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Preparing TDS Returns is a simple process and usually does not require any external assistance. However, it is prudent to follow practices that ensure that the filed TDS Returns are error-free. This means that correct credit will be received by the employees and vendors. Moreover, it will help avoid receiving unwanted Default Notices from the IT Department.
A few of these healthy practices are summarized below:
1. Tax should be deducted (TDS) at the correct percentage rate.
2. For TDS on Salary, the monthly deduction amount should be based on the annual projected taxable income of each employee.
3. TDS amount should be deposited on time. In case of delay in deposit, ensure that the interest is correctly calculated and deposited.
4. All PANs need to be correct.
5. For ‘No Deduction’ or ‘Lower Deduction’, make sure the Employee / Vendor in question is eligible for the privilege.
6. Keep a close watch on the threshold limits on payment to vendors under different sections. Once it crosses the limit, TDS is applicable on the total payment from the beginning of the financial year.
Checklist to avoid unwanted errors / defaults in TDS Returns:
a) The Tax Account Number (TAN) should be correctly mentioned.
b) Challan information should be properly checked and validated.
c) PANs need to check properly and validated.
d) Section should be correctly quoted and cross checked for short deductions, late deductions, etc.
e) For deposit of TDS or delay in filing Returns, correct interest amount and / or late fee should be determined and payment should be made before filing.
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