TDS Returns – AuditBuzz

TDS & TCS Returns

TDS (Tax Deducted at Source)

TDS or Tax Deducted at Source is income tax reduced from the money paid 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. The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against his final tax liability. The recipient takes credit for the amount already deducted and paid on his behalf.

Budget 2023 updates –

Section 194BA – Introduction of TDS on income from online gaming
Section 196A – Starting April 1st, 2023, non-residents earning income from mutual funds in India can provide a Tax Residency Certificate to avail the benefit of TDS as per rate given in tax treaty, instead of 20%.
Section 192A – TDS rate reduced to 20% from maximum marginal rate on PF withdrawal for employees who do not have PAN
Section 193 – No exemption from TDS on interest from listed debentures. Therefore, tax has to be deducted on interest on such specified securities.
Section 194N – TDS threshold has been increased on cash withdrawal by co-operative societies. Starting April 1st, 2023, tax will be deducted on cash withdrawals by co-operative societies if the amount exceeds Rs 3 crore, instead of the previous limit of Rs 1 crore.

Main Rates for TDS are as below:

Section	Nature of transaction	Threshold limit	TDS Rate
192	Payment of salary	Basic Exemption limit of employee	Normal Slab rates
194A	Interest from other than interest from securities (from deposits with banks/post office/co-operative society)	Senior Citizens- 50,000 Others- 40,000)	10%
194C	Payment to contractor/sub-contractor:-	Single transaction- 30,000 Aggregate transactions- 1,00,000
	a) Individuals/HUF		1%
	b) Other than Individuals/HU		2%
194D	Insurance commission to:
	a) Domestic Companies	15,000	10%
	b) Other than companies	15,000	5%
194H	Commission or brokerage	15,000	5%
194I	Rent
	194-I(a) Rent on plant and machinery	2,40,000	2%
	194-I(b) Rent on land/building/furniture/fitting	2,40,000	10%
194J	Any sum paid by way of fee for professional services	30,000	10%
194J	Any sum paid by way of remuneration/fee/commission to a director	30,000	10%
194J	Any sum paid for not carrying out any activity concerning any business	30,000	10%
194J	Any sum paid for not sharing any know-how, patent, copyright, etc.	30,000	10%
194J	Any sum paid as a fee for technical services	30,000	2%
194J	Any sum paid by way of royalty towards the sale or distribution, or exhibition of cinematographic films	30,000	2%
194J	Any sum paid as fees for technical services, but the payee is engaged in the business of operation of the call center.	30,000	2%
194Q	Payments for the purchase of goods	50,00,000	0.10%
194R	Perquisite or benefit to a business or profession	20,000	10%
206AB	Payment to non-filers, i.e. those who have not filed their income tax return in the last year Budget 2023: Non filers do not include: - People who are not required to file their ITRs - NRs who do not have a PE in India	No limit	2 times the rate given in the Income Tax Act or Finance Act or 5%, whicheveris higher
206AA	TDS rate in case of Non availability of PAN	No limit	Rates specified above or 20%, whichever is higher

Rate of TDS under Section 195

The rate of TDS under Section 195 increases by adding the applicable education cess and surcharge. However, for payments made according to the DTAA rates, no educational cess or surcharge is applied.

TDS deduction rates applied under Section 195 are explained below-

Particulars	Rates
Income from investment made by an NRI (Interest/Dividend)	20%
Long-term capital gains (Section 115E) Shares of an Indian Company Debentures and deposits of a Public Company in India Securities issued by the government	10%
Long-term capital gain from listed shares and securities (Section 112A)	10%
Any other long-term capital gain	20%
Short-term capital gains (Section 111A)	15%
Interest payable on foreign currency borrowings (Government/Indian concern)	20%
Royalty and Fees for technical services (Government/Indian concern)	20%
Winnings from: Horse races Online games Card games, lotteries, crossword puzzles, and other games	30%
Any other income	30%

*LTCG stands for Long Term Capital Gains and STCG stands for Short Term Capital Gains

How and when to file TDS returns?

Filing Tax Deducted at Source returns is mandatory for all the persons who have deducted TDS. TDS return is to be submitted quarterly and various details need to be furnished like TAN, amount of TDS deducted, type of payment, PAN of deductee, etc. Also, different forms are prescribed for filing returns depending upon the purpose of the deduction of TDS. Various types of return forms are as follows: Form 26QTDS on all payments except salaries Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May

Form No	Transactions reported in the return	Due date
Form 24Q	TDS on Salary	Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May
Form 27Q	TDS on all payments made to non-residents except salaries	Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May
Form 26QB	TDS on sale of property	30 days from the end of the month in which TDS is deducted
Form 26QC	TDS on rent	30 days from the end of the month in which TDS is deducted

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 assessee 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

TDS Refund

TDS (Tax Deducted at Source) is a mechanism by which the government collects tax at the source of income. When someone makes a payment, they deduct a certain percentage as TDS and remit it to the government. If the TDS deducted is more than the actual tax liability, individuals or businesses are eligible for a TDS refund.

Who are Taxpayers?

Eligibility for TDS Refund:

How to Claim TDS Refund:

File an income tax return: To claim a TDS refund, you must file an income tax return. Make sure to report all your income sources and provide details of the TDS deducted.
Verify Form 26AS: It's essential to verify your Form 26AS to ensure that TDS entries match your records.
Request a refund in your tax return: In your income tax return, you can request a TDS refund. The tax department will process your request and issue a refund if you are eligible.

Timeline for TDS Refund:

Checking TDS Refund Status:

Documents Required:

Common Reasons for Delay:

Understanding TDS refunds is essential for individuals and businesses to ensure they receive the correct refund amount. If you believe you are eligible for a TDS refund, follow the necessary procedures and monitor the status to receive your refund promptly.

E-filing of TDS (Tax Deducted at Source) is the process of electronically submitting TDS returns and related documents to the income tax authorities in many countries, including India. TDS is a system where individuals or entities are required to deduct a certain percentage of tax at the source when making specified payments, such as salaries, interest, rent, and professional fees. This deducted tax is then deposited with the government on behalf of the recipient of the payment.

Here’s a general description of the e-filing process for TDS in India:

Register as a Deductor : This category includes people who earn income through various sources, such as employment, self-employment, investments, or rental income.
Collect TDS Certificates: Ensure that you have received TDS certificates (Form 16/16A) from the deductees (i.e., the individuals or entities from whom you have deducted TDS). These certificates contain details of the TDS deducted.
Prepare TDS Returns: Use accounting or TDS software to prepare the TDS returns in the required format. In India, TDS returns are generally filed using Form 24Q (for salaries) or Form 26Q (for other payments).
Verify Data: Verify all the data entered in the TDS return, including PANs, tax deducted, and challan details, to ensure accuracy.
Generate a TDS File: Once the TDS return is prepared and verified, generate a TDS return file in the specified format (usually in text format).
TAN Registration: Ensure that you have a valid TAN (Tax Deduction and Collection Account Number). You'll need this for e-filing.
Visit the NSDL Portal: Go to the NSDL (National Securities Depository Limited) or the relevant government portal for TDS e-filing, which is commonly used in India.

Log In: Log in to your account on the portal using your TAN and other credentials.
Upload TDS File: On the portal, you can upload the TDS return file that you generated in step 5. Make sure to select the appropriate TDS return form, such as 24Q or 26Q.
Submit and Receive Acknowledgment: After successfully uploading the file, submit it. You will receive an acknowledgment with a unique token number. This acknowledgment is proof that you have filed the TDS return.
Payment of TDS: Pay any TDS liabilities to the government using the Challan 281 form. You can do this online as well.
Keep Records: Maintain records of all TDS returns, acknowledgments, and payment receipts for future reference.
Correction and Rectification: If you make any mistakes in your TDS return, you can make corrections and file a revised return using the same process.
Annual Compliance: Ensure that you file your TDS returns and make TDS payments on time, as specified by the tax authorities.

E-filing of TDS returns is a mandatory requirement for businesses and individuals who deduct TDS in many countries to ensure transparency, accuracy, and timely compliance with tax regulations. The process and forms may vary from one country to another, so it’s essential to follow the specific guidelines and rules of your tax jurisdiction.

TCS Returns

TCS Tax Collected at source.

Tax Collection at Source (TCS) refers to the levy imposed on sellers, who are responsible for collecting tax from buyers during a transaction and subsequently remitting it to the appropriate tax authorities. The rules and regulations governing the specific goods subject to TCS are outlined in Section 206C of the Income-tax Act. To facilitate this process, individuals conducting TCS must possess a Tax Collection Account Number.

The types of products subject to Tax Collection at Source (TCS) regulations and the corresponding tax rates that apply to them.

When the goods listed below are employed in the manufacturing, processing, or production of items, taxes are not due. However, if these same goods are utilized for trading purposes, then tax becomes applicable. The seller collects the applicable tax at the point of sale, and the tax rate varies based on the specific category of goods:

Type of Goods or transactions	Rate
Liquor of alcoholic nature, made for consumption by humans	1%
Timber wood under a forest leased	2.5%
Tendu leaves	5%
Timber wood by any other mode than forest leased	2.5%
Forest produce other than Tendu leaves and timber	2.5%
Scrap	1%
Minerals like lignite, coal and iron ore	1%
Purchase of Motor vehicle exceeding Rs.10 lakh	1%
Parking lot, Toll Plaza and Mining and Quarrying	2%
Where total turnover is more than Rs.10 crore in the previous financial year and receives sale consideration of any products of more than Rs.50 lakh, such seller must collect TCS upon receiving consideration from the buyer on such amount over and above Rs.50 lakh, as per Section 206C(IH). (Without PAN, then 1% is TCS)	0.1%

Classification of Seller for TCS

The Tax Collection at Source (TCS) classification designates certain individuals and entities as authorized sellers. Only the following entities, and no others, have the authority to collect taxes at the source from buyers:

Central Government
State Government
Local Authority
Statutory Corporation or Authority
Companies registered under the Companies Act
Partnership firms
Co-operative Societies
Individuals or Hindu Undivided Families (HUF) subject to an audit of accounts under the Income-tax Act for a specific financial year.

Classification of Buyers for TCS

A buyer is an individual who acquires goods of specific types through various means, such as sales, auctions, tenders, or other methods. However, the following categories of buyers are exempt from the requirement to have tax collected at the source (TCS):

Public sector companies
Central Government
State Government
Embassies and High Commissions
Consulates and other trade representatives of foreign nations
Clubs, including sports and social clubs
Resident buyers who use their purchases for manufacturing, processing, or power generation purposes (not for trading) and provide a written declaration to this effect in duplicate.

TCS Payments & Returns

All funds collected by a government office must be deposited on the same day they are collected.

In the case of TCS, the seller is required to deposit the collected tax amount using Challan 281 within 7 days from the last day of the month in which the tax was collected, on a monthly basis.

If a tax collector fails to collect tax or doesn’t remit the collected tax to the government within the specified due dates, they will be subject to an interest charge of 1% per month or a fraction of a month.

Every tax collector is obligated to submit a quarterly TCS return, specifically in Form 27EQ, detailing the tax amounts they’ve collected during a given quarter. Any interest accrued due to delayed payment of TCS to the government must be settled before filing this return.

TCS Certificate

When a tax collector submits their quarterly TCS return using Form 27EQ, they are required to furnish a TCS certificate to the purchaser of the goods.

Form 27D serves as the certificate issued for TCS returns that have been filed, and it includes the following essential information:

Names of the Seller and Buyer
TAN (Tax Deduction and Collection Account Number) of the seller who files the quarterly TCS return
PAN (Permanent Account Number) of both the seller and the buyer
Total tax amount collected by the seller
Date of tax collection
The applicable tax rate

This certificate must be issued within 15 days from the date of filing the quarterly TCS returns. Here is a summarized table of all the TCS due dates:

Quarter Ending	Due date to file TCS return in Form 27EQ	Date for generating Form 27D
For the quarter ending on 30th June	15th July	30th July
For the quarter ending on 30th September	15th October	30th October
For the quarter ending on 31st December	15th January	30th January
For the quarter ending on 31st March	15th May	30th May

FAQs

FAQ on TDS & TCS rates

What is TDS?

Tax Deducted at Source (TDS) is a mechanism through which tax is deducted by a person or entity while making payments such as salary, rent, interest, or other specified payments. This deducted amount is then remitted to the government on behalf of the payee.

Who is responsible for deducting TDS?

The person or entity making the payment (the deductor) is responsible for deducting TDS. This can be an individual, a company, or any other legal entity.

Who is the recipient of the TDS deduction?

The recipient of the TDS deduction is the payee or the person receiving the payment.

What are the different types of payments on which TDS is applicable?

TDS is applicable on various types of payments, including salary, interest, rent, professional fees, commission, and more. The rates and rules may vary depending on the nature of the payment.

When is the TDS amount to be deposited with the government?

The TDS amount deducted must be deposited with the government within a specified time frame. The due dates for TDS deposits are typically on a monthly or quarterly basis, depending on the category of the deductor.

Can TDS deducted be claimed as a tax credit by the payee?

Yes, the TDS deducted can be claimed as a tax credit by the payee while filing their income tax return. It reduces the total tax liability.

What is Tax Collected at Source (TCS)?

TCS is a tax collection mechanism in India where the seller collects tax from the buyer at the time of sale of specified goods or services. The seller later deposits this tax with the government.

Who is liable to collect TCS?

Usually, the seller or the entity receiving payment for specified transactions is liable to collect TCS. This responsibility is primarily on businesses and individuals whose turnover exceeds a certain threshold.

What are the types of transactions subject to TCS in India?

TCS is applicable to a wide range of transactions, including the sale of goods, sale of scrap, sale of motor vehicles, sale of minerals, and more. Rates and thresholds may differ based on the nature of the transaction.

What is the rate of TCS notified by Government?

Rate of TCS is 0.5% under each Act (i.e. the CGST Act, 2017 and the respective SGST Act / UTGST Act respectively) and the same is 1% under the IGST Act, 2017. Notifications No. 52/2018 – Central Tax and 02/2018-Integrated Tax both dated 20th September, 2018 have been Page 2 of 11 issued in this regard. Similar notifications have been issued by the respective State Governments also.

Is it necessary for eCommerce operators who are already registered under GST and have GSTIN, to have separate registration for TCS as well?

E-Commerce operator has to obtain separate registration for TCS irrespective of the fact whether e-Commerce operator is already registered under GST as a supplier or otherwise and has GSTIN.

Whether TCS is to be collected on import of goods or services or both?

TCS is not liable to be collected on any supplies on which the recipient is required to pay tax on reverse charge basis. As far as import of goods is concerned since same would fall within the domain of Customs Act, 1962, it would be outside the purview of TCS. Thus, TCS is not liable to be collected on import of goods or services.

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