For small business owners, filing Tax Deducted at Source (TDS) returns is a key part of compliance. Certain payments made by businesses are subject to tax deductions at the source through a method called TDS. These deductions must be reported and the necessary information must be provided to the tax authorities when filing TDS returns.
Small business owners must gather the necessary data before filing TDS returns. Obtaining a Tax Deduction and Collection Account Number (TAN) and collecting details on the deductees are part of this process.
Obtain TAN (Tax Dedication and Collection Account Number)
A TAN is a special identification number necessary for withholding and collecting taxes at the source. Small business owners can visit the tax authority’s official website, complete the TAN application form with the required information, provide supporting documentation, and pay any applicable fees to obtain a TAN. The business will be able to deduct and submit taxes after receiving the TAN, which will be issued after verification.
Collect details of the deductees.
Deductees are people or organisations from whose taxes have been withheld at the source. Deductees’ names, addresses, Permanent Account Numbers (PANs), and the amount of tax deducted must all be gathered by small business owners. For correctly submitting TDS returns and providing TDS certificates to deductees, this information is essential. To ensure compliance with tax laws, it’s crucial to keep accurate records and documentation.
Prepare TDS Return:
1. Choose the appropriate TDS return form
Small business owners should select the appropriate form to prepare TDS returns, taking into account factors such as payment type, deductee type, and relevant tax law sections. Usually, TDS return forms are arranged quarterly (for example, Q1, Q2, Q3, Q4). Compliance requires careful form selection. The relevant TDS return form can be found on the website of the tax authority, or you can ask a tax expert for advice.
2. Access the online TDS filing portal or use third-party software
Small business owners can access the online TDS filing portal offered by their country’s tax authority or use third-party software to submit TDS returns. Businesses can directly upload TDS return files through online portals provided by tax authorities, while third-party software streamlines the filing process with user-friendly interfaces and functionality. Choosing between the two options depends on personal preferences and the available resources.
3. Fill in the necessary details in the form
Small business owners should guarantee accuracy and completeness while completing the TDS return form. They must contain information such as TAN, financial year, quarter, deductee PAN, name, address, amount of tax deducted, mode of payment, and the relevant section for the deduction. Any exemptions, deductions, or corrections should also be mentioned, along with any relevant supporting documentation. To maintain compliance and minimise errors, it is crucial to thoroughly review and validate all data before submitting the form.
Validate and Generate TDS Return:
1. Review the entered information for accuracy and completeness
It is essential for small business owners to carefully review the entered information after entering the relevant information in the TDS return form. They must ensure that all information is accurate and comprehensive, including the TAN, deductee information, tax-deducted amounts, method of payment, and relevant sections. To prevent fines and ensure compliance, it is crucial to check for errors, omissions, and inconsistencies. A comparison of the data with any supporting document is advised, and any differences should be corrected. The TDS return can be created and submitted to the tax authorities once the accuracy has been confirmed.
2. Validate the TDS return using the built-in validation utility
Small business owners can utilise the built-in validation utility provided by the online TDS filing site or third-party software to verify their TDS return. This tool helps identify errors or discrepancies in the supplied data, such as incorrect PAN numbers, missing fields, or inaccurate tax amounts. Business owners can make sure that the TDS return complies with the appropriate format and meets the requirements set forth by the tax authorities by running the validation software. Correcting any errors before completing and submitting the TDS return is a crucial step.
File TDS Return
1. Generate the TDS return file in the accepted format (e.g., FVU, TXT, ZIP)
Small business owners should generate the TDS return file in the acceptable format as defined by their country’s tax authority after validating the TDS return. FVU (File Validation Utility), TXT (plain text), and ZIP (compressed file) are examples of commonly used formats. The relevant option within the online TDS filing portal or the export feature of third-party software might be chosen to do this. The resulting file will include all pertinent information from the TDS return in a structured style and be prepared for electronic submission to the tax authorities or other filing requirements.
2. Log in to the online TDS filing portal
To log in to the TDS filing portal online:
- Visit the tax authority’s website for your country.
- Go to the TDS filing section.
- Find the sign-in or login option.
- Enter your username and password in the spaces given.
- If additional security verification processes are required, please complete them.
- Upon successful authentication, navigate to the portal’s dashboard.
- To upload the created TDS return file or to enter the necessary information directly, follow the instructions.
- Review the entry and verify the filing procedure.
- For future reference, keep a copy of the acknowledgement/receipt.
3. Upload the generated TDS return file
- Log in to the TDS filing website.
- Go to the dashboard or section for TDS filing.
- Find the TDS return file submission or upload option.
- By selecting the upload or browse button, choose the file from your device.
- Ensure that the file is in the acceptable format that the portal has provided.
- Click the “Upload” or “Submit” button to initiate the file transmission.
- Ensure that the file is successfully sent by waiting for the upload procedure to finish.
- Look for any confirmation messages or notifications to verify that the transfer was completed.
- Verify the submitted file to make sure the data is accurate and comprehensive.
- By the portal’s instructions, confirm the submission.
- Keep a copy of the acknowledgement that is produced following a successful submission for your records.
4. Authenticate the submission using digital signatures (if applicable)
Use digital signatures to verify the submission of the TDS return, if necessary. The filing procedure is made more secure and authentic by the use of digital signatures. Utilise a valid digital signature certificate to digitally sign the return by following the methods given by the online TDS filing portal. This contributes to ensuring the integrity and non-repudiation of the TDS return’s submission.
5. Obtain an acknowledgement receipt or token for future reference
Obtain an acknowledgement receipt or token after successfully submitting the TDS return using the web portal for your records. This receipt, which serves as submission proof, includes crucial details like the acknowledgement token or number. This receipt should be kept on file in case it becomes necessary for any upcoming investigations, audits, or compliance requirements.
Pay TDS Late Filing Fees (if applicable):
1. Determine if any late filing fees are applicable
Refer to the tax regulations and instructions issued by the tax authority to determine whether any late filing penalties are relevant for TDS returns. These regulations outline the deadlines for submitting TDS returns and the consequences of filing them late. Review the rules to determine if late filing fines are applicable, and then calculate the corresponding amount. Adhering to regulations enables timely compliance and prevents fines.
2. Calculate the fees based on the number of days delayed
Small business owners should consult the unique penalty structure established by their country’s tax authorities to calculate the late filing fees for TDS reports, based on the number of days the filing is delayed. Typically, a percentage or a fixed amount is charged for each day that the submission is late. To determine the total fees, multiply the applicable penalty rate by the number of days the return is late. It’s crucial to adhere to the instructions provided by the tax authority to calculate and settle the necessary late filing fees correctly.
3. Pay the fees through the designated mode (online or offline)
Follow the instructions provided by the tax authority regarding the preferred method of payment for late filing fees on TDS returns. It might be offline or online. To pay the fees within the allotted period, please use the designated payment method, such as Internet banking or in-person payment at an accredited bank.
Conclusion
In conclusion, small business owners must fulfil their obligations to deduct and remit taxes by filing TDS returns to ensure compliance with tax laws. The tax and compliance service provider Kanakkupillai, with experience in obtaining TAN, collecting deductee information, validating forms, and accurately submitting them, can help with understanding the complexity of filing TDS returns. You can rely on Kanakkupillai to simplify the TDS return filing procedure and guarantee prompt compliance.
