IndiaFilings » Learn » Guide to TDS Return Filing in India

Guide to TDS Return Filing in India

Guide to TDS Return Filing in India

Guide to TDS Return Filing in India

TDS return filing, an integral part of the tax system, involves reporting and submitting details of tax deductions made at the source. It ensures smooth tax collection and helps individuals comply with tax regulations. In this guide, we will look at the TDS return filing process, including its benefits, steps, deadlines, and how IndiaFilings can assist you in simplifying the entire procedure. Discover how TDS return filing can streamline your tax obligations and ensure a hassle-free experience.

File Now!

What is TDS? And Full Form of TDS

TDS, or Tax Deducted at Source, refers to the income tax deducted from payments made during specific transactions, such as rent, commission, professional fees, Salary, interest, etc., by the entities executing these payments. Ordinarily, the individual receiving the income is responsible for paying income tax. However, the government employs Tax Deducted at Source regulations to ensure that income tax is pre-deducted from the payments made to you. The recipient of the income receives the final amount after the TDS deduction. The recipient then includes the total amount before deduction in their income, and the TDS amount is adjusted against their eventual tax liability. The recipient receives credit for the already deducted and paid Tax on their behalf.

When and Who Should Deduct TDS?

TDS (Tax Deducted at Source) is deducted when specific payments are made under the Income Tax Act.

  • Anyone making such payments is responsible for deducting TDS.
  • Individuals or HUFs (Hindu Undivided Families) without tax audits are exempt from TDS.
  • For rent payments above Rs 50,000 per month by individuals and HUFs, a 5% TDS is mandatory, even without a tax audit.
  • Employers deduct TDS based on income tax slab rates; banks usually deduct 10% or 20% without PAN.
  • If your total taxable income is below the limit, you can avoid TDS by providing investment proof.
  • Prevent TDS on interest income by submitting Form 15G/15H if your income is below the taxable limit.
  • If TDS is deducted, but your income is below the limit, claim a refund by filing a return.

The Due Date for depositing the TDS

The TDS must be deposited to the government by the 7th of the following month.

How to Make TDS Deposit?

To deposit Tax Deducted at Source (TDS), utilize Challan ITNS-281 on the government portal. For a comprehensive online walkthrough on depositing TDS payments, refer to our detailed article with step-by-step instructions.

What is TDS return?

A TDS return is a quarterly statement summarizing all TDS-related transactions made within a specific quarter. It encompasses details of TDS collected and deposited to the Income Tax by the deductor. Key elements in a TDS return include:

  • Deductor and deductee’s PAN
  • Particulars of TDS payments
  • Challan details

These details are also reflected in the payee’s Form 26AS. TDS return filing is mandatory for individuals falling within prescribed tax slabs. Eligible individuals can file TDS returns via the IT department’s e-filing portal.

Who Needs to File TDS Return?

Filing TDS returns is required for employers and organizations holding a valid TAN (Tax Deduction and Collection Account Number). Individuals whose accounts undergo auditing under Section 44AB and those holding government or company positions must also file online TDS returns quarterly.

This means that the deductor can be an individual, a group of individuals, HUFs (Hindu Undivided Families), limited companies, local authorities, associations of individuals, partnership firms, and more.

According to the Income Tax Act, TDS returns are filed for the following types of payments:

  • Salary income
  • Income from securities
  • Insurance commission
  • Payouts related to NSC (National Savings Certificate)
  • Earnings from winning horse races

Earnings from winning lotteries, puzzles, and similar sources

TDS Deduction Rates: Understanding the Basics

Income streams like salaries, professional fees, commission, rent, and interest earnings undergo TDS deductions. The TDS rate applied to these earnings depends on the income source and the total revenue generated.

In straightforward terms, varying types of income are subjected to distinct TDS rates. It’s important to realize that Tax is deducted on the amount exceeding a specific threshold. Typically, TDS rates span from 1% to 30% and are primarily determined by the taxable income amount.

Benefits of Online TDS Return Filing

Filing TDS returns online is a legal requirement and a smart choice for individuals and companies. Here’s why:

  • Regular Revenue: Online filing ensures a steady income flow for the government, supporting welfare initiatives.
  • Efficient Tax Collection: It streamlines tax collection, making the process more effective.
  • Smaller Payments: TDS is deducted and paid in smaller chunks every three months, making it easier to manage finances.
  • Refund Tracking: You can track your refund status and claim any excess TDS deducted.
  • Convenience: File from home or office, saving time and effort.
  • Easy TDS Calculation: Online tools like TDS calculators simplify calculating TDS on Salary.

When to File TDS Returns?

Filing Tax Deducted at Source (TDS) returns is obligatory for all individuals who have deducted TDS. TDS returns must be submitted quarterly, providing specific details like TAN, deducted TDS amount, payment type, PAN of the deductee, etc. Different forms are designated for filing returns based on the purpose of TDS deduction.

TDS Return Forms

The following table provides an overview of various TDS return forms and their purposes.

S.No.  Type of Form  Purpose
 1. 24Q It serves as a statement of tax deducted at source on salaries.
 2. 26Q This form serves as a statement of tax deducted at source on non-salaried income.
 3. 26QB It serves as a statement of tax deducted against the payment of the immovable property.
 4. 27Q It is a certificate of tax deducted at source on interest, dividend payable to NRIs, and foreign companies.
 5. 27EQ This document is a statement of TCS.

TDS Form 24Q

Under Section 192 of the Income Tax Act 1961, employers deduct TDS from employee salaries. Form 24Q is used to file Salary TDS returns and must be submitted quarterly. It specifies the salary payments to employees and the corresponding TDS deductions made by the employer.

TDS Form 26Q

When taxpayers make certain payments, TDS is deducted by the payee. Form 26Q is used to report TDS details on non-salary payments. It includes the total amount paid during a specific quarter and the corresponding TDS deducted. Form 26Q must be submitted quarterly.

Form 27Q

Form 27Q is a TDS return that outlines Tax Deducted at Source on non-salary payments to Nonresident Indians and foreigners. It should be furnished quarterly or before the due date. Form 27Q includes details of payments made and TDS deducted for NRIs by the deductor.

Form 27EQ

Form 27EQ provides information about Tax collected at the source, as per Section 206 C of the Income Tax Act 1961. It must be filed quarterly by both corporate and government collectors, as well as deductors.

TDS Return Filing Deadlines:

  • Quarter 1: Due by 31st July
  • Quarter 2: Due by 31st October
  • Quarter 3: Due by 31st January
  • Quarter 4: Due by 31st May

Ensure timely filing to meet TDS payment obligations.

Documents Needed for Online TDS Return Filing:

To successfully file TDS returns online, the following documents are required:

  • TAN (Tax Deduction and Collection Account Number) details
  • PAN (Permanent Account Number) details
  • Previous TDS filing details, if applicable
  • Period for which TDS is being filed
  • Date of business incorporation
  • Number of transactions for TDS return filing
  • Entity’s name – Proprietorship/Partnership/Company/LLP

TDS Return Filing Procedure

  • Visit the Income Tax Department website and log in using your PAN and password.
  • Click on the ‘e-File’ tab in the top menu and choose ‘Prepare and Submit TDS Return.
  • Select the relevant financial year and form type (Form 26Q for Salary TDS, Form 24Q for non-salary TDS, Form 27Q for foreign companies, etc.), then click ‘Continue.
  • Enter all required details, including TDS amount, deductee’s PAN, and Tax deducted at source.
  • Review the details and click ‘Submit.
  • Save or print the acknowledgment receipt of the TDS return filing for future reference.

For any errors or omissions in the TDS return, file a revised return by selecting the ‘Revised Return’ option during the filing process. Follow the same steps as for the original return.

Filing a Revised TDS Return to Correct Errors:

In an online TDS return scenario, if errors arise due to incorrect challan or PAN details or the absence of PAN card details, the tax amount credited will not appear in Form 16A/Form 16/Form 26AS. In such instances, it becomes necessary to file a revised TDS return.

To initiate the process of a revised TDS return, you’ll require two files:

  • A consolidated file containing the deductions made in detail during the specific quarter.
  • A justification report encompasses information about the errors identified in the initial return.

What is a TDS certificate?

TDS certificates, namely Form 16, Form 16A, Form 16B, and Form 16C, are essential documents verifying Tax Deducted at Source (TDS) deductions. These certificates must be issued by the entity deducting TDS to the respective payee whose earnings TDS was withheld during payment transactions. For instance, Form 16A is issued by banks to depositors when TDS is subtracted from interest earned on fixed deposits. Similarly, Form 16 is dispensed by employers to their employees.

Form Certificate of Frequency Due Date
Form 16 TDS on salary payment Yearly 31st May
Form 16A TDS on non-salary payments Quarterly 15 days after the deadline for filing the return
Form 16B TDS on sale of property Every transaction 15 days after the deadline for filing the return   
Form 16C TDS on rent Every transaction 15 days after the deadline for filing the return 

Understanding TDS Credits in Form 26AS

TDS (Tax Deducted at Source) is linked to your PAN (Permanent Account Number). When TDS is deducted from your income, you should check Form 26AS for tax credit details. This form shows all TDS deductions connected to your PAN, including salaries and interest income payments. It also includes taxes you paid directly, such as advance Tax or self-assessment Tax. So, using the correct PAN is important wherever TDS applies to your income.

Penalty for Late Filing of TDS

In case of delayed filing of TDS/TCS returns, a penalty is imposed as per Section 271H. Individuals or entities filing TDS returns after the due date are liable to pay a fine of ₹200 for each day of delay until the return is filed. Additionally, the assessing officer has the authority to impose penalties on defaulters.

If the TDS return is not submitted within the prescribed deadline, the assessing officer can levy a penalty of up to ₹10,000. It’s important to note that this penalty is separate from the late filing charge under Section 234E.

Key Points:

The deducted or collected tax amount is credited to the government’s account.

  • All late payment charges are directly credited to the government.
  • TDS/TCS returns must be submitted before the end of the year following the specified deadline.

Streamline Your TDS Return Filing with IndiaFilings:

IndiaFilings provides comprehensive assistance for seamless and accurate TDS return filing. Our expert team guides you through the process, ensuring compliance with legal requirements and avoiding penalties. We simplify the complexities of TDS calculations, form submissions, and documentation with user-friendly online tools. Whether you’re an individual or a business, IndiaFilings offers a hassle-free platform to file TDS returns, track refund statuses, and stay updated with the latest tax regulations. Trust IndiaFilings to make your TDS return filing process efficient, accurate, and stress-free.

File Now!