TDS – Meaning, Filing, Return & Due Dates, Late Fees, Penalty
What is TDS?
TDS or Tax Deducted at Source is tax that deducted at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments. Usually, the person receiving income is liable to pay income tax. But the government with the help of Tax Deducted at Source provisions makes sure that income tax is deducted in advance from the payments being made by you.
What is the due date for depositing the TDS to the government?
The Tax Deducted at Source must be deposited to the government by the 7th of the subsequent month.
What is TDS Return?
TDS return can be best described as the quarterly statement or summary of all TDS-related transactions made during the specific quarter. Typically, it comprises details of the TDS collected and deposited to the Income Tax Authority by the deductor. The essential details disclosed in a TDS return
TDS Return Forms
S. No | Type of Form | Purpose |
1 | 24Q | It serves as a statement of tax deducted at source on salaries. |
2 | 26Q | This form serves as a statement of tax deducted at source on non-salaried income. |
3 | 26QB | It serves as a statement of tax deducted against the payment of the immovable property. |
4 | 27Q | It is a certificate of tax deducted at source on interest, dividend payable to NRIs, and foreign companies. |
5 | 27EQ | This document is a statement of TCS. |
Due Dates to File TDS Returns
Period | Due Date |
Quarter 1 (April to June) | 31st July |
Quarter 2 (July to September) | 31st October |
Quarter 3 (October to December) | 31st June |
Quarter 4 (January to March) | 31st July |
What is a TDS certificate?
Form 16, Form 16A, Form 16 B and Form 16 C are all TDS certificates. TDS certificates have to be issued by a person deducting TDS to the assesses from whose income TDS was deducted while making payment. For instance, banks issue Form 16A to the depositor when TDS is deducted on interest from fixed deposits. Form 16 is issued by the employer to the employee.
Form | Certificate of | Frequency | Due date |
Form 16 | TDS on salary payment | Yearly | 31st May |
Form 16A | TDS on non-salary payments | Quarterly | 15 days from due date of filing return |
Form 16B | TDS on sale of property | Every transaction | 15 days from due date of filing return |
Form 16C | TDS on rent | Every transaction | 15 days from due date of filing return |
Late Filing on TDS Return Due Date
In the case of late filing of TDS/TCS returns, a late fine of Rs 200 per day must be charged to the Income Tax Department, and the fine will be imposed on every single day of delay before the late payment charges exceed the value of TDS and not more.
Let’s look at a case to grasp it better.
If you have to pay INR 5000 in TDS on March 1st, but you pay it on June 30th, the cumulative penalty will be INR 200 x 122 days = INR 24,400. Since the assessed penalty is greater than the real TDS number, i.e. INR 5000, you will only be eligible to pay INR 5000 in late filing fees.
Interest on Late Payment of TDS
In addition to the penalty, debt will be added to the total. The debt is paid by the taxpayers before the TDS return is filed. Section 201 A contains information on interest rates.
- For late payments of accelerated tax, self-assessment tax, standard tax, TDS, TCS, equalization fee, STT, CTT there is a lowered interest rate of 9% instead of 12% /1% per annum (i.e. 0.75% per month instead of 1/1.5% per month) will be paid. There will be no late fee or punishment if you are late during this time frame.
- If a portion of the whole amount of tax is not withheld at the source, the TDS/TCS amount is subject to a monthly interest rate of 1% when the interest term begins on the day the tax was deducted and ended on the final date of deduction.
- When a portion of the whole amount of TDS is not paid, 1.5 % per month interest is charged on the TDS/TCS amount. The interesting term begins on the deduction date and ends on the payment date.
- For late payment of TDS after withdrawal, interest at the rate of 1.5 % per month must be paid (from the day that it was deducted until the final date of deposit).
- Since interest is measured over months rather than days, a portion of a month would be treated as though it were the entire month.
Penalty
If TDS returns are filed after the due date, or there are errors in the return forms, the following penalties will apply:
Penalty under Section 234E
The deductor will be penalised Rs.200 every day till TDS is paid under this section of the Income Tax Act, but the penalty sum cannot exceed the TDS amount.