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:

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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.
  • recovered from the employees for meals consumed)
  • 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
  • Association of Individuals.
  • Body of Individuals.
  • Local Authorities
Rate of TDS deduction

Payments such as salaries, commission, professional fees, interest earned, rent etc. are subject to TDS deduction. Based on the type of income and amount of income earned, TDS is paid at various rates. Thus, different kinds of income has different TDS rates and the tax is paid on the extra amount earned after a certain maximum threshold limit is attained. The rate at which TDS is paid varies from 1 per cent to 30 per cent, depending on the income taxed.

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.

Late Filing of TDS Returns

As per the new rules, effective from April 1, 2017, one is liable to pay a maximum penalty of Rs. 10,000 for late filing of TDS Return. Also, filing of Form 26Q has been extended to 31st August, 2018 from 31st July, 2018. Details of penalties for late filing of Form 26Q is mentioned in the table below :

TDS Return Forms: An Overview

As the deductor is liable to deduct tax and file the TDS Return form as the supporting document, it is important to note that there are various types of TDS Return Forms for different situations. The type of TDS Return Form to be submitted is based on the Nature of Income of the deductee or the type of deductee who pays the TDS.

  • Form 24Q

    It is used for preparing eTDS returns for the TDS deducted on salary under Section 192 of the Income Tax Act, 1961. It has to be submitted on a quarterly basis by the deductor. It contains details like salaries paid and the TDS deducted of the employees by the employer. It contains 2 annexures namely Annexure-I and Annexure II. Annexure-I contains details of the deductor, deductees and challans, while Annexure II contains the salary details of the deductees. Annexure-I is to be submitted by the deductor for all the four quarters of the financial year. Annexure II need not be submitted in the first three quarters of the financial year, but has to be furnished and submitted in the fourth quarter of the financial year with details of the employees’ salaries of the entire financial year

  • Form 26Q

    It is to be submitted for tax deduction at source for all the payments received other than the salary. It is submitted on a quarterly basis by the deductor and is applicable for tax deducted at source under section 200(3), 193 and 194 of the Income Tax Act of 1961. It contains details like salaries paid and the TDS deducted of the employees by the employer. The income on which the tax is deducted at source includes interest on securities, dividend securities, professional fees, directors’ remuneration, etc. It is compulsory to furnish PAN by the deductors who are non-government deductors. For government deductors “PANNOTREQD” has to be mentioned on the form.

  • Form 27Q

    It is applicable for payments made to non-resident Indians and foreigners other than salary. It has to be filled in for the declaration of Tax Deducted at source for the NRIs and Foreigners. It is submitted on a quarterly basis by the deductor and is applicable for tax deducted at source under section 200(3) of the Income Tax Act of 1961. The income on which the tax is deducted at source includes interest, bonus, any additional income or any other sum owed to non-resident Indian or foreigner. It is compulsory for non-government deductors to furnish PAN. For government deductors the code “PANNOTREQD”has to be mentioned on the form.

  • Form 27EQ

    It is a quarterly statement that furnishes the details and information of the tax collected at source as per section 206C of the Income Tax Act of 1961. The form 27EQ is submitted on a quarterly basis. In this form it is mandatory to furnish TAN. It is the statement to show the Tax Collected at Source (TCS), which is the tax collected by the seller. When a buyer purchases certain goods or commodities, the seller collects the tax from the buyer through the TCS route. This tax is collected on the payment received from the buyer either in cash, credit, cheque, demand draft or from any other mode of payment. It is to be furnished by corporate deductors and collectors but not by government deductors and collectors. It is compulsory to furnish PAN by the deductors who are non-government deductors. For government deductors, the code “PANNOTREQD” has to be mentioned on the form.

  • Documents To Be Submitted

    • Address proof of establishment | Any utility bill and NOC from the owner if the establishment is rented.
    • Address proof of partners, proprietor or directors as applicable | E.g. Passport, driving license
    • PAN of partners, proprietors and directors as applicable
    • Photo of partners, proprietors and directors as applicable
    • Salary details of employees
    • Financial statements of the establishment
    • Certificate of incorporation and address proof in case of company

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