With regard to administering employee salaries, compliance with tax regulations is vital for each employer. One of the significant obligations is subtracting Tax Deducted at Source (TDS) from employee salaries and reporting it to the Income Tax Department. It is at this point that Form 24Q comes in. Form 24Q is the quarterly return filed by employers in which the TDS deducted from salaries paid to employees is detailed. It not only protects the taxman by ensuring that the right amount of tax is deducted and remitted to the government but also provides a clear register of employee earnings and deductions. This blog provides a detailed understanding of 24Q TDS, its filing process, significance, and the primary details employers require to know.
Overview of TDS
TDS is the tax subtracted from the deductor’s payments related to salary, professional fees, commission, interest, rent, and other such payments.
The tax is subtracted at the source of the payments, and the recipient gets the net amount after deducting TDS. The gross amount of TDS is included in the recipient’s gross income, and TDS is adjusted against the recipient’s ultimate tax liability.
Overview of Form 24Q: TDS on Salary Income
Form 24Q is invoked when employers, referred to as deductors, pay monthly allowances to employees, referred to as deductees. The deductor subtracts TDS under Section 192 and is bound to file Form 24Q each quarter of the financial year. This form lists the total remuneration paid to the employee and the respective TDS deductions.
Who Deducts TDS on Salaries?
Employers, whether individuals, firms, Hindu Undivided Families (HUFs), or companies, are obligated to deduct TDS on salaries if the employee’s income crosses the basic exemption limit.
Requisites for Filing Form 24Q
Possessing a Tax Deduction Account Number (TAN) is essential to launch TDS deduction and file Form 24Q. Moreover, details like employee particulars and challan information, including PAN and various income details, are required for precise filing.
Form 24Q Annexures: Annexure I, Annexure II, and Annexure III
Annexures I and II constitute the two annexures in 24Q. For the initial three quarters of an FY, Annexure II is not required to be submitted, though Annexure I must be deposited for each of the four quarters. Only the last quarter, from January to March, is needed for Annexure II submission. As per the income tax slab, TDS must be opted out of salaries. If the employee files documentation of their investments, the employer needs to consider all of their investments and deductions.
Annexure I
Annexure I includes deductee-wise TDS separation against each challan.
Particulars of challan(s):
- Challan serial number
- Total Amount in Challan
- BSR code of the branch
- TDS amount assigned among deductees
- Date of deposition of the challan
- Interest amount assigned among deductees
Particulars of deductee(s):
- Name of the employee
- TDS Section Code
- Employee reference number (if present)
- Date of payment/ credit
- TDS amount
- PAN of the employee
- Amount paid or credited
- Education Cess
Moreover, the employer must validate any non-deduction or decreased deduction of TDS if he does so or subtracts it at a reduced rate.
Annexure II
Annexure II gives a detailed analysis of an employee’s salary, details of deductions claimed, income from various sources, and house property. It also has the total tax liability computed on the individual.
Annexure III
Annexure III gives a detailed overview of pension and interest income credited or paid in the financial year. It also includes income from other sources, house property, and the general tax liability computed for the individual.
Form 24Q Due Date
Your employer must file the 24Q TDS Form within the specified bracket:
31st July for April to June
31st January for October to December
31st October for July to September
31st May for January to March
TDS Section Code in Form 24Q
The TDS Section Code signifies the salary type within which TDS is deducted:
192A: Government employees (other than union government employees)
192C: Union government employees
192B: Non-government employees
These codes aid the Income Tax Department in classifying employee salaries and ensuring proper TDS deductions precisely.
Penalty and Fees Connected With the Form 24Q
In the event of delayed filing or non-filing of Form 24Q, the employer may encounter the specified consequences.
Interest
If TDS is not subtracted, the interest rate is 1% each month from the expected deduction date to the actual deduction date.
If TDS is not submitted, the interest rate is 1.5% each month from the actual deduction date to the actual payment date.
Late Filing Fees
Under Section 234E, a daily fine of Rs 200 is relevant until the return is filed. This amount accumulates daily until it matches the total TDS amount.
Penalty under Section 271H
Apart from the late filing fees, the Assessing Officer (AO) may levy a penalty.
- The minimum penalty is Rs 10,000, and the maximum is Rs 1,00,000.
- However, no penalty is charged under 271H if:
- Late submission charges and interest (if applicable) are also submitted.
- TDS is paid to the government.
- The return is deposited a year before the expiration date from the outstanding date.
Process to File TDS Return on Salary
The following steps outline the process for filing a TDS return on salary:
Step 1: Go to the NSDL website to download the TDS utility. You must initially log into the website before choosing the utility.
Step 2: You must initially download and unzip the folder before choosing the TDS file.
Step 3: Open the utility and choose Form 24Q from the intermediate dropdown menu. Since the updated form hasn’t been filed yet, choose the standard icon and select “Continue.”
Step 4: The server would then guide Form 24Q. Annexure II will only be available in the fourth quarter, so you won’t be able to choose it during the initial three.
Step 5: Following that, the employer completes the form window with the required data. These comprise the financial year, employer details, PAN, kind of deductor, and TAN. Fields denoted with an asterisk are essential. The form needs a citation of the details of the Form 24Q that was filed for the earlier period at the end. The receipt number from the earlier return includes the validation of the previous file.
Step 6: The particulars of the tax amount paid are present on the challan tab. Key columns comprise the TDS amount, interest, surcharge, and fees. The BSR code is on the challan, which the employer can access. Two hundred should be selected as the “minor head of the challan.” When generating challans, business proprietors should have a distinct Excel form present. They would not need to discuss each challan one at a time when creating the 24Q return.
Step 7: Fill Annexure I with the deductees’ particulars, including the number of employees
Step 8: The most critical information in this return is the pay data in Annexure II. Begin by adding the needed number of rows, which should equal the total number of workers
Step 9: From the menu, select “Create file” now.
Step 10: When everything is completed, choose “Validate.” Then, Form 27 A and the FVU file will be generated. Once the employer has signed Form 27A, forward it along with the FVU file to the TIN facilitator Centre.
Wrapping Up
Form 24Q is the most important in income tax compliance for employers, explaining all facts regarding TDS deductions and the salary of employees. By keeping deadlines in mind and making proper Filing, employers facilitate the right tax credits and deductions of their employees. Holding Form 24Q is essential to maintain a smooth and clear tax reporting system.
Timely submission according to Form 24Q requirements not only prevents penalties but also maintains uninterrupted tax procedures for employers and employees. Simplifying TDS return filing with Kanakkupillai improves compliance and efficiency, enhancing strong financial management procedures.
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