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15 Tips for Filing TDS/TCS Returns

If you are a business owner, deducting tax at source (TDS) from your employees and vendors, paying the TDS collected to the credit of the Government of India, filing the returns on time and creating and maintaining complex reports must be keeping you on your toes always.

Here are 15 tips to relieve your tension and make your job more organized and hassle-free. If you have a finance background, following them and applying them yourself shouldn't be too much of a challenge.

Otherwise, you can always hire a professional to take care of the hassles.

1. Take note of the due dates of payment of your taxes. Typically payment is to be made by 7th of the next month for taxes deducted in the current month. Only for March, the due date is 30th April.

2. Report complete details of all the deductions without fail. Reporting the PAN details of your deductees, tax rates and challan numbers in the correct forms is vital. TDS on salary should be reported in Form 24Q and Non-Salary in Form 26Q.

3. Make sure to file the TDS/TCS statements on time. You have to file the returns quarterly. There is a penalty of up to Rs. 200/- per day for delay. Typically, TDS Returns are to be filed by 15th of the month following the quarter end with the exception of the March quarter which is 15th May.

4. As per Section 203A of the IT ACT, 1961, if you deduct/collect taxes at source, you need to apply for a Tax Collection and Deduction Account Number (TAN). You need to quote it in all the documents related to TDS payment and return filing.

5. Never quote PAN in places asking for TAN. Both have different purposes and are not interchangeable.

6. Deposit all the taxes using challan 281. It is very important that you quote the correct TAN & Assessment Year.

7. Enter correct challan details and give the proper breakup of amounts for different deductees while preparing the TDS Return. Put the correct information in the different columns.

8. Ensure that the amounts quoted in the “Deducted” and “Deposited” columns of the deductee rows in the appropriate forms, tally.

9. In case, the deductee does not have a PAN or you are unaware of it, you will have to deduct tax at a higher rate as specified by the Income Tax Department.

10. Taxes must be collected or deducted at the correct rates as prescribed by the different sections of the IT Act.

11. Use different flags like A, B, C, T, Y, etc, for exemption in deductions or deduction at lower / special rates, as may be applicable.

12. You need to deduct taxes at the time of making payment or providing credit in the books, whichever is earlier.

13. Before submitting a TDS Return, make sure that the PANs of all deductees & employees are properly mentioned. If possible, do a proper checkup to ensure there are no errors as this would lead to default alerts.

14. It is important to check that all taxes are properly deducted and deposited on time. Appropriate interest should be paid for delayed payments to avoid defaults.

15. Before paying salaries for the 4th quarter, proper tax computation for the financial year for each employee should be done and tax should be deducted. While filing TDS Returns of Salaries for Quarter 4, tax computation needs to be provided. It is very important to submit error-free TDS Returns which enable our employees & vendors to get timely tax credit and at the same time, this ensures that as a tax deductor, you have properly taken care of the compliance obligations.

A good TDS/TCS return preparation software like TDSMAN can help you minimize your labor as well as eliminate most of the errors, even as it speeds up the whole process.