TDS i.e. Tax Deducted at Source is a survey of collecting tax by the Indian Government at the time when a transaction takes place. The tax is required to be deducted at the time of payment or when money is deducted at the time of payment or when money is credited to the payer’s account, whichever is earlier.
Tax is deducted usually in a range of 1% to 10%. Apart from depositing the tax, the deduction should also file a TDS Return which is a quarterly statement to be given to the Income Tax Department (ITD). It is compulsory to submit TDS Return on time by the deductors.
TDS is deducted on:
- Salaries
- Commission
- Rent
- Professional services
- Consultation services
- Contract and Labor work
- On winning Lotteries, Puzzles etc.
Eligibility criteria:
TDS Return can be filed by organizations or employers who avail a valid Tax Collection and Deduction Account Number (TAN). Deduction of tax at source is required for anyone who is making specified payments which are mentioned under the IT Act. Assesses who are liable to submit TDS Return electronically within due date.
Following are assesses who are liable to file quarterly TDS Return electronically:
- People holding an office under the Government
- People whose accounts are Audited under Section 44AB
- Company
TDS Returns FORMS and RATES
FORM 24Q – TDS on Salary
FORM 26Q – For Companies and in any other cases
FORM 26QB – For Immovable property
FORM 27Q – For Non-residents and Foreign companies
Benefits for filing TDS Return:
- Helps in regular collection of taxes
- Offers an easy mode of tax payment to the payer
- Helps in spreading the entire tax payment over a number of months which makes it easier for the tax payer and reduces the burden of lump-sum tax payment to the taxpayer
- Ensures a flow of regular income to the Government
Penalty for delay in filing TDS Return:
According to Section 234E, a penalty of Rs.200/- per day shall be paid by the assessee until the time the default continues, if the assessee fails to file TDS Return before the due date. However, the total penalty should not exceed the TDS amount
Non-filing of TDS Return: if a person has furnished incorrect information or has not filed the return within one year from the due date of filing return, he/she shall be liable for penalty, which should not be less than Rs.10,000/- and not more than Rs.1,00,000
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