TDS, which stands for Tax Deducted at Source, is the amount deducted as tax from different kinds of payments like salary, contract payment, commission, etc., if the payment exceeds certain threshold limits (at prescribed by the government). TDS is deducted prior to making the payment and deposited with the government. TDS returns have to be filed by the assessee for deducting the TDS. They are filed on a quarterly basis, indicating the TAN of the assessee as well as all the details concerning the TDS collected during the period. Payment amount, PAN of deductee, TDS amount and type of payment are among the details included.
| Form | Particulars |
|---|---|
| Form 24Q | Quarterly statement for tax deducted at source from “Salaries” |
| Form 26Q | Quarterly statement of tax deducted at source in respect of all payments other than “Salaries” |
| Form 27Q | Quarterly statement of deduction of tax from interest, dividend or any other sum payable to non-residents |
| Form 27EQ | Quarterly statement of collection of tax at source |
Source: Income Tax Department
TDS returns are due every quarter. The due dates for all the TDS returns i.e. Form 24Q, Form 26Q, Form 27Q and Form 27EQ are the same and as follows: Due dates for filing TDS returns:
| Quarter | Period | Last Date of Filing |
|---|---|---|
| 1st Quarter | 1st April to 30th June | 31st July 2018 |
| 2nd Quarter | 1st July to 30th September | 31st October 2018 |
| 3rd Quarter | 1st October to 31st December | 31st January 2019 |
| 4th Quarter | 1st January to 31st March | 31st May 2019 |
Due dates for filing TCS returns:
| Quarter | Period | Last Date of Filing |
|---|---|---|
| 1st Quarter | 1st April to 30th June | 15th July 2018 |
| 2nd Quarter | 1st July to 30th September | 15th October 2018 |
| 3rd Quarter | 1st October to 31st December | 15th January 2019 |
| 4th Quarter | 1st January to 31st March | 15th May 2019 |
Should there be any delay in depositing TDS, or mistakes when filing TDS returns, then late filing fees, penalty and interest shall apply.
Section 234E of the Income Tax Act deals with the fee for default in producing statements. It states “where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.”
To understand this, consider the following example:
Mr. X’s TDS amount payable is Rs. 4,000 on 15th May. However, he pays it only after 10 days. Then the calculation comes out to Rs. 200 x 10 days = Rs. 2,000. Mr. X will therefore have to pay Rs. 2,000 as the late filing fee. Along with this, he will have to pay interest (covered below).
Interest under Section 201(1A) of the Income Tax Act becomes applicable on failure to deduct tax at source or delay in payment of TDS and interest under Section 206C(7) for failure to collect tax at source or delay in payment of TCS.
| Section | Type of Default | Interest that is subject to TDS or TCS amount | Period for which interest has to be paid |
|---|---|---|---|
| 201A | Non-deduction of tax at source in part or entirely. | 1% per month | From the date on which tax becomes deductible until the date it is actually deducted. |
| Following deduction of tax, non-payment of tax in part or entirely. | 1.5% per month | From the date of deduction until the payment date |
According to Section 201(1A), interest for delay in payment of TDS will need to be paid prior to filing the TDS return. To understand how interest payment works, consider this example - Mr. X’s TDS payable amount is Rs. 4,000 and the date of deduction is 15th January. However, TDS is paid on 15th March. Then the interest he owes is Rs. 4000 x 1.5% x 2 months = Rs. 120.
In the event that TDS returns are filed post the due date or any discrepancies are found in the return forms, then the below penalties shall become applicable:
Section 276A of the Income Tax Act reads "If a person, without reasonable cause or excuse, fails to deduct or after deducting fails to pay the tax as required by or under the provisions of sub-section (9) of section 80E or Chapter XVII-B, he shall be punishable with rigorous imprisonment for a term which may extend to six months, and shall also be liable to fine which shall be not less than a sum calculated at the rate of fifteen per cent per annum on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid."
If an individual does not file the TDS/TCS return or fails to do so by the prescribed due dates, he or she will have to pay late filing fees, as provided under Section 234E, along with the late filing fees that the individual will be liable to pay as penalty under Section 271H. • Section 234E, as seen above, states that a deductor will be required to pay a fee of Rs. 200 per day as long as the TDS payment is pending. It must, however, be noted that the penalty shall not surpass the amount of TDS for which statement had to be filed. • Section 271H of the Income Tax Act deals with penalty for failure to furnish statements. Under this, an assessing officer can direct an individual who fails to file the statement of TDS by the due date to pay “a sum which shall not be less than ten thousand rupees but which may extend to one lakh rupees.” This penalty will be in addition to the penalty under Section 234E.
What would happen if a deductor fails to deduct TDS or after deducting the same does not deposit it to the government’s account?
In such a case, the deductor would have to face the following consequences like disallowance of expenditure, levy of interest and levy of penalty.
What should be done if the tax is deducted, but the payee’s final tax liability is nil or less than the TDS amount?
Here, the payee can claim the refund of the whole or excess TDS amount by filing the return of income.
What are the duties and responsibilities of the individual who deducts tax at source?
Below are few of the basic duties of the person liable to deduct tax at source:
What should be done if the TDS credit is not reflected in Form 26AS?
TDS credit may not be reflected in Form 26AS due to a number of reasons such as non-filing of TDS statement by the payer, quoting wrong PAN of the deductee in the TDS statement, etc. In case of non-reflection of TDS credit in Form 26AS, the payee will need to contact the payor for determining the reasons for non-reflecting the TDS credit in Form 26AS.
What will be the TDS deducted for payment of remuneration to company's director?
Section 194J of the Income Tax Act levies TDS on technical and professional services. Under this section, payments made to director in the form of sitting fees, remuneration or any other sum besides those on which tax deductible under Section 192 are to be regarded for deduction of tax at source at the rate of 10%.
