What is TDS?
TDS or Tax Deducted at Source is a specific amount that is reduced when a certain payment like salary, commission, rent, interest, professional fees, etc. is made. The person who makes the payment, deducts tax at the source, while the person who receives a payment/income has the liability to pay tax. It lowers tax evasion because the tax will be collected at the time of making a payment.
How to File TDS return online?
In order to file your TDS return, there are few things you must ensure. They are as follows:
• You must have a valid Tax Deduction and Collection Account Number (TAN) and make sure it is registered for e-filing
• Prepare your TDS statements using Return Preparation Utility before validating the same using File Validation Utility
• You must have a valid Digital Signature Certificate that is registered for e-Filing in case you want to upload your returns using DSC
• Provide the demat account or bank account details of your principal contact, or ensure that his/her PAN is linked with his/her Aadhaar in case you want to upload your returns using Electronic Verification Code
• You must have a valid Tax Deduction and Collection Account Number (TAN) and make sure it is registered for e-filing
• Prepare your TDS statements using Return Preparation Utility before validating the same using File Validation Utility
• You must have a valid Digital Signature Certificate that is registered for e-Filing in case you want to upload your returns using DSC
• Provide the demat account or bank account details of your principal contact, or ensure that his/her PAN is linked with his/her Aadhaar in case you want to upload your returns using Electronic Verification Code
Penalty for Late Filing TDS Return
Here are the penalties levied by the Income Tax Department for the failure to submit or defaults in submitting your TDS return/statements:
• Failure to submit your returns: Under Section 272A (2) of the Income Tax Act, a penalty of Rs.100 will be levied for each day that the returns remain unsubmitted, subject to a maximum of the TDS amount.
• Failure to file your returns on time: Under Section 234E of the Income Tax Act, a penalty of Rs.200 will be levied for each day that the returns remain unfiled, subject to a maximum of the TDS amount.
• For defaults in the filing of TDS statement: Under Section 271H of the Income Tax Act, a penalty of Rs.10,000 to Rs.1 lakh will be levied in case the deductor defaults at the time of filing TDS return within the due date.
• For incorrect details: Under Section 271H of the Income Tax Act, a penalty of Rs.10,000 to Rs.1 lakh will be charged in case the deductor submits incorrect information pertaining to PAN, challan particulars, TDS amount, etc.
• For non-payment of TDS: Under Section 201A of the Income Tax Act, interest will also be levied along with the penalty in case TDS is not paid within the due date. In case a part of the tax amount or the whole of it is not deducted at source, interest will be charged at 1.5% every month starting from the date on which the tax was deductible to the date on which the tax is actually deducted.
• Failure to submit your returns: Under Section 272A (2) of the Income Tax Act, a penalty of Rs.100 will be levied for each day that the returns remain unsubmitted, subject to a maximum of the TDS amount.
• Failure to file your returns on time: Under Section 234E of the Income Tax Act, a penalty of Rs.200 will be levied for each day that the returns remain unfiled, subject to a maximum of the TDS amount.
• For defaults in the filing of TDS statement: Under Section 271H of the Income Tax Act, a penalty of Rs.10,000 to Rs.1 lakh will be levied in case the deductor defaults at the time of filing TDS return within the due date.
• For incorrect details: Under Section 271H of the Income Tax Act, a penalty of Rs.10,000 to Rs.1 lakh will be charged in case the deductor submits incorrect information pertaining to PAN, challan particulars, TDS amount, etc.
• For non-payment of TDS: Under Section 201A of the Income Tax Act, interest will also be levied along with the penalty in case TDS is not paid within the due date. In case a part of the tax amount or the whole of it is not deducted at source, interest will be charged at 1.5% every month starting from the date on which the tax was deductible to the date on which the tax is actually deducted.
Types of TDS
Here are some of the income sources that qualify for TDS:
• Salary
• Amount under LIC
• Bank Interest
• Brokerage or Commission
• Commission payments
• Compensation on acquiring immovable property
• Contractor payments
• Deemed Dividend
• Insurance Commission
• Interest apart from interest on securities
• Interest on securities
• Payment of rent
• Remuneration paid to the director of a company, etc
• Transfer of immovable property
• Winning from games like a crossword puzzle, card, lottery, etc.
• Salary
• Amount under LIC
• Bank Interest
• Brokerage or Commission
• Commission payments
• Compensation on acquiring immovable property
• Contractor payments
• Deemed Dividend
• Insurance Commission
• Interest apart from interest on securities
• Interest on securities
• Payment of rent
• Remuneration paid to the director of a company, etc
• Transfer of immovable property
• Winning from games like a crossword puzzle, card, lottery, etc.
Challan for TDS Payment
Challan ITNS 281 is the Challan form for online payment of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source). Challan No. 281 is applicable for Tax Deducted at Source / Tax Collected at Source (TDS/TCS) from corporates and non-corporates. TDS exception is essentially a mechanism developed by the Indian Government where in there is a tax deduction at the source of an income, calculated at a specific rate and thereby becomes payable to the department of Income Tax.