Insights on TDS Returns & Compliances

–An Article by CA Manpreet S. Taneja

There are various taxation terminologies which are frequently used in business and also in day to day chores, but we are not fully acquainted of such nomenclatures.

One such concept is “Tax deducted at source” popularly known as “TDS”. From salaried person to a businessman, from payment of rent to purchase of goods role of TDS is significant.

Therefore, it becomes imperative to all to have a minimal knowledge of TDS and in this article, we will get through such basic concepts of TDS and its liabilities regarding submission of TDS and Returns.

Q1.- What is TDS?

Ans.- “TDS” stands for Tax Deducted at Source. In simple words, TDS is the amount which the person making payment for either goods or services availed (“Payor”) to the person providing goods or services (“Payee”), at the time of payment or recording in his books of accounts, has to deduct the amount as applicable and pay the net amount to the Payee and deposit the TDS amount to the exchequer (tax authorities) within the due dates as notified.

Example: – Suppose Mr. Jackie has availed services of an Architect, Mr. Antonio, for construction of his office at New Delhi. The Professional Charges of Mr. Antonio are INR 2 lacs. The construction is completed on 27^th April 2021. Mr. Antonio raised the invoice for the services on 28^th April 2021. Mr. Jackie records the entry in his books of account after receipt of invoice on 30^th April 2021. He makes payment to Mr. Antonio on 3^rd May 2021. (Please note that TDS rate on technical or professional services is deductible under section 194-J @10%)

Now the liability to deduct TDS arises at either of below events: –

1. Making Payment                                         

2. Recording in Books of Accounts

*Whichever is Earlier

In the example above, on 30^th April, 2021, Mr. Jackie would have recorded the journal entry as below: –

On Making Payment to Antonio, the journal entry would be: –

Now, as per the prevalent law, the Payor is required to deposit the TDS deducted for the month of April, to the exchequer [Central Board of Direct Taxes-(CBDT)], within 7 days from the end of the month. Therefore, Mr. Jackie is required to pay INR 20,000 deducted from payment to Mr. Antonio, latest by 07^th May 2021 to the CBDT vide notified challans.

On Payment of TDS, Journal Entry in Books of Mr. Jackie will be

After payment of TDS to the exchequer, the TDS Deductor has to furnish Quarterly Returns in the notified forms within the specified timelines. Thereafter, the tax deducted shall be reflected in the TDS and income summary (Form 26AS) of the Payee (whose TDS has been deducted – Mr. Antonio in our case).

The TDS deducted from payment of Mr. Antonio, will be reflected in his Form 26AS after the TDS return has been filed by Mr. Jackie for the period of April’21 to June’21 latest by 31^st July 2021.

Mr. Antonio shall take INR 2,00,000 /-(Inclusive of TDS) into consideration, while computing his total income for financial year 2021-22 and not INR 1,80,000/  He shall take the credit of INR 20,000/- out of his final tax liability.

Q.2- On what nature of transactions, TDS is deductible?
Ans.- TDS is deductible on various nature of payments like:

S.No.	Section	Nature of Payment
1	192	TDS from Payment of Salaries
2	192-A	Premature withdrawal from Employee Provident Fund (Payment of accumulated balance of provident fund which is taxable in the hands of an employee)
3	193	Interest on Securities
4	194	Dividend other than the dividend as referred to in Section 115-O
5	194-A	Interest other than interest on securities – Banks Time deposits, Recurring deposit and Deposit in Co-op Banks
6	194-B	Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort
7	194-BB	Income by way of winnings from horse races
8	194-C	Payment to Contractors Contract – Transporter not covered under 44AE
9	194-D	Insurance Commission
10	194-DA	Payment in respect of life insurance policy, the tax shall be deducted on the amount of income comprised in insurance pay-out
11	194-E	Payment to non-resident sportsmen/ sports association
12	194-EE	Payment in respect of deposit under National Savings scheme Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India
13	194-G	Commission on sale of lottery tickets
14	194-H	Commission or Brokerage
15	194-I	194-I(a)- Rent on Plant & Machinery
16	194-I	194-I(b)-Rent on Land or building or furniture or fitting
17	194-IA	Transfer of certain immovable property other than agriculture land
18	194-IB	Payment of Rent by Individuals or HUF not liable for Tax Audit
19	194-IC	Payment of monetary consideration under Joint Development Agreements
20	194-J	Fees for professional or technical services:
21	194-K	Payment of any income in respect of Units of Mutual fund as per section 10(23D) or Units of administrator or from a specified company
22	194-LA	TDS on compensation for compulsory acquisition of immovable Property
23	194-LBA	194-LBA (1)-Business trust shall deduct tax while distributing, any interest received or receivable by it from a SPV or any income received from renting or leasing or letting out any real estate asset owned directly by it, to its unit holders 194-LBA (2)-Distribution of, any interest received or receivable from SPV by Business trust 194-LBA (3)-Distribution of, any income received from renting or leasing or letting out any real estate asset owned directly by Business trust
24	194-LB	Payment of interest on infrastructure debt fund to Non-Resident
25	194-LBB	Investment fund paying an income to a unit holder [other than income which is exempt under Section 10(23FBB)]
26	194-LBC	Income in respect of investment made in a securitization trust (specified in Explanation of section115TCA)
27	194-M	Payment of commission, brokerage, contractual fee, professional fee to a resident person by an Individual or a HUF who are not liable to deduct TDS under section 194C, 194H, or 194J.
28	194-N	Cash withdrawal
29	194-O	Applicable for E-Commerce operator for sale of goods or provision of service facilitated by it through its digital or electronic facility or platform.
30	194-Q	Purchase of goods (applicable w.e.f 01.07.2021)
31	195	Payment of any other sum to a Non-resident
32	194-P	TDS on Senior Citizen above 75 Years
33	206-AB	TDS on non-filers of ITR

Q.3.- What are the due dates for payment of TDS?

Ans.- Firstly we have to understand, that CBDT has classified tax payers for payment/ deposit of TDS as well as filing of TDS returns as follows: –

1. Govt. Deductors: – These are offices of Govt., Govt Organisations, State or Central Govt Undertakings, such as government schools, colleges, municipalities, etc.

2. Non Govt Deductors: – All other deductors, other than govt. are covered here. The constitution may be company, individual, partnership etc.

TDS Depositing Due Dates

Where tax is deducted by the office of the Government:

Where tax is deducted by Others:

Q4. What are the due dates for filing of TDS Returns?

TDS Return Filing Due Dates

Keeping in view of above timelines below given is summary for submission filing return for financial year 2021-2022

TDS Return Filing Due Dates for FY 2021-2022

It is necessary to keep in mind the above given timelines for submission of TDS and its returns as there are various penalties for non-compliance of TDS related provisions.

About Author:

Hi, This insightful article was penned down by Mr. Manpreet S Taneja. Read what he has to say about himself.

Know Me:  One of the torch bearers for an esteemed Institute, I am well liked as CA Manpreet.

I am passionate about managing Finance and Investment and love to explore new avenues. Numbers and formulas have always lured me and now auditing and taxation has become my expertise.

Tax advisory, Financial Reporting, Secretarial compliances and other Managerial considerations are my other prowess one can count on. After working with reputed firms and renowned banks, I have gained rich experience of over 5 years and successfully ventured into practice.

I believe in what Winston Churchill has rightly said “Success is not final; failure is not fatal: it is the courage to continue that counts.” and that is the motivation that drives me towards excellence.

Qualification: Chartered Accountant, B.Com (Hons.)

Specialization: Audit, Taxation, Finance, Bank Audit

Firm Name: Manpreet Taneja & Co.

Mobile No.: 8826953372

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