Overview TDS return filing

Tax deducted at source commonly referred to as TDS is the amount of tax paid to the government of India at the time of making any transactions. As per the income tax act, 1961 any individual or any enrolled firm making any payments (such as rent, salary, or commission) should deduct a certain amount of tax at the source. TDS to be deducted according to the relevant rates issued by the income tax department.

The individual or organization which deducts the tax is named as a deductor and the person whose tax is retained is named as a deductee. It is the duty of the person who is making payment to somebody to deduct TDS and file TDS returns. The specified payment can be salary, interest, commission, brokerage, contract payments, etc.

Taxpotter provides expert help all through the TDS return filing process.

What is TDS return?

TDS is a quarterly document submitted to the income tax department. The deductor must file a TDS return on time. The TDS return should contain details like TAN number, PAN of deductor and deductee, amount of tax paid, TDS challan information, type of payment, etc.

An investment proof must be submitted by the deductee for claiming deductions and in case excess TDS has been deducted then one can file a return and claim a refund from the income tax department.

Eligibility for filing TDS return

TDS is filed by organizations or employers having a TAN (tax collection and deduction account number) number. An individual or business is required to file if they fall under the below-mentioned categories

  • Payment of salary
  • Payment from a national savings scheme
  • Income from insurance commission, horse racing, lottery or puzzles, etc
  • Income generated from securities

Benefits of filing TDS returns

Filing TDS returns provides various benefits to the individuals or businesses such as

1. Tracking of records

Filing TDS returns at the prescribed time helps the government to keep a track of records and reports of an influx of income. Tracking of records also helps to keep a check on tax evasion

2. Reduces tax burden

It reduces the burden of individuals from paying a huge amount of tax at a time by spreading the amount of tax over. So, the payment is easy.

3. Use of tax collected in nation’s welfare

The amount of tax collected from TDS returns is used for the welfare of the public

4. Smooth collection of tax

It is convenient for both the deductor and deductee as the tax is deducted automatically. It also ensures a steady source of revenue for the government.

5. Acquiring loans

It will help the banks to assess your income and repaying capability while applying for loans.

6. Refunds

In case you have made any tax-deductible investments, then you can claim refunds by proving the investment proofs.

Documents required for TDS return filing process

Following documents are required for filing TDS return

  • Tax collection and deduction account number (TAN)
  • Permanent account number (PAN)
  • Registration date or incorporation date of the business
  • Time period for which TDS return has to be filed
  • Previous TDS filing details

Due dates for filing TDS returns

Quarter Period Due date of filing
1st quarter 1st April to 30th June 31st July
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 certificate

TDS certificates are issued by the employer (deductor) to the deductee on deducting TDS on their behalf. The certificate contains a 7 digit unique certificate number. On receiving the certificate the employees can check for tax breaks paid by them. Different types of TDS certificates are mentioned below

Certificate Form Periodicity
TDS on salary Form 24Q Yearly
TDS payments other than salary Form 26Q Quarterly
TDS from other sources of income like interest from dividends, savings, fixed deposits Form 27Q Quarterly
TDS on rent Form 26QC Every transaction

TDS return filing procedure

  • First fill Form 27A, which has multiple columns. In case the form is filled in hard copy it should be verified with the e-TDS return that has been filed electronically
  • Next, fill the total amount paid and tax deducted at source in the respective forms.
  • Now mention the TAN of the organization that is filing TDS in form 27A
  • The appropriate challan number, mode of payment, and tax details must be mentioned on the TDS returns. Fill this information correctly or else in case of mismatch TDS returns have to be filed again.
  • For bringing consistency the basic form used for filing e-TDS must be used. Then enter the 7 digit BSR code to make the tallying process easier.
  • Physical TDS returns must be submitted at any TIN-FC. All TIN-FCs are managed by NSDL
  • In case the returns are filed online, they can be submitted directly on the official NSDL website. A level 2 signature must be used by the deductor as TDS returns are filed online
  • All the information will be checked and if they are correct, a token number or provisional receipt will be issued.
  • The acknowledgment confirms that TDS returns have been issued
  • In case, the return is not accepted a non-acceptance memo will be issued stating the reasons for rejection. In that case, you have to file the returns again.

Penalty for filing late TDS returns

In case any individual or entity fails to file the TDS returns before the due date, they are liable to pay late fees

  • As per section 234E, a penalty of Rs 200 per day shall be paid by the entity until the delay continues. But the amount of penalty must not exceed the TDS amount
  • As per penalty under section 271H, the authorized officer can issue orders to the defaulters and impose a penalty of a minimum of Rs 10,000 and a maximum of Rs 1,00,000. This penalty is in addition to the penalty mentioned above.
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