What is TDS?
TDS stands for ‘Tax Deducted at Source’. Government of India introduced TDS to collect tax at the source from where an individual’s income is generated. TDS is used as a tool to collect tax in order to minimize tax evasion by taxing the income (partially or wholly) at the time it is generated rather than at a later date.
TDS is applicable on various incomes such as salaries, interest received, commission received, dividends etc. As per the Income Tax Act, there are different TDS rates for different payments and different categories of recipients.
TDS works on the concept that every person making specified type of payments to any person shall deduct tax at the rates prescribed in the Income Tax Act at source and deposit the same into the government’s account. The person who is making the payment is responsible for deducting the tax and depositing the same with government.
Form26AS is a statement which shows the amount of tax deducted and deposited in a person’s name/PAN in a particular financial year.
TDS Returns
Rs. 4999
for one year
KEY POINTS
- When will TDS be deducted?
TDS withholding rules require that taxes be paid when the taxpayer receives the payment due or receives the actual payment, whichever is earlier.
- Who can reduce TDS?
The person making the payment is responsible for deducting the TDS. That person or organization must reduce the amount at some level and deposit it with the government each fiscal year.
- Return of TDS and related forms
A TDS refund is a statement issued upon successful tax payment that includes all TDS deduction transactions made within a quarter. Issued by the payer filed with the Indian Income Tax Department. Tax refund contains all TDS deduction data collected from the payer as well as other relevant information such as the permanent account numbers of the payer and payee and other data related to payments to the Government of India. It also collects information about TDS Challan.
- End dates in various forms
Taxpayers are required to submit a form that includes details of the TDS deduction, depending on the different dates and quarters.
- Penalty provision
Failure to comply with the provisions of the TDS is a Serious Offense and punishable under Section 271 (C) of the Income Tax Act of 1961, where the minimum fine is 10,000 and can be up to Rs. 1,00,000/-. Additional Section 276B applies to all such cases where intentional non-compliance has been identified. In all these cases, the sentence is 3 years in prison, which can be up to seven years.
Due Date for TDS Filing
The due date for Payment of TDS deducted is seventh of the next month. For the current fiscal year it is 30th April of the next year. The due date for TDS filing is as follows:
| Quarter | Period | The due date for Filing Form 27Q |
| Q1 | 1st April – 30th June | 31st March 2021 |
| Q2 | 1st July – 30th September | 31st March 2021 |
| Q3 | 1st October – 31st December | 31st Jan 2021 |
| Q4 | 1st January – 31st March | 31st May 2021 |
TDS Return Forms :
Form 27Q
Form 27Q is a TDS Return or Statement containing details of Tax Deducted at Source (TDS) deducted on payments other than salary made to Non-Resident Indian (NRI) and foreigners. Form 27Q is required to furnish every quarter on or before the due date. Form 27Q contains details of payments made and TDS deducted on payments made to NRI by the deductor.
TDS Form 24Q
According to Section 192 of the Income Tax Act 1961, an employer deducts TDS while paying a salary to an employee. An employer has to file a salary TDS return in Form 24Q, which has to be submitted every quarter. Details of the salary paid to the employees and the TDS deducted from the payment has to be specified in Form 24Q. In other words, Form 24Q is the quarterly statement of the payment made to the employee and the TDS deducted from it by the deductor.
Form 27EQ
Form 27EQ contains all details about the tax that is collected at the source. According to Section 206C of the Income Tax Act 1961, this form must be filed every quarter. The form has to be submitted by both the corporate and government collectors and deductors.
TDS Form 26Q
When a taxpayer pays taxes, the payee deducts TDS on certain occasions. Form 26Q is used to file TDS details on payments made other than salary. The form mentions the total amount that is paid during the quarter and the TDS amount that has been deducted. Form 26Q has to be submitted every quarter.
FAQs
- Is it possible to apply for a NIL TDS refund when filing withholding tax for the first time?
Answer – The law does not require you to submit a NIL TDS declaration, but can send it in the relevant quarter if requested by the employer.
- Will TDS apply in the material and labor account?
Answer – TDS is deducted from the amount paid for work only in this case.
- Are there any TDS provisions on transportation and transportation costs?
Answer – TDS is deducted from the amount paid if at any point in the previous year there are more than 10 goods carriers in the taxpayer’s possession.
- Are taxpayers eligible to pay TDS towards apartment purchases?
Answer – Apartments that cost more than Rs. 50 lakh attracts a TDS of 1% per Section 194IA.