TDS Return

TDS Return Forms 24Q, 26Q, 27Q, 27EQ

Tax Deducted at Source or TDS is a type of advance tax which is deducted from the earnings of an individual or an organization before the money is actually credited into that entity’s account, according to the Indian Taxation Code. The government is able to generate revenues by implementing the provisions of TDS on the earnings of individuals as well as businesses. Rules and regulations regarding TDS are controlled and governed under the Income Tax Act, 1961 by the Central Board of Direct Taxes (CBDT).

As the name suggests, “Tax Deducted at Source” implies that the payee or the employer deducts the tax before making a payment to the receiver. Tax Deducted at Source is applicable on income earned regularly and also on the income earned occasionally or irregularly. Thus, TDS is applicable on various incomes, including, but not limited to Salary, Commission, Rent, Professional Fees and Interest.

An employer or company that has valid TAN - Tax Collection and Deduction Account Number can file for TDS return. Any individual or business who makes a particular payment which is stated under the I-T Act needs to deduct tax at source. The deposit for the same has to be made within the stipulated time. The payment categories include:

It is mandatory for every deductor to submit TDS return to the Income Tax Department of India in quarterly statements. Every detail of the returns has to be accurate and precise. Keeping up with the quarterly payments can be cumbersome and if not done on time, you may attract huge penalty.

Advantages of payment of TDS

TDS is payable on the earnings so it is important to note that the liability to pay TDS is applicable only in the event of earnings actually taking place. TDS is deducted before making payments. Deductions are to be made on payments that are made in cash, cheque or credit. The amount deducted under TDS is further deposited with various government agencies. Payment of TDS has various advantages which are as follows:

• Deducting TDS at source prevents tax evasion.
• Tax collection is done duly and in a timely manner.
• A large number of people come under the tax net.
• Collection of TDS is a steady source of revenue for the government.

TDS Deductors as per Taxation Rules

Following is the list of deductors liable to deduct TDS:

• Individuals
• Hindu Undivided Family
• Limited Companies
• Partnership Firms
• Body of Individuals
• Association of Individuals
• Local Authorities

Method of TDS deduction

As commonly known, TDS is deducted on the payments made to the receiver. It means that the payments are done to the receiver after deduction of appropriate tax for the income in question. The amount of TDS that the receiver is liable to pay is deducted from the payment the receiver is liable to receive and the remainder is paid out. It is important to note that the liability to deduct TDS is of the deductor. For instance, in case of employer paying salary to employee, the employer is the deductor and the employee is the TDS deductee.

All about TDS returns

A TDS Return is a summary of all the transactions related to TDS made during a quarter. TDS Return is a quarterly statement submitted by the deductor to the Income Tax Department. The statement shows a summary of all the entries for TDS collected by the deductor and the TDS paid by the deductor to the Income Tax Authority. The TDS Return statement includes details like the PAN number of the deductor & the deductees, all the detailed particulars of the TDS paid to the government and the TDS Challan information.