TDS Returns

Eligibility, Filing Process, Due Dates & Revised TDS Return.

Tax Deducted at Source or TDS is a source of collecting tax by Government of India at the time when a transaction takes place. Here, the tax is required to be deducted at the time money is credited to the payee’s account or at the time of payment, whichever is earlier.

In case of payment of salary or life insurance policy, tax is deducted at the time of payment. The deductor then deposits this TDS amount to the Income Tax (I-T) department. Through TDS, some portion of your tax is automatically paid to the I-T department. Thus, TDS is considered as a method of reducing tax evasion.Tax is deducted usually over a range of 1% to 10%.

What is TDS Return?

Apart from depositing the tax, the deductor should also file a TDS return.TDS return is a quarterly statement to be given to the I-T department. It is compulsory for deductors to submit a TDS return on time. The details required to file TDS returns are:

• PAN of the deductor and the deductee
• Amount of tax paid to the government
• TDS challan information
• Others, if any

Eligibility Criteria for TDS Return

TDS return can be filed by employers or organizations who avail a valid Tax Collection and Deduction Account Number (TAN). Any person making specified payments mentioned under the I-T Act are required to deduct tax at source and needs to deposit within the stipulated time for the following payments :

• Payment of Salary
• Income by way of “Income on Securities”
• Income by way of winning lottery, puzzles and others
• Income from winning horse races
• Insurance Commission
• Payment in respect of National Saving Scheme and many others

TDS Return Filing

Various forms are used for filing TDS return, depending on the purpose of deduction. These returns have to be in company with a signed verification in Form No. 27A. It is a form that controls the quarterly statements. This has to be filed by deductors together with quarterly statements. It summarizes the control totals of “amount paid” and “income tax deducted at source” which has to match with the totals in TDS return.

TDS Return Submission

Assessees who are liable to submit TDS return electronically: An assessee is liable to file e-TDS return if TDS is deducted from his/her income. It is obligatory to file TDS return within the due date mentioned above. In case an assessee does not file the return within the prescribed time, he will be liable to pay a penalty. Following are the assessees liable to file quarterly TDS return electronically:

TDS Return filing Process

The following points are required to be considered to make sure that an error-free TDS return is submitted :

• Form 27A contains a control chart whose all columns must be filled. This form is then verified in hard copy form with the e-TDS return filed electronically.
• The totals of the amount paid and the tax deducted at source have to be correctly filled and the same has to be filled in all the forms, including Form No. 27A, Form No. 24, Form No. 26 and Form No. 27.
• The assessees are required to mention their Tax Deduction Account Number (TAN) in Form No. 27A. This is similar to what is done in case of e-TDS return. This is dictated by ‘sub-section (2) of section 203A of the I-T Act in India’.
• At the time of filing the TDS return, ensure that details relating to the depositing of tax deducted at source have been mentioned accurately.
• The basic form that has been used for e-TDS return recommended by the department is compulsory to follow. This is because it brings consistency and better understanding in filling the forms. It is necessary to mention the Bank Branch Code or the BSR code. It is a 7-digit code provided to the banks by the Reserve Bank of India.
• E-TDS return has to be filed in the ASCII clean text format. To avail this format, you can use software of your choice such as Computex, MS Excel or Tally. Also, you have an option of using the software available at NSDL website known as Return Prepare Utility (e-TDS RPU Light) for filing the return online. It is important to ensure that the online TDS file formats come with ‘txt’ as the filename extension.
• The physical returns are submitted at any TIN-FC’s managed by NSDL. TIN-FC’s are found at specified areas across the country.
• If returns are filed online, then they can be submitted directly at NSDL TIN website. In this case, the deductor has to sign the return through digital signature.
• While submitting the return, if all the information mentioned is accurate then a provisional receipt/token number would be issued. This provisional receipt/token number is considered as an acknowledgment, stating the fact that the return has been filed. In case, the return is not accepted, then a non-acceptance memo will be issued along with the reasons for rejections.

Penalty for delay in filing TDS Return

According to Section234E, if an assessee fails to file his/her TDS Return before the due date, a penalty of Rs 200 per day shall be paid by the assessee until the time the default continues. However, the total penalty should not exceed the TDS amount.

Non-filing of TDS Return

If an assessee has not filed the return within 1 year from the due date of filing return or if a person has furnished incorrect information, he/she shall also be liable for penalty. The penalty levied should not be less than Rs 10,000 and not more than Rs 1,00,000.

TDS Return Preparation Utility

Deductors/collectors are required to prepare e-TDS/TCS statements as per these file formats using, NSDL e-Gov. Return Preparation Utility or in-house software or any other third party software and submit the same to any of the TIN-FCs established by NSDL e-Gov. NSDL e-Governance has developed a software called e-TDS Return Preparation Utility (RPU) to facilitate preparation of e-TDS returns. Users must pass the e-TDS/ TCS return file generated using RPU through the File Validation Utility (FVU) to ensure format level accuracy of the file. This utility is also freely downloadable from NSDL e-Gov TIN website.

Revised TDS Return

After submitting the return, if any error is detected, such as incorrect challan details or PAN not provided or incorrect PAN provided, the tax amount credited with the government will not reflect in the Form16/ Form 16A/ Form 26AS. To facilitate conformity and make sure that the tax amount is properly credited and reflected in the Form 16/Form 16A/ Form 26AS, a revised TDS return has to be filed.

TDS Refund

TDS is the tax amount deducted at the time of payment. At the year end, while assessing the total tax liability, there is a difference between the total tax deducted during the year and the actual tax liability. If the tax deducted at the source is less than the actual tax liability, then the difference between the two has to be paid by the assessee. On the other hand, if the tax deducted at source is more than the actual tax liability, it results in TDS refund.

Benefits of TDS

Filing TDS return is mandatory as per I-T Act, 1961. Some of its benefits are:

• It helps in regular collection of taxes
• Ensures a flow of regular income to the government
• Reduces the burden of lump-sum tax payment. It helps in spreading the entire tax payment over a number of months which makes it easier for the taxpayer
• Offers an easy mode of tax payment to the payer!