TDS returns must be filed by respective organizations or taxpayers according to a predefined schedule. In this post, we have guided some of the important questions and their solution about the TDS return filing.
Tax Deducted at Source (TDS) is a type of direct tax introduced by the income tax department of India that requires the eligible person to tax deducted at source while making payments such as salary (employers), interest (banks), rent (tenants), etc. and pay the TDS amount to the government.
Q.1 – What is the Meaning of TDS?
Solution:- Tax Deducted at Source (TDS) is a tax collection mechanism in India, under the Income Tax Act of 1961, in which the tax is collected at the very source of income i.e. the point at which the income is generated. Under this system, an individual or deductor who is responsible for making payment of a prescribed nature to any other individual or deductee shall deduct tax at source from the deductee’s income and deposit the same into the Central Government’s account on behalf of the deductee. TDS is one of the measures against tax evasion practices and results in quick and efficient tax collection.
Q.2 – What Refers to a TDS/TCS Statement?
Solution:- The TDS/TCS statement is the essence of TDS/TCS returns in an electronic form. TDS/TCS reflects the sum of ‘amount paid’ as well as ‘income tax deducted at source and when these returns are filed in electronic/digital mode in accordance with the amendment in section 200(3)/206C by the Finance Act, 2005, they refer to as quarterly TDS/TCS statements. This sum of ‘amount paid’ & ‘income tax deducted at source’ in e-TDS/TCS return must correspond with the totals mentioned on Form No. 27A. As per the IT Act, these quarterly statements need to be furnished from FY 2005-06 afterwards. However, the IT Department advised discontinuing the acceptance of e-TDS/TCS statements at the TIN which are related to Fiscal Years before 2007-08.
Q.3 – Who Needs to File TDS/TCS Statements?
Solution:- According to the Income Tax Act, of 1961, it is mandatory for all corporate and government deductors and collectors to file their TDS and TCS statements, respectively, in electronic form. However, the same can be filed either manually or electronically if the deductors or collectors are not corporate or government deductors.
Q.4 – How the Returns eTDS and eTCS are Prepared?
Solution:- The returns eTDS and eTCS are prepared in the format prescribed by the e-Filing Administrator which is available on the official website of the Income Tax Department (www.incometaxindia.gov.in) and e-Gov-TIN website of NSDL(www.tin-nsdl.com). The prepared e-TDS/TCS return should be duly validated using File Validation Utility which is available with the data structure. Noteworthy points while filing the e-TDS/TCS return are as follows:
- e-TDS/TCS return file should not be stretched to diversified computer media and should be filled in a virus-free CD/Pen Drive
- Physical Form No. 27 should be attached to the e-TDS/TCS return file. Form No. 27A should be in physical form and should be properly filled & signed by an authorized signatory
- Post-February 1, 2014, Submission of Form 27A created using File Validation Utility becomes mandatory
- Overwriting or striking should be avoided on Form No. 27A
- An e-TDS return file should be compressed (when it needs to be compressed) through Winzip 8.1 or ZipItFast 3.0 compression utility or a higher version for the smooth and quick filing of a return
- Any bank challan or copy of the TDS/TCS certificate need not be filed with an e-TDS/TCS return
- e-TDS/TCS return may get rejected at TIN-FCs if these compliances are not adhered to
Q.5 – Is it Necessary for Employees and Deductees to Quote their PAN?
Solution:- All the deductees must quote their PAN. However, as far as educators are concerned, it is mandatory only for non-Government deductors.
Q.6 – What Duties Should be Carried out by the Deductor i.e. the Person Who is Deducting Tax at Source?
Solution:- The following basic duties should be carried out by the deductor i.e. the person who is deducting tax at source:
- Procurement of Tax Deduction Account Number (TAN) and reflecting the same in all the TDS-related documents
- TDS deduction at the appropriate rate
- Crediting the TDS to the Central Government’s account by the stipulated due date
- Filing of the periodic (quarterly/monthly) TDS statements/ TDS return by the stipulated due date
- Issuing a TDS certificate to the payee w.r.t TDS deducted from his income by the stipulated due date
Q.7 – What are Form 24, 26, 27 and 27E?
Solution:- The form 24, 26, 27 and 27E are prescribed formats to file TDS/TCS returns by the income tax department.
- Form 24 is the prescribed format to file TDS returns detailing Salary Payments
- Form 26 is the prescribed format to file TDS returns detailing Domestic Payments other than salary
- Form 27 is the prescribed format to file TDS returns detailing Foreign or NRI payments other than salary
- Form 27E is the prescribed format to file TCS returns
Q.8 – Which File Format or Data Structure Should be Followed While Preparing an e-TDS/TCS Return?
Solution:- The file format or data structure prescribed by the e-filing administrator should be followed while preparing the e-TDS/TCS return.
Q.9 – How TAN is Different from PAN w.r.t Deductor?
Solution:- PAN is an abbreviation of Permanent Account Number whereas TAN is an abbreviation of Tax Deduction Account Number. TAN of deductor i.e. an individual who deducts tax is important to be quoted on the TDS-related documents and submitted to the income tax department. So, a deductor must hold a TAN even if he has a PAN. However, as per section 194- IA, when a deductor purchases land or building and pays TDS on it, then he need not hold a TAN, he can remit the TDS using PAN.
Q.10 – Which Forms are Used to File Quarterly TDS/TCS Returns?
Solution:- Which are used forms to file quarterly TDS/TCS returns are as follows:
- Form No.24Q for tax deducted at source from ‘Salaries’
- Form No.26Q for tax deducted at source from payments other than ‘Salaries’
- Form No.27Q for tax deducted at source from dividend, interest or any other amount payable to non-residents
- Form No.27EQ for tax collected at source
Q.11 – What are the Meaning and Use of Form No. 27A?
Solution:- Form No. 27A can be called a control chart of quarterly e-TDS/TCS statements. Form No. 27 should be filed by deductors or TDS collectors in paper form along with the quarterly statements. For each e-TDS/TCS return, a separate Form No. 27A has to be filed.
Form No. 27A is a summarised form of e-TDS/TCS returns that comprises control totals of ‘amount paid’ & ‘income tax deducted at source’. The control totals of ‘amount paid’ and ‘income tax deducted at source’ reflected in Form No. 27A must be equal to the corresponding control totals in the e-TDS/TCS return. It should be noted that Form No. 27A must be in physical form and must be duly filled & signed by an authorized signatory. After February 1, 2014, it became mandatory to submit only Form 27A which is generated using File Validation Utility.
Q.12 – What is the Meaning of Bank Challan Number?
Solution:- Bank Challan Number refers to the receipt number that a bank branch, where TDS is deposited, provides. The bank branch provides a different receipt number for each challan which is deposited. This challan number has to be mentioned in the e-TDS/TCS return.
Q.13 – What Value needs to be mentioned in Annexure-II of 24Q, Q4 Statement When the Value of Annual Rent Payable is More Than Rs. 1,00,000 and Landlord Do Not Hold PAN?
Any of the below-mentioned values can be selected by the Deductor to quote under the PAN field and file statement when the PAN is unavailable.
- Amount paid to Government organizations related to Central or State government only
- Amount paid to Non-resident
- Amount paid to Non-Government organizations and Non-resident
- The first option is applicable when either central or state government’s organization is the landlord
- The second option is applicable when a Non-Resident is a landlord
- The third option is applicable when a Non-Government organization and Non-resident is the landlord
Q.14 – What is a ‘Bank Branch Code’ and from where it can be Obtained?
Solution:- Bank Branch Code is a unique seven-digit code assigned to each branch of the bank by the Reserve Bank of India. The bank branch code of the bank branch where the TDS is deposited needs to be mentioned in the e-TDS/TCS return. ‘Bank Branch Code’ can be obtained from the bank branch itself.
Q.15 – Is there any Software that can be Used to Prepare e-TDS/TCS returns?
Solution:- NSDL e-Gov provided Return Preparation Utility can be used to prepare e-TDS/TCS returns. This software is available for free. Besides, third-party software can also be used for the e-filing of TDS/TCS like Gen TDS software. Gen TDS is a certified software by SAG Infotech that can be used to perform any TDS-related tasks accurately and quickly. Alike software is listed on the NSDL e-Gov -TIN website i.e. www.tin-nsdl.com.
Q.16 – What are the due dates of TDS return filing?
Solution:- The following are the TDS return due dates
| Quarter | Due Date |
|---|---|
| 1st Apr to 30th Jun | 31st July of Financial Year |
| 1st Jul to 30th Sep | 31st October of Financial Year |
| 1st Oct to 31st Dec | 31st January of Financial Year |
| 1st Jan to 31st Mar | 31st May of the following Financial Year |
Q.17 – A person who works in Australia and had invested Rs 15 lakh in a residential property in India in January 2018, is now planning to sell the property for Rs 18 lakh. The reader asks whether the buyer can deduct tax at the time of payment even though this transaction may lead to capital loss due to indexation?
Solution:- There has been much debate in the past as to whether Tax Deducted at Source (TDS) should be made on the total amount of the sale or only on the portion of the taxable income. As per Supreme Court judgment TDS can be made only when the non-resident is accountable to pay tax under the tax law.
- The Supreme Court has resolved the debate about TDS in the case of GE India Technology Centre (P) Ltd. v. CIT and has been confirmed by subsequent Supreme Court decisions. The court ruled that TDS can only be applied if the non-resident is required to pay tax under the tax law.
- Additionally, the payer can apply to the tax officer if they are certain that TDS applies but are unsure of the amount of payment subject to tax in the hands of the non-resident and therefore the amount of TDS. If the payer is fairly certain, they can determine whether TDS applies and, if so, what the amount should be.
- In this case, the cost and sale price of the property are known, so it is possible to calculate the capital gains tax. The calculation shows that there would be a capital loss after indexation (Indexed cost = ₹1,500,000 / 272 * 348 = ₹19,19,117). This means that the buyer does not need to deduct TDS (tax deducted at source) and there is no need to contact the tax officer for this decision.
- The seller can provide the necessary documents to the buyer so that the buyer can accurately calculate the capital loss. After obtaining a CA certificate in filing Form 15CA and 15CA, the net proceeds can be sent to the seller.
- In practice, to avoid being considered a defaulting taxpayer, the buyer usually asks the seller to obtain a certificate of low or no tax deduction from the tax authority. This is to prevent any legal issues that may arise later. If the seller does not provide this certificate, the buyer will deduct tax from the total sale amount, even if there is a capital loss.
