TDS works on the concept that every person making specified type of
payments to any person shall deduct tax at the rates prescribed in the Income-tax Act at source
and deposit the same into the government's account.
The person who is making the payment
is responsible for deducting the tax and depositing the same with government. This person is
known as 'deductor'. On the other hand, the person who receives the payment after the tax
deduction is called 'deductee'.Form26AS is a statement which shows the amount of tax deducted
and deposited in a person's name/PAN in a particular financial year.
An individual can, therefore, view/check the TDS from incomes paid to him by viewing this Form 26AS. Each deductor is also duty bound to issue a TDS certificate certifying how much amount is deducted in the deductee's name and deposited with the government.
In November 2021, government has introduced Annual Information Statement (AIS) and Taxpayer Information Summary (TIS). Both the documents provide record of financial transactions that income tax department has of an individual. It shows total income received, source of income and total tax deducted on the income received.
TDS stands for 'Tax Deducted at Source'.
Apart from depositing the tax the deductor also has to do TDS return filing. TDS return filing is a quarterly statement that is to be given to the Income Tax department. It is necessary to submit the TDS returns on time. TDS return filing can be done completely online. Once the TDS returns are submitted the details will come up on Form 26 AS. While filing the TDS returns the various details to be mentioned are:
The entity making a payment (which is subject to TDS) deducts a certain percentage of the amount paid as tax and pays the balance to the recipient. The recipient also gets a certificate from the deductor stating the amount of TDS. The deductee can claim this TDS amount as tax paid by him (i.e. the deductee) for the financial year in which it is deducted.
The deductor is duty bound to deposit the TDS with the government. Once deposited this amount reflects in the Form 26AS of individual deductees on the TRACES website linked to the income tax department's e-filing website.
If a person expects that his total income in a financial year will be below the exemption limit, he can ask the payer not to deduct TDS by submitting Form 15G/15H.
Different threshold levels are specified by the Income Tax department for different payments such as salaries, interest received etc. For example, there will be no TDS on the total interest received on FD/FDs from a single bank if it is less than Rs 40,000 in a year from that bank. For senior citizens, TDS on interest received on FD will be applicable if it crosses Rs 50,000 in a single financial year.
Tax deducted at source or TDS is the tax that is collected by the Government of India at the time when a transaction takes place. Here, in this case, the tax is to be deducted at the time the money is credited to the payee's account or at the time of payment whichever happens earlier. In this case of salary payment or the life insurance policy, the tax is deducted at the time when the payment is done. The deductor is required to deposit this amount with the Income Tax Department. Through TDS a portion of the tax is paid directly to the Income Tax Department. The Tax is deducted usually over a range of 10%.
TAN or the Tax Deduction and Collection Number is a
mandatory 10 digit alpha number that is to be obtained by all the people who are
responsible for deducting tax at source or tax collection at source on behalf of
the government. Salaried individuals are not required to obtain TAN or to deduct
the tax at the source.
In the case of the proprietorships businesses and
other entities are required to deduct tax at the source while making certain
payments like the salary, payments to the contractor, payment of rent that is
exceeding Rs.2,40,000 per year. IndiaFilings can help in obtaining the TAN
registrations.
The entities that have a valid TAN registration have to file
the TDS returns quarterly. Our TDS experts can help in computing the TDS
payments and file the TDS returns while complying with the TDS regulations.
TDS return filing is done by organizations or employers who have availed a valid tax collection and deduction number (TAN). Any person who is making specified payments mentioned under the Income Tax Act is required to deduct the taxes at the sources and they are needed to deposit the tax within the stipulated time for making the following payments.
| Quarter | Period | Last Date of Filing |
|---|---|---|
| 1st Quarter | 1st April to 30th June | 31st July 2022 |
| 2nd Quarter | 1st July to 30th September | 31st October 2022 |
| 3rd Quarter | 1st October to 31st December | 31st Jan 2023 |
| 4th Quarter | 1st January to 31st March | 31st May 2023 |
TDS forms are depending on the income of the deductee or the type of deductees paying taxes. The TDS forms are mentioned below:
| Form No. | Description |
|---|---|
| Form 24Q | Quarterly TDS statement for tax deducted on salary payments. |
| Form 27Q | Quarterly TDS statement for tax deducted while making payment, other than salary, to non-resident (not being a company), and foreign company |
| Form 26Q | Quarterly TDS statement for other cases like TDS deducted on professional fees, interest payments, etc. |
Here is the step-by-step procedure to file the TDS returns online.
Step 1: Firstly, Form 27 A containing multiple columns has to be filled and in case of the hard copy of the Form, it has to be verified along with the E-TDS return that has been filed electronically.
Step 2: In the next step, the tax that is deducted at the source and the total amount that has been paid needs to be correctly filled as well as tallied.
Step 3: The TAN of the organizations is to be mentioned on Form 27 A. There will be difficulties in the process of verification if the mentioned TAN is incorrect.
Step 4: While filing the TDS returns the appropriate challan number, the mode of the payment, and the tax details have to be mentioned. In case of the incorrect challan number or the incorrect date of the payment, there will be a mismatch and the TDS returns also need to be filed again.
Step 5: To bring consistency the basic Form used for Filing the e-TDS must be used. The 7 Digit BSR has to be entered for easing the tallying process.
Step 6: Physical TDS returns are to be submitted at the TIN FC, which is managed by NSDL. In case of the online filing, they can be submitted on the official website of the NSDL TIN.
Step 7: If the provided information is correct then a token number or a provisional receipt is received. This is a proof that TDS return has been filed.
Step 8: In case of rejection, a non-acceptance memo along with the reason for the rejection is issued and the returns have to be filed again.
After the TDS is deducted by the deductor it is necessary to furnish the TDS Certificate. The deductee can cross-check the tax credit by viewing a valid TDS certificate from TRACES that bears a 7 digit unique certificate number and a TRACES watermark.
The TDS certificates are to be preserved by the deductee. TDS certificates on payments other than salaries are issued every quarter and the TDS certificate for the salary is provided on annual basis.
In case the deductee loses possession of the certificate he can request to get a duplicate TDS Certificate.
If the assessee is failing to file the TDS returns before the due date then there is a penalty of Rs.200 under Section 234 E per day by the assessee until the time the default is continuing.
If the assessee has not filed the return within a year from the date of filing then the returns or if the person has furnished incorrect information then he or she will also be liable for a penalty. The penalty levied is not less than 10,000 and more than Rs. 1,00,000.
Once the TDS returns are submitted and errors are detected like incorrect challan details or the PAN is not provided or incorrect PAN is provided then the tax amount credit with the government will not be reflected in the Form 16A / Form 26AS. To make sure that the amount is properly credit and reflected in Form 16/ Form 16A / Form 26 AS a revised TDS return has to be filed.
The revised TDS returns can be filed only when the original TDS return is accepted by the TIN central system. The assessee can check the status of the TIN Central System. The assessee can check the status of the TDS returns that are filed online by providing the required details such as the PAN and the Provisional Receipt Number/ Token number on NSDL.
The revised TDS returns have to be prepared by using the most recent consolidated TDS statement. The certificate can be downloaded from the TRACES website.
TDS Credit can be claimed by the deductor to claim the credit of the TDS the deductee must mention the details of the TDS in his returns of income. The deductee is required to take due care to quote the correct TDS certificate number and the TDS details while filing the returns of income.
In case of incorrect details that are provided by the deductee, there will be a discrepancy with the tax credit of processing the TDS returns.
CBDT has appointed National Securities Depository Ltd., Mumbai as e-TDS Intermediary.
No separate CD/floppy should be used for each return.
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