TDS Return Filing, Eligibility, Process and Procedure
TDS or Tax Deducted at Source is a source of collecting tax by the Government of India and it is done at the time of every transaction. This type of tax is usually deducted at the time when expense is incurred.
What is TDS Return?
Besides depositing the tax, the deductor must also do TDS Return Filing. It is a quarterly statement which has to be given to the I-T department and it is mandatory for deductors to present or submit a TDS return at the expected time.
Here are details needed to file TDS returns are:
- PAN of the deductor and the deductee
- Tax amount paid to the government
- Information of TDS challan
- Others, if any
Key Takeaways
- The government, on the other hand, ensures that income tax is deducted in advance from your payments by adhering to the Tax Deducted at Source requirements.
- Individuals and HUFs who must deduct TDS at a rate of 5% are exempt from applying for TAN.
- The complete list of Specified Payments that are subject to TDS deduction, as well as the TDS rate.
- Due Date on which TDS Should be Deposited to the Credit of the Government.
- If you have had TDS deducted from any of your earnings made during the year, you must check and confirm with your Tax Credit Form 26AS.
Who is required to deduct TDS?
There is no need to deduct TDS if the expense is incurred an individual or HUF whose books are not liable to be audited. But, if the rental payments of an Individual / HUF exceeds Rs.50,000/- per month, they are required to deduct TDS. If the deductee does not own a PAN, TDS can be deducted at a higher rate of 20%.
TDS Return Filing
TDS returns must be filed in a particular time limit, below are mentioned period when TDS returns have to be done every year.
Quarter |
Period |
TDS Return Due Month of that particular year |
| 1st Quarter | 1st April to 30th June | 31st of July |
| 2nd Quarter | 1st July to 30th September | 31st of October |
| 3rd Quarter | 1st October to 31st December | 31st of January |
| 4th Quarter | 1st January to 31st March | 31st of May |
The TDS return forms vary depending on the purpose of deduction. Check out the various type of TDS Return Forms below:
Particulars |
Form No. |
| TDS on Salary | Form 24Q |
| TDS on payments other than salary | Form 26Q |
| TDS on payment for transfer of immovable property | Form 26QB |
| TDS where deductee is a non-residents and foreign companies | Form 27Q |
With a signed verification in Form No. 27A, these returns have to be in company and it is a form that checks the statements every quarterly. This has to be filed by deductors along with quarterly statements. It sums up the control totals of income tax deducted at source and the amount paid and most importantly, this amount should match with the totals in TDS return.
TDS Return Submission
Individuals are legally responsible to submit TDS return only if TDS is deducted from his/her salary or income. It is compulsory to file TDS return within the expected dates which are mentioned above. In case, if an individual does not file the return within the due date, that particular individual will be liable for the penalty amount.
Following are the people who are liable to file TDS return every quarterly:
- People whose accounts are Audited u/s44AB
- People how own an office under the Government
- Company
TDS Return filing Process
Consider the following points to file an error-free TDS return:
- Form 27A is a form which contains a control chart and all the columns in this form must be filled. Verify this form thoroughly before filing the TDS return electronically.
- The total amount paid and the tax deducted at source must be filled correctly and fill the same amount in all the forms. The forms include Form No. 27A, Form No. 26, Form No. 24 and Form No. 27.
- The person who is filing TDS returns are needed to mention their Tax Deduction Account Number (TAN) in Form No. 27A. The same has to be filled if the person is filing an e-TDS return. This is determined by ‘sub-section (2) of section 203A of the I-T Act in India’.
- While filing the TDS return, the person should be very careful and ensure that the details of the depositing of tax deducted at source should be mentioned accurately without any errors.
- The basic form which has been applied for e-TDS return mentioned by the department is mandatory to follow. As it brings regularity and better understanding in filling the respective forms. It is required to mention the BSR code or the Bank Branch code, the 7-digit code provided to every bank by the Reserve Bank of India.
- TDS return must be filed in the ASCII clean text format. To get this format, you can use software such as MS Excel, Computex or Tally. Also, it is also recommended to use software available at NSDL website which is known as Return Prepare Utility (e-TDS RPU Light) for filing the returns online. Note that the online TDS return file formats comes only with ‘txt’ as the filename extension.
- The physical TDS returns are filed at any TIN-FC’s managed by NSDL. TIN-FC’s are found at many places across the country.
- If TDS returns are filed online, then you can visit the NSDL TIN website and file the return. While filing online, the deductor has to sign the TDS return via digital signature.
- When filing the return, if all the information and amounts mentioned in the forms are accurate then an acknowledgement number will be issued, declaring the fact that the TDS return has been filed. If the return is not accepted due to any errors, then a non-acceptance memo will be released together with the reasons for rejection.
Validation process for TDS Return File
The procedure for the validation process of TDS return file is detailed below:
- First, fill all the required details in the file
- next, update the details in the portal validation utility tool
- This validation utility tool is available on the NSDL website and it is free
- If there are any errors in the file, FVU will issue a report for the same
- Modify the necessary changes or errors and verify the file again via the FVU
Delay in filing TDS Return
Delaying in filing TDS return result in penalty. According to Section 234E, if an individual fails to file his/her TDS Return within the expected date, a penalty of Rs.200/- per day is charged. However, keep in mind that the total penalty of TDS return filing not exceeds the TDS amount.
Non-filing of TDS Return
If an individual who is liable to File TDS Return has not filed the return for about 1 year from the due date of filing return or if an individual has provided incorrect information, then that individual will be liable for penalty. The penalty imposed should not be below Rs10,000 and not more than Rs.1, 00,000.
Conclusion
TDS is applicable to various types of income such as salary, interest, commission, rent, etc. The rate of TDS and the due date for depositing the TDS with the government varies depending on the nature of the income and the status of the recipient.
Filing TDS returns is mandatory for all entities that have deducted TDS during the year. The due date for filing TDS returns is 31st July for the first quarter, 31st October for the second quarter, 31st January for the third quarter, and 31st May for the fourth quarter.
Kanakkupillai is a company that provides various financial and legal services such as company registration, GST registration, income tax filing, TDS filing, and other compliance-related services. They can assist businesses and individuals in complying with TDS requirements, including filing TDS returns on time and avoiding penalties.
FAQ on Tax Deducted at Source
TDS deductor are responsible for the following:
- Obtain a Tax Deduction Account Number and include it in any TDS-related papers.
- Subtract the TDS at the appropriate rate as it is applicable.
- Within the stipulated due date, deposit the TDS amount with the government authority.
- TDS returns filings should be done as are due on the given date.
- Within the stated timeframe, provide the TDS certificate to the payee.
If you do not provide your Permanent Account Number or PAN details to the deductor, the deductor will deduct TDS at the highest of the rate prescribed in the relevant provisions of the Act or 20%, according to Section 206AA of the Income Tax Act.
PAN stands basically for Permanent Account Number and TAN for Tax Deduction Account Number.
The person in charge of deducting TDS, i.e., the deductor, should get a TAN. In all TDS-related papers, the deductor must include the TAN.
However, there is an exception, and it is that in the case of TDS on land and construction purchases made under Section 194-IA, the deductor is not needed to get a TAN and can return the TDS using PAN.
TDS on rent, as defined by Section 194-IB, and TDS on payments of specific sums by individuals or HUFs, as defined by Section 194M, can also be remitted using PAN rather than TAN.
The employer deducts TDS on salary at the employee's 'average rate' of income tax. It will be computed as follows: Average Income tax rate = Income tax payable (calculated through slab rates) divided by employee's estimated income for the financial year.
The concept of TDS requires that the person on whom responsibility has been cast, is to deduct tax at the appropriate rates, from payments of specific nature which are being made to a specified recipient. The deducted sum is required to be deposited to the credit of the Central Government.
Under Section 192, TDS is deducted at the time of actual payment of salary and not during the accrual of salary. It means tax will be deducted when your employer pays salary whether in advance or on time or in arrears (late payment).
It is because the salary received from the employer is categorised as income, and the same attracts a TDS based on the average prevailing rates of tax. The ITA makes it mandatory for employers to deduct TDS on salary if they pay a salaried income to their employees.
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