Guide to meet TDS / TCS Obligations for deductor/Collector

What Is TDS/TCS?

Generally the person who earns the income pays tax on such income either in the form of advance tax or in the form of self-assessment tax. However, in certain situations, the person making prescribed payments is required to deduct tax from such payments (at prescribed rates) and deposit the tax so deducted with the Government. Such form of tax deduction is called Tax Deduction at Source (TDS). The person who deducts the tax is called ‘deductor’ and the person whose tax is deducted is called ‘deductee’.

TCS is Tax Collected at Source in which seller collects the tax from buyers at the time of selling some prescribed goods. The person who collects the tax is called ‘collector’ and the person whose tax is collected is called ‘collected.

A seller collects the tax from buyers at the time of selling some prescribed goods. The person who collects the tax is called ‘collector’ and the person whose tax is collected is called ‘collectee’.

Which Number is to be Obtained by The Deductor/Collector

Every Person Deducting/Collecting tax at source is required to obtain a unique number called as Tax Deduction Account Number (TAN). The Number has to be quoted to the deductor/collector in every correspondence related to TDS/TCS. TAN is not mandatory in case of Tax Deduction Made on sale of immovable property.

Internet Based Functionalities For TDS/TCS Compliance by Deductors / Collectors

• Mandatory to Register on TRACES (www.tdscpc.gov.in) in order to use various functionalities available on the portal.
• Do view your “Deductor Dashboard” to know about your TDS performance (Statement status, Challan Status, Default payable, Deductor Compliance Profile).
• View “TDS CPC communications” on TRACES homepage to access the various communication sent by CPC (TDS) to deductors/ collectors.
• Online TDS statement corrections. Offline TDS statement corrections directly on TRACES.
• Downloads-TDS/TCS Certificates, Transaction Based Report (TBR) for non-PAN deductees reported in Form 270, Consolidated file, Justification Report, TAN-PAN Consolidated File.
• Intermediary Communication-Alerts (SMS/email) in case of challan and PAN errors identified in regular TDS Statements during preliminary screening, to avoid Default Intimation from CPC(TDS).
• Aggregated TDS Compliance Report – Consolidated default summary of all TANs corresponding to a PAN in case of corporates/banks (available in taxpayer login on TRACES).
• e-Tutorials, FAQs, Circulars & Notifications and CPC (TDS) Communications.
• Deductor Grievance Module- Request for Resolution online at TRACES.

When to Deduct / Collect Tax

♣ Every deductor/collector shall deduct tax at the time of making the prescribed payment or at the time of credit of the income/ payment to the account of the deductee. whichever is early.

In case of TCS, tax has to be collected by the seller at the time of debiting of the amount payable by the buyer to the account of buyer or at the time of receipt of such amount from the buyer in cash or issue of cheque/draft, or by any other mode, whichever is earlier.

♣ In case of TDS on salary, tax is to be deducted at the time of actual payment.

When to Deposit The Tax Deducted/Collected At Source To The Credit Of The Government?

♣  All sums deducted by an office of the Government shall be paid tote credit of the Central Govemment on the same date where the tax is paid without an Income Tax Challan. Where tax is paid with such challan, the TDS/TCS shall be paid within 7 days from the end of the month in which the deduction is made or in a case where tax on perquisites is opted to be deposited by the employer.

♣  Where TDS is made in the month of March by any non-Government deductor the same shall be deposited to the Government account by 30th April. Where the TDS is made by such deductor in any other month or tax on perquisites is opted to be deposited by the employer, the tax shall be deposited by 7th of the next month.

♣  Deductor should ensure that the tax deposited is credited to the govt. account within the due date. The Challan Identification Number reflects the date of credit to government account.

♣  TDS on immovable property is paid to the credit of the Central Government within a period of 30 days from the end of the month in which the deduction is made and shall be accompanied by a challan-cum statement in Form No. 26QB.

♣  Where TCS is made in the Month of March by any non-Government account  by 7th April.

Time of payment or credit	Due date of payment of TDS
When the income or amount liable to TDS is credited or paid during any month other than the month of March	Tax shall be deposited on or before 7 days from the end of the month in which the deduction is made.
When the income or amount liable to TDS is credited or paid during the month of March	Tax shall be deposited on or before 30″ April.
Note: In certain cases, quarterly payment of TDS can be permitted with the prior approval of the Assessing Officer.

Where To Deposit TDS/TCS ?

The tax deducted/collected by the deductor/collector is to be deposited in the account of the Government by remitting it into any branch of the Reserve Bank of India or the State Bank of India or any other authorised bank.

Which Challan Is Used for Payment Of TDS/TCS?

TDS/TCS is to be deposited to the credit of the Government by using challan no. ITNS-281.

How To Deposit Tax?

Tax deducted/collected at source is to be deposited to the designated bank by depositing same in cash or by cheque. Further, tax deducted/collected at source can be deposited by electronic mode by using internet banking facility or by using debit card.

Who Has To Deposit TDS/TCS By Electronic Mode Only?

In case of following deductors/collectors electronic payment (i.e by Internet Banking or Debit Card) of TDS/TCS is mandatory

(a) All corporate assessees;

(b) Non Corporate Assessee who are subject to audit under section 44AB.

What is The Form of TDS/TCS Certificate and What Should Be The Frequency For Issuance of  TDS/TCS Certificate?

Every deductor/collector has to issue a certificate to the deductee in respect of tax deducted by him. Such certificate is generally referred to as TDS/TCS certificate. TDS/TCS certificate is to be issued in following form:

• Download TDS/TCS certificate (Form 16/16A/27D)(tdscpc.gov.in) bearing unique TDS certificate number and issue to the taxpayers within due date.
• TDS certificate in Part A of Form 16 shall be generated only for those PANs that have been reported in Annexure II of 24Q statement for 4th Quarter. The deductors are, therefore, advised to ensure that they provide salary details of their employees employed for whole or part of the year in Annexure II of Quarterly TDS Statement for 4th Quarter.

Particulars	Form No.	Frequency of certificate issuance
TDS certificate in respect of tax deducted on salary	Form No. 16	Annually
TDS certificate in respect of tax deducted on payments other than salary	Form No. 16A	Quarterly
TCS certificate	Form No. 27 D	Quarterly

Multiple payments can be clubbed in quarterly TDS/TCS certificate.

Due Date for Issuance of TDS Certificates and Penalty for non-compliance u/s 272A:

Please be advised that under the provisions of section 203 of the Income Tax Act, 1961 read with rule 31A, Certificate of tax deducted at source is to be furnished within fifteen (15) days from the due date for furnishing the statement of tax deducted at source. Failure to comply with the provisions of the Act will attract penalty under the provisions of section 272A of the Act, a sum of one hundred rupees for every day during which the failure continues.

For deduction of TDS made on or after 01/04/2012 all deductors (including Government deductors) shall issue TDS certificate in Form No. 16A which is downloaded from www.tdscpc.gov.in. Thereupon the deductor shall verify the correctness of contents of the certificate and authenticate it by either using digital or manual signature. It is only then that the certificate shall be treated as a valid certificate.

What are the Contents of a TDS Certificate?

a. The TDS/TCS certificate to be issued by the deductor/collector contains the following details:

(a) Valid PAN of the deductee;

(b)Valid TAN of the deductor/collector ;

(c) Challan Identification Number (CIN), which is a number generated by a combination of BSR code of the bank where tax is deposited, date of deposit and the challan serial number allotted bythe bank;

(d) Receipt number of the relevant quarterly statement of TDS/TCS (i.e., TDS/TCS return).

What Is The Statement of TDS/TCS And In Which Form It Is To Be Issued

♣ Every person responsible for deducting/collecting tax at source has to deliver to the Government the information relating to tax deducted/collected by him. This information is to be furnished in the prescribed form and this form is called statement of TDS/TCS (or TDS/TCS Statement). Following chart will highlight the form of statement of TDS/TCS:

♣ Correct Reporting: Cancellation of TDS/TCS statement and deductee row is no longer permissible. Accordingly, it is very important to report correct and valid particulars (TAN of the deductor/collector, Category (Government/Non-Government) of the deductor/collector, PAN of the deductees and other particulars of deduction of tax) in the quarterly return.

♣ Quote correct and valid lower rate TDS/TCS Certificate Number in TDS/TCS statement wherever the TDS/TCS has been deducted at lower/zero rate on the basis of certificate issued by the Assessing Officer. The deductor/collector can verify the Lower TDS/TCS Certificate number online on the TRACES website tdscpc.gov.in.

♣ Last provisional receipt number to be quoted in regular TDS/TCS statements: While filing new regular (original) TDS/TCS statement, it is mandatory to quote the last accepted provisional receipt number of the regular quarterly TDS/TCS statement of any form type.

♣ TDS/TCS statement cannot be filed without quoting any valid challan and deductee row.

♣ Download TAN-PAN Master from TRACES and use the same to file new statement to avoid quoting of incorrect and invalid PAN.

♣ Validate PAN and name of fresh deductees from TRACES before quoting it in TDS statement.

♣ File correction statements promptly in case of incomplete and incorrect The TRACES website www.tdscpc.gov.in provides the facility for Online Correction of Statements.

♣  Government deductors should obtain BIN (Book Identification Number) from their Accounts Officer (AN holder) in time and quote the same correctly in TDS/TCS statement.

Statement In respect of & Form of Statement of TDS/TCS	Form of statement of TDS/TCS
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
TCS	Form No. 27EQ

What Is the Frequency And Due Date Of Statement Of TDS/TCS?

Due dates for filing of TDS returns are different for Government Deductors and Non-Government Deductors, which is as follows :

Sl. No.	Date of ending of the quarter of the financial year	Due date for Government Deductors	Due date for Non-Government Deductors
(1)	(2)	(3)	(4)
1.	30th June	31st July of the financial year	15th July of the financial year
2.	30th September	31st October of the financial year	15th October of the financial year
3.	31st December	31st January of the financial year	15th January of the financial year
4.	31st March	15th May of the financial year immediately following  the financial year in which deduction is made	15th May of the financial year immediately following the financial year in which deduction is made

TCS Return:

The seller contractor i e. deductor has to file a quarterly return in form 27EQ and in Form 27A and has to issue the TCS certificate to Deductee in Form 27D on or before following Due Date:

Quarter	Due Dates for filing TCS Return	Due Dates for issuing TCS Certificate
April to June	15th July	30th July
July to September	15th October	30th October
October to December	15th January	30th January
January to March	15th May	30th May

Note: CBDT has revised the due date for filing TDS returns for Government and Non-Government Deductors due to COVID-19 pandemic situation.

The Revised Dates has been given below:

Sl. No.	Nature of compliance	Revised Due Dates
(1)	(2)	(3)
1.	Form 24Q, 26Q, 27Q and 27EQ of Q4 of FY 2019-20	31-07-2020
2.	Form 24Q, 24Q, 26Q, 27Q and 27EQ of Q1 and Q2 of FY 2020-21	31-03-2021
3.	Form 26QB, 26QC and 26QD of February, 2020	31-07-2020
4.	Form 26QB, 26QC and 26QD of March, 2020	31-07-2020
5.	Form 26QB, 26QC and 26QD of April to November, 2020	31-03-2021
6.	Form 16 for TDS on salary during FY 2019-20	15-08-2020
7.	Form 16A for TDS on income other than salary for Q4 of FY 2019-20	15-08-2020
8.	TCS certificate for Q4 of FY 2019- 20	15-08-2020

What are The Consequences of TDS/TCS Defaults and Non-Payment To Government?

• Failure to deduct tax or short deduction of tax or failure/delay in payment of the tax deducted to the credit of Government by the due date, would make the deductor an assessee in default in respect of such tax and also liable to penalty which is equal to the amount for which the assessee is a deemed defaulter.
• In case of non-deduction/short deduction or delay in deduction of tax, interest @ 1% per month or part of the month is levied on the fix deductible amount and in case of delay in payment of tax after deducting, interest @ 1¹/2% per month or part of the month, till such time the tax deducted is not credited to the Government shall also be payable.
• In case of delay in payment of tax after collecting, interest @1% per month or part of the month till such time the tax is not paid.
• Failure on part of the deductor to pay the tax deducted at source, to the credit of Central Government makes him liable to rigorous imprisonment of a minimum period of three months but which may extend to seven years.
• Download the justification report to know the details of TDS/TCS defaults, if any, on processing of TDS/TCS statement from the TRACES website tdscpc.gov.in

What are the Consequences Of Default In Furnishing Statement/Filing Incorrect Information Therein?

• With effect from 1st July 2012, failure to file TDS/TCS statement within the prescribed time shall make the deductor/collector liable to pay by way of fee u/s 234E, a sum of two hundred rupees for each day during which the default continues.
• With effect from 1st July 2012, furnishing of incorrect information in the statement by the deductor/collector would make him liable to penalty, which shall not be less than ten thousand rupees but which may extend to one lakh rupees.
• In case the delay in filing TDS/TCS statement is more than one year from the prescribed date, then the deductor shall be additionally liable to pay a minimum penalty of ten thousand rupees which may extent to one lakh.
• Failure to apply for TAN or quote correct TAN by the deductor may result in levy of penalty of ten thousand rupees.
• Late filing fee u/s 234E, being statutory in nature, cannot be waived off.

Aggregated TDS Compliance

• The PAN of an entity (Central Office, Headquarter etc.), having more than one TANs of its branches, associated with the referenced PAN, can review the ‘Aggregated TDS Compliance” report on a regular basis for a summary TDS compliance at Organization level.
• This feature provides for a summary of TDS defaults of all respective TANs across all Financial Years, which assists in effective TDS administration, monitoring, control and compliance at Organization level.
• The feature will be extremely useful for the purpose of complying with the provisions of Section 40(a)(ia) of the Income Tax Act, 1961 by the concerned entity, to ensure that correct information is disclosed in paragraph 27A/B of the Tax Audit Report (Form 3CD u/s 44AB the Act.
• To use this feature, the deductor needs to register on TRACES with its PAN.

What Is the Form Of Filing Statement Of TDS/TCS?

The statement of TDS/TCS 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 electronic form.

Following deductors/collectors have to file the statement of TDS/TCS in the form specified in electronic form only.

(a) Deductor who is an office of the Government; or

(b) Deductor who is a company; or

(c) Deductor who is a person who is required to get his accounts audited under section 44AB in the immediately preceding financial year; or

(d) Deductor in whose case 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/collector, furnishing the quarterly statement in electronic form is optional.

What Is the Duty Of Deductor/Collector 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%.

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(Republished with Amendments by Team Taxguru)