What is TDS?
Tax
deducted at source or TDS is the tax that is collected by the Government of
India at the time when a transaction takes place. Here, in this case, the tax
is to be deducted at the time the money is credited to the payee's account or
at the time of payment whichever happens earlier.
In this case of salary payment or
the life insurance policy, the tax is deducted at the time when the payment is
done. The deductor is required to deposit this amount with the Income Tax
Department. Through TDS a portion of the tax is paid directly to the Income Tax
Department. The Tax is deducted usually over a range of 10%.
What is TAN?
TAN
or the Tax Deduction and Collection Number is a mandatory 10 digit alpha number
that is to be obtained by all the people who are responsible for deducting tax
at source or tax collection at source on behalf of the government. Salaried
individuals are not required to obtain TAN or to deduct the tax at the source.
In
the case of the proprietorships businesses and other entities are required to
deduct tax at the source while making certain payments like the salary,
payments to the contractor, payment of rent that is exceeding Rs.2,40,000 per
year. IndiaFilings can help in obtaining the TAN registrations.
The entities that have a valid
TAN registration have to file the TDS returns quarterly. Our TDS experts can
help in computing the TDS payments and file the TDS returns while complying
with the TDS regulations.
Eligibility Criteria
Who can file TDS returns?
TDS return filing is done by
organizations or employers who have availed a valid tax collection and
deduction number (TAN). Any person who is making specified payments mentioned
under the Income Tax Act is required to deduct the taxes at the sources and
they are needed to deposit the tax within the stipulated time for making the
following payments.
·
Salary
Payment
·
Income
on securities
·
Income
by winning the lotteries, puzzles, and others.
·
Income
from winning horseraces
·
Insurance
commissions.
·
Payment
concerning the National saving scheme and many others.
·
Advantages of payment of TDS
TDS is payable on the earnings so it is important to note that
the liability to pay TDS is applicable only in the event of earnings actually
taking place. TDS is deducted before making payments. Deductions are to be made
on payments that are made in cash, cheque or credit. The amount deducted under
TDS is further deposited with various government agencies. Payment of TDS has
various advantages which are as follows :
- Deducting
TDS at source prevents tax evasion.
- Tax
collection is done duly and in a timely manner.
- A large
number of people come under the tax net.
- Collection
of TDS is a steady source of revenue for the government.
- TDS
Deductors as per Taxation Rules
Following is the list of
deductors liable to deduct TDS:
- Individuals
- Hindu
Undivided Family
- Limited
Companies
- Partnership
Firms
- Body of
Individuals
- Association
of Individuals
- Local
Authorities
Rate of TDS deduction
Payments such as salaries,
commission, professional fees, interest earned, rent etc. are subject to TDS
deduction. Based on the type of income and amount of income earned, TDS is paid
at various rates. Thus, different kinds of income has different TDS rates and
the tax is paid on the extra amount earned after a certain maximum threshold
limit is attained. The rate at which TDS is paid varies from 1 per cent to 30
per cent, depending on the income taxed.
Method of TDS deduction
As commonly known, TDS is deducted
on the payments made to the receiver. It means that the payments are done to
the receiver after deduction of appropriate tax for the income in question. The
amount of TDS that the receiver is liable to pay is deducted from the payment
the receiver is liable to receive and the remainder is paid out. It is
important to note that the liability to deduct TDS is of the deductor. For
instance, in case of employer paying salary to employee, the employer is the
deductor and the employee is the TDS deductee.
All About TDS Returns
A TDS Return is a summary of all
the transactions related to TDS made during a quarter. TDS Return is a
quarterly statement submitted by the deductor to the Income Tax Department. The
statement shows a summary of all the entries for TDS collected by the deductor
and the TDS paid by the deductor to the Income Tax Authority. The TDS Return
statement includes details like the PAN number of the deductor & the
deductees, all the detailed particulars of the TDS paid to the government and
the TDS Challan information.
- TDS Return Forms: An Overview
As the deductor is liable to
deduct tax and file the TDS Return form as the supporting document, it is
important to note that there are various types of TDS Return Forms for
different situations. The type of TDS Return Form to be submitted is based on
the Nature of Income of the deductee or the type of deductee who pays the TDS.
What is TDS?
Tax
deducted at source or TDS is the tax that is collected by the Government of
India at the time when a transaction takes place. Here, in this case, the tax
is to be deducted at the time the money is credited to the payee's account or
at the time of payment whichever happens earlier.
In this case of salary payment or
the life insurance policy, the tax is deducted at the time when the payment is
done. The deductor is required to deposit this amount with the Income Tax
Department. Through TDS a portion of the tax is paid directly to the Income Tax
Department. The Tax is deducted usually over a range of 10%.
What is TAN?
TAN
or the Tax Deduction and Collection Number is a mandatory 10 digit alpha number
that is to be obtained by all the people who are responsible for deducting tax
at source or tax collection at source on behalf of the government. Salaried
individuals are not required to obtain TAN or to deduct the tax at the source.
In
the case of the proprietorships businesses and other entities are required to
deduct tax at the source while making certain payments like the salary,
payments to the contractor, payment of rent that is exceeding Rs.2,40,000 per
year. IndiaFilings can help in obtaining the TAN registrations.
The entities that have a valid
TAN registration have to file the TDS returns quarterly. Our TDS experts can
help in computing the TDS payments and file the TDS returns while complying
with the TDS regulations.
Eligibility Criteria
Who can file TDS returns?
TDS return filing is done by
organizations or employers who have availed a valid tax collection and
deduction number (TAN). Any person who is making specified payments mentioned
under the Income Tax Act is required to deduct the taxes at the sources and
they are needed to deposit the tax within the stipulated time for making the
following payments.
·
Salary
Payment
·
Income
on securities
·
Income
by winning the lotteries, puzzles, and others.
·
Income
from winning horseraces
·
Insurance
commissions.
·
Payment
concerning the National saving scheme and many others.
·
Advantages of payment of TDS
TDS is payable on the earnings so it is important to note that
the liability to pay TDS is applicable only in the event of earnings actually
taking place. TDS is deducted before making payments. Deductions are to be made
on payments that are made in cash, cheque or credit. The amount deducted under
TDS is further deposited with various government agencies. Payment of TDS has
various advantages which are as follows :
- Deducting
TDS at source prevents tax evasion.
- Tax
collection is done duly and in a timely manner.
- A large
number of people come under the tax net.
- Collection
of TDS is a steady source of revenue for the government.
- TDS
Deductors as per Taxation Rules
Following is the list of
deductors liable to deduct TDS:
- Individuals
- Hindu
Undivided Family
- Limited
Companies
- Partnership
Firms
- Body of
Individuals
- Association
of Individuals
- Local
Authorities
Rate of TDS deduction
Payments such as salaries,
commission, professional fees, interest earned, rent etc. are subject to TDS
deduction. Based on the type of income and amount of income earned, TDS is paid
at various rates. Thus, different kinds of income has different TDS rates and
the tax is paid on the extra amount earned after a certain maximum threshold
limit is attained. The rate at which TDS is paid varies from 1 per cent to 30
per cent, depending on the income taxed.
Method of TDS deduction
As commonly known, TDS is deducted
on the payments made to the receiver. It means that the payments are done to
the receiver after deduction of appropriate tax for the income in question. The
amount of TDS that the receiver is liable to pay is deducted from the payment
the receiver is liable to receive and the remainder is paid out. It is
important to note that the liability to deduct TDS is of the deductor. For
instance, in case of employer paying salary to employee, the employer is the
deductor and the employee is the TDS deductee.
All About TDS Returns
A TDS Return is a summary of all
the transactions related to TDS made during a quarter. TDS Return is a
quarterly statement submitted by the deductor to the Income Tax Department. The
statement shows a summary of all the entries for TDS collected by the deductor
and the TDS paid by the deductor to the Income Tax Authority. The TDS Return
statement includes details like the PAN number of the deductor & the
deductees, all the detailed particulars of the TDS paid to the government and
the TDS Challan information.
- TDS Return Forms: An Overview
As the deductor is liable to
deduct tax and file the TDS Return form as the supporting document, it is
important to note that there are various types of TDS Return Forms for
different situations. The type of TDS Return Form to be submitted is based on
the Nature of Income of the deductee or the type of deductee who pays the TDS.
Type of TDS Return Forms Particulars of the TDS Return Forms Form 24Q Statement for tax deducted at source from salaries Form 26Q Statement for tax deducted at source on all payments other than salaries. Form 27Q Statement for tax deduction on income received from interest, dividends, or any other sum payable to non residents. Form 27EQ Statement of collection of tax at source. - Form 26Q
- It is to
be submitted for tax deduction at source for all the payments received
other than the salary.
- It is
submitted on a quarterly basis by the deductor and is applicable for tax
deducted at source under section 200(3), 193 and 194 of the Income Tax
Act of 1961.
- The
income on which the tax is deducted at source includes interest on
securities, dividend securities, professional fees, directors’
remuneration, etc.
- It is
compulsory to furnish PAN by the deductors who are non-government
deductors. For government deductors “PANNOTREQD” has to
be mentioned on the form.
Form 27Q
- It is
applicable for payments made to non-resident Indians and foreigners
other than salary.
- It has
to be filled in for the declaration of Tax Deducted at source for the
NRIs and Foreigners.
- It is
submitted on a quarterly basis by the deductor and is applicable for tax
deducted at source under section 200(3) of the
Income Tax Act of 1961.
- The
income on which the tax is deducted at source includes interest, bonus, any
additional income or any other sum owed to non-resident Indian or
foreigner.
- It is
compulsory for non-government deductors to furnish PAN. For government
deductors the code “PANNOTREQD”has to be mentioned on the
form.
Form 27EQ
- It is a
quarterly statement that furnishes the details and information of the
tax collected at source as per section 206C of the Income Tax Act of
1961.
- The form
27EQ is submitted on a quarterly basis. In this form it is mandatory to
furnish TAN.
- It is
the statement to show the Tax Collected at Source (TCS), which is the
tax collected by the seller. When a buyer purchases certain goods or
commodities, the seller collects the tax from the buyer through the TCS
route. This tax is collected on the payment received from the buyer
either in cash, credit, cheque, demand draft or from any other mode of
payment.
- It is to
be furnished by corporate deductors and collectors but not by government
deductors and collectors. It is compulsory to furnish PAN by the
deductors who are non-government deductors. For government deductors,
the code “PANNOTREQD” has to be mentioned on the
form.
Due Dates for Filing TDS Returns
- Form 26Q
Charges for Filing TDS/TCS
TDS return filing procedure
How to file TDS returns online?
Here is the step-by-step procedure to file the TDS returns online.
Step 1: Firstly, Form 27 A containing multiple columns has to be filled and in case of the hard copy of the Form, it has to be verified along with the E-TDS return that has been filed electronically.
Step 2: In the next step, the tax that is deducted at the source and the total amount that has been paid needs to be correctly filled as well as tallied.
Step 3: The TAN of the organizations is to be mentioned on Form 27 A. There will be difficulties in the process of verification if the mentioned TAN is incorrect.
Step 4: While filing the TDS returns the appropriate challan number, the mode of the payment, and the tax details have to be mentioned. In case of the incorrect challan number or the incorrect date of the payment, there will be a mismatch and the TDS returns also need to be filed again.
Step 5: To bring consistency the basic Form used for Filing the e-TDS must be used. The 7 Digit BSR has to be entered for easing the tallying process.
Step 6: Physical TDS returns are to be submitted at the TIN FC, which is managed by NSDL. In case of the online filing, they can be submitted on the official website of the NSDL TIN.
Step 7: If the provided information is correct then a token number or a provisional receipt is received. This is a proof that TDS return has been filed.
Step 8: In case of rejection, a non-acceptance memo along with the reason for the rejection is issued and the returns have to be filed again.
--------------------------------------------------------------
(The views expressed in this article are strictly personal.)
By GST Info Tamil
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