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TDS Return Filing with Corpbiz

The acronym TDS stands for Tax Deducted at Source. It is the tax levied by the government when a transaction occurs. The tax amount is deducted either when the money is put into the payee's account or when the payment is made, whichever occurs first.

The primary goal of TDS is to collect taxes from all sources of income. According to the Income Tax Act of 1961 rules, a tax deductor must provide a quarterly TDS statement (Quarterly) comprising the details of tax deductions made during the quarter by the specified due date. The rate of TDS deducted is decided by the Department of Income Tax. It is the Deductor's obligation to deduct TDS before making the payment and depositing it with the Government.

The entity/individual who is responsible for deducting a particular amount is known as the Deductor and the entity/individual from whom the tax is deducted is referred to as the Deductee. There are also several types of payments for individuals and businesses.

What is TDS Return Filing?

The easiest way to describe TDS returns is as a quarterly statement or summary of every transaction pertaining to TDS that took place within the designated quarter. It usually contains details on the TDS that were gathered and filed by the deductor with the Income Tax Authority. The important details given in a TDS return filing statement are the following:

  • The PANs of the deductor and deductee.
  • Details of TDS paid, including Challan.

Notably, every information contained in the online income tax return form is likewise provided on the payee's Form 26AS. It is required for all persons who fall under the tax brackets established by the IT department.

Generally, qualified persons can submit TDS returns using the IT department's e-filing system. A taxpayer is required to pay a penalty of at least Rs. 10,000 for the delay if they do not file TDS returns within a year of the deadline.

Similarly, giving false information results in fines that need to be paid. Notably, Section 234 mandates that a taxpayer pay a penalty of Rs. 200 per day till the return is filed if they fail to file a TDS return by the deadline. In any case, the total liability can never go over the TDS amount.

What is TDS Return Filing?

Apart from submitting the tax, the deductor is also required to file the TDS returns. TDS return filing is a quarterly statement that must be submitted to the Income Tax department. It is vital to file TDS returns on time. TDS return filing can be done fully online. Once the TDS returns are submitted, the information will appear on Form 26 AS.

What is TAN?

TAN, or Tax Deduction and Collection Number, is an obligatory 10-digit alpha number that must be obtained by anybody responsible for collecting tax at the source or deducting the same on behalf of the government. Salaried persons are not required to get a TAN or deduct the tax at source.

In the case of proprietorships, enterprises and other organizations are required to deduct tax at the source when making specified payments such as salaries, contractor payments, and rent payments of more than Rs.2,40,000 per year.

Entities with a valid TAN registration must file their TDS reports quarterly after TDS return filing. Our TDS specialists can assist you in computing the TDS payments and filing the TDS forms in accordance with TDS requirements.

Eligibility Criteria for Filing TDS

Employers and organizations with a valid Tax Collection and Deduction Account Number (TAN) can file TDS returns. Any person making certain payments indicated under the IT Act is obligated to deduct tax at source and submit within the time limits for the following payments:

  • Payment of Salaries
  • Income in the form of "income on securities"
  • Income from winning the lottery, riddles, and others
  • Earnings from winning horse races
  • Insurance Commission
  • Payment in relation to the National Savings Scheme and many others

Benefits of Online TDS Return Filing

The following are some benefits of TDS return filing:

Prevents Tax Evasion

Timely TDS Return Filing helps the government follow the records of the intake of income, preventing people from evading taxes.

TDS Return Filing Benefit the Nation

TDS return filing provides a consistent stream of money for the government.

Taxpayer Burden is Reduced

TDS can be paid quarterly, eliminating the need for a big sum payment. This reduces the load on both taxpayers and tax-collecting organizations.

Convenient

TDS return filing help collect taxes for welfare reasons more efficiently. It is convenient for the Deductee because the tax is immediately deducted.

What is the Rate of TDS Deduction?

TDS deductions apply to income obtained from wages, professional fees, commissions, rent, interest, and other sources. The rate of TDS charged on eaarnings is determined by the source of income and total revenue earned.

Simply put, various forms of income are subject to varying rates of TDS. It should be remembered that tax is paid on the extra amount generated after the maximum threshold level has been reached. TDS rates range between 1% to 30% and are significantly influenced by the amount of income taxed.

Forms for TDS Return Filing

The following forms are used for TDS Return Filing in India:

TDS Form 24Q

Section 192 of the Income Tax Act of 1961 requires employers to deduct TDS when paying an employee's wage. An employer is required to file salary TDS returns on Form 24 Q, which must be submitted quarterly. Form 24 Q specifies the salary data paid to workers as well as the TDS withheld from the payment. In other words, Form 24 Q is a quarterly account of payments paid to employees and TDS deducted by the deductor.

TDS Form 26Q

When a taxpayer pays taxes, the payee deducts TDS at specific times. Form 26Q is used to file TDS data for payments other than salary. The form specifies the total amount paid for a certain quarter as well as the TDS amount deducted. Form 26 Q must be submitted at least once every quarter.

Form 27Q

This is a TDS return or statement that gives information about the tax deducted at source on non-salary payments made to nonresident Indians and foreigners. Form 27 Q must be submitted every quarter on or before the due date. Form 27 Q provides payment data, and the deductor pays the NRI the TDS deducted on those payments.

Form 27EQ

Form 27 EQ covers all information concerning the tax collected at the source. As per Section 206 C of the Income Tax Act of 1961, this form must be filed quarterly. The form must be filed by both business and government collectors and deductors.

What is a TDS Certificate?

The TDS Certificate must be provided once the deductor has deducted the TDS. The deductee can double-check the tax credit by examining a valid TDS certificate from TRACES with a 7-digit unique certificate number and a TRACES watermark.

The deductee is responsible for preserving the TDS certificates. TDS certificates for payments other than salaries are supplied quarterly, whereas TDS certificates for salaries are granted annually. If the deductee loses his TDS certificate, he can obtain a copy of the same.

Due Dates to File TDS Returns

The TDS Return filing due dates are as follows:

Quarter 1

31st July

Quarter 2

31st October

Quarter 3

31st Jan

Quarter 4

31st May

How to Download TDS Return Forms?

Taxpayers must select the appropriate TDS Returns Form to file based on the kind of TDS paid. Taxpayers may readily view and download TDS return forms and complete the TDS return filing process by following these steps:

  • Go to the official website of NSDL.
  • Click on the 'Download' icon.
  • Select e-TDS/e-TCS from the drop-down menus.
  • Click on 'Quarterly returns'.
  • Choose 'Regular'.
  • Once redirected to a new website, select a suitable TDS Return Form from the 'form' area.
  • Click 'Download'.

How to Verify TDS Returns Fund?

Here is a complete process through which you can verify TDS returns fund:

  • Provide the necessary information in the TDS return file.
  • Once the information has been entered, update it on the portal validation utility tool available on the NSDL website.
  • The File Validation Utility will generate a full report on the mistake found in the file.
  • Once these procedures are completed, taxpayers can make the necessary modifications and validate them using the File Validation Utility.

How to File TDS Return Online?

The TDS Return filing includes information such as the total TDS deducted and the amount submitted by the deductor, the deductor's and deductee's TAN/PAN, challan information, and so on. The step-by-step method for TDS return filing is shown below:

Prepare the TDS Return Form: The applicant must prepare the TDS Return in the format specified by the Income-tax Department.

Submit the Form Along with the Appropriate Documents: The applicant must submit the form and all other documentation to the nearest TIN Facilitation Centre.

Verification of Form and Documents by the Authority: The authorities will examine all the papers, and if any revisions are required, the form will be rejected with a letter explaining why.

Issue of Receipt of Acknowledgment: Once the applicant has corrected all of the information, the authority will issue the receipt of acknowledgement.

Requirements for Uploading TDS Returns

Taxpayers must ensure these important points before TDS return filing, as these are the requirements for uploading TDS Returns:

  • Taxpayers must have a valid TAN.
  • They should be enrolled for e-filing.
  • The Return Preparation Utility and File Validation Utility should be used to create and validate the TDS statement.
  • DSC must be registered for e-filing.
  • Details about the Demat account or bank account should be supplied.
  • To upload TDS returns via EVC, PAN must be linked to Aadhaar.
  • Individuals must be informed of the steps to take if there is a mistake in filing a TDS return.

Documents Required For TDS Return

The below-mentioned documents are required for TDS return filing: -

General Documents

  • TAN (Tax Collection and Deduction Account Number) and PAN of the taxpayer.
  • Date of Incorporation of the Business.
  • Tenure for which the TDS is to be filed.
  • Last TDS filing details.
  • Form 16 and a Salary Certificate received from the Employer by the employee.

Interest Income

  • Passbook/Bank statement for interest on savings account.
  • Income statement of Interest for fixed deposits.
  • TDS certificates issued by the banks & other.

Capital Gains

  • Particulars of investment in the Capital Gains Accounts Scheme.
  • Sale & Purchase Deed of the property as well as stamp valuation of the property (for building/land).
  • Deed of Re-investment purchase for claiming the exemption from Capital Gains.
  • Credentials for the cost of an improvement on the property (if any improvement is made).
  • Particular expense that has been acquired on transfer.
  • Stock statement in case of the trading in shares, etc. (specifying sale & purchase value of shares).
  • In the matter of other capital assets, the cost of purchase, cost of improvement, the value of a sale, if any.

Section 80 Investments

The investment made under PPF, NSC, ELSS, ULIPS, and LIC qualifies for deductions under Section 80C.

House Property

  • Co-owner details, if the property is co-owned
  • Address of the said property
  • Property Tax, Rent details
  • The Interest certificate issued by the bank for the housing loan.

Tax Savings Investments

  • PPF passbook
  • Tuition fees receipts
  • Repayment certificate for housing loan
  • Donation receipts (along with PAN of the donee)
  • Fixed deposit receipts
  • Deposit receipts for senior citizen saving scheme
  • Life and medical insurance payment receipt

Others

  • Receipts of any income from winning the horse races, lottery, etc
  • Details of accrued interest on NSC during the year
  • Dividend amount warrants/
  • Bank Passbook/Statement or interest income certificate
  • PPF passbook for interest
  • Interest certificates on bonds
  • Rent agreement for building, plant & machinery, etc., given on rent (if any)

What is a Revised TDS Return?

It should be noted that if an error in the challan or PAN information is found in the submitted TDS return, the tax amount deposited with the government will not be shown in Form16/Form16A/Form26AS. To avoid this, rectify the errors and file a corrected TDS. Keep the following points in mind while filing amended TDS returns:

  • The TDS Return filing can be done if the Tax Information Network central system approves the original return.
  • Taxpayers may check on the NSDL's official website using their PAN and Provisional Receipt Number.
  • This updated TDS statement allows taxpayers to make amended TDS returns. The TDS Reconciliation Analysis and Correction Enabling System, or TRACES, website offers a report of this type for download.

Procedure for Validation of TDS Returns

The procedure for validating the TDS returns is described below:

  • First, all important information must be included in the file.
  • After uploading the details, they must be updated using the validation utility tool accessible on the site.
  • The program may be downloaded for free from the NSDL website.
  • If the file has any issues, the File Validation Utility (FVU) will report them.
  • Before resubmitting the file for verification, all necessary modifications must be done.

Penalties for Non-Compliance

The penalties for not complying with the TDS return filing provisions are mentioned below:

Penalty for Late Filing of TDS Returns

If the assessee does not complete the TDS return filing by the due date, the assessee will face a penalty of Rs. 200 per day under Section 234 E for the duration of the failure.

Penalty for Not Filing the TDS Returns

If the assessee fails to complete TDS return filing within a year of the filing date or if the individual provides false information, he or she will face a penalty. The penalty charged is between Rs. 10,000 and Rs. 1,000,000.

Interest on Late Deposit of TDS

Section 201(1A) requires you to pay interest if you deposit TDS late after deduction. Interest is computed at a rate of 1.5% per month from the day TDS was deducted until the date of deposit. It should be noted that this should be determined on a monthly basis rather than on the number of days. Therefore, a partial month is considered a full month.

For example, the TDS deduction date for Rs 5,000 is January 13, 2023. If you pay TDS on May 17, 2023, the interest you owe begins on January 13, 2023, and is calculated as Rs 5000 x 1.5% each month x 5 months (January-May) = Rs 375.

"Month" is not specified in the Income Tax Act of 1961. However, in a number of High Court rulings, it was stated that it should be viewed as a 30-day period rather than an English calendar month. The interest is computed from the day TDS was deducted, not when it was payable.

Consider the scenario in which you deposit tax one month beyond the due date. Say you deducted TDS on February 21, 2023. Then the due date is March 7, 2023. If you deposit tax on March 8, 2023 (one day beyond the due date). Then, interest will be charged from February 21st to March 8th, 2023, a two-month period. You must now pay interest on the TDS amount at the rate of 1.5% each month for two months, totalling 3%.

Streamline Your TDS Return Filing with Corpbiz

Our Corpbiz specialists will be at your disposal to provide advice on TDS Return Filing and compliance for the smooth operation of your business in India. Corpbiz pros will help you organize everything effortlessly and affordably, ensuring that the procedure is completed successfully. To avoid the pitfalls of TDS Return Filing and to fully comprehend the requirements, it is best to use an attorney with experience in the process.

Frequently Asked Questions

According to Section 234E, if the assessee fails to file their TDS return within the specified time frame, you must pay a late fee of Rs. 200 each day until the return is filed. Please keep in mind that the total amount of the penalty cannot exceed the TDS amount.

If you do not file your TDS return within one year after the deadline, you will have to pay a penalty. The penalty varies from Rs 10,000/- to Rs 1,00,000/-. It also applies to an assessee who submitted inaccurate information throughout the filing procedure.

If a mistake is identified in the form after submission, such as an inaccurate PAN, no submission of PAN data, or an invalid challan number, the amount deposited to the government's credit will not be displayed in Form 16, Form 16A, or Form 26AS. You must file an amended return to confirm and ensure that the amount is credited to the appropriate account and shown on Forms 16, 16A, and 26AS.

Any individual who pays for specific goods or services must complete the TDS Return. Individuals and Hindu Undivided Families (HUF) are not required to deduct TDS.

If you need to file an amended return, you can do so several times.

TAN is an abbreviation for Tax Deduction and Collection Number. It is an alphanumeric ten-digit number used to file the TDS return. A person must submit an application in FORM 49B within one month after deducting TDS for the allocation of a Tax Deduction and Collection Number. If an individual fails to apply for TAN, he or she can be fined up to INR 10,000.

At the end of the year, there may be a disparity between the total amount deducted and the actual tax due. The probable outcomes are:

  • If the TDS exceeds the actual tax due, you are eligible for a TDS refund.
  • If the TDS is less than your actual tax burden, you must pay the difference.

A return preparation software for e-TDS/TCS is available for free download from the NSDL website. However, third-party manufacturers have developed software for filing e-TDS/TCS returns.

The extra TDS you paid is refundable. However, the reimbursement period varies by situation and is determined by whether you filed your IT returns on time. If you submitted your return on time, you should anticipate a refund to be posted to your account within three to six months.

According to Section 200A of the Income Tax Act of 1961, if India's IT department fails to issue the TDS refund within the specified time frame, you are entitled to a 6% annual interest rate on the refund amount. Interest will be calculated beginning with the first month of the fiscal year, which is April. However, interest will not be paid if the amount is less than 10% of the actual tax due.

Each bank branch is assigned a unique seven-digit code by the RBI. You must include the code of the bank branch where the TDS is lodged.

No, it is not necessary to file Form 26Q individually. All payments paid to residents must be submitted on Form No. 26Q, together with a separate annexure.

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