TDS REFUND

TDS stands for Tax Deducted at Source, a method where income tax is automatically deducted from an individual's payments during certain transactions, such as salary, rent, interest, professional fees, and commissions. Typically, the recipient is obligated to pay the income tax. However, the TDS mechanism allows the tax to be collected upfront from the payments made, ensuring timely tax collection by the government.

The amount received after the TDS deduction is the recipient's net income, and they must then report the gross amount (before the TDS deduction) in their tax return.

Apart from depositing the tax, the deductor must file TDS returns. A TDS return is a quarterly report consolidating all transactions involving Tax Deducted at Source within a given quarter. TDS return filing must be completed quarterly to ensure compliance with tax regulations and avoid potential penalties. Once the TDS returns are submitted, the details will appear on Form 26 AS. While filing the TDS returns, the various details to be mentioned are:

• The Permanent Account Number (PAN) of the person making the deduction and the payment recipient.
• Specifics regarding the TDS payments made.
• Details pertaining to the deposit challans.
• This information is also mirrored in Form 26AS for the payment recipient.
• Filing a TDS return is a compulsory procedure for those who are within the specified income tax brackets.
• Those required to file can do so through the official e-filing portal of the Income Tax Department.

TDS return can be best described as the quarterly statement or summary of all TDS-related transactions made during the specific quarter. Typically, it comprises details of the TDS collected and deposited to the Income Tax Authority by the deductor. The essential details disclosed in a TDS return statement include the following –

• Deductor and deductee’s PAN.
• Particulars of TDS paid.
• Challan details.

Notably, all details included in the online TDS return form are also disclosed in the payee’s Form 26AS. It is mandatory for all individuals who come under the purview of tax slabs prescribed by the IT department.

Similarly, the penalty has to be paid in case one furnishes incorrect information. Notably, Section 234 states that if a taxpayer fails to file TDS return within the due date, he/she must pay a penalty of Rs.200 each day until filed. Regardless, the total liability must not exceed the TDS amount at any given point in time.