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TDS and TCS Compliances
Ensuring Accurate Tax Deduction and Collection Compliance
At Alpviram Legal, we specialize in comprehensive Tax Deducted at Source (TDS) and Tax Collected at Source (TCS) compliance services. Our goal is to assist businesses in accurately managing tax deductions and collections, ensuring timely filings, and adhering to the latest regulations set by the Income Tax Department of India.
Understanding TDS and TCS
Tax Deducted at Source (TDS) is a mechanism where the payer deducts a certain percentage of tax before making specific payments like salary, interest, commission, rent, etc., to the payee. This system ensures tax collection at the source of income generation.
Tax Collected at Source (TCS) refers to the tax collected by the seller from the buyer at the time of sale of specified goods or services. The seller is responsible for collecting this tax and remitting it to the government.
Types of TDS and TCS Returns and Their Due Dates
Timely filing of TDS and TCS returns is crucial to avoid penalties. Below is a comprehensive guide to the various forms, their applicability, and respective due dates:
Regular TDS Returns
| Form | Applicability | Due Dates |
|---|---|---|
|
24Q |
TDS on salaries |
– Q1 (Apr-Jun): Jul 31
– Q2 (Jul-Sep): Oct 31
– Q3 (Oct-Dec): Jan 31
– Q4 (Jan-Mar): May 31 |
|
26Q |
TDS on payments other than salaries to residents |
– Q1 (Apr-Jun): Jul 31
– Q2 (Jul-Sep): Oct 31
– Q3 (Oct-Dec): Jan 31
– Q4 (Jan-Mar): May 31 |
|
27Q |
TDS on payments to non-residents (excluding salaries) |
– Q1 (Apr-Jun): Jul 31
– Q2 (Jul-Sep): Oct 31
– Q3 (Oct-Dec): Jan 31
– Q4 (Jan-Mar): May 31 |
|
27EQ |
TCS on specified goods |
– Q1 (Apr-Jun): Jul 15
– Q2 (Jul-Sep): Oct 15
– Q3 (Oct-Dec): Jan 15
– Q4 (Jan-Mar): May 15 |
Challan-cum-Statements for Specific Transactions
| Form | Applicability | Due Dates |
|---|---|---|
|
26QB |
TDS on sale of immovable property |
Within 30 days from the end of the month in which the property transaction took place |
|
26QC |
TDS on rent of property |
Within 30 days from the end of the month in which rent is paid or credited |
|
26QD |
TDS on payment to resident contractors and professionals under Section 194M |
Within 30 days from the end of the month in which payment is made. |
Consequences of Non-Compliance
Failing to adhere to TDS and TCS regulations can lead to:
Interest Charges: Delayed deduction attracts interest at 1% per month, and delayed payment incurs interest at 1.5% per month.
Late Filing Fees: A fee of ₹200 per day is levied for late filing of TDS/TCS returns until the return is filed, subject to the total amount of TDS/TCS.
Penalties: Non-filing or incorrect filing can result in penalties ranging from ₹10,000 to ₹1,00,000.
TDS Certificates – Form 16, Form 16A & More
TDS certificates are crucial documents that provide proof of tax deducted at source. They help taxpayers in filing accurate income tax returns and reconciling TDS credit in Form 26AS. Here’s a breakdown of the key certificates:
Form 16 – TDS Certificate for Salary
What is it?
Form 16 is a certificate issued by employers to salaried employees, showing the total salary paid and the TDS deducted during the financial year.
Key Contents:
PAN and TAN of employer
PAN of employee
Summary of salary paid
TDS deducted and deposited
Breakdown of exemptions and deductions under Chapter VI-A
Verification by employer
When is it issued?
By June 15 of the financial year following the year in which TDS was deducted.
Who needs it?
All salaried individuals who have had TDS deducted by their employer.
Importance:
Required for filing income tax returns
Acts as proof of TDS
Helps employees understand tax breakup and deductions claimed
Form 16A – TDS on Non-Salary Payments
What is it?
Form 16A is issued for TDS deducted on non-salary payments like:
Interest
Rent
Commission
Professional fees
Contractual payments
Key Contents:
Name and address of deductor and deductee
Nature of payment
Amount paid and tax deducted
Challan details of tax deposited
When is it issued?
Within 15 days from the due date of filing the quarterly TDS return:
Q1: 15 August
Q2: 15 November
Q3: 15 February
Q4: 15 June
Use:
Crucial for claiming TDS credit in income tax returns and verifying entries in Form 26AS.
Form 16B – TDS on Property Sale (Section 194IA)
Issued by: Buyer of immovable property
To: Seller
For: TDS deducted @ 1% under Section 194IA
Use: Must be attached when seller files ITR or applies for a lower TDS certificate.
Due Date to Issue: Within 15 days from filing Form 26QB (property transaction form).
Form 16C – TDS on Rent (Section 194IB)
Issued by: Individual/HUF (not liable for tax audit) who pays rent > ₹50,000/month
To: Landlord
Use: Evidence of TDS deduction on rent at 5%
Due Date: Within 15 days from filing Form 26QC.
Form 16D – TDS on Payments under Section 194M
Applicable to individuals or HUFs making payments to contractors, professionals, or for commission exceeding ₹50 lakh annually, and not covered under tax audit.
Use: Confirms 5% TDS deduction on such payments.
Issued After: Filing Form 26QD
Why These Certificates Matter
Verification for TDS Credit: They help recipients verify tax deducted by deductors and claim it correctly while filing ITR.
Avoids Mismatches: Ensures accurate reflection in Form 26AS and avoids scrutiny.
Proof of Compliance: For deductors, issuing certificates timely is mandatory under the Income Tax Act.
Form 26AS – Your Annual Tax Credit Statement
Form 26AS is a consolidated annual tax statement issued under Section 203AA of the Income Tax Act. It reflects all the tax-related information linked to your PAN, helping taxpayers track the taxes paid and claimed during a financial year.
What Does Form 26AS Contain?
Form 26AS is generated by the Income Tax Department and contains the following key details:
TDS (Tax Deducted at Source)
TDS deducted by employers, banks, companies, or any deductor
TDS on salary (Form 16), interest (Form 16A), property sale (Form 16B), etc.
TCS (Tax Collected at Source)
Tax collected by sellers on sale of certain goods/services like scrap, timber, etc.
Advance Tax & Self-Assessment Tax
Payments made directly by the taxpayer
Details of Refunds Received
Any income tax refund issued by the IT Department during the year
High-Value Transactions
Includes property purchases, mutual funds, credit card expenses, etc. reported under SFT (Specified Financial Transactions)
Details of AIR Transactions (now merged into 26AS)
Reportable high-value financial activities notified by financial institutions
Frequently Asked Questions
It is the comprehensive statute that governs the levy, administration, collection, and recovery of income tax in India.
Individuals, Hindu Undivided Families (HUFs), companies, firms, LLPs, associations of persons, bodies of individuals, local authorities, and any other artificial juridical persons are liable to pay tax if they have taxable income.
The assessment year is the year following the financial year in which income is assessed to tax. The previous year is the financial year in which income is earned.
Residential status is determined based on the individual’s physical presence in India during the financial year and the preceding years, as specified in the Act.
Income is categorized into:
- Salaries
- Income from House Property
- Profits and Gains of Business or Profession
- Capital Gains
- Income from Other Sources
Agricultural income is exempt from tax, but it is considered for rate purposes when computing tax on non-agricultural income.
It provides a rebate on tax payable for individuals with income below a certain threshold, effectively reducing their tax liability.
It is a certificate issued by employers detailing the salary paid and tax deducted at source (TDS) on it.
It is the income tax payable if your tax liability exceeds a certain amount, to be paid in installments during the financial year.
It is a means of collecting tax at the source from where an individual’s income is generated.
Returns can be verified electronically using Aadhaar OTP, net banking, or by sending a signed physical copy to CPC Bangalore.
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