Quaterly TDS/TCS Return Filing for Business
Deliverables - Timeline
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Deliverables
Acknowledgement Receipt of Income Tax Forms
Compliance Documents
Copy of tax payment challan if any payment is made to Income Tax Department
Timeline
2 Days
(from receipt of all documents)
What is TDS?
TDS stands for Tax Deducted at Source. It is a mechanism introduced by the government to collect tax directly from the source of income. Under this system, tax is deducted at the time of making specific payments (e.g., salary, rent, professional fees, interest, etc.). The person or entity making the payment (the "deductor") is responsible for deducting the tax and depositing it with the Income Tax Department on behalf of the recipient (the "deductee").
Purpose of TDS Return Filing
TDS returns help the Income Tax Department track the taxes deducted by businesses or individuals, ensuring that they are remitted to the government. TDS return filing also allows the deductee to claim credit for the tax deducted when filing their personal income tax returns.
TDS Return Filing Process
TDS returns help the Income Tax Department track the taxes deducted by businesses or individuals, ensuring that they are remitted to the government. TDS return filing also allows the deductee to claim credit for the tax deducted when filing their personal income tax returns.
1. Deduct TDS: The person or entity making a payment (the deductor) must deduct TDS at prescribed rates based on the type of payment and the status of the payee (whether they are a resident or non-resident).
2. Deposit TDS:: After deducting TDS, the deductor must deposit the amount with the government within the due date. This can be done using a challan (e.g., Challan No. ITNS 281 for TDS payments).
3. File TDS Return: The deductor must file a TDS return to report all the deductions made and deposited. The return must contain details such as:
PAN of the deductor and deductee
The amount of TDS deducted
The amount deposited with the government
The type of payment (e.g., salary, professional fees, etc.)
Any other details as required by the Income Tax Department.
4. Issuance of TDS Certificates: The deductor must issue TDS certificates to the deductees as proof of tax deduction.
Form 16 for salary-related TDS (issued annually).
Form 16A for non-salary payments (issued quarterly).
5. Submit the Return: TDS returns must be filed through the online portal of the Income Tax Department. They can be filed through Traces Portal.
6. Quarterly Filing: TDS returns must be filed quarterly, and the due dates for filing TDS returns are as follows:
Q1 (April to June): 31st July
Q2 (July to September): 31st October
Q3 (October to December): 31st January
Q4 (January to March): 31st May
What are the Forms Of TDS Return Filing?
Form 24Q: For TDS on salary.
Form 26Q: For TDS on payments other than salary (e.g., professional fees, interest, etc.).
Form 27Q: For TDS on payments to non-residents.
Form 27EQ: For TCS (Tax Collected at Source) returns (if applicable).
Form 24Q- TDS Return on Salary Payment
At the time of paying salary to an employee, the employer deducts TDS u/s 192. The employer has to file salary TDS return in Form 24Q. 24Q is to be submitted on a quarterly basis. Details of salary paid to the employees and TDS deducted on such payment are to be reported in 24Q
24Q Section Codes
1. 92A – Salary paid to govt. employees other than union govt. employees
2. 92B – Salary paid to non-government employees
3. 92C – Salary paid to union govt. employees
4. 94P – Payment to Specified Senior Citizen
Form 26Q: TDS Return Filing for Non Salary Deductions
Filing Form 26Q is a crucial obligation for any payer who deducts Tax Deducted at Source (TDS) on payments other than salary. This quarterly return provides the Income Tax Department with essential information about various payments, ensuring transparency and compliance with tax regulations. Understanding how to accurately file Form 26Q is vital to avoid penalties and interest for late filing.
Sections Covered in 26Q
1. 193 – Interest on securities
2. 194 – Dividend
3. 194A – Interest other than Interest on Securities
4. 194B – Winnings from lotteries and crossword puzzles
5. 194BB – Winnings from horse race
6. 194C – Payment of contractor and subcontractor
7. 194D – Insurance commission
8. 194DA – Maturity of life insurance policy
9. 194EE – Payment in respect of deposit under national savings scheme
10. 194F – Payments on account of repurchase of Units by Mutual Funds or UTI 94F
11. 194G – Commission, prize etc., on sale of lottery tickets
12. 194H – Commission or Brokerage
13. 194I(a) – Rent
14. 194I(b) – Rent
15. 194J – Fees for Professional or Technical Services
16. 194K – Income in respect of units
17. 194LA – Payment of Compensation on acquisition of certain immovable property
18. 194LBA – Certain income from units of a business trust
19. 194LBB – Income in respect of units of investment fund
20. 194LBC – Income in respect of investment in securitization trust
21. 194N – Payment of certain amounts in cash
22. 194O – Payment of certain sums by e-commerce operator to e-commerce participant
23. 194Q – TDS on purchase of goods
24. 194R – TDS on benefit or perquisite in respect of business or profession
25. 194S – TDS on transfer of Virtual Digital Assets
26. 197A – Details of payment where there is no deduction of tax in certain cases
Form 27EQ - TCS Return
Form 27EQ contains all details pertaining to tax that is collected at source. According to Section 206C of the Income Tax Act 1961, this form must be filed every quarter. The form has to be submitted by both the corporate and government collectors and deductors. In this article, we look at Form 27 EQ in detail.
Consequences of Non-Filing or Late Filing of TDS Returns
If a TDS return is not filed on time or is filed incorrectly, the deductor may face the following penalties:
Late Filing Fee: ₹200 per day of delay in filing the return until the return is submitted.
Interest on Late Payment: Interest is charged on late payment of TDS at the rate of 1.5% per month.
Penalty for Non-Compliance: Penalties for non-filing or incorrect filing of TDS returns can range from ₹10,000 to ₹1,00,000 under Section 272A of the Income Tax Act.
Benefits Of TDS Return Filing :
1. Transparency: TDS return filing ensures that taxes are collected and paid in a transparent manner.
2. Tax Credit for Deductees: The deductee (e.g., employee, contractor) can use the TDS deducted and deposited by the deductor as a credit against their own tax liability when filing their income tax returns.
3. Avoid Penalties: Proper and timely filing helps the deductor avoid penalties and interest charges.
4. Compliance with the Law: Filing TDS returns ensures compliance with the Income Tax Act and helps avoid legal issues.
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FAQs
The late fee for filing the TDS return after the due date is Rs. 200 per day till the default continues. However, late fee cannot exceed the amount of TDS deducted.
The interest liability for failure to deduct tax is 1% for every month or part of the month on the amount of tax from the date on which tax was deductible to the date on which such tax was actually deducted.
