T.D.S means the Tax deducted at source. Whenever a person liable to deduct tax of another person under Income Tax Act, deducts tax, the credit of such tax is given to the deductee when his liability to pay income tax is calculated. Such credit is given on the basis of the information given by the deductor to the Income Tax Department by way of filing his T.D.S statements, wherein the full detail about the tax deducted, the PAN No of deductee etc are given, so that the right credit of T.D.S can be given to the deductee.
Rule 37BA(1) provides that credit for tax deducted at source and paid to the Central Government in accordance with the provisions of Chepter XVII, shall be given to the person to whom payment has been made or credit has been given (i.e.Deductee), on the basis of information relating to deduction of tax furnished by the deductor to the income tax authority or the person authorized by such authority.
The above underlined words as used in rule 37BA(1) shows that the credit for T.D.S will be given by the Income Tax Department to the deductee on the basis of the information received from Deductor regarding Tax Deducted by him. Hence the correct filing of statement of T.D.S by the Deductor becomes very important.
Some procedural aspects relating to T.D.S and T.D.S statements filing are discussed herebelow:
Time period for depositing Tax deducted: The Tax deducted at source needs to be deposited within the time frame as follows:
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Section
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Person
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Time limit of deposit
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(1)Sum deducted u/s 193,
194A, 194C, 194D, 194E,
194G, 194H, 194-I, 194J, 195,
196A to 196D
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(A) Tax Deducted by or on behalf of the Government
(B) Tax deducted by or behalf of any other person
(i)if the amount is credited to the account of the payee as on the date upto which the account of such persons are made
(ii) in any other case
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Same Day of Deduction
Within 2 months of the expiration of the month in which that date falls(by 30th April w.e.f 01-04-2010, where the amount is paid or credited in the month of March vide notification No 41/2010 date 31-05-2010)
Within one week for the last day of the month in which the deduction is made
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(2)Sum deducted u/s 192,
194, 194B, 194BB, 194EE,
194F and 194K, 194LA
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(A) Tax deducted by or on behalf of Government
(B) Tax deducted by or on behalf of other person
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Same Day of Deduction
Within one week for the last day of the month in which the deduction is made |
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(3) Sum paid under section 192(1A) by the employer on the non monetary perquisites provided to the employee
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(A)Tax deducted by or on behalf of Government
(B)Tax deducted by or on behalf of other person
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Same Day of Deduction
Within one week for the last day of each month on which the Income is due u/s 192(1B). |
Special cases where payment can be deposited quarterly: In the following cases the Assessing officer may with the prior approval of the joint commissioner, allow payment of TDS quarterly as under:
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(a) (i) any income by way of interest other than income by way of interest on securities
(ii) any income by way of insurance commission
(iii) any income by way of commission or brokerage referred to in section 194H
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Quarterly on July 15, October 15, January 15 and April 15
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(b) Income chargeable under the head salaries
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Quarterly on June 15, September 15, December 15 and March 15
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Where to deposit Tax: The person deducting tax shall pay the amount of tax so deducted to the credit of Central Government by remitting it into any branch of:
(i) The Reserve bank of India
(ii) The State bank of India
(iii) Any authorized bank
It shall be accompanied by TDS Challan. However, where the deduction is made by or on behalf of Government, the amount shall be deposited without production of a challan.
The following person will pay tax electronically on or after 01-04-2008 :
(i) a company and
(ii) a person (other than a company), to whom the provisions of section 44AB are applicable.
Interest for late deposit of TDS: If any person liable to deduct tax under Income Tax Act fails to deduct the whole or any part of the tax or after deducting fails to pay the tax, he or it shall be liable to pay simple interest @1% for every month or part of the month on the amount of tax from the date on which the tax was deductible to the date on which such tax is actually paid.
W.e.f 1/07/2010 the interest is payable @1% for every month or part of the month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted and @1.5% for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid.
Levy of interest is mandatory: Levy of interest u/s 201(1A) is mandatory. The interest u/s 201(1A) is not in the nature of penalty but a simple interest. If any person after deducting tax fails to remit it he is made liable u/s 201(1A) to pay interest. The liability arises immediately upon each default and is mandatory. There is no question of waiver of such payment on the ground that the default was not intentional- Bennet Coleman & co. Ltd. vs ITO [1986] 157 ITR 812 (Bom.)
TDS statements: Any person deducting any sum or any employer opting to pay tax on non-monetary benefits given to employee, shall, after paying the tax deducted to the credit of Central Government within the time prescribed, prepare quarterly statement for the period ending 30th June, 30th September, 31st December and the 31st March in each financial year.
Such Statements will be required to be delivered to the Director General of IncomeTax(Systems) / M/s National Securities Depository Ltd.(NSDL) on or before the 15th July, 15th October, 15th January in respect of the first three quarters of the financial year and on or before the 15th June[w.e.f 01-04-2010 its 15th May as per notification No 41/2010; SO No. 1261(E) dated 31.05.2010]. following the last quarter of the financial year, for the last quarter.
The forms for the TDS statements are as follows:
(1) Form No 24Q in respect of TDS on payment of salary or Tax deposited by an employer opting to pay tax on non-monetary benefits given to employee.
(2) Form No 26Q in respect of TDS on other payments.
Earlier the annual return of TDS was also required to be filed. But w.e.f 01-04-2006 filing of annual return has been done away with. The quarterly statement for the last quarter shall be treated as the annual return of TDS( refer to Para 4.10 of Circular No. 1/2010 dated 11th Jan. 2010 )
Form of TDS statements for Banks, cooperative societies etc: Any Banking company to which the Banking regulation Act,1949 applies or cooperative society engaged in carrying on the business of Banking responsible for paying to a resident any income by way of Interest(other than interest on securities) not exceeding Rs.10000where the payer is a bank or cooperative society and Rs 5000 in any other case, shall furnish quarterly statements in form 26QAA and 26QA in electronic form.
Mode of Furnishing TDS statements: The TDS statements has been allowed to be filed in two modes, one is in paper form and other is on computer media.
Certain following persons are compulsorily required to deliver or cause to be delivered quarterly statements on computer media(3.5.” 1.44 MB floppy diskette or CD-Rom of 650 MB capacity)
(a) Where. The deductor is an office of Government; or
(b) Where, the deductor is a company; or
(c) Where the deductor is a person required to get his accounts audited u/s 44AB in the immediately preceding financial year; or
(d) Where, the number of deductees records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty.
All deductors other than those above mentioned are not compulsorily required to file the TDS statements on computer media and they has the option either to file statements on computer media or on paper format.
The persons responsible for deducting tax at source and preparing TDS statement shall quote his TAN and PAN in the quarterly statement and also quote the PAN of all the deductees in the quarterly statement and furnish particulars of the tax paid to the Central Government.
Pan need not to be furnished of those persons to whom the second proviso to sub-section 5B of section 139A applies i.e the persons who furnish 15G or 15H forms for non deducting of their tax. However w.e.f 01/04/2010 15G or 15H form shall not be valid unless the person furnishes his PAN in such forms.
Where no tax is deductible in any quarter, then no quarterly statement is to be filed even though the assessee may have obtained TAN.
Where to file TDS statements: Persons filing TDS statement on paper shall file 24Q or 26Q in paper format and file it with the Tin facilitation centre of NSDL whereby the paper format of TDS statement is digitized and is submitted with the Income Tax Department.
Persons who are filing their quarterly statements on computer media shall file form 24Qand/or26Q on computer media and furnish this form to the e-TDS intermediatory at any of the TIN facilitation centre. These quarterly statements are required to be prepared as per the data structure provided by the e-filing administrator designated by the Board for the purpose of Efiling of returns of TDS scheme 2003.
Persons filing TDS statement shall also enclose with the statement a declaration in form No. 27A in the paper format. If any compression software has been used for preparing the quarterly statement on computer media, then such compression software shall also be furnished on the same computer media.
Such person shall also affix a label indiacting name, PAN., TAN and address of the person responsible for deduction of tax at source, the period to which the statement pertains and the volume number of the said computer media in case more than one volume of such media is used.
Processing of TDS statements: W.e.f 01-04-2010 A statement of TDS furnished by any deductor shall be processed as follows:
-the sums deductible shall be computed after making the adjustments for any airthmatical error in the statement or an incorrect claim, apparent from any information in the statement
-the interest, if any, shall be computed on the basis of the sums deductible as computed in the statement
Based on the above an intimation will be issued to the deductor granting the deductor a refund or advising him of the amount of tax and interest payable, if any. The time limit for the issue of intimation will be one year from the end of financial year in which the TDS statement is filed.
Penalty for failure to furnish quarterly statement of TDS:If any person fails to deliver or cause to be delivered a copy of TDS quarterly statement within the time prescribed, he shall pay, by way of penalty, a sum of Rs 100 for every day during which failure continues. But the penalty shall be not exceed the amount of tax deductible[section 272A(2)(k)]. Such penalty shall be imposewd by the Joint Director or Joint Commissioner[section 272A93)]. No order imposing penalty shall be passed unless the person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter[section 272A(4)]
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