Tax Deducted at Source or TDS may be a source of collecting tax by Government of India at the time when a transaction takes place. Here, the tax is required to be deducted at the time money is credited to the payee’s account or at the time of payment, whichever is earlier.
In case of payment of salary or life assurance policy, tax is deducted at the time of payment. The deductor then deposits this TDS amount to the tax (I-T) department. Through TDS, some portion of your tax is automatically paid to the I-T department. Thus, TDS is taken into account as a way of reducing evasion .
What is TDS Return?
Apart from depositing the tax, the deductor should also file a TDS return.
TDS return may be a quarterly statement to tend to the I-T department. it’s compulsory for deductors to submit a TDS return on time. the small print required to file TDS returns are:
- PAN of the deductor and therefore the deductee
- Amount of tax paid to the govt
- TDS challan information
- Others, if any
Eligibility Criteria for TDS Return
TDS return are often filed by employers or organizations who avail a legitimate collection and Deduction Account Number (TAN). a person making specified payments mentioned under the I-T Act are required to deduct tax at source and wishes to deposit within the stipulated time for the subsequent payments :
- Payment of Salary
- Income by way of “Income on Securities”
- Income by way of winning lottery, puzzles et al.
- Income from winning horse races
- Insurance Commission
- Payment in respect of National Saving Scheme and lots of others
TDS Return filing Process
The following points are required to be considered to form sure that an error-free TDS return is submitted:
• Form 27A contains an impact chart whose all columns must be filled. this type is then verified in text form with the e-TDS return filed electronically.
• The totals of the quantity paid and therefore the refore the tax deducted at source need to be correctly filled and the same has got to be filled altogether the forms, including Form No. 27A, Form No. 24, Form No. 26 and Form No. 27.
• The assessees are required to say their tax write-off Account Number (TAN) in Form No. 27A. this is often almost like what’s wiped out case of e-TDS return. this is often dictated by ‘sub-section (2) of section 203A of the I-T Act in India’.
• At the time of filing the TDS return, make sure that details concerning the depositing of tax deducted at source are mentioned accurately.
• The basic form that has been used for e-TDS return recommended by the department is compulsory to follow. this is often because it brings consistency and better understanding in filling the forms. it’s necessary to say the Bank Branch Code or the BSR code. it’s a 7-digit code provided to the banks by the Federal Reserve Bank of India.
• E-TDS return has got to be filed within the ASCII clean text format. To avail this format, you’ll use software of your choice like Computex, MS Excel or Tally. Also, you’ve got an option of using the software available at NSDL website referred to as Return Prepare Utility (e-TDS RPU Light) for filing the return online. it’s important to make sure that the web TDS file formats accompany ‘txt’ because the extension .
• The physical returns are submitted at any TIN-FC’s managed by NSDL. TIN-FC’s are found at specified areas across the country.
• If returns are filed online, then they will be submitted directly at NSDL TIN website. during this case, the deductor has got to sign the return through digital signature.
• While submitting the return, if all the knowledge mentioned is accurate then a provisional receipt/token number would be issued. This provisional receipt/token number is taken into account as an acknowledgment, stating the very fact that the return has been filed. In case, the return isn’t accepted, then a non-acceptance memo are going to be issued along side the explanations for rejections.
Validation of the TDS Return File
The procedure for the validation of TDS return file is given below:
- Fill within the required details within the file
- After filling within the details, update it within the portal validation utility tool
- The tool is out there on NSDL website for free of charge
- In case any error is found within the file, FVU will provide a report for an equivalent
- Make the required changes and verify the file again through the FVU
Penalty for delay in filing TDS Return
According to Section234E, if an assessee fails to file his/her TDS Return before the maturity , a penalty of Rs 200 per day shall be paid by the assessee until the time the default continues. However, the entire penalty shouldn’t exceed the TDS amount.
Non-filing of TDS Return
If an assessee has not filed the return within 1 year from the maturity of filing return or if an individual has furnished misinformation , he/she shall even be responsible for penalty. The penalty levied shouldn’t be but Rs 10,000 and less than Rs 1,00,000.
TDS Return Preparation Utility
Deductors/collectors are required to organize e-TDS/TCS statements as per these file formats using, NSDL e-Gov. Return Preparation Utility or in-house software or the other third party software and submit an equivalent to any of the TIN-FCs established by NSDL e-Gov. NSDL e-Governance has developed a software called e-TDS Return Preparation Utility (RPU) to facilitate preparation of e-TDS returns. Users must pass the e-TDS/ TCS return file generated using RPU through the File Validation Utility (FVU) to make sure format level accuracy of the file. This utility is additionally freely downloadable from NSDL e-Gov TIN website.
Revised TDS Return
After submitting the return, if any error is detected, like incorrect challan details or PAN not provided or incorrect PAN provided, the tax amount credited with the govt won’t reflect within the Form16/ Form 16A/ Form 26AS.
To facilitate conformity and confirm that the tax amount is correctly credited and reflected within the Form 16/Form 16A/ Form 26AS, a revised TDS return has got to be filed.
Procedure for filing Revised Return
The following are the various sorts of corrections that are to be made so as to submit an error-free TDS return:
• C1 correction: Under this sort , you’ll fill within the correct details of the deductor just like the name and address of the deductor
• C2 correction: Under this sort , you’ll update challan details which include specific details like challan amount, BSR code, serial number of the challan, tender date of the Challan, etc.
• C3 correction: Under this, you’ll add, change or update details of the deductee
• C4 Correction: Under this sort, you’ll add or delete salary details erstwhile mentioned
• C5 correction: Under this sort , the PAN number of the worker or the deductee are often edited
• C9 correction: Under this sort , you’ll insert a totally new challan then put within the essential deductees
The above mentioned charges would even be required to be again paid just in case a revised return is filed by the deductor.
Revised Return are often filed multiple times to include any changes.
Prerequisites for the submission of revised TDS return
• Revised TDS return are often filed as long as the first TDS return is accepted by the TIN central system.
• The assessee can check the status of the TDS return filed online by providing required details, like PAN number and Provisional Receipt number/Token number on NSDL website https://onlineservices.tin.egov-nsdl.com/TIN/JSP/tds/linktoUnAuthorizedInput.jsp
• Revised TDS return has got to be prepared by using the foremost recent consolidated TDS statement. this will be downloaded from the TRACES website. For downloading this statement, the provisional receipt/token number of the first statement should be mentioned.
TDS is that the tax amount deducted at the time of payment. At the year end, while assessing the entire liabilities , there’s a difference between the entire tax deducted during the year and therefore the actual liabilities . If the tax deducted at the source is a smaller amount than the particular liabilities , then the difference between the 2 has got to be paid by the assessee. On the opposite hand, if the tax deducted at source is quite the particular liabilities , it leads to TDS refund.
Status of TDS Refund
The status of TDS refund are often verified within the following ways:
• An acknowledgment is shipped to your registered e-mail address
• You can use your PAN on the web site https://incometaxindiaefiling.gov.in/
• You also can out in CPC Bangalore on 1800-4250-0025 (toll-free number) to see the status.
TDS Refund period
The excess TDS paid by the assessee gets refunded. The period of time of TDS refund amount depends on whether you’ve got filed your tax return on or before the maturity or not. If you’ve got filed it on time, then excess TDS amount are going to be refunded between three to 6 months.
Interest on TDS Refund
According to Section 200A of the I-T Act, 1961, if the tax department doesn’t pay the TDS refund amount within the required period of time , they’re going to need to pay an interest of 6% p.a. on the refund amount. This interest is calculated from the primary month i.e. April of any fiscal year . However, no interest is applicable if the TDS refund amount is a smaller amount than 10% of actual liabilities.
Benefits of TDS
Filing TDS return is mandatory as per I-T Act, 1961. a number of its benefits are:
• It helps in regular collection of taxes
• Ensures a flow of normal income to the govt
• Reduces the burden of lump-sum tax payment. It helps in spreading the whole tax payment over variety of months which makes it easier for the taxpayer
• Offers a simple mode of tax payment to the payer!
Frequently Asked Questions
Ans.For quick and efficient collection of taxes, the Income-tax Law has incorporated a system of deduction of tax at the purpose of generation of income. this technique is named as “Tax Deducted at Source”, commonly referred to as TDS. Under this technique tax is deducted at the origin of the income. Tax is deducted by the payer and is remitted to the govt by the payer on behalf of the payee.
The provisions of deduction of tax at source are applicable to many payments like salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. In respect of payments to which the TDS provisions apply, the payer has got to deduct tax at source on the payments made by him and he has got to deposit the tax deducted by him to the credit of the govt .
Ans.A payee can approach to the payer for non-deduction of tax at source except for that they need to furnish a declaration in Form No. 15G/15H, because the case could also be , to the payer to the effect that the tax on his estimated total income of the previous year after including the income on which tax is to be deducted are going to be nil.
Form No. 15G is for the individual or an individual (other than company or firm) and Form No. 15H is for the senior citizens.
Ans.A deductor who fails to deduct the entire or any a part of the tax on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee-in-default in respect of such tax if such resident—
(i) has furnished his return of income under section 139;
(ii) has taken under consideration such sum for computing income in such return of income; and
(iii) has paid the tax due on the income declared by him in such return of income, and therefore the deductor furnishes a certificate to the present effect in Form No.26A from a accountant .
o However, w.e.f. 01-09-2019, sum paid to non-resident are going to be covered by above provisions.
In such a case, the payee can claim the refund of entire/excess amount of TDS (as the case may be) by filing the return of income.
Ans. it’s the duty and responsibility of the payer to deduct tax at source. If the payer fails to deduct tax at source, then the payee won’t need to face any adverse consequences. However, in such a case, the payee will need to discharge his liabilities . Thus, failure of the payer to deduct tax at source won’t relieve the payee from payment of tax on his income.
Ans.Following are the essential duties of the one that is susceptible to deduct tax at source.
- He shall obtain tax write-off Account Number and quote an equivalent altogether the documents concerning TDS.
- He shall deduct the tax at source at the applicable rate.
- He shall pay the tax deducted by him at source to the credit of the govt (by the maturity laid out in this regard*).
- He shall file the periodic TDS statements, i.e., TDS return (by the maturity laid out in this regard*).
- He shall issue the TDS certificate to the payee in respect of tax deducted by him (by the maturity laid out in this regard*).
*Refer tax calendar for the due dates.
Ans. to understand the quantum of the tax deducted by the payer, you’ll ask the payer to furnish you a TDS certificate in respect of tax deducted by him. you’ll also check Form 26AS from your e-filing account at https://incometaxindiaefiling.gov.in
Ans.As per section 206AB, the tax shall be deductible at the upper rates prescribed under this provision if the subsequent conditions are satisfied:
(a) Deductee has not filed the return of income for two assessment years relevant to the previous year immediately before the previous year during which tax is required to be deducted;
(b) The maturity to file such return of income, as prescribed under section 139(1), has expired; and
(c) the mixture amount of tax deducted and picked up at source is Rs. 50,000 or more in each of those 2 previous years.
Tax is required to be deducted at higher rates in respect of each sum or income or amount from which tax is deductible under any provision of Chapter XVII-B except the sum or income or amount on which tax is deductible under any of the subsequent provisions:
Ans. Non-reflection of TDS credit in Form 26AS are often thanks to several reasons like non-filing of TDS statement by the payer, quoting incorrect PAN of the deductee within the TDS statement filed by the payer. Thus, just in case of non-reflection of TDS credit in Form 26AS, the payee has got to contact the payer for ascertaining the right reasons for non-reflection of the TDS credit in Form 26AS.
Ans.As per section 206AA, if you are doing not furnish your Permanent Account Number to the payer (i.e., deductor), then the deductor shall deduct tax at the upper of the subsequent rates :
- At the speed laid out in the relevant provision of the Act.
- At the speed or rates effective , i.e., the speed prescribed within the Finance Act.
- At the speed of 20%.
Ans.1. In respect of payment of interest on long-term bonds to a non-resident under section 194LC.
2. Where deductee being a non-resident or a far off company, shall in respect of payments within the nature of interest, royalty, fees for technical services and payments on transfer of any capital asset, furnish the subsequent details and documents to the deductor, namely:—
i. name, e-mail id, contact number;
ii. address within the country or specified territory outside India of which the deductee may be a resident;
iii. a certificate of his being resident in any country or specified territory outside India from the govt of that country or specified territory if the law of that country or specified territory provides for issuance of such certificate;
iv. Tax number of the deductee within the country or specified territory of his residence and just in case no such number is out there , then a singular number on the idea of which the deductee is identified by the govt of that country or the required territory of which he claims to be a resident.
Ans.As per section 206AA, a declaration in Form No. 15G or Form No. 15H isn’t a legitimate declaration, if it doesn’t contain PAN of the person making the declaration. If the declaration is without the PAN, then tax is to be deducted at higher of following rates :
• At the speed laid out in the relevant provision of the Act.
• At the speed or rates effective , i.e., the speed prescribed within the Finance Act.
• At the speed of 20%.
Ans.Yes, failure to remit tax deducted by you within the government’s account within stipulated time-limit would attract interest, penalty and rigorous imprisonment of upto seven years.
Ans.Yes, the decrease in your case are going to be reflected in your Form 26AS and, hence, you’ll check Form 26AS and claim the credit of the tax accordingly. However, the claim of TDS to be made in your return of income should be strictly as per the TDS credit being reflected in Form 26AS. If there’s any discrepancy within the tax actually deducted and therefore the decrease being reflected in Form 26AS then you ought to intimate an equivalent to the deductor and will reconcile the difference. The credit granted by the Income-tax Department are going to be as per Form 26AS.
Ans.Yes, Finance Act, 2013 has introduced section 194-IA which provides for deduction of tax at source just in case of payment of sale consideration of immovable property (other than rural agricultural land) to a resident. Section 194-IA isn’t applicable if the vendor may be a non-resident. Tax is to be deducted @ 1%. No tax is to be deducted if the consideration is below Rs. 50,00,000. If the sale consideration exceeds Rs. 50,00,000, then tax is to be deducted on the whole amount and not only on the quantity exceeding Rs. 50,00,000.
Ans.Yes, u/s 195. just in case you’ve got any doubt regarding the quantity on which TDS is to be made, you’ll file an application with the officer handling non-resident taxation who will pass an order determining the TDS to be made. Alternatively, if the recipient feels that the TDS is more he may file an application together with his Assessing Officer for non-deduction.
Answer: No tax required to be deducted by a person from any sum payable to-
- the Government, or
- the Federal Reserve Bank of India, or
- an organization established by or under a Central Act which is, under any law for the nonce effective , exempt from income-tax on its income, or
- a open-end fund specified under clause (23D) of section 10,
where such sum is payable thereto by way of interest or dividend in respect of any securities or shares owned by it or during which it’s full beneficial interest, or the other income accruing or arising thereto .