WHAT IS TDS/TCS?
In case of certain prescribed payments (e. g. Interest, commission, brokerage, rent, etc.) the person making payment is required to deduct tax at source (TDS) at prescribe rate. Payer is known as deductor and the payee, who receives the net payment is called the deductee.
TCS is Tax Collected at Source by seller from buyers at the time of selling some prescribed goods. Seller is called ‘collector’ and the buyer is called ‘collectee’.
What is TAN?
Every person deducting/collecting tax at source is required to obtain Tax Deduction Account Number (TAN) and Quote it in every correspondence related to TDS/TCS.
Note: Not mandatory in case of tax deduction on :
(a) Purchase of immovable property U/s 1941A
(b) Payment of rent (paid by non-auditable Individual ft HUF ) U/s 1941B
(c) Payment of Contractual/Commission/ Brokerage/Professional Services (paid by non-auditable Individual & HUF ) U/s 194M
INTERNET BASED FUNCTIONALITIES FOR TDS/TCS COMPLIANCE BY DEDUCTORS/COLLECTORS :
WHEN TO DEDUCT/COLLECT TAX?
WHEN TO DEPOSIT THE TAX DEDUCTED/COLLECTED AT SOURCE TO THE CREDIT OF THE GOVERNMENT?
Table No. 1
|Mode of TDS/TCS payment||Due date of payment|
|Where tax is paid without an Income Tax Challan||On same day (applicable in case of book adjustment.)|
|TDS/TCS made during the month of March||On or before 30th April.|
|TDS/TCS made during the months other than March||On or before 7 days from the end of the month.|
|TDS on purchase of immovable property (194IA)*||On or before 30 days from the end of the month of deduction.|
|TDS on rent (1941B)*||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.
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
WHAT IS CHALLAN IDENTIFICATION NO. (CIN)?
Every Income Tax Challan is identified by CIN which contains Bank BSR Code, Date of Payment and Challan serial no.
TDS / TCS is required to be deposited in cash/cheque in Bank through Challan manually or electronically. Electronic payment of TDS/TCS is mandatory for:
(a) All corporate assessees;
(b) Non-corporate assessees 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/collectee in respect of tax deducted / collected by him in following form:
Table No. 2
|Particulars||Form No.||Frequency of certificate issuance|
|TDS certificate on salary||Form 16||Annually|
|TDS certificate on payments other than salary||Form 16A||Quarterly|
|TCS certificate||Form 27D||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|
Multiple payments can be clubbed in quarterly TDS/TCS certificate
WHAT IS THE DUE DATE FOR ISSUANCE OF TDS/TCS CERTIFICATE?
Table No. 3
|Form No.||Due date|
|Annual Form No.16 Quarterly F 16A/F 27D||15th June following the financial year. See column 3 and 5 of table no. 5|
W.e.f. 01/04/2012 it is mandatory to issue only downloaded TDS certificate (16A) from www.tdscpc.gov.in. The deductor shall verify the correctness of contents Er authenticate it by digital or manual signature. It is only then a valid certificate.
WHAT ARE THE CONTENTS OF A TDS/TCS CERTIFICATE?
a. The TDS/TCS certificate 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 by the bank;
(d) Receipt number of the relevant quarterly statement of TDS/TCS (i.e., TDS/TCS return).
WHAT IS STATEMENT OF TDS/TCS AND IN WHICH FORM IT IS TO BE FURNISHED?
TDS/TCS STATEMENT CANNOT BE FILED WITHOUT QUOTING ANN VALID CHALLAN AND DEDUCTEE ROW.
Table No. 4
|Statement in respect of TDS/TCS||Statement Form|
|TDS on salary||Form No. 24Q|
|TDS on payment other than salary to a nonresident 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|
|TDS on sale of immovable property||Form No. 26QB|
|TDS on payment of rent by certain individual or HUF||Form No. 26QC|
WHAT IS THE FREQUENCY & DUE DATE OF SUBMISSION OF TDS/TCS STATEMENT?
Due dates for filing of TDS/TCS statement
Table No. 5
|Due date of TDS statement||Due date for
|Due dates of TCS Statement||Due date for 27D|
|30th June||31st July||15th August||15th July||30th July|
|31st October||15th November||15th October||30th October|
|31st January||15th February||15th January||30th January|
|31st March||31st May||15th June||15th May||30th May|
WHAT ARE THE CONSEQUENCES OF TDS/TCS DEFAULTS AND NONPAYMENT TO GOVERNMENT?
(a) late fee of Rs. 200/- per day for each day of default, subject to certain limits (u/s 234E).
(b) Minimum Penalty of Rs. 10,000/- (may be extended to Rs. 1 Lakh). (u/s 271H)
WHAT ARE THE CONSEQUENCES OF DEFAULT IN FURNISHING STATEMENT/FILING INCORRECT INFORMATION THEREIN?
AGGREGATED TDS COMPLIANCE
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 an electronic form.
Following deductors/collecbars have to file the statement of TDS/ICS 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%
WHAT IS LOWER DEDUCTION CERTIFICATE?
A Certificate issued for Deduction of Tax at Lower/ NIL Rates under section 197/197A of the Income Tax Act, 1961. Assessing Officer can issue a certificate for lower or no deduction of tax: to the deductor, where the deductee is a non-resident
CIRCUMSTANCES IN WHICH CERTIFICATE OF LOWER DEDUCTION OF TDS MAY BE OBTAINED
INCOMES COVERED BY CERTIFICATE UNDER SECTION 19
Certificate for lower deduction of TDS can be obtained for incomes covered by following provisions:
Section 197 – PROCEDURE TO SUBMIT FORM
(a) Any assessee who wishes to apply for the certificate of No deduction of TDS or deduction at lower rate shall have to make an application in Form No.13 as prescribed under the Income Tax Rules, 1962
(b) Enabled online filing of Form 13 in order to facilitate faster processing of applications.
(c) AO is required to dispose off the application within a time period of 30 days from the end of the month in which application is received by him.
(d) If the application submitted is complete and AO is satisfied with the information and justification provided for deduction of lower TDS, he shall approve it and issue the certificate to the assessee. Every certificate issued has a unique 10 digit alpha-numeric no.
(e) To avoid deduction of TDS at a higher rate, the assessee will have to furnish a copy of AD’s certificate (attached to the invoice raised) to the payer and if the payer is satisfied that his name is specifically stated in the certificate, he will deduct TDS at the rate mentioned in the certificate.
(f) While filing his TDS return, deductor is required to mention the TDS certificate no. & PAN of the deductee and validate it on the TRACES website.
DOCUMENTS & OTHER DETAILS TO BE SUBMITTED ALONG WITH FORM 13
VALIDITY OF CERTIFICATE
The certificate issued for nil/lower deduction of TDS pertains to that particular Financial year for which application has been made by the assessee. It is valid from the date of issue and expires at the end of that year (unless it is cancelled by AO before its expiry)
Although Form 13 application can be submitted at anytime during the year, it is recommended to furnish it at the commencement of the year itself.
OPTION OF SELF DECLARATION (FORM 15G/15H) IN CERTAIN CASES
As per Sec 197A, in case of certain incomes such as:
(a) Withdrawal of Provident fund (Sec 192A)
(b) Receipt of Life Insurance proceeds (Sec 194DA)
(c)Rental income (Sec 194-I)
(d) interest from securities (Sec 193)
(e) Interest other than from securities (Sec 194A)
Assessee can give a sail-declaration to the deductor in the prescribed form (Form 15G/15H) in order to avail nil deduction of TDS provided he satisfies the following conditions:
If he is of age less than 60 years, his gross income (before deductions) must be less than the basic exemption limit (Rs 2.5 Lakhs)