Tips to avoid Defaults in TDS Returns

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  • Make sure taxes are deducted on time and at correct deduction rates /amount. The applicable section under which the deduction falls should be correctly applied.
  • Tax needs to be deducted either when payment is made or when the amount is credited, whichever is earlier. It implies that the tax needs to be deducted on the same day when advance payments are made. The late deduction is a default and will attract interest.
  • Taxes deducted during the course of the month should be deposited on time. Typically it is by 7th of the following month. The only exception is that for deductions in March, it needs to be deposited by 30th April.
  • TDS Returns needs to be filed on completion of each quarter. Returns for Salary & Non-Salary TDS is to be filed separately in Form 24Q & Form 26Q respectively.
  • Use a proper TDS Return preparing software/tool that helps in predicting possible errors/defaults. This would prevent unnecessary hassles later.
  • Make sure TDS Returns are filed on time to avoid penalty on the delayed filing. Typically, TDS Returns are to be filed by the end of the month following the quarter.

  Use TDSMAN. one of the leading software for preparing error-free TDS Returns

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Challan ITNS 281- Important Points

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Important points to note related to ITNS-281 are as follows:

1. Company Deductee/Non-Company Deductee – Although this appears in the Challan format, however it has lost its relevance as now one can include Company / Non-Company Deductee in the same Challan. It does not matter whatever one may select.

2. Assessment Year – The Assessment Year as mentioned in the Challan is important as the TDS deposited through the Challan, can only be used for deductions made in the mentioned assessment year, the immediate next year and all earlier years.

3. TAN (Tax Account No.) – This determines the identification of the Tax Deductor / Collector. Any error in the TAN is as good as not making payment of TDS/TCS dues. As such its correctness is of prime importance.

4. Type of Payment – Although it still appears in the Challan format, it has lost its relevance ever since the ‘type of payment’ is linked to each Deductee instead of all dedicates of the same ‘type of payment’ was clubbed under one Challan. One still needs to specify the ‘type of payment’, which in any case will be ignored by the IT Department, while processing the Challan. Also it is important to note the same Challan can be used for multiple ‘types of payments’.

5. Details of Payment
– Tax, Surcharge & Cess: The sum total of the Tax, Surcharge & Cess may be clubbed together and placed under Tax for convenience.
– Fee under Section, 234E: This is the fee for delay in submitting the TDS/TCS Returns.
– Interest: This amount includes:
Interest on delay of deposit of TDS/TCS.
Interest on late Deduction of Taxes.

6. BSR Code & Challan Identification No. (CIN)
After Challan is paid, the receiving bank acknowledges the receipt by providing the following information:

– BSR Code – This is a 7-digit code number that identifies the receiving bank
– CIN – This is a unique transaction serial number provided by the bank.
– Date of Payment – The date of receipt of payment by the bank

The above information is very important and needs to be specified correctly while preparing the TDS / TCS Returns. Make sure it is properly readable (especially for Challans used for Cheque / Cash payments across the counter)

Online payment using Challan ITNS 281

Fees for Late Filing of TDS Returns (Section 234E)

 

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Steps for Preparing Correction Returns

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Steps for Preparing Correction Returns

  1. Request for TDS (Consolidated) file from TRACES
  2. Download requested TDS (Consolidated) file from TRACES
  3. Upload TDS (Consolidated) file for correction into the software. This file is password protected [Password: TAN_Request Number]. While uploading, the software will automatically determine the password and read the data at the time of uploading
  4. Make corrections & validate
  5. Generate the correction return
  6. File the Correction Return / Statement

Procedure of preparing e-Returns for TDS / TCS

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What is the Interest for non-payment of tax as per demand notice?

Let us first understand the provisions of section 220(1) relating to payment of tax as per demand notice. Then we will understand the provision for levy of interest in case of non-payment of tax demanded as per demand notice issued under section 156.

When a demand notice under section 156 has been issued to the taxpayer for payment of tax (not including notice for payment of advance tax) then such amount is payable within a period of 30 days as per section 220(1). This period may be reduced with approval of designated authorities. In case of failure of payment of amount in the demand notice issued under section 156, as per section 220(2), the person shall be liable to pay simple interest at 1% for every month or part of a month. Interest shall be payable for the period commencing from the day after the last date till the day on which the amount is paid. After TDS statement is processed the deductor is intimated the amount payable or refundable. This intimation is deemed as notice of demand under section 156, failure of which attracts interest under section 220(2).

Where interest is charged under sub-section (1A) of section 201 on the amount of tax in intimation which has  been specified sub-section (1) of section 200A for any period no interest shall be charged under Section 220(2) on the same amount for that period.

[As amended by Finance Act, 2017]

It is also provided that where interest is charged under sub-section (7) of section 206C on the amount of tax specified in the intimation issued under sub-section (1) of section 206CB for any period, then, no interest shall be charged under sub-section (2) on the same amount for the same period.

Filing of TDS / TCS Return Online using Aadhaar

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