1. Overview

    TDS is one of the modes of collection of taxes, by which a certain percentage of amounts are deducted by a person at the time of making/crediting certain specific nature of payment to the other person and deducted amount is remitted to the Government account. It is similar to "pay as you earn" scheme also known as Withholding Tax in many other countries, one of the countries is USA. The concept of TDS envisages the principle of "pay as you earn". It facilitates sharing of responsibility of tax collection between the deductor and the tax administration. It ensures regular inflow of cash resources to the Government. It acts as a powerful instrument to prevent tax evasion as well as expands the tax net.

  2. Who shall deduct tax at source?

    Every person responsible for making payment of nature covered by TDS provisions of Income Tax Act shall be responsible to deduct tax. However in case of payments made under sec. 194A, 194C, 194H, 194I and 194J in respect of all assesses other than individual and HUF whose accounts are not subject to Tax Audit Under Section 44AB of the Income tax Act,1961 during the preceding financial year , is required to deduct tax at source.

  3. These persons are mainly:

    • Principal Officer of a company for TDS purpose including the employer in case of private employment or an employee making payment on behalf of the employer.
    • DDO (Drawing & Disbursing Officer), In case of Govt. Office any officer designated as such.
    • In the case of "interest on securities" other than payments made by or on behalf of the Central govt. or the State Government, it is the local authority, corporation or company, including the Principal Officer thereof.
    • Such person is called Deductor while the person from whom the tax is deducted is called Deductee.
    • Tax must be deducted at the time of payment in cash or cheque or credit to the payee's account whichever is earlier. Credit to payable account or suspense account is also considered to be credit to payee's account and TDS must be made at the time of such credit.
  4. TDS Certificate

    A tax deductor is also required to issue TDS certificate to the deductee within specified time under section 203 of the I T Act. The certification from the deductor, for the deduction and payment of the respective TDS amount to the bank, issued to the deductee is a TDS certificate. The deductee should produce the details of this certificate, during the regular assessment of income tax, to adjust the amount of TDS against the Tax payable by the Deductee [assessee].

  5. Types of TDS certificates

    Salaries - Form 16: In case of Salaries, the certificate should be issued in FORM 16 containing the Tax computation details and the Tax deducted & Paid details. This refers to the details submitted over Form 24Q.

    Non-salaries - Form 16A: In case of Non-Salaries, the certificate should be issued in FORM 16A containing the Tax deducted & Paid details. Separate certificates should be prepared for each Section [nature of payment]. This refers to the details submitted over Form 26Q and 27Q.

  6. Forms to file TDS/TCS Returns

    • Form 24Q for salaries
    • Form 26Q for non-salaries
    • Form 27EQ for TCS
    • Form 27A/27B Control sheet for electronic TDS/TCS
  7. Our services for TDS processing

    • Filing of Original Returns
    • Filing of Revised Returns
    • Resolving issues related to TDS notices
  8. eTDS Returns filing process with us

    Step 1 : You would deduct TDS from Employees / Vendors to whom the payments are made above the limit specified in Income Tax Act.

    Step 2 : Send us the list of deductions made along with the payment challans. (We would be sending the template for providing the information)

    Step 3 : We would complete the data entry and generate Form 27A and send you the copy of same.

    Step 4 : You are required to send us Form 27A signed hard copy.

    Step 5 : We would file eTDS return and send you the acknowledgement.

    Step 6 : We would be downloading the Form 16 / 16As and send it to you.

    Step 7 : You in turn distribute the Form 16 / 16As to your employees / Vendors.

  9. Mandatory for filing the TDS returns

    It is mandatory (w.e.f June 1, 2003) for corporate deductor as well as Non-Corporate deductor furnishes their TDS returns in electronic form (e-TDS return) within the prescribe time frame as shown below:

    (A) Tax Deducted by an office of Government

    Situation Time limit of deposit with Central Government. Sections under which deduction is made
    (i) Where tax is paid without production of an income-tax challan. On the same day All sections of Chapter XVII-B
    (ii) Where tax is paid accompanied by an income-tax challan. On or before 7 days from the end of the month in which deduction is made or income tax is due under section 192(1A). All sections of Chapter XVII-B

    (B) Tax Deducted By Deductors Other Than An Office Of Government

    Situation Due Date
    (i) Where the income or amount is credited or paid in the month of March. On or before 30th April
    (ii) In any other cases  
    (a) Under normal cases (On or before 7 days from the end of month in which- (a) the deduction is made; or (b) income -tax is due under section 192(1A).
    (b) Under special cases i.e. where the assessing officer with the prior approval of Joint Commissioner permits quarterly payment of tax deducted under section 192,194A,194d and 194H. Quarter ending 30th June-7th July 
    Quarter ending 30th September-7th October 
    Quarter ending 31st December-7th January 
    Quarter ending 31st March-30th April

    (C) Due date for filing Quarterly TDS returns

    Quarter Due Date for Filing Form No's 24Q & 26Q
    • Apr to Jun 15th July
    • Jul to Sep 15th October
    • Oct to Dec 15th January
    • Jan to Mar 31th May
  10. Consequences due to non-compliance of TDS provisions

    • Disallowance of expenses on which no TDS is deducted u/s. 40(a)(ia) of Income Tax Act,1961 Act.
    • Notices would be sending by the department u/s. 201(1) of the Act
    • Charging of Interest u/s. 201(1A) of the Act for late payment of Challanas.
    • Levying of Penalty u/s. 271C of IT Act: Regarding failure to deduct TDS
    • Amount: Penalty amount equal to the tax which has not been deducted.
    • Levying of Penalty u/s. 221 of Act for non-payment of demand raised.
    • Prosecution u/s.276B of the Act – Failure to pay tax to the credit of central government Under Chapter XII-D OR XVII Involves rigorous imprisonment which shall not be less than 3 Years but which may extend upto 7 years and with fine.
    • Penalty u/s.271BB of the Act: Failure to get TAN or to quote such number in Tax Challans, Certificates and returns etc. Amount: Rs.10,000/-
    • Penalty u/s. 271H of the Act is attracted for late filing of TDS returns 1 year from the original due date. Amount: Rs.10,000 – Rs 1,00,000.
    • Penalty u/s. 272A (2) (K) of the Act is attracted for late filing of TDS returns:
  11. On or before 01.07.2012: Amount:

    Minimum: Rs 100 per day till the default continues.
    Maximum: amount of TDS deductible.

  12. On or after 01.07.2012: Amount:

    Minimum: Rs 200 per day till the default continues.
    Maximum: amount of TDS deductible.

  13. Do’s & Don’ts for filing TDS Returns Do’

    • Ensure that correct challan particulars including CIN and amount are mentioned in TDS challan.
    • File correction statement as soon as discrepancy is noticed
    • Download details of challan from challan status enquiry from TIN-NSDL.com
    • Correct section is quoted against each deductee record.
    • Correct rate is quoted against each deductee record.
    • Correct PAN of the deductee is mentioned.
    • Ensure that TDS return is filed with same TAN against which TDS payment has been made & TDS certificate is issued.
  14. Don’ts

    • Don't file late returns as it affects deductee tax credit
    • Don't quote incorrect TAN vis-à-vis TDS payments
  15. How to prepare e-TDS Return

    e-TDS returns are prepared using any Return Preparation Utility (RPU). There are many 3rd party software and services available in the market that helps you prepare and file the e-TDS return. To facilitate preparation of e-TDS returns, government has also launched a TDS Return Preparation Utility, that can be downloaded from the NSDL website without any cost. You can also file correction return using the TDS-RPU provided by NSDL.

  16. Submission of TDS Returns

    The TDS return prepared can be uploaded on NSDL website directly. In such case the assessee needs to digitally sign the form. In case of e-filing of TDS return a token number is generated instantly, that can be used as an acknowledgement receipt. In case there’s any discrepancy in the return a non-acceptance memo is issued stating reasons of rejection.

    Assessee can also submit the return in a CD/Pen Drive accompanied by a signed verification in Form No. 27A at any TIN-FC (Facilitaion Centres) opened by NSDL at various cities. Following are the charges for furnishing e-TDS return:

    No. of deductee records in e-TDS/TCS return Upload charges (exclusive of service tax)
    Returns having up to 100 records Rs. 35
    Returns having 101 to 1000 records Rs. 200
    Returns having more than 1000 records Rs. 650
  17. Correction of TDS Returns

    In case of any discrepancies in original TDS return, a correction return is filed that can be prepared using any RPU. Same fee is applicable for correction return also. An assessee can file a correction return any number of time. There is no due date or time limit for filing correction return.