Tax Deducted at Source, as the name suggests, is the tax deducted at the time the income is received by or credited to the “person” so that collection of tax is propounded and there is regular flow of taxes to the government. Every business, whether a startup or an existing company, is certain to incur some expenses or to make payments to its parties irrespective of its size and scale. Thus TDS provisions apply to all types and size of businesses. TDS is deducted on various types of income such as salary, interest on bank deposits and bonds, winnings from lotteries and horse races etc.
TDS has to be deposited to the credit of the Central Government and TDS Returns should be filed within due dates prescribed by the Income Tax Act, 1961. TDS Certificates have to be issued by the deductor giving details of tax deducted so that the same is adjusted against income tax payable for the year by the deductee. A mandatory 10 digit Tax Deduction Number (TAN) is also required to be obtained by the deductor for this purpose.
Non Compliance with any of the provisions of the Income Tax Act in respect of deduction and deposit of TDS, filing returns, obtaining TAN etc leads to severe penalties. Hence, it is advisable to take expert help in order to avoid any kind of liability. Mr. Compliance provides a whole range of services which can completely take care of your TDS issues.
Key Points on TDS deduction
- Payment of TDS Deducted
The tax deducted at source (TDS) while making payment to parties for qualified expenses must be deposited before 7th of next month.
- Filing of TDS Return
After making the payment of TDS to the income tax, the taxpayer is required to file a quarterly return where the TDS deposited is mapped against the PAN of the person from which TDS was deducted. The TDS Return is filed within 30th of the month succeeding the quarter.
- Interest on Non Payment of TDS
The TDS deducted by a person need to be deposited within 7th day of the next month. Any failure or delay in depositing the TDS is punishable under section 271 C or/and Section 276 B. The defaulter is further liable to pay interest on delayed payment at the rate of 1.5% per month or part thereof. There is no provision in law where the interest can be waived; hence the assessee should be very careful.
- Interest on Non-Deduction of TDS
When a person while making payment for which he ought to have deducted TDS fails in deducting TDS or deducts an amount less than the required amount. In all such cases, the deductor is liable to pay an interest @ 1% per month or part of the month, till the date on which TDS is deducted. Hence, a businessperson must be prudent while making payment to parties and ensure that TDS is deducted.
- The Consequence of Non-Compliance
The non-compliance of TDS provisions is a grave offence and is punishable under section 271 (C) of the Income Tax Act 1961, wherein the minimum penalty is 10,000 which can go up to Rs. 1,00,000/-. Further section 276B applies to all such cases where a willful default is established, in all those cases the punishment is 3 Years rigorous imprisonment which can go up to seven years.
Due Date of Payment of TDS &Filing of TDS Return
|SL. NO.||PARTICULAR||DUE DATE||FREQUENCY|
|1||Payment of TDS deducted under various sections of the INCOME TAX ACT||Before 7th day of Next Month||Monthly|
|2||1st Quarter TDS Return ( 1st April to 30th June)||31st July 2017||Quarterly|
|3||2nd Quarter TDS Return(1st July to 30th September)||31st Oct 2017||Quarterly|
|4||3rd Quarter TDS Return(1st October to 31st December)||31st Jan 2018||Quarterly|
|5||4th Quarter TDS Return(1st January to 31st March)||31st May 2018||Quarterly|