TDS stands for Tax Deducted at Source, a tax imposed by the government when a transaction takes place.
The tax is deducted either when the payment is credited to the payee's account or when it is made,
whichever happens first.
The main purpose of TDS is to collect taxes from various income sources. Under the Income Tax Act of
1961, a tax deductor is required to submit a quarterly TDS statement containing details of the tax
deductions made during the quarter by the specified due date. The TDS rate is determined by the Income
Tax Department. It is the responsibility of the deductor to deduct TDS before making the payment and to
deposit it with the government.
The entity or individual responsible for deducting the tax is known as the Deductor, while the entity or
individual from whom the tax is deducted is referred to as the Deductee. TDS applies to various types of
payments for both individuals and businesses.
What is TDS Return Filing?
TDS returns can be easily described as a quarterly statement or summary of all transactions related to
TDS that occurred within the specified quarter. These returns typically include details on the TDS
collected and deposited by the deductor with the Income Tax Authority. Key information in a TDS return
filing includes:
The PANs of both the
deductor and the deductee.- Details of the TDS
payments made, including the Challan information.
Additionally, the details provided in the online income tax return form are also reflected in the payee's
Form 26AS. Filing TDS returns is mandatory for anyone falling under the tax brackets specified by the
Income Tax Department.
Eligible individuals can generally file TDS returns through the IT department's e-filing system. If TDS
returns are not filed within a year of the deadline, the taxpayer is subject to a penalty of at least
Rs. 10,000. Providing incorrect information can also result in fines. According to Section 234, if a
taxpayer fails to file their TDS return by the deadline, they must pay a penalty of Rs. 200 per day
until the return is filed. However, the total penalty cannot exceed the amount of the TDS.
What is TAN?
TAN, or Tax Deduction and Collection Account Number, is a mandatory 10-digit alphanumeric code that must
be obtained by anyone responsible for deducting or collecting tax on behalf of the government. However,
salaried individuals are not required to obtain a TAN or deduct tax at the source.
In the case of proprietorships, businesses, and other organizations, tax must be deducted at the source
for specific payments, such as salaries, contractor payments, and rent exceeding Rs. 2,40,000 annually.
Entities with a valid TAN registration must file their TDS reports quarterly after completing their TDS
return filing. Our TDS experts can assist in calculating TDS payments and filing the necessary TDS forms
in compliance with TDS regulations.
Eligibility Criteria for Filing TDS
Employers and organizations with a valid Tax Deduction and Collection Account Number (TAN) are eligible
to file TDS returns. Individuals or entities making specific payments outlined in the Income Tax Act are
required to deduct tax at the source and submit it within the prescribed deadlines. These payments
include:
- Salary payments
- Income from
securities
- Winnings from
lotteries, contests, and similar activities
- Earnings from horse
race winnings
- Insurance commissions
- Payments related to
the National Savings Scheme and others
Benefits of Online TDS Return Filing
Here are some advantages of filing TDS returns online:
- Prevents Tax Evasion: Timely filing of TDS returns allows the government to track
income records, helping to prevent tax evasion.
- Supports National Revenue: Filing TDS returns ensures a steady flow of revenue for
the government.
- Reduces Taxpayer Burden: TDS payments can be made quarterly, reducing the need for
large lump-sum payments and easing the financial burden on taxpayers and tax-collecting
agencies.
- Convenience: Online TDS return filing streamlines the tax collection process for
welfare programs and provides convenience for the deductee, as the tax is deducted
automatically.
What is the Rate of TDS Deduction?
TDS deductions apply to various types of income, including wages, professional fees, commissions, rent,
interest, and other sources. The rate of TDS is determined based on the type of income and the total
revenue earned.
In essence, different types of income are subject to different TDS rates. Tax is applied to the income
exceeding the maximum threshold level. TDS rates typically range from 1% to 30%, with the exact rate
depending on the income amount and category.
Forms for TDS Return Filing
In India, the following forms are used for TDS return filing:
- TDS Form 24Q
Required under Section 192 of the Income Tax Act of 1961, this form
is used by employers to report TDS deducted from employees' wages. Form 24Q must be filed
quarterly and details the salary paid to employees and the TDS withheld. Essentially, it
provides a quarterly summary of salary payments and TDS deductions.
- TDS Form 26Q
This form is used to report TDS deductions on payments other than
salaries. Form 26Q details the total payments made and the TDS amount deducted for a specific
quarter and must be filed quarterly.
- TDS Form 27Q
This form reports TDS on non-salary payments made to non-resident
Indians (NRIs) and foreigners. Form 27Q must be submitted quarterly by the due date and provides
details of the payments and TDS deducted on these payments.
- TDS Form 27EQ
Covering all information related to tax collected at source, Form
27EQ must be filed quarterly under Section 206C of the Income Tax Act of 1961. This form is
required to be filed by both business and government collectors and deductors.
What is a TDS Certificate?
A TDS Certificate is issued after the TDS has been deducted by the deductor. The deductee can verify
their tax credit by checking a valid TDS certificate from TRACES, which includes a unique 7-digit
certificate number and a TRACES watermark.
The deductee is responsible for keeping the TDS certificates. Certificates for non-salary payments are
issued quarterly, while those for salary payments are provided annually. If a TDS certificate is lost,
the deductee can request a duplicate copy.
Due Dates to File TDS Returns
| Quarter 1 |
31st July |
| Quarter 2 |
31st October |
| Quarter 3 |
31st Jan |
| Quarter 4 |
31st May |
How to Download TDS Return Forms
To file a TDS return, taxpayers need to choose the correct TDS return form based on the type of TDS paid.
Follow these steps to view and download the TDS return forms:
- Visit the official NSDL website
- Click on the 'Download' icon
- From the drop-down menu, select e-TDS/e-TCS
- Click on 'Quarterly returns'
- Choose 'Regular'
- On the redirected page, select the appropriate TDS Return Form from the 'form' section
- Click 'Download'
How to Verify TDS Returns Fund?
- Enter the required information into the TDS return file.
- Upload the file to the portal validation utility tool available on the NSDL website.
- The File Validation Utility will generate a comprehensive report highlighting any errors in the
file.
- Make the necessary corrections based on the report and revalidate the file using the File
Validation Utility.
How to File TDS Return Online
Filing a TDS return involves providing details such as the total TDS deducted, the amount submitted by
the deductor, TAN/PAN numbers for both the deductor and deductee, challan information, and more. Follow
these steps for online TDS return filing:
- Prepare the TDS Return Form: Complete the TDS Return in the format specified by the
Income Tax Department.
- Submit the Form and Required Documents: Upload the completed form and any
supporting documents to the designated TIN Facilitation Centre.
- Verification by Authorities: Authorities will review the form and documents. If any
corrections are needed, the form may be rejected with a letter explaining the issues.
- Receive Acknowledgment: After making any necessary corrections, the authority will
issue an acknowledgment receipt confirming the successful submission.
Requirements for Uploading TDS Returns
Before filing TDS returns, taxpayers should ensure the following requirements are met:
- Valid TAN: Ensure you have a valid Tax Deduction and Collection Account Number
(TAN).
- E-Filing Enrollment: Be enrolled for e-filing.
- Use of Utilities: Utilize the Return Preparation Utility and File Validation
Utility to prepare and validate the TDS statement.
- DSC Registration: Register a Digital Signature Certificate (DSC) for e-filing.
- Account Details: Provide details about your Demat or bank account.
- PAN-Aadhaar Linking: Link your PAN to Aadhaar for uploading TDS returns via EVC.
- Correction Procedures: Be aware of the steps to correct any errors in the TDS
return filing.
Documents Required for TDS Return
To file a TDS return, the following documents are typically required:
- TAN (Tax Deduction
and Collection Account Number)
- PAN (Permanent
Account Number)
- TDS Challan Details
- Payment Information
- Deduction Details
- Certificates (if
applicable)
- DSC (Digital
Signature Certificate)
- Supporting Documents
What is a Revised TDS Return?
A Revised TDS Return is filed to correct any errors in the originally submitted TDS return, such as
mistakes in the challan or PAN information. If these errors are not corrected, the tax amount deposited
with the government may not reflect in Form 16, Form 16A, or Form 26AS. To address this, taxpayers can
file a corrected TDS return.
Key points to remember when filing a revised TDS return include:
- The original TDS return must be approved by the Tax Information Network (TIN) central system
before filing a revised return.
- Taxpayers can check the status of their return on the official NSDL website using their PAN and
Provisional Receipt Number (PRN).
- The updated TDS statement allows taxpayers to make corrections, and a report of this type can be
downloaded from the TRACES website.
Procedure for Validation of TDS Returns
The process for validating TDS returns involves the following steps:
- Ensure all required information is correctly included in the TDS return file.
- Upload the file and update the details using the validation utility tool available online.
- The validation utility tool can be downloaded for free from the NSDL website.
- If there are any errors in the file, the File Validation Utility (FVU) will generate a report
highlighting them.
- Make the necessary corrections before resubmitting the file for verification.
Interest on Late Deposit of TDS
As per Section 201(1A), if you fail to deposit TDS on time after deduction, you are required to pay
interest. This interest is charged at a rate of 1.5% per month from the date the TDS was deducted until
it is deposited. It's important to note that interest is calculated monthly, not daily, meaning even a
partial month is considered a full month.
For instance, if TDS of ₹5,000 was deducted on January 13, 2023, and paid on May 17, 2023, interest is
calculated from January 13, 2023, as ₹5,000 × 1.5% per month × 5 months (January-May) = ₹375.
The term "month" is not explicitly defined in the Income Tax Act of 1961. However, several High Court
rulings have clarified that a "month" should be considered as a 30-day period rather than a calendar
month. The interest calculation begins from the date TDS was deducted, not from the date it was due.
For example, if TDS was deducted on February 21, 2023, and the due date was March 7, 2023, but the tax
was deposited on March 8, 2023 (just one day late), interest will still be charged for two months—from
February 21 to March 8, 2023. You would need to pay interest on the TDS amount at a rate of 1.5% per
month for two months, totaling 3%.
Why Choose SeaRoot for TDS Return Filing?
- Expert Assistance: At SeaRoot, our experienced tax professionals ensure accurate
and timely filing of your TDS returns, minimizing the risk of penalties.
- Hassle-Free Process: We handle the entire TDS return filing process, from preparing
the forms to submission, making it convenient and stress-free for you.
- Compliance Assurance: With SeaRoot, you can be confident that your TDS returns will
comply with all regulatory requirements, avoiding unnecessary legal complications.
- Tailored Solutions: We understand that every business is unique. SeaRoot offers
customized TDS filing services to meet your specific needs.
- Prompt Support: Our dedicated team is always ready to assist you with any queries
or issues, ensuring a smooth TDS return filing experience.
Choose SeaRoot for reliable, efficient, and expert TDS return filing services.
Frequently Asked Questions
1.What is TDS Return Filing?
TDS Return Filing is the process of submitting a quarterly statement that summarizes the tax
deducted at source (TDS) for various payments, such as salaries, interest, or rent. The deductor
must file this return to the Income Tax Department within the specified deadlines.
2.Who is required to file TDS returns?
Any person or entity that deducts TDS, such as employers, contractors, or businesses, is required
to file TDS returns. This includes those with a valid Tax Deduction and Collection Account
Number (TAN).
3.What happens if TDS returns are filed late?
Late filing of TDS returns incurs a penalty of ₹200 per day, as per Section 234E, until the
return is filed. However, the total penalty cannot exceed the TDS amount.
4.How can I correct errors in TDS returns?
If there are errors in the original TDS return, such as incorrect PAN details or challan
information, you can file a revised TDS return to rectify the mistakes.
5.What is Form 16 and Form 16A in TDS?
Form 16 is a TDS certificate issued for tax deducted on salary, while Form 16A is issued for tax
deducted on income other than salary. These forms provide a summary of the TDS deducted and
deposited with the government.
6.What is the penalty for non-filing or incorrect filing of TDS returns?
Along with the late filing penalty, providing incorrect information or failing to file TDS
returns can result in fines ranging from ₹10,000 to ₹1,00,000 under Section 271H.
