Overviewof TDS
TDS is one of the modes of
collection of taxes, by which a certain percentage of amounts are deducted by a
person at the time of making/crediting certain specific nature of payment to
the other person and deducted amount is remitted to the Government account. It
is similar to "pay as you earn" scheme also known as Withholding Tax
in many other countries, one of the countries is USA. The concept of TDS
envisages the principle of "pay as you earn". It facilitates sharing
of responsibility of tax collection between the deductor and the tax
administration. It ensures regular inflow of cash resources to the Government.
It acts as a powerful instrument to prevent tax evasion as well as expands the
tax net.
Who shall deduct taxat source?
Every person responsible for
making payment of nature covered by TDS provisions of Income Tax Act shall be
responsible to deduct tax.
However in case of payments
made under sec. 194A, 194C, 194H, 194I and 194J in respect of individual and
HUF, only if the turnover or professional receipt exceeds sum of Rs. 40 lakh or
Rs. 10 lakh respectively (the limits will be Rs.60 Lakh or Rs. 15 Lakh respectively
w.e.f. 01.07.2010) in previous year, he is required to deduct tax at source.
These persons are
mainly:
-
Principal Officer of a company for TDS purpose including the employer in case
of private employment or an employee making payment on behalf of the employer.
- DDO
(Drawing & Disbursing Officer), In case of Govt. Office any officer
designated as such.
- In
the case of "interest on securities" other than payments made by or
on behalf of the Central govt. or the State Government, it is the local
authority, corporation or company, including the Principal Officer thereof.
Such person is called Deductor while the person from whom the tax is
deducted is called Deductee.
Tax must be deducted at the
time of payment in cash or cheque or credit to the payee's account whichever is
earlier. Credit to payable account or suspense account is also considered to be
credit to payee's account and TDS must be made at the time of such credit.
Every deductor is required to obtain a unique identification
number called TAN (Tax Deduction Account Number) which is a ten digit alpha
numeric number e.g.DELH90468K.
This number has to be quoted by the deductor in every
correspondence related to Income Tax matters concerning TDS.
4. The tax deducted has to be deposited in the designated
banks within specified time. (Govt. deductors shall transfer the tax
deducted through book entry in Government account).This is detailed below:
▬ By or on behalf of the
Government : on the same day,
▬ By or on behalf of any other
person : before
the 7th of the following month.
However, if the amount is credited in the books on 31st March
then the tax should be remitted by 31st May.
Note: w.e.f., 01.04.2008 electronic payment of
tax has to be done by all corporate assesses and all persons
whose cases are auditable under section 44B.
6. File statements of tax deduction in the prescribed time.
The due dates for filing of TDS/TCS statement
are :
15th of
July for Quarter 1,
15th of
October for Quarter 2,
15th of
January for Quarter 3 and
15th June
for last Quarter however for TCS statements the due date is 30th April.
Form
24Q for salaries
Form 26Q
for non salaries
Form 27EQ for TCS
Form 27A/27B Control sheet for electronic
TDS/TCS
It may be noted that the
following persons have to compulsorily file e-TDS /e-TCS statements
- All
government offices/Departments
- All
companies /corporations
- All
persons whose cases are auditable
- All
persons whose TDS statements contain more than 50 deductees.
Dos
- Ensure
that TDS return is filed with same TAN against which TDS payment has been
made & TDS certificate is issued.
- Ensure
that correct challan particulars including CIN and amount is mentioned.
- Correct
PAN of the deductee is mentioned.
- Correct
section is quoted against each deductee record.
- Correct
rate is quoted against each deductee record.
- File
correction statement as soon as discrepancy is noticed
- Retain
the original FVU file to enable future corrections
- Make
use of free of charge RPU provided through TIN-NSDL.com
- Download
details of challan from challan status enquiry (TAN based view) from
TIN-NSDL.com
- Registration
for TAN enables you to avail additional facilities from Tax Information
System.
- Always
verify status of TDS returns from Tin NSDL to ascertain the discrepancy,
if any, and/or whether your TDS return stands accepted or rejected by the
system.
Dont's
- Don't
file late returns as it affects deductee tax credit
- Don't
quote incorrect TAN vis-à-vis TDS payments
The process of filing of e-TDS /e-TCS
returns is available in detail at following websites www.incometaxindia.gov.in orhttp://tin-nsdl.com.
8. Issue TDS certificates as per existing procedure
and within the time prescribed as stated below:
The certificate should be issued within
one month from the end of the month in which the income is credited
however for credit entries made on 31st March, due date is 7th June,
except in the case of salary where the certificate has to be issued by 30th of
April of the following financial year in which the income was credited.
9. File e-TBAF (In case of Govt. DDO's
where TDS is credited in Central Govt. account through book adjustments)
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