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  1. RRSK & ASSOCIATES Chartered Accountants
  2. Let’s understand the Background RRSK & ASSOCIATES Chartered Accountants Makes Specified Payment Expenditure in the Hands of remitter. This can be claimed as an allowable expenditure subject to conditions. Income in the Hands of the Recipient. Should disclose the same in Tax return and remit taxes. WHY TDS
  3. RRSK & ASSOCIATES Chartered Accountants To collect Tax from the very Source (Pay tax as you earn) Beneficial to Assessee – Burden of the tax payment at year end is reduced. Beneficial to Government – Collection of taxes is spread across the year (Stable revenue) Tax deducted is credited against the recipient of Income thereby reducing Default in filing of returns W H Y T D S ?
  4. TDS explained . .  A person (deductor)  liable to make payment of specified nature  to any other person (deductee)  shall deduct tax at source  At a specified rate  Remit the same into the account of the Central Government  The deductee is entitled to get credit of the amount so deducted RRSK & ASSOCIATES Chartered Accountants
  5. TAN (TAX DEDUCTION ACCOUNT NUMBER) Unique 10 digit alpha numeric identification number Section 203A mandates quoting of TAN Form 49B to be filed online to apply for TAN TIME OF DEDUCTION OF TDS At the time of payment Or Credit Whichever is EARLIER RRSK & ASSOCIATES Chartered Accountants
  6. TDS RETURNS 1. Form 24 Q - Deductions made in a salaried case 2. Form 26 Q - Deductions made in the non-salaried case 3. Form 27 Q - Deductions made in the case of NRIs 4. Form 26QB - Deduction of tax u/s 194-IA. 5. Form 26QC - Deduction of tax u/s 194-IB. TDS CERTIFCATES 1. Form 16: which is issued by the employer to the employee incorporating details of tax deducted by the employer throughout the year, and 2. Form 16A: which is issued in all cases other than salary. RRSK & ASSOCIATES Chartered Accountants
  7. TIME LIMIT FOR DEPOSIT OF TAX RRSK & ASSOCIATES Chartered Accountants Deductor is other than Govt • Where the amount is credited or paid in the month of March • On or before 30th day of April • In any other case • On or before 7 days from the end of the month in which the deduction is made Deductor is office of Govt • Where tax is paid without production of an income-tax challan On the same day when tax is deducted 194M/ 194 IA/ 194 IB • 30 days from the end of the month in which the deduction is made • shall be accompanied by a challan-cum-statement • Form No. 26QB / 26QC /26QD
  8. TIME LIMIT FOR FURNISHING RETURNS RRSK & ASSOCIATES Chartered Accountants Quarter Form 24Q (Salary) Form 26Q (Other than Salary) 1st July 31st July 31st 2nd October 31st October 31st 3rd January 31st January 31st 4th May 31st May 31st FURNISHING OF TDS STATEMENT ELECTRONICALLY  Using digital signature or  with the verification of the statement in Form 27A
  9. Consequences - Default in payment of TDS  Disallowance of expenditure as per section 40(a)(i)  Levy of interest: As per section 201, 1.5% p.m on the amount of tax deducted at source subject to amount of TDS  Levy of Penalty  Punishable with imprisonment – 3 Months to 7 years Consequences - Default in Deduction of TDS  Levy of Interest – As per Section 201, 1% p.m on the amount of tax deducted at source will be levied subject to the maximum amount of TDS Consequences - Late filing of TDS Return  If the deductor fails to furnish the TDS return on or before the specified due date, he shall be liable to pay a penalty under section 234E of ₹ 200 per day till the date of default subject to the maximum amount of TDS is levied. RRSK & ASSOCIATES Chartered Accountants
  10. Filing of TDS Returns RRSK & ASSOCIATES Chartered Accountants
  11. Modes of Filing the returns RRSK & ASSOCIATES Chartered Accountants • Through TIN-FC • Through E-filing portal Regular Return • Correction statements through TRACES • E-filing by way of revised return • Revised Return through TIN-FC Corrections
  12. Pre-Requisites  TAN (Tax Deduction Account Number)  PAN (Permanent Account Number)  Transaction Details • Name of the Payee with PAN • Date of payment • Section of tax deduction • Rate of tax deduction  Payment Details • Challan Number and Date • Challan Amount • BSR Code RRSK & ASSOCIATES Chartered Accountants
  13. Prepare TDS Returns – Return preparation utility (RPU)  Prepare TDS Return using the Return preparation Utility  Fill in the Details of the Deductor, Challan, Transactions and Deductee details with the section numbers  Download the CSI (Challan status Inquiry) File from OLTAS website to validate the challan details  Save the file and then click on the Create File  In the Challan input file name - select the downloaded CSI File  Error and statistics report file path - select the folder to generate the return. Then click on Validate.  With the registered TAN Log into E-Filing portal and file return. RRSK & ASSOCIATES Chartered Accountants
  14. Screenshots of the process RRSK & ASSOCIATES Chartered Accountants Click on downloads and then click on Regular option under e-TDS/e-TCS Download the Utility Open this Java file - Utility Select the return to be filed
  15. Screenshots of the process RRSK & ASSOCIATES Chartered Accountants
  16. Screenshots of the process RRSK & ASSOCIATES Chartered Accountants Fill in TDS details in Form, Challan and Annexure tabs
  17. Screenshots of the process RRSK & ASSOCIATES Chartered Accountants
  18. Screenshots of the process RRSK & ASSOCIATES Chartered Accountants
  19. Screenshots of the process RRSK & ASSOCIATES Chartered Accountants
  20. Screenshots of the process RRSK & ASSOCIATES Chartered Accountants Login to Income tax portal Upload fvu file in zip format Upload Signature file using DSC Management utility Status of the uploaded return
  21. Corrections in TDS Returns RRSK & ASSOCIATES Chartered Accountants
  22. Corrections through Return preparation Utility RRSK & ASSOCIATES Chartered Accountants
  23. Corrections through TRACES RRSK & ASSOCIATES Chartered Accountants Validate the in progress correction with DSC – To initiate online correction
  24. Response to TDS Notice RRSK & ASSOCIATES Chartered Accountants
  25. RRSK & ASSOCIATES Chartered Accountants Download Details of the TDS Notice login to traces using CREDENTIALS click on communications > inbox View Details Request for Download Intimation Download Intimation for the Details of Notice
  26. Upload Correction statement RRSK & ASSOCIATES Chartered Accountants Validate the in progress correction with DSC – To initiate online correction
  27. TDS Practical Issues RRSK & ASSOCIATES Chartered Accountants
  28. Who should deduct TDS  Any person defined under Income tax act  Except Individual and HUF whose books are not required to be audited • Rent payments made by individuals and HUF exceeding Rs 50,000 per month, are required to deduct TDS @ 5% even if the individual or HUF is not liable for a tax audit RRSK & ASSOCIATES Chartered Accountants
  29. How to know if a transaction attracts TDS? Transactions specified in the Section 192 – 195 attracts TDS. There are some cases where TDS is not Deducted such as:- 1. On declaration furnished by the payee on Form 15G or 15H. 2. Payment to Government/RBI/Statutory Corporation etc. 3. Exempt Incomes 4. On certificate issued by ITO u/s 197 5. Interest earned on NSC, KVP, or Indian Vikas Patra Scheme 6. Interest earned from recurring deposits or Savings Account opened in co-operative societies. Some of the tricky transactions that fits into TDS ambit: × Subscription to journals - No TDS  Advertisement in Journals attracts TDS × Software in CD – No TDS  Customised software attracts TDS RRSK & ASSOCIATES Chartered Accountants
  30. Latest Amendments in few years Section 194Q – effective from July2022, TDS @ 0.1% on purchase of any goods of the value or aggregate of value exceeding fifty lakh rupees. Section 194R – TDS @ 10% on benefit or perquisite of a business or profession Section 194S – effective from July2022, TDS @ 1% on transfer of Virtual Digital Assets (VDAs), Cryptocurrency, NFTs Section 206AB – Higher rate of deduction of tax at source for non- filers of income-tax return RRSK & ASSOCIATES Chartered Accountants
  31. TDS on Payment by E-Commerce Operator to Participants Section 194O – E-Commerce operator to deduct tax @ 1% of the gross amount of sale of goods/services on payment to E- Commerce participant RRSK & ASSOCIATES Chartered Accountants E-Commerce Participant Buyer E-Commerce Operator TDS
  32. Questions Q: TDS provisions on “Provisions made in the books of accounts”? TDS mechanism cannot be put into practice until identity of the person in whose hands, it is includible as Income can be ascertained TDS shall be made only if the payee was identified and quantum of payment was also ascertainable on the last day of the FY. Q: What is the solution available to tax payer if a Sum reflected in Form 26AS is not actually his income but he has received a demand notice from AO to remit taxes for the same? Assessee can produce necessary documents to substantiate his stand. Q: At what rate TDS is to be deducted if deductee do not furnish PAN? As per Section 206AA at 20%. RRSK & ASSOCIATES Chartered Accountants
  33. Questions Q: Claim of TDS Credit Deducted by the Employer but not Paid by it to the Government? Employee is eligible to claim the TDS deducted. Section 205 provides that where tax is deductible at source, the assessee shall not be called upon to pay the tax himself to the extent to which tax has been deducted from that income Q: Can Individuals submit Form 15G, Form 15H to avoid TDS on dividend income too? Declaration can be filed by the individual if total dividend income does not exceed the maximum exemption limit and tax on the estimated total income for the financial year in which such income is to be included is nil RRSK & ASSOCIATES Chartered Accountants
  34. Questions Q: Is employer answerable for Short deduction of tax on Salary? Short deduction of tax under section 192 for any reason would justify action of the AO in treating the employer as Assessee in default Q: Can Depreciation be claimed on a property where TDS u/s 194Q is not complied? Non-deduction of tax on the purchase of assets cannot take away the right to claim depreciation, if the Asset happens to be a Non- current Asset since Depreciation is not an expenditure but an allowance. RRSK & ASSOCIATES Chartered Accountants
  35. Questions Q: Whether the deduction of tax at source under sections 194C and 194J has to be made out of the gross amount of the bill including reimbursements or excluding reimbursement for actual expenses ? Sections 194C and 194J refer to any sum paid. The section hence conveys reimbursements cannot be deducted out of the bill amount for the purpose of tax deduction at source. To overcome this, it is advisable to have a separate bill/invoice for reimbursement of expenses Q: Whether TDS is applicable to the component of GST? TDS is not recoverable on component of GST RRSK & ASSOCIATES Chartered Accountants
  36. RRSK & ASSOCIATES Chartered Accountants Sivakumar R / 94440 18283 Vijayalakshmi Y ( ) / 94440 16782 Aarthi S (9884116057) / 98841 16057

Editor's Notes

  1. The main aim of the amendments in Schedule III of the Companies Act, 2013 is to improve the transparency in the financial statements of the company. This will help the person reading these statements get a better understanding of the functioning of the company. It is applicable to all companies w.e.f. 1st April 2021.