TDS Return Filing with Corpbiz

TDS (Tax Deducted at Source) is a tax collected by the government at the time of a transaction. The deduction is made when the amount is credited to the payee’s account or during payment—whichever happens first.

Objective of TDS

TDS aims to collect taxes from various income sources. As per the Income Tax Act, 1961, a tax deductor must file a quarterly TDS return with details of deductions made during the quarter. The Income Tax Department decides the applicable TDS rate. It is the deductor’s duty to deduct and deposit TDS with the government before making payments.

• Deductor: The entity or person responsible for deducting TDS.
• Deductee: The entity or person from whom TDS is deducted.
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What is TDS Return Filing?

TDS return filing refers to submitting a quarterly statement containing details of transactions related to TDS deductions. It includes:

• PAN details of the deductor and deductee.
• TDS payment details, including Challan Number.

The information is also reflected in Form 26AS, which provides a consolidated view of taxes deducted for the deductee. Failure to file TDS returns on time may attract penalties.

• Late Filing Penalty: A minimum of 10,000, if not filed within a year of the due date.
• False Information Penalty: Additional fines for incorrect filing.
• Penalty under Section 234E: 200 per day until the return is filed, subject to a maximum of the TDS amount.
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TAN (Tax Deduction and Collection Account Number)

TAN is a 10-digit alphanumeric number required by any entity deducting TDS. However, salaried individuals are not required to obtain a TAN or deduct TDS.

For businesses, TDS must be deducted on specified payments such as:

• Salaries
• Contractor payments
• Rent payments exceeding 2,40,000 per year

Entities registered with TAN must file TDS reports quarterly. Corpbiz’s TDS specialists assist in computing TDS payments and filing returns as per 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. Any person making specified payments under the Income Tax Act must deduct tax at source and submit it within the prescribed time limits for the following payments:

• Salaries
• Income from securities
• Winnings from lotteries, puzzles, and others
• Earnings from horse race winnings
• Insurance commission
• Payments under the National Savings Scheme
• Other specified payments
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Benefits of Online TDS Return Filing

Prevents Tax Evasion

Timely TDS Return Filing enables the government to track income records, preventing tax evasion.

Consistent Government Revenue

TDS return filing ensures a steady inflow of revenue for national development.

Reduces Taxpayer Burden

Since TDS is deducted periodically, it prevents taxpayers from making large lump-sum payments, reducing financial strain.

Convenience

TDS return filing simplifies tax collection, making the process efficient for both deductors and deductees.

TDS Deduction Rates

TDS applies to income from salaries, professional fees, commissions, rent, interest, and more. The TDS rate depends on:

• Source of income
• Total income earned

Tax is only deducted on amounts exceeding the applicable threshold. TDS rates vary from 1% to 30%, depending on the nature and amount of income.

Forms for TDS Return Filing

The following forms are used for TDS Return Filing in India:

TDS Form 24Q

Under Section 192 of the Income Tax Act, 1961, employers must deduct TDS when paying an employee’s salary. Form 24Q is used to file salary TDS returns on a quarterly basis. This form contains details of salary payments and TDS deducted by the employer.

TDS Form 26Q

For payments other than salary, Form 26Q is used to file TDS details. It contains the total amount paid and the TDS deducted for a particular quarter. Taxpayers must file Form 26Q quarterly.

Form 27Q

This form applies to non-salary payments made to Non-Resident Indians (NRIs) and foreign entities. Form 27Q must be filed quarterly, containing details of TDS deducted on such payments.

Form 27EQ

Under Section 206C of the Income Tax Act, 1961, Form 27EQ is used to file details of Tax Collected at Source (TCS). It must be submitted quarterly by businesses and government entities responsible for tax collection.

What is a TDS Certificate?

Once TDS is deducted, the deductor must issue a TDS certificate to the deductee. This certificate allows the deductee to verify tax credits via TRACES, ensuring its authenticity with a 7-digit unique certificate number and a TRACES watermark.

• TDS certificates for salaries are issued annually.
• TDS certificates for non-salary payments are issued quarterly.

If a deductee loses their TDS certificate, they can request a duplicate copy.

Due Dates to File TDS Returns

The TDS Return filing due dates are as follows:

How to Download TDS Return Forms?

Taxpayers must select the appropriate TDS Return Form based on the type of TDS paid. The steps to download TDS return forms are as follows:

1. Visit the official NSDL website.
2. Click on the ‘Download’ option.
3. Select e-TDS/e-TCS from the drop-down menu.
4. Click on ‘Quarterly returns’.
5. Choose ‘Regular’.
6. Once redirected to a new page, select the suitable TDS Return Form from the ‘Form’ section.
7. Click ‘Download’.

How to Verify TDS Returns Fund?

To verify TDS returns fund, follow these steps:

1. Enter the necessary details in the TDS return file.
2. Update the file on the portal validation utility tool available on the NSDL website.
3. The File Validation Utility (FVU) will generate a report indicating errors in the file.
4. Make necessary corrections and validate the file again using the FVU.

How to File TDS Return Online?

The TDS return filing process involves details such as TDS deducted, amount submitted by the deductor, TAN/PAN details, and challan information. Follow these steps:

1. Prepare the TDS Return Form: Ensure the return is in the prescribed format.
2. Submit the Form & Documents: File the form at the nearest TIN Facilitation Centre.
3. Verification by Authority: The authorities will check the submitted documents. If errors exist, the form will be rejected with a reason.
4. Acknowledgment Receipt: Once errors are corrected, an acknowledgment receipt will be issued.

Requirements for Uploading TDS Returns

Before filing TDS returns, ensure the following:

• A valid TAN is mandatory.
• E-filing registration is required.
• Return Preparation Utility (RPU) and File Validation Utility (FVU) must be used.
• A registered DSC (Digital Signature Certificate) is needed.
• Demat or bank account details must be provided.
• PAN must be linked with Aadhaar for TDS return upload via EVC.

Individuals should also be aware of error rectification procedures in case of mistakes in TDS return filing.

Documents Required for TDS Return Filing

The following documents are required for TDS return filing:

General Documents

• TAN (Tax Collection and Deduction Account Number) and PAN of the taxpayer.
• Date of Incorporation of the business.
• Tenure for which TDS is to be filed.
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• Last TDS filing details.
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• Form 16 and Salary Certificate received from the employer.

Interest Income

• Passbook/Bank statement for interest on savings account.
• Income statement of interest for fixed deposits.
• TDS certificates issued by banks or financial institutions.
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Capital Gains

• Investment details under the Capital Gains Accounts Scheme.
• Sale & Purchase Deed of property and stamp valuation (for land/building).
• Re-investment purchase deed for claiming exemption from capital gains.
• Proof of improvement costs incurred on the property.
• Expenses incurred during the transfer process.
• Stock statement (if trading in shares) with sale & purchase details.
• Cost of purchase, improvement, and sale value for other capital assets.

Section 80 Investments

• Investments made under PPF, NSC, ELSS, ULIPS, and LIC for deductions under Section 80C.
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House Property

• Co-owner details (if property is jointly owned).
• Property address.
• Property tax and rent details.
• Interest certificate from the bank for a housing loan.
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Tax-Saving Investments

• PPF passbook.
• Tuition fee receipts.
• Repayment certificate for a housing loan.
• Donation receipts (along with PAN of the donee).
• Fixed deposit receipts.
• Senior citizen savings scheme deposit receipts.
• Life & medical insurance payment receipts.
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Others

• Receipts of income from lottery, horse races, etc.
• Details of accrued interest on NSC during the year.
• Dividend amount warrants.
• Bank passbook/statement or interest income certificate.
• PPF passbook for interest.
• Interest certificates on bonds.
• Rent agreement (for building, plant & machinery, etc., if rented).
  
  

  What is a Revised TDS Return?

  It should be noted that if an error in the challan or PAN information is found in the submitted TDS return, the tax amount deposited with the government will not be shown in Form16/Form16A/Form26AS. To avoid this, rectify the errors and file a corrected TDS. Keep the following points in mind while filing amended TDS returns:

  • The TDS Return filing can be done if the Tax Information Network central system approves the original return.
  • Taxpayers may check on the NSDL's official website using their PAN and Provisional Receipt Number.
  • This updated TDS statement allows taxpayers to make amended TDS returns. The TDS Reconciliation Analysis and Correction Enabling System, or TRACES, website offers a report of this type for download.

Procedure for Validation of TDS Returns

The process for validating TDS returns is as follows:

1. Include all necessary details in the TDS return file.
2. Upload the details and update them using the Validation Utility Tool available on the NSDL website.
3. The File Validation Utility (FVU), which can be downloaded for free from the NSDL website, checks for errors.
4. If errors are detected, the FVU generates a report listing the issues.
5. Make the necessary corrections and resubmit the file for validation.

Penalties for Non-Compliance

Penalty for Late Filing of TDS Returns

• Under Section 234E, a penalty of Rs. 200 per day is imposed until the return is filed.
• The total penalty cannot exceed the total TDS amount.

Penalty for Non-Filing of TDS Returns

• If TDS returns are not filed within one year or if false information is provided, a penalty of Rs. 10,000 to Rs. 1,000,000 may be imposed.

Interest on Late Deposit of TDS

• Under Section 201(1A), if TDS is deducted but not deposited on time, interest is charged at 1.5% per month from the date of deduction until the date of deposit.
• Interest is calculated on a monthly basis, meaning even a partial month is considered a full month.

Example:

• TDS of Rs. 5,000 was deducted on January 13, 2023, but deposited on May 17, 2023.

• Interest = Rs. 5,000 × 1.5% per month × 5 months (January–May) = Rs. 375.

• If TDS was deducted on February 21, 2023, and the due date was March 7, 2023, but deposited on March 8, 2023, then:

  • Interest is calculated for two months (February–March) at 1.5% per month, totaling 3%.

Streamline Your TDS Return Filing with Corpbiz

Corpbiz experts can assist with TDS Return Filing and compliance to ensure smooth business operations. Our professionals help organize and simplify the process, ensuring compliance with all legal requirements efficiently and affordably. For hassle-free TDS Return Filing, consulting an experienced attorney is recommended.