Tax Deducted at Source or TDS may be 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.
TDS
Overview
In case of payment of salary or life assurance policy, tax is deducted at the time of payment. The deductor then deposits this TDS amount to the tax (I-T) department. Through TDS, some portion of your tax is automatically paid to the I-T department. Thus, TDS is taken into account as a way of reducing evasion .
What is TDS Return?
Apart from depositing the tax, the deductor should also file a TDS return.
TDS return may be a quarterly statement to tend to the I-T department. it’s compulsory for deductors to submit a TDS return on time. the small print required to file TDS returns are:
- PAN of the deductor and therefore the deductee
- Amount of tax paid to the govt
- TDS challan information
- Others, if any
Eligibility Criteria for TDS Return
TDS return are often filed by employers or organizations who avail a legitimate collection and Deduction Account Number (TAN). a person making specified payments mentioned under the I-T Act are required to deduct tax at source and wishes to deposit within the stipulated time for the subsequent payments :
- Payment of Salary
- Income by way of “Income on Securities”
- Income by way of winning lottery, puzzles et al.
- Income from winning horse races
- Insurance Commission
- Payment in respect of National Saving Scheme and lots of others
TDS Return Preparation Utility
Deductors/collectors are required to organize e-TDS/TCS statements as per these file formats using, NSDL e-Gov. Return Preparation Utility or in-house software or the other third party software and submit an equivalent 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 make sure format level accuracy of the file. This utility is additionally freely downloadable from NSDL e-Gov TIN website.
Income Tax Calculation for Partnership Firm
While calculating the tax applicable for a partnership firm, it’s to be noted that Under an tax , the subsequent sort of expenses paid by the partnership firm to the partners isn’t considered as deductions:
➼ Salary, bonus, commission or remuneration paid to non-working partners.
➼ Remuneration or interest paid to the partners which aren’t in accordance with the terms of the partnership deed.
➼ Remuneration or interest paid to the partners is in accordance with the terms of the partnership deed but they belong to the amount before the date of formation of the partnership deed.
Apart from the above conditions, the interest paid to partners should be within the conformity with the terms of the partnership deed and will not exceed 12% once a year . Also, remuneration paid to partners should be consistent with the terms of the partnership deed and will not exceed the subsequent permissible limit:
➼ On first Rs. 3 Lakhs of book profit or within the case of loss – Rs. 1,50,000 or 90% of book profit, whichever is more.
➼ On the balance of the book profit – 60% of book profit.
Penalty for delay in filing TDS Return
According to Section234E, if an assessee fails to file his/her TDS Return before the maturity , a penalty of Rs 200 per day shall be paid by the assessee until the time the default continues. However, the entire penalty shouldn’t exceed the TDS amount.
Non-filing of TDS Return
If an assessee has not filed the return within 1 year from the maturity of filing return or if an individual has furnished misinformation , he/she shall even be responsible for penalty. The penalty levied shouldn’t be but Rs 10,000 and less than Rs 1,00,000.
Revised TDS Return
After submitting the return, if any error is detected, like incorrect challan details or PAN not provided or incorrect PAN provided, the tax amount credited with the govt won’t reflect within the Form16/ Form 16A/ Form 26AS.
To facilitate conformity and confirm that the tax amount is correctly credited and reflected within the Form 16/Form 16A/ Form 26AS, a revised TDS return has got to be filed.
TDS Return filing Process
The following points are required to be considered to form sure that an error-free TDS return is submitted:
- Form 27A contains an impact chart whose all columns must be filled. this type is then verified in text form with the e-TDS return filed electronically.
Validation of the TDS Return File
The procedure for the validation of TDS return file is given below:
Fill within the required details within the file
After filling within the details, update it within the portal validation utility tool
The tool is out there on NSDL website for free of charge
In case any error is found within the file, FVU will provide a report for an equivalent
Make the required changes and verify the file again through the FVU
Prerequisites for the submission of revised TDS return
Revised TDS return are often filed as long as the first TDS return is accepted by the TIN central system.
- The assessee can check the status of the TDS return filed online by providing required details, like PAN number and Provisional Receipt number/Token number on NSDL website.
- Revised TDS return has got to be prepared by using the foremost recent consolidated TDS statement. this will be downloaded from the TRACES website. For downloading this statement, the provisional receipt/token number of the first statement should be mentioned.
Benefits
Benefits of TDS
Filing TDS return is mandatory as per I-T Act, 1961. a number of its benefits are:
It helps in regular collection of taxes
Ensures a flow of normal income to the govt
Reduces the burden of lump-sum tax payment. It helps in spreading the whole tax payment over variety of months which makes it easier for the taxpayer
Offers a simple mode of tax payment to the payer!
TDS Refund
TDS is that the tax amount deducted at the time of payment. At the year end, while assessing the entire liabilities , there’s a difference between the entire tax deducted during the year and therefore the actual liabilities . If the tax deducted at the source is a smaller amount than the particular liabilities , then the difference between the 2 has got to be paid by the assessee. On the opposite hand, if the tax deducted at source is quite the particular liabilities , it leads to TDS refund.
Status of TDS Refund
The status of TDS refund are often verified within the following ways:
- An acknowledgment is shipped to your registered e-mail address
- You can use your PAN on the web site https://incometaxindiaefiling.gov.in/
- You also can out in CPC Bangalore on 1800-4250-0025 (toll-free number) to see the status.
TDS Refund period
The excess TDS paid by the assessee gets refunded. The period of time of TDS refund amount depends on whether you’ve got filed your tax return on or before the maturity or not. If you’ve got filed it on time, then excess TDS amount are going to be refunded between three to 6 months.
Interest on TDS Refund
According to Section 200A of the I-T Act, 1961, if the tax department doesn’t pay the TDS refund amount within the required period of time , they’re going to need to pay an interest of 6% p.a. on the refund amount. This interest is calculated from the primary month i.e. April of any fiscal year . However, no interest is applicable if the TDS refund amount is a smaller amount than 10% of actual liabilities.
Process
Get the process done in 5 Easy Steps
1. Choose the package and fill the form.
2. Make Payment
3. Our Executive will get in touch with you and verify the details.
4. Filing the Application to concern department
5. Congratulations your Work is complete
FAQ
Q.1 what's tax deducted at source?
Ans. For quick and efficient collection of taxes, the Income-tax Law has incorporated a system of deduction of tax at the purpose of generation of income. this technique is named as “Tax Deducted at Source”, commonly referred to as TDS. Under this technique tax is deducted at the origin of the income. Tax is deducted by the payer and is remitted to the govt by the payer on behalf of the payee.
The provisions of deduction of tax at source are applicable to many payments like salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. In respect of payments to which the TDS provisions apply, the payer has got to deduct tax at source on the payments made by him and he has got to deposit the tax deducted by him to the credit of the govt .
Q.2 Can the payee request the payer to not deduct tax at source and to pay the quantity without deduction of tax at source?
Ans. A payee can approach to the payer for non-deduction of tax at source except for that they need to furnish a declaration in Form No. 15G/15H, because the case could also be , to the payer to the effect that the tax on his estimated total income of the previous year after including the income on which tax is to be deducted are going to be nil.
Form No. 15G is for the individual or an individual (other than company or firm) and Form No. 15H is for the senior citizens
Q.3 Under what circumstances a deductor wouldn't be deemed as an assessee-in-default even after he fails to deduct TDS or after deducting an equivalent fails to deposit it to the govt ’s account?
Ans. A deductor who fails to deduct the entire or any a part of the tax on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee-in-default in respect of such tax if such resident—
(i) has furnished his return of income under section 139;
(ii) has taken under consideration such sum for computing income in such return of income; and
(iii) has paid the tax due on the income declared by him in such return of income, and therefore the deductor furnishes a certificate to the present effect in Form No.26A from a accountant .
o However, w.e.f. 01-09-2019, sum paid to non-resident are going to be covered by above provisions.
In such a case, the payee can claim the refund of entire/excess amount of TDS (as the case may be) by filing the return of income.
Q.4 If the payer doesn't deduct tax at source, will the payee face any adverse consequences by means of action taken by the Income-tax Department?
Ans. it’s the duty and responsibility of the payer to deduct tax at source. If the payer fails to deduct tax at source, then the payee won’t need to face any adverse consequences. However, in such a case, the payee will need to discharge his liabilities . Thus, failure of the payer to deduct tax at source won’t relieve the payee from payment of tax on his income.
Q.5 What are the duties of the person deducting tax at source?
Ans. Following are the essential duties of the one that is susceptible to deduct tax at source.
He shall obtain tax write-off Account Number and quote an equivalent altogether the documents concerning TDS.
He shall deduct the tax at source at the applicable rate.
He shall pay the tax deducted by him at source to the credit of the govt (by the maturity laid out in this regard*).
He shall file the periodic TDS statements, i.e., TDS return (by the maturity laid out in this regard*).
He shall issue the TDS certificate to the payee in respect of tax deducted by him (by the maturity laid out in this regard*).
*Refer tax calendar for the due dates.
What your client says
Witness with first hand, direct from our lovely cusromers