A TDS Return is a form that people need to fill out and submit to the government if they've had some of their income taxed before they received it. You have to do this within a certain time and provide information about the tax deduction, who took the tax, and who received the money.
What is TDS Return Filing?
A TDS return is like a report that shows all the tax-related activities that happened in three months. It mainly includes information about the tax money collected and given to the tax authorities by the person or company who collected it. The important things in a TDS return are:
The unique identification numbers of the person or company who collected the tax and the one who paid it.
Details about how much tax was collected.
Information about the payment made, like the transaction details.
Filing a TDS return helps the government make sure that people and organizations don't avoid paying taxes. The government keeps a record of these returns, and if someone doesn't file on time, they can be fined.
When people or companies file TDS returns every month, it gives the government a steady income. This system helps the government keep track of who is consistently paying their taxes.
Filing TDS returns also makes it harder for people to avoid paying taxes because the employer deducts the tax from the payment and provides a certificate to the employee. This increases the number of people who pay taxes in the country.
The agencies responsible for collecting taxes need to monitor everyone who should be paying taxes. TDS return filing makes it easier for both the tax agencies and the deductor, as the tax is taken out at the time of payment. This means the person receiving the money doesn't have to file taxes separately.
Who Can File TDS Returns?
People and organizations that have a valid TAN (Tax Deduction and Collection Account Number) can file TDS returns. Also, individuals whose financial records are audited under Section 44AB and who work for the government or companies must file TDS returns online every three months.
This means that the deductor can be various entities like individuals, groups of people, Hindu Undivided Families (HUFs), limited companies, local authorities, groups of people, or partnership firms, among others.
According to the Income Tax Act, TDS is filed for the following types of payments:
Income from securities
Commission earned from insurance
Payments related to National Savings Certificates (NSC)
Winnings from horse races
Winnings from lotteries, puzzles, and similar sources.
Tax & Process
PAN Card Information: Details about the individual's PAN card.
TDS Certificate: If someone else has deducted TDS.
Step 1: Fill out Form 27A, which has multiple columns. If you're using a hard copy of the form, make sure to verify it along with the electronically filed E-TDS return.
Step 2: Accurately record the amount of tax deducted at the source and the total payment made.
Step 3: Mention the TAN (Tax Deduction and Collection Account Number) of the organizations on Form 27A. Using an incorrect TAN can cause verification issues.
Step 4: When filing TDS returns, provide the correct challan number, payment mode, and tax details. Incorrect details can lead to discrepancies, and you may need to refile the TDS returns.
Step 5: Use the standard form for e-TDS filing to maintain consistency. Enter the 7-digit BSR (Basic Statistical Return) for easier reconciliation.
Step 6: Submit physical TDS returns at the TIN FC (Tax Information Network Facilitation Center) managed by NSDL. For online filing, use the official NSDL TIN website.
Step 7: If all the information is correct, you will receive a token number or provisional receipt as proof of filing the TDS return.
Step 8: If your TDS return is rejected, you will receive a non-acceptance memo with the reasons for rejection, and you'll need to refile the returns accordingly.
What are the different types of TDS Forms?
TDS forms vary depending on the income of the person or entity from whom tax is deducted. The main TDS forms include:
Form 24Q (Quarterly): for TDS from salaries.
Form 26Q (Quarterly): for TDS on payments other than salaries.
Form 27Q (Quarterly): for TDS from interest, dividend, or payments to non-residents.
Form 27EQ (Quarterly): for the collection of tax at source.
What is a TDS Certificate?
A TDS Certificate is a document given to the person from whom tax is deducted (deductee). It serves as proof of tax deduction and can be used to verify tax credits. The certificate includes a unique 7-digit number and a TRACES watermark. TDS certificates for non-salary payments are issued quarterly, while salary TDS certificates are provided annually. If the certificate is lost, a duplicate can be requested.
On what amount is TDS deducted?
TDS is deducted only when the total income is taxable. If the total income is less than Rs 2,50,000, no TDS is deducted. This threshold applies to both men and women under 60 years of age.
What happens if TDS is not deducted on time?
There is a penalty for not deducting or depositing TDS on time. The employer may need to pay interest on the delayed TDS amount before filing TDS returns or responding to demands raised by TRACES.
How is TDS deducted from Salary?
To calculate TDS on salary, first, compute any exemptions available under Section 10 of the Income Tax Act. Then, subtract these exemptions from the gross monthly income. Finally, multiply the resulting yearly income by 12, as TDS is calculated on an annual basis.