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TDS Return Filing

 

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    What is TDS Return Filing?

    Every business, whether a startup or an existing company, is certain to incur some expenses or to make payments to its parties irrespective of its size and scale. Thus TDS provisions apply to all types and size of businesses. It applies in the same or similar way to a proprietor, firm, LLP or a company registered under the companies, Act. 2013. The payment of expense by a person is an Income in the hands of the recipient. Thus the payer is under a liability to deduct the tax at applicable rates while making payment to the party. For small payments, the provision of TDS does not apply until it crosses a threshold limit as prescribed. It must be noted that the TDS is applicable only on the specified payment and after it reaches the threshold limit. The most common types of expenses on which TDS is applicable is provided here.

    Key Points about TDS Deduction & Payment

    Payment of TDS Deducted

    The tax deducted at source (TDS) while making payment to parties for qualified expenses must be deposited before 7th of next month. For example, the TDS deducted in November 2017 is payable on or before 7th December 2017. The challan number for making TDS deposit is 281. while making TDS Payment care must be exercised while selecting the appropriate section/nature of the payment.

    The Consequence of Non-Compliance

    The non-compliance with TDS provisions is a grave offense and is punishable under Section 271 (C) of the Income Tax Act 1961, wherein the minimum penalty is 10,000 which can go up to Rs. 1,00,000/-. Further section 276B applies to all such cases where a willful default is established, in all those cases the punishment is 3 Years rigorous imprisonment which can go up to seven years.

    Interest on Non Payment of TDS

    The TDS deducted by a person need to be deposited within 7th day of the next month. Any failure or delay in depositing the TDS is punishable under section 271 C or/and Section 276 B. The defaulter is further liable to pay interest on delayed payment at the rate of 1.5% per month or part thereof. There is no provision in law where the interest can be waived; hence the assessee should be very careful.

    Filing of TDS Return

    After making the payment of TDS to the income tax, the taxpayer is required to file a quarterly return where the TDS deposited is mapped against the PAN of the person from which TDS was deducted. The TDS Return is filed within 30th of the month succeeding the quarter. For example, the first quarter ends on 30th June, hence the TDS Return must be submitted before 30th July.

    Interest on Non-Deduction of TDS

    When a person while making payment for which he ought to have deducted TDS fails in deducting TDS or deducts an amount less than the required amount. In all such cases, the deductor is liable to pay an interest @ 1% per month or part of the month, till the date on which TDS is deducted. Hence, a businessperson must be prudent while making payment to parties and ensure that TDS is deducted.

    Other Consequences of Default on TDS

    The expenses on which TDS was required to be deducted shall be disallowed as an expense under section 40(a) while computing the total taxable income. To understand it quickly let’s take an example of business where the income is 10 lac and the expense is also 10 lac, then effectively there shall be zero income tax, However, if the TDS is not deducted then the tax shall be three lakhs (30% of 10 lakh).

    Pricing

    (All Inclusive)

    TDS Rate Chart for FY 2021-22 (AY 2022-23) - Most Used Sections

    SectionFor Payment ofThreshold limitTDS Rate %
    192Salary IncomeIncome Tax SlabSlab rates
    (Based on old or new tax regimes)
    192 AEPF – Premature withdrawalRs 50,00010%
    If no Pan, TDS @ 30%
    193Interest on SecuritesRs. 10,00010%
    193Interest on DebenturesRs 5,00010%
    194Dividend
    (Dividend other than listed companies)
    Rs 5,00010%
    (No TDS on Div Payouts by
    REITs / InvITs)
    194 AInterest other than on securities by banks / post officeRs. 40,000
    (Rs 50,000 for Senior Citzens)
    10%
    194 AInterest other than on securities by othersRs. 5,00010%
    194 BWinnings from Lotteries / Puzzle / GameRs. 10,00030%
    194 BBWinnings from Horse RaceRs. 10,00030%
    194 DPayment of Insurance Commission
    (Form 15G/H can be submitted)
    Rs. 15,0005% (Individuals)
    10% (Companies)
    194DAPayment in respect of Life Insurance PolicyRs 1,00,0005%
    194EPayment to non-resident sportsmen/sports association20%
    194 EEPayment of NSS DepositsRs 2,50010%
    194 GCommission on Sale of Lottery ticketsRs 15,0005%
    194 HCommission or BrokerageRs 15,0005%
    194 IRent of Land, Building or FurnitureRs. 2,40,00010%
    194IRent of Plant & MachineryRs. 2,40,0002%
    194 IBRent
    (Tenant has to deduct TDS)
    (Individuals who are not liable to Tax Audit)
    Rs 50,000 (per month)5%
    194 IATransfer of Immovable Property , other than Agricultural landRs. 50 lakh1%
    194ICPayment of monetary consideration under Joint Development Agreements10%
    194JFees for professional or technical servicesRs 30,0002% (or) 10%
    194LAPayment of compensation on acquisition of certain immovable propertyRs 2,50,00010%
    194 LBInterest from Infrastructure Bond to NRINA5%
    194 LDInterest on certain bonds and govt. SecuritiesNA5%
    194NCash withdrawal during the previous year from one or more account maintained by a person with a banking company, co-operative society engaged in business of banking or a post office:> Rs 1cr2%
    194QPurchase of goods (applicable w.e.f 01.07.2021)Rs 50 lakh0.10%
    206ABTDS on non-filers of ITR at higher rates
    (applicable w.e.f 01.07.2021)
    5% or Twice the
    rates in force
    194PTDS on Senior Citizen above 75 Years (No ITR filing cases)Slab Rates

    Due Date for TDS Return Filing and Payment of TDS

    SL. NO.PARTICULARDUE DATETYPE OF EVENT
    1Payment of TDS deducted under various sections of the income tax actBefore 7th day of Next MonthMonthly
    21st Quarter TDS Return (1st April to 30th June)31st JulyQuarterly
    32nd Quarter TDS Return(1st July to 30th September)31st OctQuarterly
    43rd Quarter TDS Return(1st October to 31st December)31st JanQuarterly
    54th Quarter TDS Return(1st January to 31st March)31st MayQuarterly

     

    Note: TDS deducted in a month is required to be paid before 7th day of next month. While making TDS mention correct section in the challan number 281. For TDS payment use separate challan while making payment for specific type (section). Interest on Late Payment is- 1.5% per month or part thereof, The penalty on Late filing of TDS Return is Rs. 200 per day, however it is limited to the TDS amount.

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