TDS Filing Compliances

TDS compliances should be fulfilled where the tax is collected over a payment made for an asset or service. Different types of payments, such as, rent, commission, professional fees, interest, etc. are there on which TDS is applicable in India. Based on its type, the TDS deposit procedure and its receipt that is compulsorily be given to the seller/service provider varies accordingly. Here we’re to provide you 100% Government-authorized and risk-free TDS compliances assistance. Do not delay in availing and complete this liability. It can cost you penalties/legal charges if you fail to pay the TDS and file its details within due time. Go through its details and know how it's Myitronline works.

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Annual TDS Compliances in India – An Overview

Tax Deducted at Source (TDS) is a kind of tax deduction subtracted at the time of specific payments made to the seller (deductee) by purchaser (deductor), such as, rent, commission, professional fees, interest, etc. when the amount is more than the minimum threshold limit exempted from deduction. The deductor then has to deposit the deducted amount to the Government which will be considered as a kind of advance tax paid on behalf of the deductee who received his/her deducted income. The method helps the deductee to reduce his/her tax liability over the already tax deducted income and Government can keep a regulation of revenue over these incomes keeping a check on Tax Evasion. So, this tax process is the reverse of the general process of tax payment done by a taxpayer, where the payer is liable to deposit the tax instead of the seller. TDS is deducted on the basis of slab rate as specified by CBDT. TDS filing is usually done in quarterly basis per AY through online and offline options as available for the buyer. Buyer should issue a TDS certificate to the seller as a token of his/her TDS deduction.

Types of Available TDS Forms

Based on the type of payment on which the deductor has made the TDS deduction, there is TDS filing form that he/she has to select for furnishing the transaction details.
The available forms are:

  • Form 24Q: TDS filing from Salaries
  • Form 26Q: TDS filing from Payments other than Salaries
  • Form 26QB: TDS on Sale of Property
  • Form 26QC: TDS on Sale of Property

  • Form 27Q: TDS filing from additional income, such as, interest, dividend or any other amount payable to NRI
  • Form 27EQ: TDS filing for TCS (Tax Collected at Source)

Important things to remember about these forms are given below:

Form 24Q:

This form should be submitted by the deductor (an employer) every quarter for the monthly TDS deduction made on salary of an employee u/s 192 of the Income Tax Act, 1961. The deductor has to provide the details in two Annexures, I and II, Annexure I requires details of deductor, deductees, challan, etc. and Annexure II requires details of salary. Annexure I should be filed in each quarter, while Annexure II, in the last quarter. Minimum salary threshold exempted from TDS deduction depends on the income slab rate (age based) as prescribed by CBDT. Deductor eligible of 24Q TDS Deduction are:

  1. Individuals
  2. Companies (Private/Public)
  3. HUF (Hindu Undivided Family)
  4. Trusts
  5. Partnership Firms
  6. Co-operative Societies

Form 26Q:

This is a quarterly filing done for TDS deducted in applicable rate of percentage on dividend securities, interest of securities, director’s remuneration, professional fees, etc. u/s 200(3), 193 and 194 of Income Tax Act,

Note:
  1. Government deductors need to specify ‘PANNOTREQD’ on the form
  2. Non-Government deductors have to mandatorily furnish PAN

Form 26QB:

1% TDS is deducted on the purchase of any immovable property (building/part of building/non-agricultural land) with price more than INR 50 lakh u/s 194-IA of the Income Tax Act. The tax should be deducted by the buyer (not seller) to be deposited in Government’s Account within 30 days from the end of the month in which TDS was deducted along with filing this Challan-cum-Statement. TAN of the deductor is not required.

Form 26QC:

Under Section 194IB, individual/HUFs (not liable to audit u/s 44AB) who are paying rent more than INR 50,000 p.m. are required to deduct TDS at the rate 5% from the rent paid to the landlord, who is resident to India. The deduction can be made at the time of rent payment/last month of previous year/last month of tenancy, if the property is vacated during the year. Such TDS should be transferred to Government’s account within 30 days of the end of the deduction along with this Challan-cum-Statement. TAN of the deductor is not required.

Form 27Q:

This quarterly TDS Return is done by the deductor for payments other than salary for NRIs and Foreigners under the rules of Section 200(3) of Income Tax Act, 1961. Form 26Q is used for TDS on additional income, such as, interest, bonus or any other sum owed to NRI or foreigner.

Note:
  1. Government deductors need to specify ‘PANNOTREQD’ on the form
  2. Non-Government deductors have to mandatorily furnish PAN

Form 27EQ:

This quarterly return is filed for TCS as the TDS u/s 206C of the Income Tax Act, 1961. This tax is collected by the seller on the goods/commodities purchased by a buyer with payment given by cash, credit, cheque, demand draft or any other mode.

Note:
  1. Government deductors need to specify ‘PANNOTREQD’ on the form
  2. Non-Government deductors have to mandatorily furnish PAN

Annual TDS Compliances Benefits

TDS Annual Compliances are essential part for every Deductor to fulfil within time to ensure the following benefits:

  • Ensuring loyal tax payment and initiative in prevention of Tax Evasion
  • Timeliness and Regularity in Tax payment liability
  • Gives Government a Steady Source of Income
  • Relieves taxpayer from more tax burden
  • TDS extends of the scope of Tax Collection options from almost every source of income when it exceeds the threshold value.

Penalties on Failure of TDS Payment or TDS Filing

In case, a deductor fails to make TDS payment on time, he/she may come under penalties as:  

  • Late filing fee (On failing to file the TDS Return on time), where fine of INR 200 per day is charged as per Section 234E until Return is filed. The amount should not exceed the TDS amount.
  • Interest (On failing to deposit TDS payment on time)

Section

Nature of Default

Interest subject to TDS/TCS Amount

Period For

201(1A)

On failing TDS Deduction, either in whole/part

1% per month

Starting from the date

On Failing TDS Payment, although filing made either in whole/part

1.5% per month

0.75% per month or part of the month for delay in payment beyond due date falling between Mar 20’2020 – June 29’2020 (as per relief allowed in COVID-19 restriction). If goes beyond June 30, 1.5% will be charged as interest rate

Starting from the date of deduction to the date of payment


Note: The above interest should be paid before TDS Return Filing. The interest rate is charged on monthly basis and thus, part of a month is considered as full month.

  • Penalty (On failing to file TDS Return in 1 year of the due date), where an amount equal to the TDS payment that is not deposited to be charged as penalty.

Note: Due to the lockdown restrictions for COVID-19 pandemic, the penalty amount is reduced for the period between March 20th – June 30th, 2020 as per Ordinance 2020.

  • Prosecution (276B), where the defaulter with charge of violation of provisions of Chapter XVII is penalized with rigorous imprisonment for the term not less than 3 months, extended to 7 years and fine.

In case, a deductor fails to file TDS Return on time, he/she may come under penalties as: 

  • Late Filing Fee (Sec 234E), where fine of INR 200 per day is charged until Return is filed. The amount should not exceed the TDS amount.
  • Penalty (Sec 271H), where the Assessment Officer penalizes the defaulter with penalty payment of minimum INR 10,000 till INR 1 lakh for not making TDS Return on time.
    • This penalty is additional with the fine of Section 234E of IT Act
    • The section covers penalty in the charge of incorrect TDS Return Filing

    Note: No penalty is charged u/s 271H, if the following conditions are fulfilled:

    • Tax Deducted/Collected at source is paid to the credit of the Government
    • Late Filing Fees and Interest (if any) is paid to the credit of the Government
    • TDS/TCS Return if filed before the expiry of a period of one year from the due date specified in this behalf.

Documentation for Annual TDS Compliances

It is mandatory for the deductor to submit TDS Return on time otherwise be charged with penalties. Essential documents required during TDS Return Submission are:

  • PAN of deductor
  • PAN of deductee
  • TAN Details of deductor (where applicable)
  • Amount of tax paid to the Government
  • TDS Challan information

Note: 25% TDS rate is reduced for non-salaried payments to be in effect from May 14, 2020 till March 31, 2021 of FY 2020-21as announced by Finance Minister Smt Nirmala Seetharaman. This rate will be applicable on FD interest, dividend income, etc.

Annual TDS Compliances Procedures

The deductor should deposit the TDS subtracted from the deductee to the Government Department’s account on the dates as given below:

Deductor

Payment Made

Due Date for Paying TDS

 

  Government Office

  Without Challan

  Same Day

  With Challan

  7th of the Next Month

Prerequisite opt to be deposited by the employer

  7th of the Next Month

  Others

  Month of March

  By April 30th

  Other Month

  7th of the Next Month

To deposit TDS amount taken by the deductor from deductee in Government’s Account, Challan ITNS-281 should be used as given in Government Portal.

From FY June 1st 2016 onwards, the TDS Filing due dates are given as:

Quarter

Quarter Period

Due Date of filing Forms 24Q and 26Q

Form 27Q

Form 27EQ

1st Quarter

1st April to 30th June

July 31st

July 31st

July 15th

2nd Quarter

1st July to 30th Sept

Oct 31st

Oct 31st

Oct 15th

3rd Quarter

1st Oct to 31st Dec

Jan 31st

Jan 31st

Jan 15th

4th Quarter

1st Jan to 31st March

May 31st

May 31st

May 15th


Note: Due to COVID-19 preventive restrictions of lockdown, the Due Date of TDS Return Filing to be done between 20.03.2020 – 30.06.2020 is extended to June 30th, 2020.

TDS Compliance Procedure

TDS Certificates - Their Purpose and Use

A TDS Certificate, as mentioned u/s 203 of Income Tax Act, 1961, is the document that the deductor should generate after depositing the deducted TDS from deductee’s income and mandatorily deliver to the deductee as a proof of his/her TDS Deduction:

Form

Certificate

Frequency

Due Date

Form 16

TDS on Salary Payment

Yearly

May 31st

Form 16A

TDS on Non-Salary Payment

Quarterly

15 Days from Due Date of filing Return

Form 16B

TDS on Sale of Property

Every Transaction

15 Days from Due Date of filing Return

Form 16C

TDS on Rent

Every Transaction

15 Days from Due Date of filing Return

Also, Form 26AS is a PAN linked annual Tax Credit Statement generated to the taxpayer under Rule 31AB of Income Tax Rules that contains the details of TDS deduction, if any, done over the taxpayer’s income.

Note: In case, excess TDS is deduced from deductee’s income, he/she can claim for Refund from the Income Tax Department.  

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