TDS (Tax Deducted at Source) is an indirect system of deduction of Tax by Indian authorities according to the Income Tax Act. 1961 at the point of generation of income tax.Tax is deducted by the payer and is remitted to the government by the payer, on behalf of payee.
A TDS Return is a quarterly statement which has to be submitted to the Income Tax Department of India. Submitting TDS Return is mandatory if you are a deductor. It has details of TDS deducted and deposited by you.
TDS means Tax Deducted at Source. It is the amount deducted from payments of various kinds such as salary, contract payment, commission etc. This deducted amount can be adjusted against the tax due of the deductee.
Annual TDS return is the TDS return which is prepared in electronic media as per prescribed file format. Such returns furnished in a CD/Pen Drive should be accompanied by a signed verification in Form No. 27A.
It is the duty of the person who is making payment to someone for specified goods or services to deduct TDS and file TDS return. The specified payment includes salary, interest, commission, brokerage, professional fees, royalty, contract payments, etc. The person who deducts TDS is called deductor and the person whose tax is being deducted is called deductee.
TDS is not required to be deducted by individuals and HUF except for those whose accounts are required to audited u/s 44AB i.e. whose gross receipts in preceding financial year in case of business is more than 2 crore(AY 2017-2018), 1 crore ( AY 2016-2017) and in case of profession 50 lakhs( AY 2017-2018) , 25 lakhs(AY 2016-2017).
TAN is an alphanumeric 10 digit number required by a person who is liable to deduct TDS and file TDS return. Thus such person must make an application within a month in which TDS was deducted for allotment of Tax Deduction and Collection Number (TAN) in form 49B. This number allotted is mandatory to mention in all TDS Certificates issued, returns, challans etc. If a person fails to apply for TAN he may be penalised upto Rs. 10,000/-.
Different types of TDS forms are as follows:-
- Form 24Q -TDS on Salaries
- Form 26Q- TDS on payments other than Salaries
- Form 27Q- TDS on payments to Non-Residents
- Form 27EQ – TCS
The Form 27A is submitted along with Quarterly TDS Returns in Form 24Q, Form26Q or Form 27Q. Form 27A is a simple form with particulars of deductor and aggregate amounts of Total Tax Deducted and total tax deposited against the total number of deductees.
PAN of the deductors has to be given by non-Government deductors. It is essential to quote PAN of all deductees.
Due dates of submission of quarterly TDS Return is 31st July for Q1, 31st October for Q2, 31st January for Q3, and 31st May for last quarter.
TDS on Salaries: Liability for deducting tax in case of Salary payments is determined by the employer at the start of financial year based on monthly salary. TDS is then deducted monthly in equal instalments.
Deduction at a higher rate: As per section 206AA if the deductee fails to provide PAN then deduction has to be made at 20% or applicable rate whichever is higher.
Payment can be made online on NSDL by selecting Challan 281 and making the payment using net banking. These TDS payments need to be made before filing the TDS return.
E-payment is compulsory for all Corporate assesses & non-corporate assesses who are liable for audit u/s 44AB.
Physical payment can be made using challan 281 in authorized bank branch.
Every person deducting tax as per provisions of section 203 is required to issue a certificate to the payee in respect of tax deducted by him along with certain other particulars. This certificate is called TDS Certificate. Even banks deducting TDS on pensions issue TDS certificates. The certificate is usually issued on deductor’s own stationery.
Types of TDS certificate to be issued in different cases:
Salaries: Certificate is to be issued in Form 16 containing details of TDS Payment, tax deducted at source and tax calculation based on which TDS was estimated. Certificate should be issued within 31st May of next financial year
Non Salary Payments: Certificate is to be issued in form 16A containing details of payment and tax deducted at source. Certificate should be issued within 15 days of due date of filing the return.
TCS: Certificate to be issued in FORM 27D containing the Tax Collected & Paid details.
Failure to issue certificate will result in penalty of Rs 100 for every day the failure continues limited to the TDS amount.
It is a document which serves as an annexure to the intimation to be sent to the deductor. Intimation will be sent to the deductor through mail / post but a justification report will have to be downloaded from the portal.