Where Legal Compliance Meets Business Success
Your Path to Financial Success Starts Here
Our expert team is here to guide you every step of the way, helping you navigate the complexities of personal finance.
Book a MeetingNeed Help?
Social Networks
Home / GST Category
TDS/TCS RETURNS
"GST registration is essential for legal business operations and unlocking tax benefits."
TDS/TCS RETURNS
The government collects two sorts of taxes: direct taxes and indirect taxes. The individual who receives the income pays direct taxes to the government. However, the seller is required to deposit indirect taxes with the government.
Two examples of indirect taxes levied by the government are TDS (Tax Deducted at Source) and TCS (Tax Collected at Source). For taxation reasons, TDS and TCS are not the same, despite the widespread belief to the contrary. TDS and TCS differ greatly from one another.
To collect taxes at the source, Tax Deducted at Source was implemented. As a result, a taxpayer must deduct TDS and reimburse the Central Government when they pay another taxpayer.
By deducting and paying, the payer of income is guaranteed to collect taxes, and the recipient is required to submit their income for taxation. In this way, the central government keeps track of revenue and taxes are collected beforehand. The TDS may be claimed by the taxpayer when submitting an income tax return. The kind of taxpayer, the type of income, and the taxpayer's residence all affect the TDS rate.
TCS requires the supplier of commodities to collect taxes from the buyer of those items abroad. After collecting the tax, the vendor pays the funds into the national government's credit.
Depending on which happens first, collection incidents happen when sales funds are received or accounts are debited. The items subject to TCS are listed under Section 206C of the Income Tax Act of 1961. These consist of parking lots, toll booths, coal, lignite, alcohol, and timber. The highest amount of commodities that TCS is permitted to sell is ₹50 lakhs
What is TDS (Tax Deducted at Source)?
In essence, tax deducted at source, or TDS, is a component of income tax. The individual making such payments must deduct it. The government can collect taxes on specific incomes as they are earned by using TDS. Assisting the government in tracking the assessee's income throughout the year and estimating the assessee's overall income and tax liability is one of TDS's primary goals. The Income Tax Act of 1961's important parts outline the TDS provisions.
Tax Deducted at Source, or TDS, is income tax that is subtracted from the amount paid by the person making the payment (the deductor) at the time of specific payments such rent, commission, professional fees, salary, interest, etc. The deductor is required to deposit the sum with the Income Tax Authority in relation to the deductee's PAN. The individual who receives money is typically responsible for paying income tax. However, the government ensures that income tax is withheld beforehand from the amounts being received by implementing regulations known as Tax Deducted at Source.
After deducting TDS, the net amount is given to the deductee. The recipient will deduct the amount of TDS from his ultimate tax due and add the gross amount to his income. The money that has already been withheld and paid on his behalf is credited to the deductee. This will assist the government in efficiently tracking transactions and collecting taxes in advance. It lessens the likelihood of tax avoidance. The TDS will be returned to the assessee upon filing the tax return, nevertheless, if the assessee has no tax liability or if the TDS deducted exceeds the actual tax due for the year.
Due date for depositing TDS to the Government
The TDS must be deposited by the 7th of subsequent month to the government:
| QUARTER | DUE DATE |
|---|---|
| April to June | 31st July |
| July to September | 31st October |
| October to December | 31st January |
| January to March | 31ST May |
Using the TAN login, the Income Tax Portal must be used to deposit the tax that was withheld at the source. The e-Pay Tax feature of the e-Filing portal has replaced the OLTAS 'e-payment: Pay Taxes Online' direct tax payment feature. In order to pay taxes directly, including TDS, you must select the Income Tax Department's 'e-Pay Tax' option at https://www.incometax.gov.in/.
Due dates and forms for TDS return
All individuals who have deducted TDS are required to file Tax Deducted at Source returns. The TDS return must be filed on a quarterly basis and include a number of facts, such as the TAN, the amount of TDS withheld, the mode of payment, the deductee's PAN, etc. Additionally, depending on why TDS is being deducted, multiple forms must be used when filing returns. The following are some examples of return form types:
| FORM NO | PURPOSE OF RETURN | DUE DATE |
|---|---|---|
| Form 26Q | TDS on all payments (excluding salary) | 1st Quarter- 31st July 2ND Quarter- 31st October 3rd Quarter- 31st January 4th Quarter- 31st May |
| Form 24Q | TDS on Salary | 1st Quarter- 31st July 2ND Quarter- 31st October 3rd Quarter- 31st January 4th Quarter- 31st May |
| Form 27Q | TDS on all payments made to NRI (excluding salary) | 1st Quarter- 31st July 2ND Quarter- 31st October 3rd Quarter- 31st January 4th Quarter- 31st May |
| Form 26QB | TDS on sale of property | 30 days following the month-end when TDS is deducted |
| Form 26QC | TDS on Rent | 30 days following the month-end when TDS is deducted |
TDS Certificate
TDS certificates are found on Forms 16, 16A, 16B, and 16C. TDS certificates must be sent to the assessee from whose income TDS was withheld during payment by the person who is deducting TDS. For example, when TDS is subtracted from interest on fixed deposits, banks provide the depositor with Form 16A. The employer provides the employee with Form 16.
| FORM | CERTIFICATE | DUE DATE |
|---|---|---|
| FORM 16 | TDS on salary payment | 31st May |
| FORM 16A | TDS on Non salary payment | Within 15th days from due date of filing return |
| FORM 16B | TDS on sale of property | Within 15th days from due date of filing return |
| FORM 16C | TDS on Rent | Within 15th days from due date of filing return |
How TDS statements are uploaded?
To upload TDS statements to the Income Tax Department's website, adhere to the instructions below:
i) Go to the webpage for income taxes. Enter your TAN to log in.
ii) On the dashboard, choose e-File > Income Tax Forms > File Income Tax Forms.
iii)Select the appropriate form and complete the information.
iv) Use DSC or EVC to validate the return.
Penalty for TDS Returns Filed Late
Section 234E charges a late fine of ₹200 per day for TDS/TCS returns that are not submitted to the Income Tax Department (ITD) on time. This implies that, up to a maximum of the entire TDS amount, the cost increases for each day the return is late. It's crucial to pay this late fee before submitting the TDS/TCS return.
What is TDS (Tax Deducted at Source)?
Provisions for TCS, or tax collection at source, are found in the Indian Income Tax Act. These regulations mandate that some individuals pay a particular proportion of tax from their customers in specific transactions. The many transactions on which TCS must be collected will be covered in this article.
The tax owed by the seller that he received from the customer at the time of sale is known as tax collected at source, or TCS. Within the relevant deadlines, it must be deposited with the tax authorities. The items on which the seller is required to collect taxes from the customers are governed by Section 206C of the Income-tax Act. To be able to collect TCS, these individuals need to have a Tax Collection Account Number (TAN).It should be mentioned that the seller is only in charge of collecting the tax and sending it to the appropriate authorities. He is not liable for using his own funds to pay the TCS.
TCS Rates and when it is collected
TCS must be collected by the seller by the earlier of the two dates - When the seller makes the credit sale entry in the books of accounts or whenever the customer sends money to the vendor in any way. (issuing a check or draft in cash).
Note -When money is received from the buyer in a motor vehicle sale, the TCS is collected.
Only when the items are used for trading purposes—not for manufacturing, processing, or generating goods—are taxes paid . At the point of sale, the vendor collects the tax owed. Products listed under various categories have varying TCS rates:
| TYPES OF GOODS AND SERVICES | DUE DATE |
|---|---|
| Alcoholic liquor for human consumption | 1% |
| Timber wood made from forest leased | 2.5% |
| Tendu leaves | 5% |
| Timber wood made other than forest leased | 2.5% |
| Forest produce other than timber and tendu leaves | 2.5% |
| Scrap | 1% |
| Minerals such as lignite , coal and iron ore | 1% |
| Purchase of motor vehicle exceeding value Rs. 10 lakhs | 1% |
| Parking lot, toll plaza and mining | 2% |
TCS Return
i) On the day of collection, all funds received by a government office ought to be deposited.
ii) Within seven days after the final day of the month in which the tax was collected (monthly), the seller must deposit the TCS amount using the e-filing system.
iii) The tax collector who is in charge of collecting taxes and depositing them with the government shall be liable to pay interest of 1% per month or a portion of the month if he fails to collect taxes or, after collecting, fails to submit them to the government by the deadlines mentioned above.
iv) For the taxes collected in a given quarter, each tax collector is required to file a quarterly TCS return, Form 27EQ. Prior to filing the return, the interest on the TCS payment delay to the government should be paid.
TCS Certificate
A TCS certificate must be given to the buyer of the items by the tax collector when he files his quarterly TCS report, Form 27EQ. The certificate for filed TCS returns is Form 27D. Within 15 days following the date on which TCS quarterly returns were filed, this certificate must be given. A summary of all TCS due dates is given in the table below:
| QUARTER | DUE DATE OF FILING 27EQ | DUE DATE OF GENERATING 27D |
|---|---|---|
| Quarter ending on 30th June | 15th July | 30th July |
| Quarter ending on 30th September | 15th October | 30th October |
| Quarter ending on 31st December | 15th January | 30th January |
| Quarter ending on 31st March | 15th May | 30th May |
- FAQ
1. What is TDS (Tax Deducted at Source)?
In India, taxes are collected through the TDS system, which deducts taxes at the source of income. It can be applied to a number of payments, including professional fees, rent, interest, and salaries.
2. What is TCS (Tax Collected at Source)?
Under the TCS system, the seller collects taxes from the buyer at the point of sale of specific goods or services, including luxury goods, lumber, scrap, and alcohol.
3. What is the difference between TDS and TCS?
i) TDS: When the payer makes a payment to the payee (such as a salary, interest, or rent), the tax is subtracted.
ii) TCS: When certain products are sold or transferred, the seller collects the tax.
4. Who is responsible for deducting or collecting TDS/TCS?
i) TDS: Tax deduction is the responsibility of the payer, who makes the payment.
ii) TCS: Tax collection is the responsibility of the seller, who sells particular items.
5. How is TDS deducted and when is it paid?
TDS is taken out by the payer when the payment is made. The money that has been withheld must be deposited with the government by the deadline, which is usually the seventh of the subsequent month for the majority of TDS payments.
6. How is TCS collected and when is it paid?
At the moment of payment receipt, TCS is collected by the seller. The gathered funds must be deposited with the government within the deadlines specified.
7. How do I file TDS and TCS returns?
i) The Income Tax Department's TRACES system, often known as the e-filing portal, is where TDS and TCS returns are submitted online.
ii) TDS on salary payments is handled by Form 24Q, whilst non-salary payments are handled by Form 26Q.
iii) For TCS refunds, Form 27EQ is utilized.
8. What are the due dates for filing TDS/TCS returns?
TDS returns are submitted on a quarterly basis. The following are the deadlines for filing the returns:
i) 1st Quarter- 31st July
ii) 2ND Quarter- 31st October
iii)3rd Quarter- 31st January
iv) 4th Quarter- 31st May
The following deadlines apply to TCS returns, which are submitted on a quarterly basis: -
Quarter ending on 30th June-15th July
Quarter ending on 30th September- 15th October
Quarter ending on 31st December-15th January
Quarter ending on 31st March 15th May
9. What forms are used for TDS and TCS returns?
TDS Returns:
i) Form 24Q: Regarding salary
ii) For non-salary payments, use Form 26Q.
iii) For non-residents, Form 27Q
TCS Returns:
i) Form 27EQ: For TCS received over the course of the quarter.
10. What are the penalties for late filing of TDS/TCS returns?
i) There is a ₹200 daily penalty for late TDS/TCS return submission.
ii) Additionally, interest is assessed for late TDS/TCS deposits at the rate of 1% per month for the duration of the TDS deposit delay.
iii) A monthly penalty of 1.5% for late TCS deposits.
11. How can I check my TDS and TCS credits?
By obtaining Form 26AS from the Income Tax e-filing portal, you can verify the TDS and TCS credits. A thorough account of the taxes withheld or collected against your PAN is given on this form.
12. What is the significance of Form 16 and Form 16A?
i) An employer can provide an employee with a certificate on Form 16 that details the TDS that was withheld from their pay.
ii) Form 16A, which shows the TDS withheld, is given for non-salary payments (such as rent or interest).
13. Can TDS and TCS be adjusted against income tax liability?
Yes, when you file your income tax return (ITR), you can claim the TDS and TCS amounts that were deducted or collected on your behalf as a credit against your overall tax burden.
14. Can I revise a TDS/TCS return?
If there is a mistake or omission in the initial TDS/TCS return, it is possible to amend it. Within the allotted time frames, a revised return must be submitted using the same forms (Form 24Q, Form 26Q, and Form 27EQ).