TDS is a tax collection mechanism where the payer of income deducts a portion of one’s payment and directly remits it to the government. This deduction is made for payments like interest, rent, and professional fees. As a result of this mechanism, the taxpayer is free from paying a lump sum and there is a curb on instances of tax evasion.
A private corporation is required to withhold tax at the rates specified in the Income Tax Act. The taxable amount is mandated to be deposited with the Central Government before the 7th of the succeeding month in which the tax was withheld. Finally, the Quarterly TDS returns, which record the amounts withheld, are also to be filed.
Under the Income Tax Act, Filing returns for TDS is mandatory to ensure tax compliance. Doing so also makes one liable to receive tax benefits and easily maintain financial records.
Failure to file TDS returns on time results in penalties and interest charges.
You can reduce your tax burden by claiming a tax credit on the TDS deducted from your income.
If the amount deducted from your income as TDS exceeds your actual tax liability, you can claim a refund by filing the TDS return.
TDS certificates act as a record of tax payments and are helpful in loan applications and claims.
One of the ways that the government earns its revenue is from is the TDS, which ensures that the taxes are collected at the source.
The chances of people not paying their taxes are reduced as the taxes are directly deducted from the source of payments.
The administrative burdens on businesses get minimized if a business files accurate TDS returns.
Your financial planning and the burdens from taxes can improve significantly if your TDS returns are filed accurately.
Understanding the differences between the many types of TDS and their corresponding forms can be quite a difficult task for many. To help you understand the nuanced differences, here is a list of the types of TDS in India:
| Form No | Transactions reported in the return | Due date |
|---|---|---|
| Form 26Q | TDS on all payments except salaries |
Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
| Form 24Q | TDS on Salary |
Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
| Form 27Q | TDS on all payments made to non-residents except salaries |
Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
| Form 26QB | TDS on sale of property | 30 days from the end of the month in which TDS is deducted |
| Form 26QC | TDS on rent | 30 days from the end of the month in which TDS is deducted |
| Quarter ending | Deduction Month | TDS Deposit Due Dates | Due Date for TDS Return |
|---|---|---|---|
| 30th June 2024 | April 2024 | 7th May 2024 | 31st July 2024 |
| May 2024 | 7th June 2024 | ||
| June 2024 | 7th July 2024 | ||
| 30th September 2024 | July 2024 | 7th August 2024 | 31st October 2024 |
| August 2024 | 7th September 2024 | ||
| September 2024 | 7th October 2024 | ||
| 31st December 2024 | October 2024 | 7th November 2024 | 31st January 2025 |
| November 2024 | 7th December 2024 | ||
| December 2024 | 7th January 2025 | ||
| 31st March 2024 | January 2025 | 7th February 2025 | 31st May 2025 |
Prepare the Necessary Documents:
Before logging in to the portal, gather all the required documents, including Form 27A, TDS statements, challan details, TAN, and digital signature. Your information on all these documents should be accurate.
Log in to the e-Filing Portal:
Visit the official Income Tax e-Filing portal and log in using your TAN and password. If you don't have an account, you may need to register first.
Select the TDS Return Form:
Select the form based on the type of TDS deductions you've made. For example, use Form 24Q for salaries, Form 26Q for other payments, and Form 27Q for payments to non-residents.
Enter Return Details:
Accurately enter the required details in the online form, including:
Verify and Submit:
Do not forget to review all the details before you hit submit. Inaccurate data may lead to penalties or failure.
Acknowledgement and Verification:
In the aftermath of submission, you will receive a provisional receipt and a token number as confirmation. In case of inaccuracy of data, you may be required to file a revised return.
Late Filing Fee (Section 234E):
Fail to file your TDS return on time and you will be penalized a late filing fee of Rs. 200 per day. This fee is calculated from the due date of the return until the date it is filed.
Penalty (Section 271H):
On top of the late filing fee, a penalty of Rs. 10,000 to Rs. 1,00,000 may be levied if you fail to file the TDS return within the due date. The severity of non-compliance decides the amount of penalty.
Interest on Late Deposit of TDS:
If you fail to deposit the deducted TDS to the government on time, you will be charged interest at a rate of 1.5% per month on the unpaid TDS amount. The interest is calculated from the tax deduction date to the deposit date.
Prosecution (Section 276B):
A willful failure to pay TDS is considered to be a severe case of non-compliance. For these cases, prosecution may be initiated. This could result in rigorous imprisonment for a term between three months to seven years, along with a fine.
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The TDS limit for rent depends on the type of property and the relationship between the payer and payee.
Residential Property:
Individuals and Hindu Undivided Families (HUFs) are required to deduct TDS on rent payments exceeding Rs. 50,000 per month.
Commercial Property:
TDS is applicable on rent payments for commercial properties, subject to certain conditions.
The TDS amount is calculated based on the applicable tax rate and the taxable income. The tax rate varies depending on the nature of the payment and the recipient's tax status. You can use the TDS calculator provided by the Income Tax Department.
Yes, TDS is mandatory for private limited companies. They are required to deduct TDS on various payments, including salaries, interest, rent, consultancy fees, and payments to non-residents, as per the provisions of the Income Tax Act.
The TDS limit for rent for a private limited company depends on the type of property and the recipient's tax status.
The TDS percentage for a Pvt Ltd company varies based on the nature of the payment and the recipient's tax status. Common TDS rates include:
Interest:
10% for interest on fixed deposits and other financial instruments.
Rent:
10% for rent paid to non-residents and in certain other cases.
Professional fees:
10% for payments made to professionals.
There is no specific limit of TDS exemption for a company. However, companies can claim deductions under various sections of the Income Tax Act to reduce their taxable income.
The Income Tax Act of 1961 specifies the entities eligible to deduct a portion of the payment as tax and remit it to the government. The following entities are eligible to deduct TDS in India:
Individuals deduct TDS on payments that are made over specified thresholds, including salaries and wages, interest on securities, rent of immovable property, professional fees, commission or brokerage, and payments to non-residents
Salaries: Your employer is liable to deduct TDS from your salary if your annual income exceeds the basic exemption limit.
Interest:
Rent:
Hindu Undivided Families (HUFs) are treated as separate legal entities, and deduct TDS on payments made for their business or professional activities.
Limited companies deduct TDS on various payments such as salaries and wages, interest on securities, rent of immovable property, consultancy fees, commission or brokerage, and payments to non-residents.
Partnership firms deduct TDS on specific transactions, including interest on securities, professional fees, rent of immovable property, commission or brokerage, and payments to non-residents.
Bodies of individuals formed for a common purpose, such as charitable trusts, religious institutions, and educational institutions, are eligible to deduct TDS if they meet the criteria.
Associations of individuals engaged in activities subject to TDS, such as clubs, associations, and societies, are supposed to comply with the TDS deduction requirements.
Local authorities like municipal corporations and panchayats deduct TDS on specific payments, such as payments to contractors and payments for goods and services.