Everything about Tax Deducted at Source (TDS)

Wed, 31 Jan 2024 14:52:01 +0000

Tax Deducted at Source

Introduction

The concept of Tax Deducted at Source (TDS) was introduced to collect taxes directly from the source of income. Under this concept, a person (deductor) responsible for making specified payments to another person (deductee) is required to deduct tax at the source and remit the amount to the Central Government. The deductee, from whose income tax has been deducted at source, can claim credit for the deducted amount based on Form 26AS or the TDS certificate issued by the deductor.

Entities, both corporate and non-corporate deductors, making payments specified under the Income Tax Act to third parties (deductees) must deduct Tax Deducted at Source (TDS) from these payments. The deducted tax is then deposited at designated branches of banks authorized to collect taxes on behalf of the Government of India. Additionally, deductors are required to furnish TDS returns electronically containing details of the deductees and challan details related to the deposit of tax to the Income Tax Department (ITD).

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Forms prescribed for filing TDS returns depending upon the nature of the TDS deduction

FORM	PARTICULARS
Form 24Q	The quarterly statement for tax deducted at source (TDS) from “Salaries.”
Form 26Q	The quarterly statement for tax deducted at source in respect of all payments except ‘salaries.’
Form 27Q	Quarterly statement of deduction of tax from interest, dividend, or other sum payable to non-residents or foreign companies.
Form 26QB	Statement of TDS deducted against the payment made for immovable property.
Form 26QC	It is a challan cum statement of deduction of tax u/s 194-IB against the tax deducted on the rent of the property.
Form 27EQ	Quarterly statement of collection of tax at source (TCS)

Form 24Q

Form 24Q is a quarterly statement used for deducting tax at source from employees' salaries, as per Section 200(3) of the Income Tax Act.

Employers, acting as deductors, file this statement and include details like PAN (Permanent Account Number) of both the employer and employee, salary specifics, TDS details, and other relevant information. Submission of Form 24Q to the Income Tax Department is mandatory for employers, ensuring accurate reporting of TDS on salary payments. Compliance with filing this form every quarter is essential for employers.

Form 26Q

Form 26Q is a quarterly statement that shows the deduction of taxes according to sections 200(3), 193, and 194 of the Income-tax Act. It covers payments other than salary for the specific quarter.

The form includes details such as challan information, information about the deductor and deductee. If the deductor has not deducted or deducted at a lower rate, the form requires reasons to be provided.

TDS under below sections are covered in Form 26Q:

Section	Nature of Payment
193	Interest on securities
194	Dividend
194A	Interest other than interest on securities
194B	Winning from lotteries and crossword puzzles
194BB	Winnings from horse race
194C	Payment of contractor and subcontractor
194D	Insurance commission
194EE	Payment in respect of deposit under (NSS) national saving scheme
194F	Payments on account of repurchase of units by mutual funds or UTI
194G	Commission, prizes, etc., on sale of lottery tickets
194H	Commission or brokerage
194I	Rent
194J	Fees for professional or technical services
194LA	Payment of the Compensation on acquisition of certain immovable property
194LBA	Certain income from compensation on acquisition of certain immovable property
194DA	Payment in respect of life insurance policy
194LBB	Income in respect of units of investment fund
194IA	Payment on transfer of certain immovable property excluding agriculture land
194LC	TDS on income by way of interest from an Indian Company or a business trust
194LD	TDS on income by way of interest on certain bonds and Government Securities
194LBC	Income in respect of investment in securitization trust
192A	Payment of accumulated balance due to an employee from the trustees of the Employees’ Provident Fund Scheme, 1952
194N	TDS on cash withdrawal in excess of Rs 1 crore
194M	TDS on payment to resident contractors and professionals
194O	TDS on E Commerce Transactions under Section 194O with effect from 01st April 2020

Form 27Q

Form 27Q is a quarterly report that outlines the deduction of taxes under section 200(3) of the Income Tax Act. It applies to payments, excluding salary, made to non-residents and foreigners during a specific quarter. The income sources subject to TDS deduction include interest income, bonuses, and other amounts owed to NRIs.

Form 26QB

According to Section 194-IA of the income tax act, TDS applies when selling immovable property for more than Rs 50 lakhs. The buyer deducts 1% tax and pays it to the seller. This rule doesn't apply to transactions involving agricultural land.

TDS, along with Form 26QB, must be submitted within 30 days from the month-end when TDS was deducted. The person deducting TDS provides Form 16B to the payee within 15 days from the due date of filing Form 26QB.

Form 26QC

Under Section 194IB, individuals and HUFs renting properties above Rs 50,000 must deduct 5% TDS annually. This TDS is to be paid within 30 days of deduction, using Form 26QC.

The taxpayer/tenant needs to provide Form 26QC in two cases: at the end of the fiscal year or when vacating the premises/terminating the agreement, especially if it falls within the same fiscal year.

Due Dates of filing TDS return form

TDS return due dates vary by quarter in a financial year. Here are the due dates for filing 24Q, 26Q, and 27Q:

Quarter	Due date
April to June	31st July
July to September	31st October
October to December	31st Jan
January to March	31st May

Due date of filing of Form 26QB:

The property buyer, known as the deductor, must file Form 26QB online—a combined payment and declaration statement. This form needs to be submitted within 30 days from the end of the month in which the payment or deduction occurred. There is no need to file a separate TDS return for this deduction.

Due date of filing of Form 26QC:

Pay your tax online using Form 26QC within 30 days from the end of the financial year or the day the property is vacated. For example, if tax is deducted in March, the deadline to deposit the tax and file 26QC is April 30, 2020.

Due date of furnishing of Form 27EQ:

Quarter	Due date
April to June	15th July
July to September	15th October
October to December	15th January
January to March	15th May

Consequences of filing late TDS return

TDS certificate & due date of issuing TDS certificate

A TDS certificate is required to be issued by the person deducting TDS to the assessee from whose TDS was deducted.

Different TDS certificates and their due dates are as follows:-

Form no.	Description	Periodicity	Due date
Form No. 16	TDS from salary	Annual	On or before June 15 of the financial year immediately following the financial year in which tax is deducted or such date to be extended by the income tax department
Form no. 16A	TDS from other than Salary	Quarterly	Upto 15 days from the due date of furnishing quarterly TDS returns
Form No. 16B	TDS u/s 194-IA		Within 15 days from the due date of furnishing challan in Form No. 26QB
Form No. 16C	TDS u/s 194-IB		Within 15 days from the due date of furnishing challan in Form No. 26QC

I hope this guide provided a helpful overview of TDS returns, forms and deadlines. If you find filing TDS returns confusing or intimidating, consider seeking professional help. You can contact us at 9930623006 or admin@zealconsultancy.co.in

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