Tax deducted at source(TDS) is basically a system where tax is deducted as per the provisions of Income Tax Act 1961 at the point of generation of income. A TDS Return is a quarterly statement which has to be submitted to the income tax department of India. It is compulsory to be filed on time.
Who should file a TDS return?
It is the duty of every person who is making payment for specified goods and services to deduct TDS and file TDS return. The specified payment includes commission, salary, interest, professional fees, brokerage, royalty, contract payments etc. The person whose tax is being deducted is called ‘deductee’ and the person who deducts TDS is called ‘deductor’.
Benefits of filing TDS return
Some of the benefits are as follows:
Assists in regular collections of taxes
Ensures to the government a regular flow of income
Reduces the burden of paying a heavy tax
Eligibility criteria for TDS return
TDS return can be filed by organizations or employers who avail a valid TAN (Tax Collection and Deduction Account Number). Any person making specified payment as mentioned under Income Tax - IT Act are required to deduct tax at source and needs to deposit the same within the prescribed time for following payments.
Payment of salary
Payment by way of winning puzzles, lotteries etc.
Income by way of winning horse races
Payment as per National Saving Scheme and other schemes.
Types of TDS Returns
The different types of TDS are as follows:
Form 24Q- The TDS deducted on salaries
Form 26Q – The TDS deducted on payments other than salaries
Form 27Q- The TDS deducted on payments made to Non- Residents
TAN (tax deduction and collection account number) is a 10-digit alphanumeric number which is required by a person who is liable to deduct TDS and file TDS return. This number is provided so that it can be mentioned in all TDS Certificates issued, returns, challans etc. If a person does not apply for TAN, he may be penalised up to Rs. 10000.
Who is required to issue TDS certificates?
Every person who is deducting tax as per provisions of section 203 is required to issue a TDS certificate. Even banks and other such organizations deducting TDS on pensions issue TDS certificates.
Penalty, in case of delay in filing TDS return
According to section 234E, a penalty of Rs 200/- per day shall be paid by the person until the time default continues. It is to be noted that the total penalty should not exceed the TDS amount.
Penalty for non-filing of TDS return
If the return is not filed within 1 year from the due date or if incorrect information has been furnished it shall be liable to a fine (penalty). The minimum amount of penalty should be Rs 10,000/- and the maximum is Rs 1,00,000/-.