Introduction
Apart from depositing tax, the deductor also has to file a TDS return. TDS return filing is a quarterly statement that has to be given to the Income Tax Department. It is necessary to submit the TDS return 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.
What are TDS Returns
TDS is basically a part of Income Tax. It has to be deducted by an individual for certain payments made by them. TDS or Tax Deducted at Source is the income tax deducted from the money paid by the persons making such payments at the time of specified payments such as rent, commission, professional fees, salary, interest, etc. Generally, the person receiving the income is liable to pay income tax. But with the help of tax deduction at source provisions, the government makes sure that income tax is deducted in advance from the payments being made by you. The income recipient receives the net amount (after deducting TDS). The recipient will add the gross amount to his income and the amount of TDS will be adjusted against his final tax liability. The payee takes credit for the amount already deducted and paid on his behalf.
Types of TDS Returns Forms
• Form 24Q
Under Section 192 of the Income Tax Act, of 1961, an employer deducts TDS while paying a salary to an employee. An employer has to file a salary TDS return in Form 24Q, which has to be submitted every quarter. The details of the salary to be paid to the employees and the TDS deducted from the payment are to be specified in Form 24Q. In other words, Form 24Q is the quarterly statement of payment made to the employee and TDS is the deduction which is made by the deductor.
• Form 26Q
When a taxpayer is paying taxes, the recipient is deducting TDS on certain occasions. Form 26Q is used to file TDS details on payments made other than salary. The form mentions the total amount paid and the TDS amount deducted during a particular quarter. It is necessary to submit Form 26Q every quarter.
• Form 27Q
Form 27Q is a TDS return or a statement containing details of tax deducted at source on payments other than salary made to non-resident Indians and foreigners. Form 27Q is to be submitted every quarter on or before the due date. Form 27Q contains the details of payments made and TDS deducted on payments made by the deductor to NRIs.
• Form 27EQ
Form 27EQ contains all the details regarding tax collected at the source. According to section 206C of the Income Tax Act 1961, this form has to be filled out every quarter. The form is to be submitted by both corporate and government collectors and deductors.
Prerequisites To Filing a TDS Return
Before filing a TDS return you must ensure that you have fulfilled the following conditions:
You have a valid TAN number
Such a TAN number is registered for the e-filing of TDS returns on the income tax website.
Prepare the TDS using the Return Preparation Utility (RPU)
Validate the Return Preparation Utility (RPU) using File Validation Utility (FVU)
Ensure a valid DSC certificate if you wish to avail of the digital signature facility for authentication of the TDS return.
Link the principal’s PAN with Aadhaar or provide the principal’s bank account details and Demat account details to avail of electronic verification through EVC
Pay the total TDS deducted amount before uploading the TDS return.
Important Points regarding Filing a TDS Returns
You should follow the data structure format e-TDS/e-TCS Return while preparing it.
Prepare e-TDS/e-TCS return as per file formats in plain text ASCII format with ‘txt’ as file name extension.
Prepare e-TDS/e-TCS return using the return preparation utility provided by NSDL or any other third-party software.
Verify the file format using File Validation Utility (FVU) provided by NSDL.
If there is any error in any file, FVU will report the errors. Correct the errors and re-verify the file through FVU.
Generate the .fvu file. You can either submit it through TIN-FC or upload it on the official income tax website.
Penalty for Delay in Filing TDS Returns
Filing and payment of TDS are required within the due date. If TDS is not filed within the due dates, it may result in a penalty. The Income Tax Act has provided various sections dedicated to penalties for not filing TDS within the due dates.
Section 234E:
Section 234E of the Income Tax Act, 1961 provides for a penalty provision in case the TDS deductor fails to comply with the due dates provided for filing TDS returns. If a deductor fails to file the TDS return within the due date, a penalty of Rs 200 per day is imposed on him till the amount of the TDS return for which he fails to file is entitled to be fully recovered. If the deductor files TDS after levying the penalty, the penalty provision ceases to apply. This penalty can also be imposed in buying immovable property under 26 QB, it is a challenge.
Section 271H:
Section 271H of the Income Tax Act, 1961, provides for a higher penalty for the deductor who fails to file a TDS return within the due dates and files a TDS return after more than one year from the due date or the amount is very high, or some other serious factor is involved. In this case, the fine can range between Rs 10,000 to Rs 1 lakh depending on various factors. The Income Tax Department can impose this section on a person who wrongly or maliciously files TDS returns. Production of false data like PAN, challan, etc. can also attract this liability.
Section 276B:
If a person fails to pay the TDS return to the Central Government, he shall be punishable with imprisonment for a term which shall not be less than three months, and may also extend to seven years of rigorous imprisonment with a fine.
Process for Filing TDS Returns
While filing TDS return online, a person should carry some necessary documents with him. The list of documents is as follows:
PAN cards of the deductee and the deductor
Tax amount paid to the government
Details on TDS challan
Other paperwork, if needed
Steps to follow to file TDS returns
Deductors should use Form 27A for filing returns along with quarterly statements. This form summarizes the quarterly statements and includes the amount paid and TDS.
A control chart is present on the form. Fill in all the columns of that chart.
Carefully fill in the sections for the amount paid and tax deducted at source, matching them with the relevant forms.
The assessee needs to enter his Tax Deduction Account Number in this form for accurate verification.
It is also important to mention the details of the TDS deposited while filing the return.
As per the original e-TDS return form format, one needs to enter the 7-digit bank branch code or BSR code. Reserve Bank of India gives this code to the banks.
For filing a TDS return online, assessees must follow a certain format. This can be achieved by using software called Return Prepare Utility (e-TDS RPU) from NSDL (National Securities Depositories Limited). It is important to note that the file should come with a ‘txt’ file name extension.
Now the deductor has to digitally sign the form and submit it to the NSDL Tax Information Network portal. In order to know how to file a TDS return online, one must be accustomed to digital signatures.
After submission, a person will receive an acknowledgment receipt containing a token number. In case of rejection of the return, the deductor will receive a non-acceptance memo stating the reasons for rejection.
If an assessee wants to file a TDS return in offline mode, he/she has to visit the nearest Facilitation Center under NSDL.
Conclusion
Payment and filing of TDS are necessary to contribute to the government for the overall welfare. A delay in this act may result in a penalty. Therefore, it can be said that the TDS return is one of the important tax filing processes that every taxpayer should be familiar with. One must also make it a point to know about all the requirements, eligibility criteria, rules, and specifications in order to complete the related process smoothly. In turn, this will help taxpayers make the most of tax savings and enable them to save more in a financial year.
eStartIndia will help you to file your TDS returns from the comfort of your home.
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