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How to File TDS Return?

Unravel the enigmas of tax compliance with this comprehensive guide on "How to File TDS Return," empowering you to navigate the complex world of tax deductions effortlessly.

  • 4,825 Views | Updated on: May 20, 2024

In the intricate world of finance, staying compliant with the ever-evolving tax regulations can be a daunting task. One such crucial obligation for businesses and individuals in India is filing the TDS (Tax Deducted at Source) return. While it may sound complex and intimidating, understanding the process and mastering it can prove to be a game-changer in your financial journey.

Tax Deducted at Source (TDS) is an essential component of the Indian tax system. As a responsible taxpayer, it is crucial to understand the intricacies of TDS and its implications on your financial transactions.

In this blog, we delve into the details of TDS return filing and study the steps involved. This interactive guide will equip you with the knowledge and confidence to conquer this essential tax compliance requirement.

What is TDS?

TDS is the income tax withheld by the persons who make various payments, such as rent, profit, service charges, wage, interest, and so on. TDS on income is a tax that is deducted by the employer from your salary. The purpose of TDS was to collect tax directly from the source of revenue.

The submission of a TDS return is required for all taxpayers who fall within the Income Tax Department’s tax slabs. But before you begin the filing process, double-check that you have the following information:

  • Both the deductee and the deductor have a Permanent Account Number (PAN).
  • Information from the TDS challan.
  • The sum of money collected in taxes by the government.
  • Any more essential information, if applicable.

Eligibility Criteria for TDS Returns

Along with understanding the step-by-step filing process for TDS returns, it is critical for an employee or organization to meet the requirements for TDS returns. So, before submitting a TDS return, you must have a valid TAN (Tax Collection and Deduction Account Number).

A person making a transaction under the ITA (Income Tax Act) is required to hold back tax at the source of the income and deposit it within the defined window of time. The following are some revenues for which a TDS return must be filed:

  • Salary
  • Income received from winning lotteries, solving puzzles, etc.
  • Financial gain from securities
  • Earning money by taking part in horse races and receiving insurance commission
  • Interest income
  • Sales and purchases of real estate
  • Any payments related to National Pension Scheme

Advantages of TDS Returns

Filing TDS returns offers several advantages for both the deductor (the person/company responsible for deducting tax) and the deductee (the person from whose income tax is deducted). Here are some key advantages of filing TDS returns:

Compliance with Tax Laws

Filing TDS returns ensures compliance with the tax laws of the country. It is a legal requirement for deductors to deduct tax at source and file returns accordingly. Non-compliance can result in penalties and legal consequences.

Avoidance of Penalties

Timely filing of TDS returns helps in avoiding penalties imposed by the tax authorities. If the deductor fails to deduct tax or deducts tax but does not file the TDS returns within the due date, penalties can be levied.

Verification and Correction

Filing TDS returns allows for cross-verification of the deductor’s and deductee’s tax-related information. It provides an opportunity to rectify any discrepancies in the deducted tax amount, PAN (Permanent Account Number) details, or other relevant information.

Transparent Tax System

TDS plays a vital role in maintaining a transparent tax system. It helps in tracking and documenting the deduction of tax at the source, ensuring that the correct amount of tax is deducted from the deductee’s income.

Forms required to file a TDS return

There are different TDS return types based on the nature of the deductor and deductee. The most common ones are:

Form 24Q

  • Form 24Q is a quarterly statement of tax deducted at source (TDS) from salaries.
  • It is filed by employers to report the details of TDS deducted and deposited on behalf of their employees.

Form 26Q

  • Form 26Q is a quarterly statement of tax deducted at source (TDS) for non-salary payments.
  • It is filed by individuals or entities responsible for deducting TDS on payments like rent, professional fees, or contract payments.

Form 27Q

  • Form 27Q is a quarterly statement of tax deducted at source (TDS) for payments to non-resident Indians (NRIs) and foreign entities.
  • It is filed by individuals or entities who make payments to NRIs or foreign entities and deduct TDS on such payments.

Due Dates of Filing a TDS Return

In order to file your TDS returns on time without any hassle and fear of missing deadlines, you must be aware of the due dates of filing TDS returns. The below table shows the due dates that must be considered for filing returns on time.

Quarter

Period

Last Date of Filing

1st Quarter

1st Apr to 30th Jun

31st July 2022

2nd Quarter

1st Jul to 30th Sep

31st October 2022

3rd Quarter

1st Oct to 31st Dec

31st Jan 2023

4th Quarter

1st Jan to 31st Mar

31st May 2023

Step-by-Step Guide for Filing e-TDS Return

TDS filing can look overwhelming, but it is an important step for contributing to the economic benefit of society. As a responsible citizen, one must regularly file a TDS return and contribute to the growth of the country. Here is a step-by-step guide for filing e-TDS return:

Step 1

The prescribed file format for preparing the e-TDS return is available at the following link: https://www.protean-tinpan.com/services/etds-etcs/etds-rpu.html.

Step 2

The e-TDS return should be prepared in clean text ASCII format with a ‘txt’ file extension, following the specified file formats. The Return Preparation Utility offered by Protean (formerly NSDL eGov) or any other third-party software can be used for this purpose.

Step 3

After preparing the file according to the file format, it should be verified using the File Validation Utility (FVU) provided by Protean.

Step 4

If any errors are found in the file, the FVU will generate an error report. Correct the errors and verify the file again using the FVU.

Step 5

The resulting .fvu file can be submitted at a TIN-FC (Tax Information Network Facilitation Center) or uploaded on the website https://www.incometax.gov.in/iec/foportal/.

Step 6

If all of the information supplied is correct, you will be given a token number or a provisional receipt. This acknowledgment serves as proof that the TDS Returns were properly submitted. A non-acceptance note is provided if the TDS Returns are denied, along with the grounds for the refusal. TDS Returns must be submitted anew in such circumstances.

Did You Know?

It is mandatory for deductors to issue TDS certificates (Form 16/16A) to the deductees, providing details of TDS deductions made. These certificates are crucial for individuals while filing their income tax returns.

Conclusion

Understanding TDS returns is essential for both deductors and deductees to ensure compliance with tax regulations and avoid penalties. By familiarizing yourself with the TDS return filing process, due dates, and other crucial aspects, you can effectively manage your tax responsibilities. Stay corrected with the latest rules and policies provided by the Income Tax Department, and confer with a tax professional if you have any typical queries. Remember, staying informed and proactive is the key to a smooth TDS return filing experience! Filing a TDS return online will be quite simple if you carefully follow the instructions outlined above.

Key Takeaways

  • Filing TDS returns is mandatory for all taxpayers falling within the Income Tax Department’s tax slabs through an authorized Income Tax e-filing system.
  • TDS returns play a significant role in ensuring tax compliance, verifying information, facilitating tax refunds, and aiding audits and assessments.
  • Different types of TDS returns exist based on the nature of the deductor and deductee, such as Form 24Q, 26Q, 27Q, and 27EQ.

FAQs

1

Is there any penalty if you fail to file TDS returns within the last date?

If the TDS statement is not submitted by the deadline, the Assessing Officer may order the offender to pay a minimum penalty of ₹10,000, which may be increased to ₹100,000.



2

What happens in case of errors in the TDS return file?

In case of errors in the TDS return file, the Income Tax Department provides provisions for rectification and correction.



3

How much tax is deducted for any payment?

Tax deduction for any payment is calculated with Tax deduction at source (TDS). Tax paid is dependent on the section of the Income Tax Act under which the deduction is made.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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