TDS RETURN FILING IN INDIA
Tax Deducted at Source (TDS) is a system under which tax is deducted from income at the time of payment itself. It ensures that taxes are collected in advance from various income sources, helping the government maintain a steady flow of revenue.
Entities and individuals responsible for deducting TDS are legally required to file TDS returns every quarter, declaring the details of all deductions made and taxes deposited. Timely and accurate filing of TDS returns is essential for maintaining compliance and avoiding penalties.
WHAT IS TDS (TAX DEDUCTED AT SOURCE)?
TDS is a mechanism through which tax is collected at the source of income generation. The payer deducts tax at the applicable rate while making certain payments to the recipient.
These payments include salary, rent, professional fees, interest, commission, or contractor payments. The deducted amount must then be deposited with the government within the prescribed time.
After deduction and deposit, the deductor must also file a TDS return to report all such transactions and ensure the deductee receives proper credit for the tax paid.
WHO NEEDS TO DEDUCT TDS?
TDS must be deducted by:
· Individuals and HUFs (if covered under tax audit)
· Companies, LLPs, and partnership firms
· Government bodies and other entities making specified payments
Such persons must obtain a Tax Deduction and Collection Account Number (TAN) and ensure proper deduction, deposit, and filing of TDS returns.
DEPOSIT OF TDS
The tax deducted at source must be deposited to the Central Government account within the prescribed TDS due date.
· For most months, TDS must be deposited by the 7th of the following month.
· For TDS deducted in March, the due date is 30th April (for non-government deductors).
Timely deposit ensures smooth credit to deductees and helps avoid interest and penalties.
COMMON PAYMENTS ATTRACTING TDS
- Salaries (Section 192)
- Rent (Section 194I)
- Contractor and sub-contractor payments (Section 194C)
- Professional or technical fees (Section 194J)
- Commission or brokerage (Section 194H)
- Interest (Section 194A)
TDS THRESHOLD LIMITS
| Nature of Payment | Section | Threshold Limit |
|
Rent
|
194I | Exceeds ₹2,40,000 per annum |
|
Contractor/Sub-contractor
|
194C | ₹30,000 per contract or ₹1,00,000 per year |
|
Professional Fees
|
194J | Exceeds ₹30,000 per annum |
|
Interest (Non-Securities)
|
194A | ₹40,000 (₹50,000 for senior citizens) |
|
Salary
|
192 | If taxable income exceeds exemption limit |
TDS RATES (INDICATIVE)
| Section | Nature of Payment | TDS Rate |
| 192 | Salary | As per income tax slab |
| 194A | Interest (other than securities) | 10% |
| 194C | Contractor/Sub-contractor | 1% (individual/HUF), 2% (others) |
| 194I | Rent | 2% (plant/machinery), 10% (land/building) |
| 194J | Professional/Technical services | 10% |
Note: Rates are subject to change based on amendments in the Income Tax Act.
TDS Return Filing Due Dates
| Quarter | Period Covered | Due Date |
| Q1 | April – June | 31st July |
| Q2 | July – September | 31st October |
| Q3 | October – December | 31st January |
| Q4 | January – March | 31st May |
PENALTIES FOR NON-COMPLIANCE
| Nature of Default | Consequence |
| Late deduction of TDS | Interest @ 1% per month |
| Late deposit of TDS | Interest @ 1.5% per month |
| Delay in filing TDS return | ₹200 per day until filed (up to total TDS amount) |
| Failure to file TDS return | Penalty up to the amount of TDS, as decided by the Assessing Officer |
TYPES OF TDS RETURN FORMS
| Form | Usage | Details |
| Form 24Q | Salary | TDS details on salary payments (Section 192) |
| Form 26Q | Non-salary | TDS on payments other than salary (domestic) |
| Form 27Q | Non-resident | TDS on payments to NRIs and foreign entities |
| Form 27EQ | TCS | Statement for tax collected at source |
IMPORTANCE OF FILING TDS RETURNS
Filing TDS returns is not only a legal requirement but also crucial for smooth financial operations.
Benefits include:
· Legal Compliance: Ensures adherence to the Income Tax Act, 1961.
· Accurate Record Keeping: Maintains transparency in deductions and deposits.
· Verification of Tax Credit: Allows deductees to verify TDS details in Form 26AS.
· Claiming Credit or Refunds: Enables taxpayers to claim credit for deducted taxes during ITR filing.
· Avoiding Penalties: Timely and correct filing prevents interest, fees, and legal action.
REVISED TDS RETURNS
If errors are identified after submission such as incorrect PAN, challan details, or mismatch in amounts revised TDS return must be filed.
Only returns that have been accepted by the Central TIN system can be revised. Corrections help ensure the deducted tax reflects correctly in Form 16/16A and Form 26AS.
CLAIMING TDS CREDIT
The deductee can claim credit for the TDS amount while filing their income tax return.
Accurate quoting of TDS certificate numbers and challan details ensures smooth processing and prevents mismatches in Form 26AS.