Healthy Practices for Error-Free TDS Returns

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Healthy practices for error-free TDS returns has been given below: 

  1. Deduction/ Collection of Tax at Correct Rates.
  2. Timely Deposit of TDS/TCS
  3. Accurate Reporting of data related to tax deductions/ collections made.
  4. Submission of TDS Statements within the due dates.
  5. Verification and Issuance of TDS Certificates within time.
  6. CPC (TDS) is now sending Intermediate Default Communication for PAN Errors and Short Payments, which can be corrected during the interim period of a week of filing TDS Statements before CPC (TDS) proceeds with computing Defaults for the relevant statement.
  7. User-friendly Online Correction facility can be used for Correction of Deductees, Tagging Unmatched Challans and Payment of Fees/ Interest. (Please navigate to Defaults tab to locate Request for Correction from the drop-down menu. For any assistance, please refer to the e-tutorial available on TRACES).
  8. Aggregated TDS Compliance Report assists the PAN of the Deductor to administer TDS Defaults for associated TANs and to take appropriate action.
  9. The Deductor’s Dashboard provides you with all necessary information to assist you in Compliance Self-Assessment and to take appropriate action.
  10. Non-filing Self-declaration can be made by navigating to Statements / Payments menu and submit details under Declaration for Non-Filing of Statements.
  11. PAN Verification and Consolidated TAN – PAN File facility on TRACES can be used for verifying the deductees.
  12. The Conso Files and Justification Reports downloaded from TRACES help you to identify errors in submission of revised Quarterly TDS Statements.

Do’s & Don’ts for TDS Returns

Fees for Late Filing of TDS Returns

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Preparing Salary TDS Return – Form 24Q (Q4)

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Form 24Q (Salary TDS Return), in the fourth quarter (Q4) includes two annexures – Annexure I and Annexure II.

Annexure I is the regular quarterly data for the months of January to March.

Annexure II is the tax computation calculation information for each employee along with summary and tax deduction (TDS) for the whole financial year. This would determine, if any tax is due or needs to be refunded.

Summary and information to be submitted is summarised below:

Challan Details

• Date of Payment
• BSR Code
• Challan No.
• TDS
• Surcharge
• Education Cess
• Interest
• Fee (Sec. 234E)
• Others
• Total
• Minor Head
• Remarks
• Interest (allocated)
• Others (allocated)

Annexure I

• Challan Serial No.
• Challan No.
• Date
• Employee Serial No.
• Employee Name
• PAN
• Section – Govt. / Non-Govt employees
• Date
• Amount of Payment
• Income Tax
• Surcharge
• Cess
• Total Tax
• Tax Deposited
• Deduction Date
• Remarks
• Certificate No. (15G / 15H)

Annexure II

• Total Salary
• Less : Allowance under Section 10 (breakup into different sub-sections)
• Balance (calculated)
• Break up of Balance (current employer Salary and previous employer salary, if applicable)
• Deductions u/s 16 – Standard Deduction, Professional Tax, Entertainment Allowance
• Aggregate of Entertainment Allowance, Tax on Employment and Deduction u/s 16(ia)
• Income chargeable under the head ‘Salaries’ (calculated)
• Add : Any other income / loss other than salary offered for TDS (include Interest on Housing Loan)
• Gross Total Income (calculated)
• Deductions under chapter VI-A (80C, 80CCC, 80CCCD(1), 80D, 80E, etc.)
• Total Taxable Income (calculated)
• Tax on Total Income after deducting Rebate
• Surcharge
• Education Cess @ 4%
• Tax Payable
• Less: Relief u/s 89
• Net Tax Payable
• Total TDS Deducted (Break up of Current and Previous Employer)
• PAN & Name of House Owner – if aggregate annual rent payment exceeds Rs. 1 lakh
• PAN & Name of Lender – if interest claimed on housing loan

Prepare Salary TDS Return of Quarter 4 through TDSMAN

FVU 7.0 & FVU 2.166 released by NSDL

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TDS Under Section 194J(a) & 194J(b)

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The existing section code 194J (i.e. Fees for Professional or Technical Services) has been sub-divided now into two sections, 194J(a) and 194J(b), effective from August 7 2020. u/s 194J(a) of the Income Tax Act, is related to TDS deduction on fees for Technical Services, and u/s 194J(b) of the Income Tax Act is related to TDS deduction on fees for Professional Services. Every person excluding an individual or a HUF, making payment to a resident for notified services, will be covered u/s 194J(a) & 194J(b) in the Income Tax Act.

  • Payments that are being covered u/s 194J(a)

– Fees for Technical Services
– Call center
– Royalty for sale
– Distribution or exhibition of cinematographic films etc..

  • Payments that are being covered u/s 194J(b)

– Professional services
– Royalty etc…

  • Tax Deduction Rate

– Tax deduction rate for u/s 194J(a) is 2% and for 194J(b) is 10%
– In case of payee fails to furnish PAN, he will be liable to pay TDS at the rate of 20%

  • Threshold Exemption Limit

In case of payment does not exceed the directed Threshold exemption limits, TDS will not be deductible.
TDS is required to be deducted if the amount of payment in a year exceeds Rs. 30,000.
However, Threshold exemption limit is not available only in the case of Fees / Commission / Remuneration paid to director of the company, other than Salary.

Procedure of preparing e-Returns for TDS / TCS

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Clarifications on new TCS provisions applicable from 1st October 2020

The Central Board of Direct Taxes (CBDT) has issued a detailed clarification on 29th September 2020, regarding the new TDS / TCS provisions set to become applicable from 1st October 2020. The provisions says that the seller of goods shall collect TCS @0.1% (0.075% up to 31.03.2021).

The points regarding the doubts and their clarifications are mentioned bellow:

Case1: Doubts on Amount before or after 1st October

Doubts have arisen about the applicability of TCS provisions on the amount received before 1st October 2020. CBDT has clarified that the provision on TCS shall be applicable only on the amount received on or after 1st October 2020.
Example: Turnover of seller in FY: 19-20 is more than 10 Crore
Amount of sale made to a particular buyer during the FY: 20-21 is Rs. 1 Crore
Buyer made payment to seller between 01/04/2020 to 30/09/2020 = Rs.90 Lakhs
Buyer made payment to seller between 01/10/2020 to 31-03-2021 = Rs.10 Lakhs
In such case, only Rs. 10 Lakhs will be valued for calculation of TCS and not on Rs. 50 Lakhs
(I.e. Total amount is Rs.1 crore and Rs. 50 lakh is the Threshold amount, by including the amount before 1st October)

Case2: Doubts regarding TCS on every transaction

CBDT clarifies that TCS provision is applicable only in cases where the receipt of sale consideration exceeds Rs. 50 Lakh in a financial year.
Example: Amount of the sale made to a particular buyer during FY: 20-21 is Rs.45 Lakhs (Which is less than Rs.50 Lakhs).
In such case, there is no applicability of TCS, as the amount of sale criteria is not met.

Further, CBDT has clarified that in order to simplify the compliance; TCS provision shall be applicable on the amount of “all sale consideration received on after 1st October 2020 without making any adjustment for the amount received in respect of sales made before 1st October 2020.

Case3: Doubts on “TCS is an additional Tax”

TCS is certainly not an additional Tax, rather it is in the nature of advance Income Tax / TDS for which, the buyer would get the credit against his actual Income Tax liability and if the amount of TCS is more than his Income Tax liability, the buyer would be entitled to refund the excess amount along with interest.

Case4: Doubts on TCS to be collected by every seller

TCS will be applicable to only those sellers, whose turnover from the business, exceeds Rs.10 ‘Crore during the FY: 19-20 & onwards.

Click here for the Original Press Release 

Prepare TDS/TCS returns error free & without any professional help, using TDSMAN Software

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