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TDS Return: Ensuring Tax Compliance with the Income Tax Department

What is TDS Return?

TDS Return refers to the quarterly statement that a deductor must submit to the Income Tax Department of India. A deductor is an individual or entity responsible for deducting tax from the income of another person or entity, such as an employer, bank, or contractor. This statement contains crucial details about the tax deducted and paid to the government, including PAN of the deductor and deductee, TDS challan information, and the amount of tax paid.

Importance of TDS Return

The deductor has a crucial responsibility to file TDS Return every quarter, reporting all the essential details of the tax deducted and paid to the government. These details encompass the PAN of both the deductor and the deductee, TDS challan information, and the amount of tax paid. The significance of this process is multifaceted:

  • Tracking Tax Payments: The Income Tax Department uses TDS Return to keep track of tax payments made by deductors, ensuring transparency and accountability.
  • Verification of Compliance: By analyzing TDS Returns, the Income Tax Department verifies whether deductors are fulfilling their tax deduction obligations accurately and timely.
  • Claiming Tax Credit: TDS Return enables deductees (those from whose income tax is deducted) to claim credit for the tax deducted from their income. It ensures the prevention of double taxation on the same income.

Who is Required to File TDS Return?

According to the Income Tax Act, any person or entity making certain specified payments, such as salary, rent, commission, interest, etc., to another person or entity is required to deduct tax at a prescribed rate and deposit it with the government within a specified time limit.

 The individual or entity responsible for deducting the tax is known as the deductor, while the one whose income is subject to deduction is called the deductee.

Different TDS Return Forms

Various categories of deductors and transactions require specific TDS Return forms. Some common forms include:

Form

Purpose

Form 24Q

For TDS on salary payments

Form 26Q

For TDS on payments other than salary to residents

Form 27Q

For TDS on payments to non-residents

Form 27EQ

For TCS (Tax Collected at Source) on specified transactions

 

There are four main types of TDS Return forms, each catering to different nature of payments and deductees:

  1. Form 24Q:
  • Nature of Payment: This form is used to report TDS deducted from salaries paid to employees under section 192 of the income tax act.
  • Annexures: Form 24Q consists of two annexures:
    • Annexure I: Contains details of the challan and deductee-wise break up of TDS.
    • Annexure II: Applicable only for the fourth quarter, it contains details of the salary paid and tax deducted for the financial year.
  1. Form 26Q:
  • Nature of Payment: This form is used to report TDS deducted from all payments other than salaries, including interest, commission, rent, professional fees, etc., under various sections of the income tax act.
  • Annexure: Form 26Q has an annexure with details of the challan and deductee-wise break up of TDS.
  1. Form 27Q:
  • Nature of Payment: This form is used to report TDS deducted from payments made to non-residents or foreign companies under various sections of the income tax act. It includes payments such as interest, dividend, royalty, fees for technical services, etc.
  • Annexure: Form 27Q includes an annexure with details of the challan and deductee-wise break up of TDS.
  1. Form 27EQ:
  • Nature of Payment: This form is used to report the tax collected at source (TCS) from specified goods or services under section 206C of the income tax act.
  • Annexure: Form 27EQ has an annexure with details of the challan and collectee-wise break up of TCS.

TDS Returns and Due Dates in India: A Comprehensive Overview

TDS (Tax Deducted at Source) is a crucial method of collecting income tax at the source of income. Here’s an overview of TDS returns and their due dates for the financial year 2023-24:

TDS Return Due Dates:

  • First Quarter (April to June 2023) – Due date: September 30, 2023.
  • Second Quarter (July to September 2023) – Due date: October 31, 2023.
  • Third Quarter (October to December 2023) – Due date: January 31, 2024.
  • Fourth Quarter (January to March 2024) – Due date: May 31, 2024.

Forms for Filing TDS Returns:

  • Form 24Q: This is a quarterly TDS statement for tax deducted on salary payments.
  • Form 26Q: This is a quarterly TDS statement for other cases, such as TDS deducted on professional fees, interest payments, etc.
  • Form 27Q: Quarterly TDS statement for tax deducted while making payments (other than salary) to non-resident individuals and foreign companies.
  • Form 26QB: Challan-cum-statement for tax deducted under section 194-IA (TDS on sale of immovable property).
  • Form 26QC: Challan-cum-statement for tax deducted under section 194-IB (TDS on rent payment).
  • Form 26QD: Challan-cum-statement for tax deducted under section 194M (TDS on payment to resident contractors and professionals).
  • Form 26QE: Challan-cum-statement for tax deducted under section 194S (TDS on income from online gaming).

Understanding TDS Certificates and Their Importance

A TDS certificate is a vital document that provides information about the tax deducted at source (TDS) from an individual’s income. Let’s delve deeper into the significance and types of TDS certificates:

  1. Issuance by Deductors: The person or entity responsible for deducting TDS is required to issue the TDS certificate to the person from whom the tax is deducted. This certificate serves as evidence of tax payment and enables the deductee to claim tax deductions.
  2. Types of TDS Certificates: TDS certificates come in various forms, depending on the nature of the payment and the deductee:
  • Form 16: Annual TDS certificate for tax deducted on salary payments.
  • Form 16A: Quarterly TDS certificate for other cases like TDS deducted on professional fees, interest payments, etc.
  • Form 16B: TDS certificate for tax deducted under section 194-IA (TDS on sale of immovable property).
  • Form 16C: TDS certificate for tax deducted under section 194-IB (TDS on rent payment).
  • Form 16D: TDS certificate for tax deducted under section 194M (TDS on payment to resident contractors and professionals).
  • Form 16E: TDS certificate for tax deducted under section 194S (TDS on income from online gaming).
  1. Key Information in TDS Certificates: TDS certificates contain crucial details, such as:
  • Names and addresses of both the deductor and the deductee.
  • Permanent Account Number (PAN) of both parties.
  • Include the Tax Deduction and Collection Account Number (TAN) of the deductor.
  • Amount paid or credited to the deductee.
  • Date of payment or credit.
  • Rate and amount of tax deducted at source.
  • Date of tax deposit with the government.
  • Challan identification number of tax payment.
  • Also, provide the receipt number of the TDS return filed by the deductor.
  1. Timely Issuance: The deductor must issue the TDS certificate within specified time limits. For instance, Form 16 should be issued by June 15th of the next financial year, while Form 16A should be issued within 15 days from the due date of filing TDS return for each quarter.
  2. Verification and Access: The deductee can verify the TDS certificates online through various platforms, including the e-filing website, internet banking, and TRACES portal. Moreover, they can view their tax credit statement (Form 26AS) online to check the details of tax deducted and deposited on their behalf by various deductors.

Filing TDS Returns Online: A Step-by-Step Guide

TDS returns can be filed online through the e-filing portal of the Income Tax Department or through authorized intermediaries. It is crucial to file TDS returns within the specified due dates to comply with tax regulations accurately.

Follow these simple steps to successfully submit your TDS return:

Step 1: Download RPU and FVU: Visit the NSDL website and download the Return Preparation Utility (RPU) and File Validation Utility (FVU). These software tools will assist you in preparing and validating your TDS return file.

Step 2: Fill in TDS Details: Use the RPU to fill in the required details of your TDS return, including TAN (Tax Deduction and Collection Account Number), PAN (Permanent Account Number), challan information, deductee details, etc. Incorporating data from Excel or alternative origins is also possible. Save the file in a text format with .txt extension.

Step 3: Verify TDS Return: Employ the FVU to verify the accuracy and completeness of your TDS return file. The FVU will generate a report highlighting any errors or inconsistencies in your file. If there are no errors, the FVU will generate a .fvu file that is ready for submission.

Step 4: Login and Upload: Log in to the e-filing portal of the income tax department using your TAN and password. Navigate to the TDS section and click on “Upload TDS.” Enter the statement details and upload the .fvu file generated by the FVU.

Step 5: Confirmation and Acknowledgement: After successfully uploading the file, you will receive a confirmation message, and the portal will provide you with an acknowledgement number. Additionally, you can download the provisional receipt of your TDS return from the portal.

Downloading TDS Certificates from TRACES Website

TDS certificates, such as Form 16, 16A, 16B, and 16C, play a crucial role in income tax compliance. Here’s a step-by-step guide to download these certificates from the TRACES website:

  1. Form 16:
  • Register as a deductee on the TRACES website.
  • Log in and go to Downloads > Form 16 (Part A) / Form 16 (Part B).
  • Choose the financial year, quarter, and form type.
  • Enter your PAN and TAN of your employer.
  • Click on Go and then on HTTP download to download the zip file.
  • The password to open the zip file is your date of birth in DDMMYYYY format.
  1. Form 16A:
  • Register as a deductee on the TRACES website.
  • Log in and go to Downloads > Form 16A.
  • Choose the appropriate financial year, quarter, and form type.
  • Enter your PAN and TAN of the deductor.
  • Click on Go and then on HTTP download to download the zip file.
  • The password to open the zip file is your date of birth in DDMMYYYY format.
  1. Form 16B:
  • Register as a buyer on the TRACES website.
  • Log in and go to Downloads > Form 16B/16C (For Buyer/Tenant).
  • Choose the assessment year and enter the acknowledgement number and PAN of the seller.
  • Click on Proceed and then on Submit Request to generate a request number.
  • Go to Requested Downloads and check the status of your request.
  • If available, click on HTTP download to download the zip file.
  • The password to open the zip file is your date of birth in DDMMYYYY format.
  1. Form 16C:
  • Register as a tenant on the TRACES website.
  • Log in and go to Downloads > Form 16B/16C (For Buyer/Tenant).
  • Select the assessment year and enter the acknowledgement number and PAN of the landlord.
  • Click on Proceed and then on Submit Request to generate a request number.
  • Go to Requested Downloads and check the status of your request.
  • If available, click on HTTP download to download the zip file.
  • The password to open the zip file is your date of birth in DDMMYYYY format.

By following these simple steps, you can easily download your TDS certificates from the TRACES website and access important information regarding your TDS deductions and compliance.

Consequences of Non-Filing or Late Filing of TDS Returns

TDS (Tax Deducted at Source) returns are critical for both the deductors and the deductees as they ensure accurate tax collection and compliance with tax laws. Failing to file or delaying the submission of TDS returns can lead to various serious consequences:

  1. Late Filing Fee: If you fail to file your TDS return on time, a penalty of Rs. 200 per day will be charged for each day of delay until the return is filed. The total fee cannot exceed the amount of TDS deducted. This fee is imposed under section 234E of the Income Tax Act.
  2. Penalty: In addition to the late filing fee, you may face a penalty ranging from Rs. 10,000 to Rs. 1,00,000 for late filing or non-filing of TDS return. The penalty is levied under section 271H of the Income Tax Act. The assessing officer may impose this penalty after giving you a reasonable opportunity to be heard.
  3. Prosecution and Imprisonment: Willfully failing to file TDS returns even after receiving notices from the tax authorities may lead to prosecution and imprisonment for up to seven years. This provision is covered under section 276B of the Income Tax Act.
  4. Difficulty in Claiming Tax Credit: Non-filing or incorrect filing of TDS returns may result in difficulties for deductees in claiming credit for the tax deducted at source by the deductor. The credit can only be availed if the deductor has filed the TDS return and mentioned the PAN of the deductee correctly. Failure to do so may lead to tax credit denial, resulting in potential double taxation on the same income.
  5. Loss of Loss Carry Forward Benefit: Failing to file the TDS return within the due date can lead to the loss of the benefit of carrying forward losses. One of the conditions for carrying forward losses under section 80 of the Income Tax Act⁴ is the timely filing of TDS returns.

To avoid these serious consequences, it is essential for both deductors and deductees to comply with the TDS return filing requirements diligently and within the specified due dates.

Conclusion: Filing TDS returns is crucial for ensuring tax compliance with the Income Tax Department. Understanding the significance of TDS returns, their due dates, and consequences of non-filing is essential for both deductors and deductees. By following the step-by-step guide for online filing and accessing TDS certificates, you can stay on top of your tax responsibilities and enjoy a seamless tax filing experience. Stay informed and make your tax journey a smooth one!

FAQs about TDS Return

What is a TDS return?

A TDS return is a quarterly statement containing information about TDS deducted and deposited. It is submitted by the person deducting TDS (TDS deductor) to the income tax department.

Who is required to file TDS returns?

All persons required to deduct or collect tax at source have to file TDS/TCS returns. The types of TDS returns are Form 24Q, Form 26Q, Form 27Q, and Form 27EQ.

How to file TDS returns online?

To file TDS returns online, you need to log in to the income tax India website with your TAN credentials. Then, upload the TDS return file in .fvu format generated using the Return Preparation Utility (RPU) downloaded from the NSDL website. You can attach a digital signature or verify the return using EVC or Aadhaar OTP.

When are TDS returns due?

The due dates for filing TDS returns are as follows:

Form 24Q and Form 26Q (salary and non-salary payments): 31st July for Q1, 31st October for Q2, 31st January for Q3, and 31st May for Q4.

Form 27Q (payments to non-residents) and Form 27EQ (TCS): Same as above.

What are the consequences of late filing or non-filing of TDS returns?

Consequences of late filing or non-filing of TDS returns include penalties, such as a penalty of Rs. 200 per day for late filing, penalties for incorrect filing or non-filing under section 271H, disallowance of expenses under section 40(a)(ia), and interest on late payment of TDS under section 201(1A) of the Income Tax Act.

How to claim TDS refund?

If your tax liability is less than the TDS deducted from your income, you can claim a refund of the excess amount by filing your income tax return (ITR) and mentioning the details of your income, deductions, and TDS. The refund amount will be credited to your bank account after processing by the income tax department.

How to check the status of TDS refund?

You can check the status of your TDS refund on the income tax e-filing portal by going to ‘My Account’ > ‘View e-Filed Returns/Forms’ > ‘Income Tax Returns’ and selecting the relevant assessment year. The status will show whether the refund is processed or pending.

How to download Form 16/16A/16B/16C from TRACES website?

You can download Form 16, Form 16A, Form 16B, and Form 16C from the TRACES website by logging in with your credentials, going to ‘Downloads’ > ‘Requested Downloads’, and entering the request number. After processing, you can extract and open the PDF file using the provided password.

How to rectify or revise TDS returns?

To rectify or revise TDS returns, download the latest version of the Return Preparation Utility (RPU) and File Validation Utility (FVU) from the NSDL website. Open the RPU, select the option ‘Regular’ or ‘Correction,’ fill in the required details, generate the .fvu file using the FVU, and upload the revised return on the income tax e-filing portal.

How to download Form 26AS from TRACES website?

To download Form 26AS from the TRACES website, log in with your PAN credentials, go to ‘My Account’ > ‘View Form 26AS (Tax Credit),’ select the relevant assessment year and view type, enter the verification code, and click on ‘View/Download.’ Use the provided password to open the PDF file.

How to generate Form 16/16A/16B/16C from TRACES website?

To generate Form 16, Form 16A, Form 16B, and Form 16C from the TRACES website, log in with your TAN credentials, go to ‘Downloads’ > ‘Form 16 / 16A / 16B / 16C,’ select the relevant form type, financial year, quarter, and request type, enter the required details, submit the request, and download the file after processing.

How to verify TDS returns using EVC or Aadhaar OTP?

If you do not have a digital signature, you can verify your TDS returns using Electronic Verification Code (EVC) or Aadhaar OTP. Enter the EVC received or generated, or the Aadhaar OTP, to successfully verify your return.

How to view TDS credit or challan status from TRACES website?

To view TDS credit or challan status from the TRACES website, log in with your PAN credentials, go to ‘Dashboard’ > ‘View TDS / TCS Credit,’ select the relevant financial year, assessment year, and form type, and click on ‘Go’ to see the details.

How to claim TDS exemption or lower deduction certificate from TRACES website?

To claim TDS exemption or lower deduction certificate from the TRACES website, log in with your PAN credentials, go to ‘Services’ > ‘Request for Certificate u/s 197 / 206C(9),’ select the relevant financial year, assessment year, and section, fill in the required details, and submit the request.

Harish Chandra

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