Healthy Practices for Error-Free TDS Returns

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Preparing TDS Returns is a simple process and usually does not require any external assistance. However, it is well advised to follow few practices that ensure the correctness of your filed TDS Return. This means that correct credit will be received by the employees and vendors. Moreover, it will help avoid receiving unwanted Default Notices from the IT Department.

A few of these healthy practices are summarized below:

  1. Tax should always be deducted (TDS) at the correct rate
  2. TDS amount should be deposited on correct time. In case of the deposit gets delayed, make sure that the interest amount is correctly calculated, added & deposited along with the TDS amount
  3. For TDS on salary, monthly TDS deduction amount will be based on the annual projected taxable income of each employee
  4. For ‘No Deduction’ or ‘Lower Deduction’, make sure the Employee / Vendor in question is eligible for the privilege.
  5. Make sure that all PANs are accurate
  6. Keep a close watch on the threshold limits on payment to vendors under different sections. Once it crosses the limit, TDS is applicable on the total payment from the beginning of the financial year.

Checklist to avoid unwanted errors / defaults in TDS Returns:

  • Challan information should be correctly checked & validated
  • The Tax Account Number should be correctly mentioned
  • Section should be correctly quoted & to be cross checked for short deduction / late deduction
  • PAN needs to be checked & properly validated
  • For deposit of TDS or delay in filing Returns, correct interest amount and / or late fee should be determined and payment should be made before filing.

Fees for Late Filing of TDS Returns

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