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What is TDS

Learn about TDS, its cycle, consequences, and procedures like tax deduction, remittance, Form 16, and e-TDS returns. Ensure correct TAN, payment, and filing to avoid penalties.

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What is TDS

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  1. What is TDS • With holding tax or Tax deduction at source means, deduction of tax as and when the transaction takes place i.e, when the payment is made or payable, which ever is earlier. • Since Government needs revenue to function, it is very important to have a flow of revenue to meet the expenditure.

  2. TDS Cycle • Indentifying the transaction • Tax deduction and remittance • Collection of CIN/BIN (Book Identification Number) • Preparation of Quarterly e-TDS returns • Uploading the e-TDS return through TIN-FC • Issue of Form No.16/16A

  3. Identifying the transaction • First check whether the payment made is attracts TDS liability or not, then classify the payment into two categories • 1. Salary • 2. Non-Salary (Contract Payments, Professional Fees, Parking lot lease etc.,) • Note: Even payable entries(transactions) also attracts Tax deduction at source.

  4. Tax deduction and remittance • It is the duty of the deductor (who is responsible of signing the bills or the paying authority) to deduct income tax at the time of payment as per the prevailing rates and make sure correctness of the details of PAN which is submitted by the deductee/payee. • Remittance: • 1. By Challan (No.281, for the TDS payments) • 2. By Book-adjustment (through Treasury or PAO) • Time Limit: • 1. If the tax is to be paid by challan – 7th of the following month • 2. If the tax adjusted through Book-adjustment – same day

  5. Consequences in case of failure to remit / deduct the TDS • Interest at the rate of 1.5% p.m, or part of the month, from the date of deduction to the date of actual payment, u/s 201(1A) of IT Act,1961. • if fail to deduct TDS, interest at the rate of 1% p.m or part of the month, from the date on which tax deductable to the date of actual payment u/s 201(1) of the IT Act,1961.

  6. Failure to pay tax deducted at source prosecution u/s 276B fo IT Act, 1961 • Punishable with fine and rigorous imprisonment – minimum 03 months, maximum 07 years.

  7. Payments made through Challan • Points to remember (Very Important): • Use correct Challan (Challan No. 281) • Mention Correct Code of Payment viz., 92A-Salary, 94C – Contract payment etc., • Enter the correct Assessment Year • Enter the Correct TAN

  8. Contd., • Mention the Major head as 21, since the deductors are Govt., • What is Assessment Year? • A financial year starts from the month of 1st April of the year to 31st March. Example: FY 2014-15, starts with 01.04.2014 to 31.03.2015. for this Financial year , the assessment year will be 2015-16, and so on.

  9. How to check the accuracy of the TAN? • First check the allotment letter of TAN, if it is not available, you can check at www.incometaxindia.gov.in • Failure to quote the TAN or entering the wrong TAN is liable for penalty of Rs.10,000/- u/s 272BB of IT Act, 1961.

  10. Place the curser on TAN, click on “Know your TAN”, it will take you to a new window… Place the curser here Click to verify You can download challan

  11. Enter the mandatory details (you can check by entering name or TAN) You can search by name or entering the TAN

  12. Payments made through Book-adjustment • Points to be remembered: • Quote correct TAN and Quantum of payment and tax deducted thereof and submit the particulars in time at District Treasury Office/PAO. • On receiving of particulars, the DTO/PAO files the monthly return in the Form no.24G which generates BIN.

  13. BIN (Book Identification Number) • Based upon the details submitted by the DDOs, the respective DTO/PAO will file Form No.24G (which is a monthly e-TDS return). • On successful filing of Form No.24G, a unique number will be generated for each DDO, which is called BIN. • This BIN need to be quote in the quarterly returns.

  14. Where to get this BIN • You can get from the respective DTO’s Office/PAO’s Office Or • You can check in the income tax web site • Navigation: • Go to www.tdscpc.gov.in

  15. Select “deductor”Click “check here to view BIN details” Select the deductor Click here

  16. It will take to the new windowEnter the necessary particulars

  17. Let us see how to file the e-tds returns • Now you all have the required details viz, • Challan details (or) BIN details • PAN of the deductees • TAN particulars etc.,

  18. Due dates for furnishing the e-tds returns

  19. Levy of Fee u/s 234E for the delay in filing of e-tds returns. • Note: u/s 234E of IT Act, 1961, the mandatory fee @ Rs. 200/- per day from the due date to submit the e-returns till the day of filing (restricted maximum of tax remitted in the particular quarter), this provision applicable to all type of deductors including Govt., deductors.

  20. Prerequisite for preparation of e-tds returns • e-TDS RPU (Return Preparatory Utility) software • FVU software (File Validation Utility) • CIN/BIN particulars • PAN of the deductees

  21. Where to get these software ? • Go to the website of NSDL, www.tin-nsdl.com • Click on e-tds/e-tcs filing • Click on e-tds/e-tcs RPU

  22. Click here

  23. Click on “download RPU version 4.0 (applicable from June 28, 2014)”, for the earlier years version is 3.9 Click here

  24. Click to download NSDL RPU

  25. Click to SAVE

  26. Click to install RPU

  27. After installing the software, the screen will appear as follows, Click to run RPU

  28. Click on the button “RPU, RPU 4.0, NSDL”, the screen will appear as shown below. Select, 24Q – Salary, 26Q – Non Salary, 27EQ – TCS.

  29. Contd., SSelect “Regular” for new/fresh return

  30. Select Quarter Enter FY Enter all Particulars with out fail

  31. Click, if the particulars are same as above Select YES, if you filed regular return, earlier. Mention the 15 digit number of the earlier regular return

  32. Click, to enter the challan/BIN details Click here, to enter the no.of challan/Transfer voucher details

  33. Enter the no. of rows/challans to be entered Click OK, after entering the no. of rows

  34. Late fee u/s 234E has to be entered under the “FEE” column Select section code, as per the nature of payment

  35. Enter the BIN particulars Click “YES”, if the TAX is paid through Treasury Enter 07 digit BIN no., received from the Treasury Select “200”, for normal TDS payments or “400”, for demand raised by the IT Dept.,

  36. Don’t leave any ‘AMOUNT’ column blank, enter “0” if not applicable.

  37. Click here to enter the deductee details Click here to enter the no.of rows required

  38. Enter the serial no. of the deductee Select the challan no. to which the deductee is to be mapped Follow the “HELP” guidelines to map the challans , carefully.

  39. After saving the file, click on “create file”, to create and validate the TDS/TCS statement After preparing the return, SAVE for future references For opening the previous saved file, press OPEN

  40. Now the final step – “validating the statement” Import .csi downloaded from the ‘challan status enquiry’ from TIN website. After selecting the path where .fvu & Form no.27A is to be saved, click on validate button. Select the path where .fvu file and Form no.27A is to be generated

  41. How to download .csi file from the TIN website After entering the NSDL website, click “challan status enquiry”, this window wil appear Select the “TAN Based view”, it will lead you to a new window.

  42. Enter the TAN Enter the period to fetch all the challans paid during that period.

  43. On successful passing the validations, .fvu file and Form no. 27A will be generated on the system with suffix of “.fvu”, copy these files on a CD / Pen drive and submit these to any near by TIN-FC (TIN facilitation centers) after paying a nominal fee, as prescribed.

  44. Let us see how to view “Individual Tax Credit” in Form No.26AS and how to e-file the “Individual Income-tax return”

  45. After entering the website of “www.incometaxindiaefiling.gov.in If you are registered user then click “log in “

  46. If you are registered user, enter PAN, Password & DOB If you are not registered earlier, click here

  47. After filling up the necessary details viz., PAN , Status, Mobile No. and e-mail ID, your “ID & Password “ will be created . By which you can view ‘Tax credit’ & file ‘individual return of income’ online.

  48. After log-in , to submit Return of Income, click here Click here, to view your ‘tax credit’ You can calculate your tax here.

  49. Click here, to view your ‘tax credit’ After selecting view form 26AS, this window will appear

  50. Click here, to view your ‘tax credit’

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