Preparing Nil TDS Statement / Declaration

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TRACES introduced NIL TDS Statement/Declaration of TDS from the FY 2014-15. This is applicable for Deductors who did not deduct any tax during the relevant quarter.

What is the benefit of filing a Nil TDS Statement?

The benefit of this facility is that instead of filing nil TDS/TCS Statement for a particular quarter/period, one just needs to update the status to non-filing Statement. After updating of status, TDSCPC will not send any notice for non-filing of TDS Statement.

How does it help the Department?

As per income tax rules, nil eTDS statement is not mandatory due to which, the department is not able to find out the difference between the following two types of Deductors.

– Deductors required to file return but not filed
– Deductors not required filing return

What is the Procedure of filing Nil TDS Declaration for non-filing TDS statement?

The process is as follows:

1. Login through your register id at www.tdscpc.gov.in

2. Go to “Statement/Payments TAB after login >then declaration for Non-filing of TDS statement

3. On click of declaration for Non filing of TDS statement link you, follow the instructions and provide the required information – financial year, quarter, statement type, reason for non-filing, etc.

Note – If deductor has Permanently closed his business, he should contact the Assessing Officer to close his TAN

Do’s & Don’ts for TDS Returns

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Salary TDS – Employee to inform Employer for concessional rate

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Section 115BAC has been inserted in the Finance Act 2020 in the recent budget. This allows the option to Individuals & HUF to avail concessional rate of income tax with certain conditions pertaining to claiming deductions & other concessions. The other existing option will also continue.

This comes into effect from April 2020 (i.e. FY:2020-21 / AY:2021-22).

Since the Employers need to deduct tax (TDS) on salaries, CBDT vide its Circular No. C1 of 2020 dated 13/04/2020 has clarified the procedure and rules related exercising either of the two options for calculating TDS. This is summarized as under:

  • The Employee needs to inform the Employer that for the financial year, he would be opting for the computation as per the new Section 115BAC. On receiving this intimation, the Employee will deduct tax (TDS) on salary accordingly.
  • If no intimation is received from the Employee, the existing system of TDS on salary for that employee shall continue.
  • Once the intimation is made by the Employee to the Employer to opt for tax computation under Section 115BAC, this cannot be changed during the course of the financial year. However, this can be changed in the subsequent financial year.
  • At the time of filing tax returns, the employee has the option to select either of the two options to compute the tax liability. This is irrespective of the option used by the Employer for TDS purposes.

The concessional tax slabs as per Section 115BAC is mentioned below:

Salary TDS _ Income Tax slabs

 Note: The taxable income as computed under the provisions of Section 115BAC is without Deductions and other Reliefs.

Click Here to view the original circular

 

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Section 194IB – TDS on Rent (for Individuals & HUF)

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Effective from 1st June 2017, individuals & HUF not covered under tax audit have been subjected to deduct tax at source for rent payments if it is Rs. 50,000 or more per month.

Salient features:

  • Applicable only to individuals & HUF who are not under tax audit (under section 44AB)
  • This section is applicable from 1st June 2017
  • Tax Account Number (TAN) not required for the deductor
  • Applicable to monthly Rent of Rs. 50,000/- or above
  • TDS @ 5% if rent receiver is holding PAN, or otherwise TDS would be @ 20%
  • Deduction of Tax is to done in the last month of previous year (i.e. March) or in the month when the premises is vacated
  • Deposit to be made within 30 days from the end of month when tax was deducted. As an illustration, if deduction was in March, it should be deposited by 30th April or if deduction was in December, it should be deposited by 30th January
  • The deducted tax is to be deposited in the newly introduced Form No. 26QC through electronic means to one of the authorized banks
  • TDS Certificate (Form 16C) downloaded from TRACES is to be issued

Relevant resources:

Section 194IB

Notification dated 8th June 2017 with formats of Form No. 26QC & Form No. 16C

What is form 16C?

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Fees for Late Filing of TDS Returns

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Fees for Late Filing of TDS Returns are as follows:

Section 234E-Levy of Fees 

  • Failure to submit TDS return on time will result in fees on the deductor.
  • If you delay or forget to file your TDS return, fees of Rs. 200 per day will be levied on the deductor, as long as TDS return is not filed.
  • The levied amount of fee is not supposed to exceed the TDS deductibles.
  • Prior to TDS filing, such fee should be paid and it should be reflected in the TDS return

Late Payment Intimation – reasons & how to resolve?

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