-resident payment other than salary
Form 27EQ: Periodic statement of tax collected at source
Form 26 QB: Return-cum-challan on payment of TDS to the government
Form 26 QC: Challan-cum-statement for reporting transaction responsible for TDS on rent
Form 26QD: Challan-cum-statement for reporting transaction responsible for TDS on payment to Resident contractors and professionals.
Process of TDS filing
The following Steps needs to be taken care of while filing TDS:
Firstly Form27A is filled.
If a hard copy of the form is filled then it is to be verified with an e-TDS return which is filed electronically.
Next, TDS and the total amount which is to be paid should be correctly filled and matched in respective forms.
TAN of the organization should be mentioned in Form27A who is filling TDS return.
Appropriate challan number, mode of payment, and tax detail should be mentioned in TDS returns.
7 digit BSR number will be entered so that Talley becomes easy (BSR number is a code which is provided to all registered Indian banks which help in identification of bank and its branch)
Physical TDS should be submitted to TIN-FC.
Digital Signature should be used by the deductor while filing TDS returns online.
Next, if all the information provided is correct then a token number and a provisional receipt will be received.
This acknowledgment works as a confirmation that a TDS return has been filed.
If a TDS return is rejected, a non-acceptance memo with the reason for the rejection will be issued.
If TDS return is rejected then it should be filed again.
TDS return due date of FY 2021-22:
Last Date Of Filling
1st April to 30th June
31st July 2021
1st July to 30th September
31st October 2021
1st October to 31st December
31st January 2022
1st January to 31st March
31st May 2022
The due date of filing the return which was normally 31st July 2021 has been extended to 30th September 2021.
Penalty for delay in TDS return filing
Section 234E (Income Tax Act,1961), According to this section if a taxpayer fails to file a TDS return before the due date, the penalty of Rs 200 per day shall be paid by an individual until the default carries on. A total penalty should not exceed the amount of TDS.
Advantages of TDS return filing:
It confirms the source of income to the government.
The tax collection base is extended.
Become convenient to the taxpayer as it is automatically deducted.
Prevent tax evasion.
The burden of paying a huge amount of tax is reduced. By distributing the amount of tax over months.
With the economic development of the country, it was very important to have such a tax policy so that tax evasion get reduced. As with this policy, there will be an automatic deduction of tax at the time of payment. This also becomes convenient to the taxpayer as the final payment is made after the deduction of tax and the deductor has to fill the TDS return to the Income Tax Department on or before the due date. So, that the department has the information about the various deduction made by the deductor.
CA Pulkit Goyal, is a fellow member of the Institute of Chartered Accountants of India (ICAI) having 10 years of experience in the profession of Chartered Accountancy and thorough understanding of the corporate as well as non-corporate entities taxation system.
His core area of practice is foreign company taxation which has given him an edge in analytical thinking & executing assignments with a unique perspective. He has worked as a consultant with professionally managed corporates. He has experience of writing in different areas and keep at pace with the latest changes and analyze the different implications of various provisions of the act.
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