TDS Return Filing
The person making specified payments, such as rent, commission, professional fees, salary, interest, etc., deducts TDS, or Tax Deducted at Source, from the money they pay. Usually, the person receiving income is liable to pay income tax. However, the government, through the Tax Deducted at Source provisions, ensures that income tax is deducted in advance from your payments. The income recipient receives the net amount (after reducing TDS). The recipient will incorporate the gross amount into his income and adjust the TDS amount against his final tax liability. The recipient takes credit for the amount already deducted and paid on his behalf. This will help the government collect the taxes in advance and effectively track the transactions.
When Should TDS be Deducted and by Whom?
Individuals subject to the Income Tax Act must deduct TDS when making a specified payment. However, individuals or HUFs whose business or profession sales do not exceed Rs. 1 crore or Rs. 50 lakhs, respectively, are exempt from deducting TDS.
However, even if they are not subject to a tax audit, individuals and HUFs are required to deduct TDS at the rate of 5% from rent payments that exceed Rs 50,000 per month. Furthermore, individuals and HUFs who are required to deduct TDS at 5% are not required to apply for TAN. Your employer deducts TDS at the appropriate income tax slab rates. Banks deduct TDS at a rate of 10%. They may deduct TDS at a rate of @20% if they do not have your PAN information.
For most payments, the payer deducts TDS according to the rates established by the Income Tax Act. You are not required to pay any tax if your total taxable income is below the taxable limit, and you submit investment substantiation to your employer to claim deductions. Therefore, your income should not be subject to TDS deductions.
Similarly, if your total income is less than the taxable limit, you may submit Form 15G and Form 15H to the bank to avoid TDS being deducted from your interest income. If you have been unable to provide proof to your employer or if your employer or bank has already deducted TDS and your total income is below the taxable limit, you may file a return and request a refund of the TDS. A comprehensive list of specified payments that are eligible for TDS deduction, as well as the TDS rate, is available.
How to Deposit TDS?
You must deposit Tax Deducted at Source via the Income Tax Portal using your TAN login. The Direct tax payments facility has been migrated from OLTAS ‘e-payment: Pay Taxes Online’ to the e-Pay Tax facility of the e-Filing portal. You must click on the ‘e-Pay Tax’ option of the Income Tax Department on https://www.incometax.gov.in/ to make direct tax payments, including TDS.
How and when to file TDS returns?
All individuals who have deducted TDS are required to submit Tax Deducted on Source returns. You are required to submit the TDS return every quarter, which includes the TAN, the amount of TDS deducted, the form of payment, and the deductee’s PAN, among other details. Various forms are necessary for the submission of returns, depending on the purpose of the TDS deduction. The following are the different categories of return forms:
Form No | Transactions reported in the return | Due date
|
Form 24Q | TDS on Salary | Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
Form 26Q | TDS on all payments except salaries | Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
Form 26QB | TDS on sale of property | 30 days from the end of the month in which TDS is deducted |
Form 27Q | TDS on all payments made to non-residents except salaries | Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
Form 26QC | TDS on rent | 30 days from the end of the month in which TDS is deducted |
What is a TDS Certificate?
Form 16, Form 16A, Form 16B, and Form 16C are all TDS certificates. The person who deducts TDS from the assessee’s income during payment must issue TDS certificates. For example, banks provide the depositor with Form 16A when deducting TDS on interest from fixed deposits. The employee receives Form 16 from the employer.
Form | Certificate of | Frequency | Due date |
Form 16 | TDS on salary payment | Yearly | 31st May |
Form 16A | TDS on non-salary payments | Quarterly | 15 days from due date of filing return |
Form 16B | TDS on sale of property | Every transaction | 15 days from due date of filing return |
Form 16C | TDS on rent | Every transaction | 15 days from due date of filing return |
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TDS Credits in Form 26AS
You must understand the relationship between your PAN and TDS. Both the deductor and the deductee’s PAN numbers are linked to TDS deductions. If you have deducted TDS from any of your income, you must complete Tax Credit Form 26AS. This form is a consolidated tax statement that is accessible to all PAN holders.
This form provides a comprehensive list of the TDS deducted from your income by each deductor for all types of payments made to you, including salaries and interest income, as all TDS are associated with your PAN. This report contains all the TDS associated with your PAN. This form also allows you to directly pay income tax, either as advance tax or self-assessment tax (available in AIS from FY 2022–23). Therefore, you must accurately indicate your PAN whenever TDS applies to your income.
A defective notice from the income tax department may be the consequence of an inaccurate TDS credit claim. Therefore, it is imperative to ensure that the TDS credits in Form 26AS are by the TDS receivables recorded in the accounts, especially when multiple customers or vendors are involved in the business.
How to Upload TDS statements
To upload TDS statements on the Income Tax Department website, follow the steps listed below:
- Visit the Income Tax Website. Log in with your TAN.
- Select e-File > Income Tax Forms > Fill out income tax forms on the dashboard.
- Select the relevant form and fill in the details.
- Validate the return using either DSC or EVC.
Types of TDS
The following are a few of the income sources that qualify for TDS:
- Salary
- Payments to Contractor
- Commission payments
- Sale of House
- Insurance Commission
- Interest on securities
- Interest other than interest on securities
- Rent Payment
- Professional fees
- Online Gaming
- Winning from games like the lottery, crossword puzzle, card, etc.
SMS Alerts for Higher Transparency
The income tax department has been sending VK-ITDEFL SMS messages to taxpayers. These messages contain the amount of tax deducted at source (TDS) against the taxpayer’s PAN (Permanent Account Number). Your income from salary, interest, and other sources will receive a quarterly SMS alert informing you of the TDS credit. Your Form 26AS will accumulate the TDS amount for the relevant financial year.
The Finance Ministry implemented this initiative to enhance transparency and mitigate instances of TDS mismatches during income tax submission. To prevent discrepancies, taxpayers may compare their payslip statements and SMS. A TDS mismatch frequently leads to the submission of an incorrect income tax return.
Summary
In India, the TDS (Tax Deducted at Source) system deducts tax at the source of specific payments such as salary, rent, commission, and interest, enabling the government to collect taxes in advance and effectively track transactions. Individuals and entities making these payments are responsible for deducting and depositing TDS through the Income Tax Portal. Depending on the transaction type, filers must file TDS returns quarterly using various forms, and timely filing is crucial to avoid penalties. Deductors must issue TDS certificates, such as Form 16 for salary, to the recipients, who can track their TDS credits in Form 26AS linked to their PAN. Accurate reporting and timely submissions help prevent mismatches and ensure compliance, while SMS alerts from the Income Tax Department further enhance transparency.
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FAQ’s
Tax Deducted at Source (TDS) is a system that deducts taxes from specific payments, such as interest, commission, rent, and salary. It guarantees that the government collects taxes in advance, minimizes the likelihood of tax evasion, and effectively monitors transactions.
Individuals or entities making specified payments are required to deduct TDS in accordance with the Income Tax Act. However, individuals or HUFs whose business or professional sales do not exceed Rs. 1 crore or Rs. 50 lakhs, respectively, are exempt from deducting TDS, except for rent payments exceeding Rs. 50,000 per month, which necessitates a 5% TDS deduction.
To avoid TDS deductions, submit Form 15G (for non-seniors) or Form 15H (for seniors) to the bank or your employer, indicating that your income is not taxable if your total income is below the taxable limit. Should TDS deductions have already occurred, you have the option to file a return and seek a refund.
To deposit TDS through the Income Tax Portal, utilize your TAN login. Use the ‘e-Pay Tax’ facility on the Income Tax Department’s website to make the deposit as soon as possible.
Form 26AS, a consolidated tax statement that links to your PAN, provides a comprehensive inventory of TDS deductions made against your income. To prevent complications during income tax filing. It is essential to verify TDS credits and make sure that the TDS amounts correspond to those recorded in your accounts.
In case of a discrepancy, it is essential to promptly reconcile the discrepancy by comparing the deductor’s information with that in Form 26AS. To prevent any defective notices from the Income Tax Department, corrective actions may involve contacting the deductor or submitting a correction statement.
TDS returns must be filed quarterly. The due dates are:
- Q1 (April to June): July 31st
- Q2 (July to September): October 31st
- Q3 (October to December): January 31st
- Q4 (January to March): May 31st
The deductor issues a TDS certificate to the recipient, detailing the amount of TDS deducted and remitted. Form 16 is utilized for salary payments, while Form 16A is employed for non-salary disbursements. We annually issue these certificates for Form 16 (by May 31st) and quarterly for Form 16A (15 days from the due date for submitting the return).