Overview of TDS Return Filing
TDS stands for Tax deducted at Source. As per the provision Income-tax Act, 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 deduct the said amount are termed as Deductor, and the entity/ individual whose tax is deducted is termed as Deductee. Also, in the case of Individuals and Businesses, there are various payment Categories under which TDS Return is filed -
- 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 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.
Highlights of Budget 2021
It has been put forward to exempt the senior citizens from filing income tax returns if their only annual income source is through pension income and interest income. Also, Section 194P has been newly introduced to enforce the banks to deduct tax on senior citizens more than 75 years of age who have a pension and interest income from the bank.
What are the Benefits of Filing a TDS Return?
Filing TDS Return is mandatory for an individual or any business entity and provides various benefits. A Few of them are mentioned below-
- Tracking of Records
TDS Return filing on time helps the government in tracking the records of the inflow of Income. It prevents people form evading taxes.
- Use of TDS in Nation’s Welfare
The amount received from the TDS Return filing is used for the welfare of the Nation. It ensures a steady source of revenue for the government.
- Fewer Burdens of Taxpayer
TDS is paid quarterly, so there is no burden of paying the lump sum tax at once. By that the burden of responsibility of the tax collection agencies and the deductor are lessened.
- Facilitates Smooth Collection of Tax
TDS Return facilitates a smooth collection of the tax that is used for welfare purposes. It is convenient for the Deductee as Tax is automatically deducted.
What is the Checklist to be Kept in Mind while Filing TDS Return?
- Form 27A must be duly filled.
- Verification of form with the e-TDS return filed electronically.
- Particular of the amount paid and the TDS have to 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 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.
- E-TDS return has to be filed in the ASCII clean text format. To avail of this format, you can use the software of your choice such as Computex, MS Excel, or Tally.
- TDS returns in physical form are submitted at any TIN-FC’s managed by NSDL. If TDS are filed online, then it can be submitted directly at the NSDL TIN website and the deductor has to sign the return through DSC.
What Documents are Required for Filing the TDS Return?
Below-mentioned documents are required for filing the TDS Return:-
- 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.
- Passbook/Bank statement for interest on savings account
- Income statement of Interest for fixed deposits
- TDS certificate issued by the banks & others
- 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 cost of improvement on the property (if any improvement is done)
- Particulars of expense that has been acquired on transfer
- Stock statement in case of the trading in shares etc. (specifying sale & purchase value of shares)
- In matter of other capital assets the cost of purchase, cost of improvement, value of sale if any)
Section 80 Investments
- Section 80C investment documents: - The investment made under PPF, NSC, ELSS, ULIPS, LIC qualifies for deductions under Section 80C
- Co-owner details, if property is co-owned
- Address of the said property
- Property Tax, Rent details
- The Interest certificate issued by 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)
What is the Procedure for Filing the TDS Return?
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.
Step-by-step process to file TDS return on the income tax website:-
- Step 1
Visit the website http://incometaxindiaefiling.gov.in/ and click on ‘Login here.’
- Step 2
Enter the correct login details and click on ‘Login’. The taxpayer’s user ID will be his/her TAN.
- Step 3
Once the payer logged in, the next step is to click on the ‘Upload TDS’ option under the TDS column.
- Step 4
A person will be provided with a form and he is required to select the correct details. Once the details are selected, click on ‘Validate’.
- Step 5
The returns can be validated through the following modes:-
A-Validation by using Digital Signature Certificate
The TDS can be uploaded by using Digital Signature Certificate. While uploading, what you are required to do is to first upload the TDS zip file and attach the Digital signature file. Once you have uploaded the TDS zip file, click on the Upload button.
Note-Once the process is done, a success message will appear on the screen and a confirmation mail will be sent to your registered email id.
B-Validation by using Electronic Verification Code
If the validation is not gonethrough DSC, you can validate the TDS statements by using an Electronic verification code (EVC). Upload the TDS zip file and click on ‘Click to E-verify’.
The very next step will bethat you will be having an option to use an EVC already generated.
Enter the EVC and click on ‘Submit’after selecting the relevant option,
What are the 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
- A sum of Rs. 200 for every day for which such TDS return filing failure continues. However, the late fees shall not exceed the amount of TDS Return filing.
Note-Before filing the TDS Return, the late return filing fee is required to be deposited.
Penalty under Section 271H
- The authority has the power to issue orders to the defaulter to pay the penalty, which can be-
1. 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.
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 payable, then 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, then 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.
One can file the TDS return online by logging in to the NSDL website.