What is TDS Return and Types of TDS?

In this article, we will cover

TDS – Tax Deducted at Source – is a method of taxation wherein tax is deducted from the taxpayer's income by the person paying it. This system of taxation helps to ensure that taxpayer pays their taxes promptly. TDS returns are essential to the taxation process, as they help the government assess the taxpayer's tax liability and collect all taxes. Moreover, various TDS returns are available, each tailored to the taxpayer's needs. In this blog, we'll explore what TDS return is, the different types of TDS returns, and other things. So, let's get started!! What is TDS Return and Types of TDS?

What is TDS Return?

TDS Return is a tax form required to be filed by employers and other entities responsible for deducting tax at source (TDS) from payments they make. The form requires the employer to declare the income earned and the tax deducted on such income. It must be filed within the prescribed time period to avoid any penalty or interest.

Incomes Covered Under TDS 

  • Salary
  • Bank interest
  • Amount under LIC
  • Brokerage or commission
  • Compensation on acquiring immovable property
  • Contractor payments
  • Commission payments
  • Deemed dividend
  • Interest apart from interest on securities
  • Insurance commission
  • Winning from games like a crossword puzzle, card, lottery, etc.
  • Interest on securities
  • Remuneration paid to the Director of a company
  • Payment of rent
  • Transfer of immovable property

Different Types of TDS Returns Forms

Type of TDS Return FormsDescription
Form 24Q
  • It prepares salary TDS, eTDS returns under Section 192 of the Income Tax Act, 1961.
  • Deductor must submit quarterly.
  • It includes information such as employee pay and TDS deducted by the company.
  • It has Annexure-I and Annexure-II. Annexure-I lists the deductor, deductees, and challans, whereas Annexure-II lists their salaries.
  • The deductor must submit Annexure-I for all four financial quarters.
  • Annexure II  includes staff salaries for the financial year, which must be filed in the fourth quarter.
Form 26Q
  • TDS returns must be detailed on this form.
  • This form covers non-salary payments.
  • Indian nationals living and working in India must declare it.
  • Section 200(3) of the Income Tax Act, 1961 requires this form.
  • The declaration form is based on sections 193, 194, 194A, 194B, 194BB, 194C, 194D, 194EE, 194F, 194G, 194H, 194I, 194J, 194LA, and regulation 31A.
  • The form must state if the deductor is government or non-government.
  • Non-government deductors must provide their PAN.
  • On the form, government deductors must write "PAN NOT REQD”.
Form 27Q
  • It applies to non-salary payments to non-Indians and foreigners.
  • NRIs and foreigners must fill it out to declare tax deducted at source.
  • The deductor submits it quarterly for tax deducted at source under section 200(3) of the 1961 Income Tax Act.
  • Interest, bonus, extra income, and other sums owing to non-resident Indians or foreigners are subject to source-deducted tax.
  • Non-government deductors need PAN. Government deductor forms must include "PAN NOT REQD.”
Form 27EQ
  • The form requires the TAN.
  • Quarterly declaration of tax at source (TCS) collection.
  • Income Tax Act section 206C governs the form.
  • It is obligatory for non-government deductors to include the PAN in the form.
  • Government deductors must specify "PAN NOT REQD."
  • Annexure 1 defines the deductor categorization.
  • Central Government deductors must list their Ministry/Department. 
  • It shows seller-collected Tax Collected at Source (TCS). The vendor collects tax from buyers via TCS. The buyer's payment—cash, credit, check, demand draft, or other—is taxed.

What are the Requirements for Filing a TDS Return?

The requirements for filing a TDS Return are as follows:

  • Having the details before TDS return filing
  • Verifying the details before submission
  • Paying upload fees (plus applicable GST) for filing the return at a TIN-FC 
  • Submitting documents such as TDS certificate tax payment challans, TAN details, PAN card details, notice details, and all bank account information.
  • Main categories of TDS filing categories include salary, interest, property, capital gains, and miscellaneous income.
  • Furnishing a tax residency certificate obtained from the tax authorities of its resident country along with a self-declaration of not carrying on any business in India through a permanent establishment.
  • Obtaining a TAN, collating payee details, determining the applicable TDS rate, and filing the return with the Income Tax Department.

How to File TDS Return? 

Offline Mode for TDS Return File

Filing a TDS return offline involves the following steps:

  1. Download the TDS return form from the Income Tax Department website https://www.tin-nsdl.com/services/etds-etcs/etds-rpu.html.
  2. Fill in all the details in the form.
  3. Take a printout of the form and sign it.
  4. Attach the relevant documents and proof of payments made to the form.
  5. Send the form to the designated Income Tax Department office via post or courier.
  6. Wait for the Income Tax Department to process the form and issue a confirmation.

Online Mode for TDS Return File

Filing a TDS return can be done in a few simple steps and should be done by the taxpayer regularly. Here is a step-by-step guide to filing a TDS return online:

  1. Log in to the Income Tax e-Filing Portal.
  2. Select the 'TDS' tab on the left side menu.
  3. Select the 'TDS Returns' option from the drop-down menu.
  4. Select the type of TDS return you need to file.
  5. Enter all the necessary details related to the TDS return.
  6. Upload the necessary documents and certify the TDS return.
  7. Submit the TDS return and wait for confirmation of the submission.
  8. After submitting the TDS return, a confirmation page will appear with the acknowledgment number.
  9. Download and save the confirmation page for future reference.

Benefits of Filing a TDS Return

Filing timely TDS returns offers several benefits, including

  1. Taxpayers filing TDS returns can avoid penalties and late fees.
  2. It helps you to track your income and tax paid in an organized way.
  3. It allows the taxpayer to access their TDS refund without issues.
  4. It helps keep accurate records of your income, deductions, and other tax-related and financial information.
  5. It helps to maintain compliance with the Income Tax Act 1961 and other related acts.
  6. Filing TDS returns can reduce the financial burden of paying taxes on time by allowing the taxpayer to plan out the payments.
  7. TDS return filing can help obtain loans and financial aid from banks and other financial institutions.
  8. It can help prepare and file income tax returns accurately and hassle-free.

Overview of TDS Rates

Income TypeTDS Rate
SalaryApplicable Slab Rate
Fixed deposit interest10%
Bonds10%
Insurance commissions5%
Contractor services1% or 2%
Rent2% or 10% or 5%
Shares/mutual fundsNil
Savings account interestNil
NCDs listed on exchangeNil
Property1%
Brokerage5%
Professional and technical services10%

What is the TDS Rate on Salary?

The TDS rate on salary is determined by the income you get from your employer, which determines your tax slab rate. The percentage of TDS deduction on pay will vary from 10% to 30%, depending on the tax slab.

Under the old tax system, if you were under 60:

  • TDS is 0% for income under 2.5 lakhs.
  • TDS is 5% if your income is 2.5–5 lakhs.
  • 20% TDS applies to income between 5 and 10 lakhs.
  • 30% TDS applies to income above 10 lakhs.

Under the new tax system, if you're under 60:

  • TDS is 0% for income under 2.5 lakhs.
  • TDS is 5% if your income is 2.5–5 lakhs.
  • TDS is 10% for income between 5 lakhs and 7.5 lakhs.
  • 15% TDS applies to income between 7.5 lakhs and 10 lakhs.
  • TDS is 20% if your income exceeds 10 lakhs and 12.5 lakhs.
  • TDS is 25% if your income exceeds 12.5 lakhs and less than 15 lakhs.
  • TDS is 30% for income beyond 15 lakhs.

TDS Return Deadline

Income taxes are deposited monthly. The TDS return is submitted quarterly. The TDS return for April, May, and June taxes must be submitted in July. TDS return deadlines are extended in March. May is the deadline for the fourth quarter TDS return.

QuarterPeriodLast Date of Filing
1st Quarter1st April to 30th June31st July 2022
2nd Quarter1st July to 30th September31st October 2022 
3rd Quarter1st October to 31st December31st Jan 2023
4th Quarter1st January to 31st March31st May 2023

Penalty for TDS Delay

  • A penalty of ₹200 per day will be imposed for every day of delay in filing a TDS return.
  • The Income Tax Department may impose a penalty of Rs 10,000
  • Interest may also be charged at 1.5% per month until the return is filed
  • Penalties of up to Rs 1,00,000 can be imposed in cases of willful default
  • Prosecution and imprisonment may be initiated in cases of fraudulent withholding of tax 
  • Late filing may also result in an inability to claim tax refunds

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Things to Consider When Filing TDS Returns Online

Filing TDS returns online can be a relatively simple process, provided you keep the following key points in mind:

  • Check the Deadline

The most important thing to remember when filing TDS returns is to make sure you meet the deadline. The due date is usually 31st July every year. Ensure you file your returns before this date to avoid penalties or late fees.

  • Know Your TAN

TAN (Tax Deduction and Collection Account Number) is a unique 10-digit alphanumeric code issued by the Income Tax Department. It is used to deduct TDS from payments to contractors and suppliers. You need to provide the TAN number while filing your returns online.

  • Gather the Necessary Documents

Before starting the filing process; you should gather all the necessary documents, such as the TDS certificate, Form 16A, Form 26AS, etc. Having all the required documents handy will make the filing process much smoother.

  • Be Careful about the Information You Provide

When filing TDS returns online, double-check all the information you provide. Any mistakes or inaccuracies could result in errors in your TDS return, so be extra careful when filling in the form.

  • Choose the Right Software

You should choose the right software for filing your TDS return. Many software packages are available, so compare the features and pricing before deciding. These are a few key points to keep in mind when filing your TDS returns online. Filing your returns accurately is important to avoid penalties or late fees.

How to Choose the Right Professional for TDS Return Filing?

Choosing the right professional for TDS return filing is an important decision. Two types of professionals can help you file TDS returns Chartered Accountants (CAs) and Enrolled Agents (ERIs). 

  • CAs are qualified professionals to represent taxpayers in all matters related to income tax, such as filing tax returns and advising clients on tax matters.
  • On the other hand, ERIs are certified professionals trained explicitly in taxation and authorized to represent taxpayers before the IRS.

When looking for the right professional to handle TDS return filing, these are the few points to consider:

  1. Certification: Make sure you choose a professional with the necessary certifications, such as an accountant or other professional authorized to handle TDS return filing.
  2. Experience: Look for a professional with a proven track record and extensive experience in handling TDS return filing for different types of clients.
  3. Cost: Compare the TDS return filing professional fees and ensure you get the best deal for your needs.
  4. Availability: Make sure the professional you choose can answer your questions and provide support whenever needed.
  5. Reliability: Check for any online reviews or testimonials from past clients to ensure that the professional you choose is reliable and trustworthy.

Conclusion

In conclusion, TDS returns are an important part of taxation in India, as they help the government assess the taxpayer's tax liability and ensure that all taxes are collected. There are different types of TDS returns available, each one tailored to the specific needs of the taxpayer. It is important to understand the various types of TDS returns and the process of filing them promptly to avoid any penalties or interest. Finally, consulting a professional tax consultant or a tax advisor is advisable to understand the procedures involved in TDS returns. Open your Demat account today with Samco and start trading with confidence! With the Samco app, you get access to a wide range of benefits: low fees, advanced trading tools, and 24/7 customer support. Sign up now and join the growing list of savvy investors who have made Samco their go-to platform for stock trading.

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