TDS Return Filing - An Overview

Understanding TDS Return: A Comprehensive Guide from Trustra Advisory

Tax Deducted at Source (TDS) is a fundamental aspect of the Indian Income Tax Act, 1961. It is a mechanism where tax is deducted at the very source from certain payments exceeding specified threshold limits. As a company or person making such payments, you are mandated to deduct tax at prescribed rates and deposit it with the government. Subsequently, filing a TDS return becomes a crucial compliance requirement.

This guide from Trustra Advisory Company aims to demystify the concept of TDS returns and highlight their importance.

What is a TDS Return?

A TDS return is a quarterly statement that must be submitted to the Income Tax Department of India by every deductor who is liable to deduct tax at source. It serves as a consolidated declaration of the TDS deducted and deposited during a particular quarter. Filing accurate and timely TDS returns is mandatory for all deductors.

Key Aspects of TDS Return Filing:

• Mandatory for Deductors: If you are required to deduct TDS under the Income Tax Act, filing TDS returns is a non-negotiable obligation.
• Quarterly Submission: TDS returns are filed on a quarterly basis, providing a regular reporting mechanism to the tax authorities.
• Detailed Reporting: The return must contain comprehensive details of all TDS deducted and deposited by you for the specific quarter.

Prerequisites for Filing TDS Return:

Before you proceed with filing your TDS return, ensure you have the following in place:

• Valid TAN and PAN: A Tax Deduction and Collection Account Number (TAN) is essential for deducting and depositing TDS. You also need a Permanent Account Number (PAN).
• Assessment of Liability: Identify the types of payments on which you are required to deduct TDS as per the Income Tax Act.
• Transaction and Payment Details: Maintain accurate records of all transactions and corresponding payment details where TDS has been deducted.
• Knowledge of Applicable Rates: Be aware of the prescribed TDS rates for different types of payments as specified under the Income Tax Act, 1961. (Refer to the latest TDS Rate Chart for the relevant Financial Year).

Common payments that attract TDS include salaries, interest, professional fees, payments to contractors, rent of machinery, and rent of building.

Types of TDS Return Forms:

The Income Tax Department has prescribed different forms for filing TDS returns based on the nature of the payment:

• TDS Return Form 24Q: Used for reporting TDS deducted from salaries.
• TDS Return Form 26Q: Used for reporting TDS deducted on all payments other than salaries made to residents.
• TDS Return Form 27Q: Used for reporting TDS deducted on income received from interest, dividends, or any other sum payable to non-residents.
• TDS Return Form 27EQ: Statement of collection 1 of tax at source (TCS).

Therefore, if you have made payments to resident Indians attracting TDS, you will primarily file Form 24Q (for salaries) and Form 26Q (for non-salary payments) quarterly. For payments to non-residents, Form 27Q is applicable quarterly.

It is important to note that TDS Certificates (Form 16 for salaries and Form 16A for non-salary payments) can only be generated after successfully filing your TDS returns.

Challenges in Filing TDS Return:

Navigating the process of TDS return filing can present certain challenges:

• Complexity of Regulations: TDS laws are intricate and require a thorough understanding to ensure compliance. Errors due to a lack of knowledge can lead to penalties.
• Strict Timelines: TDS returns must be filed within stipulated quarterly deadlines. Missing these deadlines can attract fines and interest.
• Data Accuracy: Maintaining accurate data, including correct PAN details and transaction specifics, is crucial. Discrepancies can cause issues for both the deductor and the deductee.
• Staying Updated: Tax laws are subject to frequent amendments. Keeping abreast of these changes is essential for continuous compliance.

Advantages of Timely and Accurate TDS Return Filing:

Ensuring proper TDS compliance offers several benefits:

• Ensures Compliance: Timely and accurate filing minimizes the risk of legal implications and penalties.
• Saves Time: Streamlined processes can free up your valuable time to focus on core business activities.
• Reduces Errors: Expertise in handling TDS returns helps minimize errors, ensuring accuracy in your filings.
• Keeps You Updated: Staying compliant necessitates keeping up with the latest tax law updates and their impact on TDS procedures.

Understanding TDS Deposit:

The deposit of TDS refers to the process of remitting the tax deducted at source to the government treasury within the prescribed due dates. Timely deposit is critical for compliance.

TDS Due Dates:

The due dates for depositing TDS and filing TDS returns are specific. Generally, TDS deducted during a month should be deposited by the 7th of the following month. However, the TDS deducted in March can typically be deposited by April 30th.

The quarterly due dates for filing TDS returns for FY 2024-25 are as follows:

Penalty for Non-Compliance:

Failing to comply with TDS provisions can attract penalties:

• Late Deduction/Payment: Interest is levied on the delayed deduction and deposit of TDS.
• Late Filing of TDS Return: A fee of ₹ 200 per day is applicable for late filing of TDS returns, up to the amount of TDS.
• Penalty by Assessing Officer: The Assessing Officer may impose a penalty in addition to interest and late fees for non-deduction or non-remittance of TDS.

Essential Details for Online TDS Return Submission:

For seamless online filing, keep the following information ready:

• TAN Details
• PAN Details of deductor and deductees
• Previous TDS Filing Records (if any)
• TDS Filing Period (Quarter and Financial Year)
• Incorporation Date (if applicable)
• Transaction Count
• Entity Type (Proprietorship, Partnership, Company, etc.)

Procedure for TDS Return Filing Online:

The online filing process generally involves preparing the return using the Return Preparation Utility (RPU), validating it with the File Validation Utility (FVU), and uploading the .fvu file to the Income Tax Department's e-filing portal.

Revised TDS Returns:

If errors are found in an already submitted TDS return (e.g., incorrect challan details or PAN errors), a revised return needs to be filed to correct the information and ensure proper tax credit reflection in Form 16/16A/26AS.

Claiming TDS Credit:

Deductees can claim credit for the TDS deducted by mentioning the relevant details in their income tax returns. Accurate reporting of TDS certificate numbers and details is crucial for seamless credit.

Let Trustra Advisory Company simplify your TDS compliance. Contact us today for expert assistance with your TDS return filing!