TDS Returns and Forms

–An Article by CA Manpreet S. Taneja–

TDS is well known taxation terminology and people are also aware its basic concept. The same has been explained in our previous article, excerpt is as below:

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 within the due dates as notified

However, understanding the concept of TDS isn’t enough if one is not aware of the compliances it called for. For instance, one is aware that he/she has to file statement for tax deducted at source from salaries or statement of collection of tax at source, but unaware of the returns which has to be filed for these statements.

It is significant to know what form is to be filed exactly and in which manner. Further it is also important to know what would happens if one fails to submit these returns. In this article we have summed up points for TDS return forms and consequences of non-submission of those returns.

Q1. What are Various Forms for TDS Returns?

Ans. The various TDS Returns Forms are: –

Type of TDS Return Forms	Particulars of the TDS Return Forms
Form 24Q	Statement for tax deducted at source from salaries
Form 26Q	Statement for tax deducted at source on all payments other than salaries.
Form 27Q	Statement for tax deduction on income received from interest, dividends, or any other sum payable to non-residents.
Form 27EQ	Statement of collection of tax at source.

Let us understand each form individually: –

Form 24Q

1. It is the form used for preparing TDS return for the TDS deducted on salary under Section 192 of the Income Tax Act, 1961.
2. It has to be submitted on a quarterly basis by the deductors.
3. It contains details like salaries paid and the TDS deducted of the employees by the employer(s).
4. It has 2 annexures namely Annexure-I and Annexure II. Annexure-I contains details of the deductor, deductees and challans, while Annexure II contains the salary details of the deductees.
5. Annexure-I has to be submitted by the deductor for all the four quarters of the financial year.
6. Annexure II need not be submitted during first three quarters of the financial year, but has to be furnished and submitted in the fourth quarter of the financial year with details of the employees’ salaries of the entire financial year.

Form 26Q

1. It has to be submitted for transactions involving TDS for all the payments received other than the salary.
2. It too has to be submitted on a quarterly basis by the deductor and is applicable for tax deducted at source under section 200(3), 193 and 194, etc. of the Income Tax Act of 1961.
3. The income on which the tax is deducted at source includes interest on securities, dividend securities, professional fees, directors’ remuneration, etc.
4. It is mandatory to furnish PAN by the deductors who are non-government deductors. For government deductors “PANNOTREQD” has to be mentioned on the form.

Form 27Q

1. It is required to be filled for payments made to Non-Resident Indians (NRIs) and foreigners other than salary.
2. It has to be filled in for the declaration of Tax Deducted at source for the NRIs and Foreigners.
3. It is also submitted on a quarterly basis by the deductor and is applicable for tax deducted at source under section 200(3) of the Income Tax Act of 1961.
4. The income on which the tax is deducted at source includes interest, bonus, any additional income or any other sum owed to non-resident Indian or foreigner.
5. It is compulsory for non-government deductors to furnish PAN. For government deductors the code “PANNOTREQD” has to be mentioned on the form.

Form 27EQ

1. It is a quarterly statement that furnishes the details and information of the tax collected at source as per section 206C of the Income Tax Act of 1961.
2. The form 27EQ is submitted on a quarterly basis. In this form it is mandatory to furnish TAN.
3. It is the statement to show the Tax Collected at Source (TCS), which is the tax collected by the seller. When a buyer purchases certain goods or commodities, the seller collects the tax from the buyer through the TCS route. This tax is collected on the payment received from the buyer either in cash, credit, cheque, demand draft or from any other mode of payment.
4. It is to be furnished by corporate deductors and collectors but not by government deductors and collectors. It is compulsory to furnish PAN by the deductors who are non-government deductors. For government deductors, the code “PANNOTREQD” has to be mentioned on the form.

Q2. What are consequences of non-filing/late filing of TDS Returns?

Ans. A person who fails to file the TDS/TCS return or does not file the TDS/TCS return by the due dates prescribed in this regard has to pay late filing fees as provided under section 234E and apart from late filing fees he shall also be liable to pay penalty under section 271H.

Late filing fees under section 234E

1. As per section 234E, where a person fails to file the TDS/TCS return on or before the due date prescribed in this regard, then he shall be liable to pay, by way of fee, a sum of Rs. 200 for every day during which the failure continues. The amount of late fees shall not exceed the amount of TDS.
2. TDS/TCS return cannot be filed without payment of late filing fees as discussed above. In other words, the late filing fees shall be deposited before filing the TDS return. It should be noted that Rs. 200 per day is not penalty but it is a late filing fee.

Penalty under section 271H

1. As per section 271H, where a person fails to file the statement of tax deducted/collect at source i.e., TDS/TCS return on or before the due dates prescribed in this regard, then assessing officer may direct such person to pay penalty under section 271H. Minimum penalty can be levied of Rs. 10,000 which can go up to Rs. 1,00,000. Penalty under section 271H will be in addition to late filing fees prescribed under section 234E.
2. Apart from delay in filing of TDS/TCS return, section 271H also covers cases of filing incorrect TDS/TCS return.
3. Penalty under section 271H can also be levied if the deductor/collector files an incorrect TDS/TCS return. In other words, minimum penalty of Rs. 10,000 and maximum penalty of up to Rs. 1,00,000 can be levied if the deductor/collector files an incorrect TDS/TCS return.
4. No penalty will be levied under section 271H for the failure to file the TDS/TCS return, if the person proves that after paying tax deducted/collected by him, along with the late-filing fee and interest (if any), to the credit of the Central Government, he had filed the TDS/TCS return before the expiry of a period of one year from the due date of filing the TDS/TCS return.
5. In other words, no penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied:
   • The tax deducted/collected at source is paid to the credit of the Government.
   • Late filing fees and interest (if any) is paid to the credit of the Government.
   • The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.
6. It should be noted that the above relaxation is applicable only in case of penalty levied under section 271H for delay in filing the TDS/TCS return and not in case of filing incorrect TDS/TCS statement.
7. Apart from above relaxation, in following two cases the taxpayer can get relief from penalty under section 271H:
   • Under section 273A (4) the Principal Commissioner of Income-tax or Commissioner of Income-tax has power to waive or reduce the penalty levied under the Income-tax Act. Penalty can be waived or reduced by the Commissioner of Income-tax if the conditions specified in section 273A (4) in this regard are satisfied.
   • Apart from shelter of section 273A (4), section 273B also provides immunity from penalty in genuine cases. As per section 273B, penalty under section 271H will not be levied if the taxpayer proves that there was a reasonable cause for failure

Hope you have understood certain basic concepts and brief about the TDS return forms in this article.

About Author:

Hi, this insightful article was penned down by Mr. Manpreet S Taneja.  A brief about him is discussed hereunder.

He is an associate member of Institute of Chartered Accountants of India, popularly known as CA Manpreet.

He is passionate about managing Finance and Investment and love to explore new avenues. Numbers and formulas have always lured him and now auditing and taxation has become his expertise.

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

He believes 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 him towards excellence.

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

Specialization: Audit, Taxation, Finance, Bank Audit

He can be reached at: Camintu266@gmail.com