TDS (Tax Deducted at Source) Return Filing is a quarterly statement submitted by individuals or entities who deduct tax at the source while making specific payments such as salary, rent, interest, commission, or professional fees. It contains details like the TAN of the deductor, PAN of the deductee, amount paid, TDS deducted, and deposited with the government. Filing TDS returns on time is mandatory to avoid penalties and ensure smooth credit of TDS to the recipient’s account. It is filed online through the NSDL portal using Form 24Q, 26Q, 27Q, or 27EQ based on the type of transaction.

TDS – Tax Deducted at Source

TDS, or Tax Deducted at Source, is a tax collection system as provided by the Income Tax Act in India. It mandates the payer to deduct a portion of tax in advance before making certain payments like salary, interest, rent, commission, or professional charges. The amount deducted is subsequently remitted with the government on behalf of the recipient. TDS provides a consistent flow of income to the government and avoids tax evasion. The payee can avail himself of the credit of the deducted amount at the time of filing his Income Tax Return (ITR). 

To whom should TDS be deducted?

TDS should be deducted by individuals or entities making specified payments like salary, rent, or professional fees exceeding prescribed limits. TDS applies to payments made to both resident and non-resident individuals or entities. The individual or organization responsible for making the payment is called the deductor, and the recipient of the payment is known as the deductee. Deduction occurs at payment or credit, whichever is earlier.

TDS Thresholds

TDS (Tax Deducted at Source) is only applicable when the payment is over specified threshold limits determined by the Income Tax Department. For instance:

• Salary: Depending on income tax slabs
• Interest from banks: ₹40,000 (₹50,000 for senior citizens)
• Rent: ₹2.4 lakh/year
• Contractor payment: ₹30,000/single payment or ₹1 lakh/year

If the payment is less than the threshold, no TDS is applicable. The limits are different for each type of payment and can be revised every year. Always use the most recent government notifications for fresh thresholds.

Who is Required to File a TDS Return?

• Any person or entity deducting TDS must file a TDS return.
• Companies, LLPs, firms, proprietors, and government bodies are commonly required to file.
• Individuals under tax audit must file TDS returns if they deduct TDS.
• Returns must be filed quarterly in prescribed forms (24Q, 26Q, 27Q, 27EQ).
• Nature of payment (salary, rent, interest, etc.) determines the form used.
• Failure to file may result in penalties and interest.
• TDS returns help the government track tax credits for deductees.
• Filing is mandatory even if no TDS is deducted in some quarters, in certain cases.

Why is TDS Return Filing Necessary?

• Legal Requirement: Mandated under the Income Tax Act for all TDS deductors.
• Avoid Penalties: Late or non-filing attracts penalties and interest.
• Ensures Transparency: Tracks tax deducted and deposited with the government.
• Enables TDS Credit: Helps deductees claim credit in their income tax returns.
• Compliance Proof: Serves as a record of tax compliance for audits or assessments.
• Mandatory for Refunds: Essential for timely processing of income tax refunds.
• Maintains Accuracy: Ensures correct PAN and deduction details are reported.

Why Choose The Legal Team for Your TDS Return Filing?

• Expert Assistance: Experienced professionals ensure accurate TDS calculation and filing.
• Timely Filing: We ensure all returns are filed within due dates to avoid penalties.
• PAN & Form Validation: Proper verification of PAN, challans, and deduction details.
• End-to-End Support: From data collection to form submission and compliance.
• Error-Free Returns: Minimized chances of notices or mismatches with Form 26AS.
• Affordable Pricing: Transparent and budget-friendly packages for all business sizes.
• Client Satisfaction: Trusted by businesses, professionals, and individuals across India.
• Dedicated Support: Responsive customer service for all your TDS-related queries.