Overview of TDS Return Filing
TDS stands for Tax Deducted at Source. It is the tax which is collected by the Government when a transaction takes place. The tax amount is deducted either at the time when the money is credited in the account of the payee or when the payment takes place, whichever happens earlier.
The main aim of TDS is to collect tax from every source of Income. As per the provisions of the IncomeTax Act 1961, a tax-deductor shall furnish a periodical TDS statement (Quarterly) containing the particulars of deduction of tax formed during the quarter by the determined due date. The Department of Income-tax decides the rate at which the TDS will be deducted. It is the responsibility of the Deductor to deduct the TDS before making the payment and deposit it to the Government.
Here, the entity/ individual who deducts the said amount is termed as Deductor, and the entity/ individual whose tax is beingdeducted is termed as Deductee. Also, in the case of Individuals and Businesses, there are various payments.
Categories under which TDS Return is Filed
There are different categories under which TDS can be filed which are:
- Salary of an individual
- Insurance Commission or the Income from any other sources like lottery puzzles etc.
- Payment from the National saving Scheme.
- The categories under which there is the eligibility to file the TDS Return on electronic media:
- Individuals whose accounts are audited under u/s 44AB
- Individuals were holding office under the Government.
What are the Benefits of TDS Return Filing?
Following are some benefits of TDS Return Filing:
- Prevents Evasion of Taxes: Timely TDS Return Filing helps the government track the records of the inflow of Income which prevents people from evasion of taxes.
- TDS isused for the welfare of the Nation: The TDS Return filing amount is utilized for the welfare of the Nation. It ensures a steady source of revenue for the Government.
- Less Burden of Taxpayer: TDS is paid quarterly, so there is no burden of paying the lump sum tax at once. Due to this, the burden of the taxpayer as well as the tax collection agencies is reduced.
- Facilitates Smooth Collection of Tax: TDS Return facilitates a smooth collection of the tax used for welfare purposes. It is convenient for the Deductee as Tax is automatically deducted.
Important Points to Know before Filing the TDS Return
- Form 27A must be duly filled.
- Verification of form with the e-TDS return filing
- Particular of the amount paid and the TDS must be correctly filled in all the forms, including Form No. 27A, Form No. 24, Form No. 26 and Form No. 27.
- Do not forget to mention the Tax Deduction Account Number (TAN) in Form No. 27A.
- Ensure that particulars relating to the depositing of TDS have been mentioned accurately.
- Mention all the details recommended by the authority.
- TDS return has to be filed properly
- TDS returns forms are submitted at any TIN-FCs managed by NSDL.
TDS Return Filing
Documents Required for TDS Return Filing
The below-mentioned documents are required for filing the TDS Return:-
- 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: Section 80C investment documents: - 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
- 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)
Procedure for TDS Return Filing
The TDS Return filing contains the details of total TDS deducted and the amount deposited by Deductor, TAN/PAN of the Deductor and Deductee, challan information, etc.
The step-by-step process to file a TDS return is given below:
Step 1: Preparation of TDS Return Form: The applicant needs to prepare the TDS Return in the format prescribed by the Income-tax Department.
Step 2:Submission of Form along with necessary documents: The applicant must submit the form and the necessary documents at the nearest TIN Facilitation Centre.
Step 3:Verification of Form and Documents by the Authority: The authority shall verify all the documents, and if there is a need for any corrections, the authority will reject the form and provide a memo stating the reason for rejection.
Step 4: Issue of Receipt of Acknowledgment: The authority will provide the receipt of acknowledgement once the applicant corrects all the information.
Penalties in case of Default made by the Deductor while Filing TDS Return
If an individual or entity fails to file, the TDS Return by the due dates as prescribed has to bear the below-mentioned penalties.
Late TDS Return Filing as Per Section 234E
Rs. 200 every day for such TDS return filing failure continues. However, the late fees shall not exceed the amount of the TDS Return filing.
Note: Before filing the TDS Return, the late return filing fee must be deposited.
Penalty under Section 271H
The authority has the power to issue orders to the defaulter to pay the penalty, which can be a minimum of Rs. 10,000 up to the maximum of Rs.1 lakh.
Note-This penalty is in addition to the late TDS return filing fees mentioned above.
Highlights of Budget 2022
- Introduction of a New Section 194S of the income tax act states that a person is liable (TDS) at the rate of 1% at the time of payment of the transfer of virtual digital assets.
- Section 194-IA- This section talks about the sale of Immovable Property. It is proposed to amend the amount of TDS Tax deduction. It provides that if a person is buying immovable property, the tax which is deducted should be 1 % of the sum paid/credited or the stamp duty value of such property, whichever is higher.
- New Section 194R- TDS states that 10% of TDS should be deducted by any person who provides perks or benefits, to any resident for carrying out any business or profession irrespective of it is monetary or not
What is a TDS certificate?
TDS certificates are the certificates issued by a person (Deductor) deducting TDS on behalf of the deductee (i.e., from whose income TDS was deducted while making payment). Below mentioned are the types of TDS Certificate-
TDS on salary payment
TDS on non-salary payments
Form 16 A
15 days from due date of filing return
TDS on sale of property
Form 16 B
15 days from due date of filing return
TDS on rent
Form 16 C
15 days from due date of filing return
What is the Period for Filing a TDS Refund?
While filing online TDS returns, if a taxpayer has paid more than the actual tax amount, the payer will be eligible to claim a TDS refund. The period within which the refund is made depends on whether the payer has made the ITR filing before or after the due date. If the returns were filed on time, a refund of the excess amount is made within 3-6 months.
However, if there is a case of late filing or failure to file the returns, the individual or the entity will have to face 2 types of penalties:
- Late filing fee- Under Section 2 and 234E
- Non-filing penalty –Under section 271 H
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Frequently Asked Questions
Any individual who is making payment for specified goods or services needs to file the TDS Return. TDS is not required to be deducted by individuals and HUF (Hindu Undivided family).
TAN is abbreviated as Tax Deduction and Collection Number. It is an alphanumeric ten-digit number for filing the TDS Return. A person needs to make an application within a month of deducting TDS for allotment of Tax Deduction and collection number in FORM 49B. If any individual fails to apply for TAN, he/she will be penalized up to INR 10,000.
Yes, the employees and deductor’s must submit the PAN number.
- Form 24Q – Tax Deduction at Salary
- Form 26Q – TDS except for the salary
- Form 26QC – Tax Deduction at source for the rent payment exceeding INR 50,000.
- Form 27Q – TDS from other sources of earning such as dividend of funds, interest from savings, or fixed deposit.
- Form 27EQ – tax collected at source
- Late TDS Return filing as per Section 234E
A sum of INR 200 every day till the TDS returns filing. Also, the late fee shall not exceed the amount of TDS return filing.
- The penalty under section 271H
A minimum of INR 10,000 and a maximum of INR 1 lakh.
Yes, there is a penalty in case of incorrect TDS return filing.
On the NSDL website, a freely downloadable return preparation utility for the preparation of e-TDS/TCS is available. However, third-party vendors have also made the software for the filing of e-TDS/TCS return
Bank Branch Code is a unique seven-digit code allotted to each bank branch by the RBI. You need to mention the code of the bank branch where the TDS is deposited.
No, it is not required to file Form 26Q separately. Form No. 26Q along with a separate annexure has to be filed for all the payments made to residents.