TDS stand for Tax Deducted at Source. As per the Income Tax Act, while making certain specified payments, the person making the payment is required to deducte tax at source, if the payment exceeds certain specified limits. Tax has to be deducted at the rates prescribed by the Income Tax Department.
Eg; Rent, Commission, Proffessional Fees...
TCS stands for Tax Collection at source.
The Company or person makes the payment after deduting TDS is called Deductor.
The company or persons receiving the payments is called Deductee
The person who requires to deduct or collect tax at source is required to obtain Tax deduction or collection account number (TAN) from IT Department. Deductor should quote TAN in every correspondence related to TDS.
The structure of TAN is "ABCD12345E"
However TAN is not mandatory in case of TDS on the purchase of immovable property and in case of TDS on rent paid by non-auditable individual and HUF.
Tax is deducted at the time of making the prescribed payments or credit of the income/payment to the deductee, whichever is earlier. In case of TDS on Salary the Tax is deducted at the time of actual payments In case of TDS on rent, tax is deducted at the time of credit of rent.
TDS colleted by a deductor should be deposited to the account of central government within the stipulated time. The different modes of are given below;
The challan used for depositing TDS is Challan No. ITNS-281. Every such challan is identified by Challan Identification number (CIN). CIN contains the BSR Code of bank, date of deposit and challan serial no.
However, in case of govenment dedcutors, TDS will be deposited through book adjustment. Such deductors should obtain the Book entry Identification Number (BIN) from thier respective accounts officer in time. They can also collect the BIN from the NSDL portal
For depositing TDS on purchase of immovable property u/s 194(IA), Form 26QB need to be used.
For depositing TDS on payment of rent by certain individuals and HUF u/s 194(IB), Form 26QB need to be used.
| Particulars | Payment due date |
|---|---|
| Tax deducted during the month of March | On or before 30th April. |
| Tax deducted during any month other than March | On or before 7th day of from the end of the month. |
| TDS on purchase of immovable property 194(IA) | On or before 30 days from the end of the month of deduction. |
| TDS on Rent u/s 194(IB) | Use NEFT or RTGS for electronic funds transfer to pay your taxes. |
Every person responsible to deduct tax must funrnish TDS statement in specified form & in the specified manner. These statememts should be filed on or before the due dates specified in the Income Tax Act.
| Particulars | Form |
|---|---|
| TDS on Salary | Form No. 24Q |
| TDS on payment other than salary to a non-resident or a foreign company or a resident but not ordinarily resident | Form No. 27Q |
| TDS on payment other than salary to any person other than above | Form No. 26Q |
| TDS on sale of immovable property | Form No. 26QB |
| TDS on payment of rent by certain individual or HUF | Form No. 26QC |
| Quarterly statement of collection of (TCS) tax at source | Form No. 27EQ |
It mandatory to issue TDS certificate downloaded from www.tdscpc.gov.in. The deductor shall verify the accuracy of contents. The certificate is valid only if it is duly authenticated by a manual or digital signature.
| Particulars | Form | Issued |
|---|---|---|
| TDS on Salary | Form No. 16 | Yearly, 15th June |
| TDS on payment other than salary to a non-resident or a foreign company or a resident but not ordinarily resident | Form No. 16A | Quarterly |
| TDS on payment other than salary to any person other than above | Form No. 16A | Quarterly |
| TDS on sale of immovable property | Form No. 26QB | For every transaction |
| TDS on payment of rent by certain individual or HUF | Form No. 26QC | For every transaction |
| Quarterly statement of collection of (TCS) tax at source | Form No. 27D | Quarterly |
| Quarter ending on | Due dates for TDS Statements | Due dates for Form 16A | Due dates for TCS Statements | Due dates for 27D |
|---|---|---|---|---|
| 30th June | 31st July | 15th August | 15th July | 30th July |
| 30th September | 31st October | 15th November | 15th October | 30th November |
| 31st December | 31st January | 15th February | 15th January | 30th January |
| 31st March | 31st May | 15th June | 15th May | 30th May |
The TDS statments can be filed in Electronic format only. Such electronic returns should be accompanied by Form No. 27A, duly signed by the authorised person of the deductor. Statments prepared should be submited through the Efiling portal of Income tax or through the TIN-FC managed by NSDL.
Failure to deduct tax, deducting less tax, delay in payment of the deducted tax to the Government, makes the deductor an assessee liable to penalty, which is equal to the amount for which the assessee is a deemed defaulter.
In case of non-deduction or less deduction or delay in deduction of tax, an interest of 1% is levied on the tax per month or part of the month. In case of delay in payment of tax after deducting, interest of 1.5% is levied per month or part of the month. The interest is applicable till the time the tax deducted is not credited to the Government.
n case of delay in payment of tax after collecting it, interest at 1% per month or part of the month shall be levied till the time the tax is not paid.
Failure on part of the deductor to pay the tax deducted at source, to the credit of Central Government makes him liable to rigorous imprisonment of a minimum period of threemonths but which may extend to seven years.
Download the justification report to know the details of TDS defaults if any, on the processing of TDS statement from the TRACES portal
Failure to apply for TAN or quote correct TAN by the deductor may result in a penalty of Rs. 10, 000.
With effect from 1 July 2012, failure to file TDS statement within the prescribed time shall make the deductor liable to pay by way of fee u/s 234E, a sum of Rs. 200 for each day during which the default continues.
With effect from 1 July 2012, the furnishing of incorrect information in the statement by the deductor would make him liable to a penalty, which shall not be less than Rs. 10, 000 but which may extend to Rs. 1 Lakh.
In case the delay in filing TDS statement is more than one year from the prescribed date, then the deductor shall be additionally liable to pay a minimum penalty of Rs. 10,000 which may extend to Rs. 1 lakh.
Late filing fee u/s 234E, being statutory in nature, cannot be waived off.
If the deductee does not furnish PAN or furnishes incorrect PAN to the deductor, the deductor shall deduct tax at source that is higher than the following rates:
(a) The rate prescribed in the Aes
(b) At the rate in force,I.e., the rate mentioned in the Finance Act
(c) At the rate of 20%