When it’s Time for Your Employees to Pay Taxes, A Hundred Questions Fill Their Minds. How, How Much, Why to What, When and Why, Again. And Who Answers These Million Queries And More? You – The Deductor. He Who Calculates Taxes on Their Income and Makes Their Lives Easier, Month After Month, Year on Year. But What If You Have Questions, Where Do You Go When You Have Doubts? Look No Further. Through The Pages Inside, I’ll take you through the A-Z of TDS. So the Next Time you’re In Doubt, Here’s something to Make Your Life Easier.
What is TDS
TDS stands for tax deducted at source. According to the income tax act, in case of certain prescribed payments (for e.G. Interest, com mission, brokerage, rent, etc.), the person making payment is required to deduct tax at source (tds) if payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.
The company or person that makes the payment after deducting tds is called a deductor and the company or person receiving the payment is called the deductee.
What is TAN and why do we need it?
The one who deducts tax at source is required to obtain TAN and quote it in every Correspondence related to TDS.
Note: The above is not mandatory in case of tax deduction on the purchase of immovable property and in case of TDS on rent (paid by non-auditable Individual and Hindu Unified Families)
What is TRACES? How does it help deductors be TDS compliant?
When is tax deducted?
Tax is deducted at the time of making the prescribed payment or credit of the income/payment to the deductee, whichever is earlier. In case of TDS on salary, the tax is deducted at the time of actual payment. In case of TDS on rent, tax is deducted at the time of credit of rent for the last month of the year.
When is the TDS deposited to the credit of the government?
|Mode of TDS payment||Due date of payment|
|When is the tax paid without an Income Tax Challan?||On the same day (applicable in case of book adjustment.)|
|TDS made during the month of March||On or before 30 April.|
|TDS made during months other than March||On or before 7 days from the end of the month.|
|TDS on purchase of immovable property (1941A)*||On or before 30 days from the end of the month of deduction.|
|(*challan cum statement in Form 26QB 26QC needs to be filed)|
|Note: In certain cases, quarterly payment of TDS can be permitted with the prior approval of the Assessing Officer.|
What challan is used to pay TDS?
TDS is credited to the government by using Challan No. ITNS-281
What is a Challan Identification Number or CIN?
Every Income Tax Challan is identified by CIN which tcontains the Bank BSR code, date of deposit and challan serial no.
How to deposit tax?
TDS is deposited as cash or cheque in the bank through challan either manually or through electronic transfer. Electronic payment of TDS is mandatory for:
(a) All corporate assessees
(b) Non-corporate assessees who are subject to audit under section 44AB
What is the format of TDS certificate and the frequency for its issuance?
Every deductor has to issue a certificate to the deductee in respect of tax deducted by him in the following form:
|Particulars||Form No.||The frequency of certificate issuance|
|TDS certificate on salary||Form 16||Annually|
|TDS certificate on payments other than salary||Form 16A||Quarterly|
|TDS certificate on purchase of immovable property||Form 16B||15 days of filing 26QB|
|TDS certificate on rent||Form 16C||15 days of filing 26QC|
|TCS certificate||Form 27D||Quarterly|
What is the due date for issuance of TDS certificate?
Table No. 3
|Form No.||Due date|
|Annual Form No. 16||15 June following the financial year.|
|Quarterly F 16A/F 27D||See column 3 and 5 of the table no. 5|
With effect from 01/04/2012, it mandatory to issue TDS certiﬁcate (only 16A which can be downloaded from www.tdscpc.gov.in). The deductor shall verify the accuracy of contents and authenticate it using a digital or manual signature. After authentication, it becomes a valid certiﬁcate.
What is the contents of a TDS certificate?
The TDS certificate contains the following details:
(a) Valid PAN of the deductee
( b) Valid TAN of the deductor
(c) Challan Identification Number (CIN), which is number generated by a combination of BSR code of the bank where tax is deposited, date of deposit and the challan serial number allotted by the bank
(d) BIN Number consists of recipt number of 24G, DDO Serial Number in 24G, date of transfer voucher
What is statement of TDS and in which form is it furnished?
|The statement in respect of TDS||TDS statement form|
|TDS on salary||Form No. 24Q|
|TDS on payment other than salary to a non-resident or a foreign company or a resident but not ordinarily resident.||Form No. 27Q|
|TDS on payment other than salary to any person other than above.||Form No. 26Q|
|TDS on sale of immovable property||Form No. 26QB|
|TDS on payment of rent by certain individual or HUF||Form No. 26QC|
|Quarterly statement of collection of (TCS) tax at source.||Form No. 27EQ|
What is the due date of submission of TDS of Statement?
Due dates for filing of TDS statement are as given in the table:
Table No. 6
|Quarter ending on||Due date for TDS statement||Due date for Form 16A||Due dates of TCS Statement||Due date for 27D|
|30 June||31 July||15 Aug||15 July||30 July|
|30 Sept||31 October||15 Nov||15 October||30 Oct|
|31 Dec||31 January||15 Feb||15 January||30 Jan|
|31 March||31 May||15 Jun||15 May||30 May|
What are the consequences of TDS defaults and non-payment to government?
1. Late fee of Rs. 200/- per day for each day of default, subject to certain limits (u/s 234E).
2. Minimum penalty of Rs. 10, 000 (may be extended to Rs. 1 lakh).(u/s 271H)
What are the consequences of furnishing wrong statements or filing incorrect information?
Aggregated TDS Compliance
What is the format of the TDS filing statement?
The statement of TDS can be filed either in:
(1) Paper form (for less than 20 deductees).
(2) Electronic form: Form no. 27A is also to be furnished along with return on the electronic form.
Following deductors have to file the TDS statement in the form specified in electronic form only. Deductors can be:
(a) The ofﬁce of the Government
(b) A company
(c) A person who is required to get his accounts audited under section 44AB in the immediately preceding financial year
(d) Where the number of deductee’s records in the quarterly statement for any quarter of the financial year is equal to or more than twenty
Note: In case of any other deductor, furnishing the quarterly statement in electronic form is optional.
What is the duty of deductor if the deductee does not furnish his PAN?
If the deductee does not furnish PAN or furnishes incorrect PAN to the deductor/collector, the deductor/collector shall deduct tax at source at higher of the following rates:
(a) the rate prescribed in the Act; or
(b) at the rate in force, i.e.. the rate mentioned in the Finance Act; or
(c) at the rate of 20%.