TDS Return Online Filing

TDS which stands for “tax deduction at source” is a tax collection system that works by collecting tax from the source of income. In other words, businesses cannot pay salary, rent, or contractor fees without deducting tax first. This tax amount is sent straight to the government. In addition TDS returns need to be filed every 3 months. This gives a summary on what tax amounts were deducted and submitted to the tax authority.

Tax Deducted at Source (TDS) is a tactic used by the government to collect tax in advance, or as they say, collect revenue before the services are rendered. This system ensures that there are no defaulters when it comes to paying tax. Any person or organization who provides payment for salary, professional services, rent, interest, or even has dealings with contractors surely have to collect tax off that payment and directly send it to the government. 

TDS allows payments to be made conveniently without waiting for long periods. The individual who makes the payment lifts a certain percentage from the total fee and keeps it aside for tax. The tax collected is paid directly to the government on behalf of the recipient. Further, details of the recipient like PAN number and TDS amount are also captured on the TDS return.

The deducted tax must be deposited with the government, and a TDS return must be filed with complete details of the transaction, including the deductee's PAN and the amount deducted.

Any employer, business, or individual with a valid TAN (Tax Deduction and Collection Account Number) can file a TDS return if they are responsible for deducting tax at source. As per the Income Tax Act, TDS must be deducted and deposited for specific types of payments, including:

• Salaries – Employers deduct TDS from employees' salaries before paying them.
• Income from Securities – TDS is deducted on interest earned from bonds and debentures.
• Winnings from Lotteries & Games – If you win a lottery or a prize in a game show, TDS applies.
• Horse Race Winnings – Prize money from horse racing attracts TDS.
• Insurance Commissions – Agents earning commissions on policies have TDS deducted.
• National Savings Scheme Payments – Interest from government savings schemes may be subject to TDS.

TDS return filing is mandatory for:

• Businesses & Companies: Every corporation or company claiming deduction of TDS on salary paid to employees or payments to vendors and professionals shall submit a TDS return.
• Employers Paying Salaries (Section 192): Employers who withhold TDS from their employee's salary payment have an obligation to submit a TDS return.
• Businesses Paying Professionals, Rent, or Commissions Payments made outside the given boundaries set for professional services, listed service, or commission requires TDS reporting.
• Contract Payments (Section 194C) – Companies making payments to contractors or subcontractors above the prescribed threshold must file TDS returns.

Filing TDS returns within the prescribed TDS return filing due date is crucial to avoid penalties. Here’s a table outlining the due dates:

Missing these deadlines can attract penalties under Section 234E.

Filing TDS return online is a streamlined process through the TRACES (TDS Reconciliation Analysis and Correction Enabling System) portal. Here’s the TDS return filing process step-by-step:

Step 1: Gather Necessary Details

Ensure you have:

• TAN and PAN details of the deductor and deductee.
• Challan details of TDS deposited.
• Nature of payment and TDS rate applicable.
• Correct TDS return form (e.g., Form 24Q for salary, Form 26Q for non-salary payments).

Step 2: Download TDS Return Preparation Utility

Visit the TIN-NSDL website and download the latest Return Preparation Utility (RPU) and File Validation Utility (FVU) to prepare the return.

Step 3: Prepare TDS Return File

Using the downloaded RPU, enter all required details, including:

• Deductor and deductee details
• TDS challan details
• TDS deducted and deposited details

Validate the return using FVU software.

Step 4: Submit TDS Return Online

• Login to the TRACES portal.
• Upload the validated .fvu file.
• Use Digital Signature Certificate (DSC) for authentication.
• Submit and download the acknowledgment receipt.

Step 5: Check TDS Return Status

After submission, verify the return status on the TIN-NSDL portal to confirm successful processing.

Filing of TDS returns is mandatory every quarter and filling the appropriate form is determined by the type of payment made:

• Form 24Q - Salary payments filed by the employer
• Form 26Q - Other than salary payments, such as fees for professional services, rent, interest, etc.
• Form 27Q - Payment made to foreigners including NRIs & other foreign entities.
• Form 27EQ - Tax retained at source TCS transactions.

Failure to fulfill the deadlines for each quarter can attract certain penalties.

TDS Form 24Q (Salary Payments)

• Applicable to: Employers deducting TDS on salaries (as per Section 192 of the Income Tax Act, 1961).
• Purpose: This form reports salary payments and the TDS deducted from employees’ salaries.
• Filing Requirement: Must be submitted quarterly by the employer.
• Example: If a company pays a salary of ₹50,000 per month to an employee and deducts ₹5,000 as TDS, this deduction must be reported in Form 24Q every quarter.

TDS Form 26Q (Non-Salary Payments)

• Applicable to: Businesses or individuals making non-salary payments where TDS applies.
• Purpose: Reports TDS on professional fees, rent, commissions, and interest payments.
• Filing Requirement: Submitted quarterly by the deductor.
• Example: If a company pays ₹1,00,000 to a consultant and deducts ₹10,000 as TDS, this must be reported in Form 26Q for that quarter.

Form 27Q (Payments to Non-Residents)

• Applicable to: Payments to NRIs or foreign entities where TDS is deducted.
• Purpose: Reports TDS deducted on payments like interest, dividends, or contract payments to non-residents.
• Filing Requirement: Filed quarterly before the due date.
• Example: If an Indian business pays $1,000 to a foreign consultant and deducts TDS as per applicable rules, the details must be reported in Form 27Q.

Form 27EQ (Tax Collected at Source - TCS)

• Applicable to: Entities collecting tax at source as per Section 206C (e.g., sale of goods like alcohol, scrap, minerals).
• Purpose: Reports TCS collected on applicable transactions.
• Filing Requirement: Submitted quarterly by government or corporate collectors.
• Example: A car dealership selling a luxury vehicle worth ₹50 lakh must collect 1% TCS (₹50,000) from the buyer and report it in Form 27EQ.

Late or incorrect TDS return filing attracts penalties:

• Late filing fee: ₹200 per day under Section 234E.
• Interest on late deposit:
  • 1% per month for late deduction.
  • 1.5% per month for late deposit.
• Penalty under Section 271H:
  • ₹10,000 to ₹1,00,000 if the return is not filed within one year.

To avoid these penalties, businesses must apply online for TDS filing and adhere to deadlines.

Filing TDS (Tax Deducted at Source) returns is essential to stay compliant with tax laws and avoid penalties. Here’s why it matters:

1. It’s a Legal Requirement
   If you deduct TDS from payments like salaries, rent, or professional fees, you must file a TDS return. Example: A company paying ₹50,000 in rent must deduct 10% TDS (₹5,000) and file a return to report this deduction to the tax department.
    
2. Keeps a Record of Tax Payments
   TDS returns act like a receipt showing how much tax has been deducted and paid to the government. This ensures transparency.
    
3. Ensures Correct Tax Deduction
   Filing returns helps verify that the right amount of TDS has been deducted. Example: If a freelancer receives ₹1,00,000 and the client deducts ₹10,000 as TDS, the freelancer can check their Form 26AS to confirm that the amount was deposited correctly.
    
4. Helps You Claim Tax Benefits
   If TDS has been deducted from your income, you can adjust it against your total tax liability. Example: If ₹30,000 TDS was deducted from your salary, but your actual tax payable is ₹25,000, you can claim a ₹5,000 refund when filing your Income Tax Return.
    
5. Makes Refunds Easier
   If extra tax was deducted, you can claim a refund—but only if you’ve filed your TDS return. Example: If an employer mistakenly deducts 15% TDS instead of 10%, the extra amount can be refunded when the tax return is filed.
    
6. Ensures Smooth Financial Transactions
   Proper TDS filing keeps your tax records clean and avoids issues with loans, credit approvals, or government contracts.
    
7. Supports Government Revenue Collection
   TDS ensures that tax is collected in advance rather than waiting for individuals to pay at the year’s end, helping the government manage funds efficiently.

By filing TDS returns on time, businesses and individuals stay compliant, avoid fines, and ensure smooth financial dealings.

To file TDS return filing online, the following documents are required:

1. TAN and PAN details of the deductor.
2. PAN details of all deductees.
3. TDS challan receipts (proof of tax deposited).
4. Salary/Invoice details (for which TDS was deducted).
5. Nature of payment and applicable TDS rate.
6. TDS return preparation utility (RPU) file.

Having these documents ready ensures a smooth filing process.

Taxpayers can apply online for TDS return filing through the TIN-NSDL or TRACES portal. The process includes:

1. Register on TRACES using your TAN.
2. Download and install TDS Return Utility.
3. Enter challan and deduction details.
4. Validate using File Validation Utility (FVU).
5. Upload the .fvu file to TRACES.
6. Submit and download the acknowledgment receipt.

Filing a TDS return isn’t just a compliance requirement—it ensures transparency and smooth tax collection for both businesses and the government. If your business deducts TDS on payments like salaries, professional fees, rent, or contractor payments, staying on top of TDS return filing is essential to avoid penalties and legal issues.

Handling TDS filings can be tedious, but you don’t have to do it alone. Filing Buddy makes the process simple and hassle-free by ensuring accurate TDS calculations, timely return filing, and compliance with tax regulations. Let us take care of your TDS return filing so you can focus on growing your business. Get in touch with Filing Buddy today!

1. What is TDS and how does it work?

 TDS (Tax Deducted at Source) is a system where tax is deducted at the time of payment for various types of income. How to file TDS return and the TDS return filing process are essential for businesses to comply with tax laws.

2. What is the TAN number, and why is it required for TDS filing? 

TAN (Tax Deduction and Collection Account Number) is a unique identification number required for deducting or collecting TDS. Without a TAN, you cannot file your TDS return.

3. Which form in the Income Tax Portal provides details of TDS? 

Form 26Q, 27Q, and 27EQ are the main forms for providing details of TDS deducted in the Income Tax Portal.

4. Is TDS applicable on the invoice value including GST or excluding GST? 

TDS is deducted on the invoice value excluding GST. The GST component is not considered part of the TDS calculation.

5. What are the important TDS Returns to be filed by an Assessee? 

Assessees need to file quarterly TDS returns using forms like 24Q, 26Q, and 27Q, depending on the nature of the payments.

6. What is the time limit for remittance of TDS? 

TDS should be remitted to the government within 7 days from the end of the month in which the deduction was made, except for March, when the deadline is 30th April.

7. What are the due dates for filing TDS Return for various quarters? 

The due dates for TDS return filing are as follows:

• Q1 (April-June): July 31
• Q2 (July-September): October 31
• Q3 (October-December): January 31
• Q4 (January-March): May 31

8. What is the late fee payable for delay in filing TDS Return? 

A late fee of ₹200 per day is charged under Section 234E for delays in filing TDS returns.

9. What is the interest payable for delay in deduction of Tax? 

Interest under Section 201(1A) is charged at 1% per month for delay in deduction of tax.

10. What is the interest payable for delay in remittance of TDS? 

If TDS is remitted late, interest at 1.5% per month is payable under Section 201(1A).

11. What is the penalty payable for delay in filing/incorrect filing of TDS Return? 

A penalty of ₹10,000 to ₹1,00,000 can be imposed for failure or incorrect filing of TDS returns.

12. What are the provisions related to Prosecution for non-payment of TDS?

Prosecution provisions under Section 276B may lead to imprisonment and a fine for non-payment of TDS.

13. What are the provisions related to disallowance of expenses due to failure in deducting or depositing TDS? 

Under Section 40(a)(i) of the Income Tax Act, expenses will not be allowed as deductions if TDS was not deducted or deposited.

14. When is TDS applicable on Salaries, and what is the TDS rate? 

TDS is applicable on salaries when the total salary exceeds the basic exemption limit. The TDS rate follows the income tax slab applicable to the employee.

15. How to file TDS return online, and what is the process for TDS return filing online?

TDS return filing online can be done via the Income Tax Portal. The TDS return filing process includes downloading and filling the appropriate forms and submitting them electronically.