To prepare a correct REGULAR RETURN, user should know the details of the following accurately.
- Who: The deductor Details
- Whom: The Deductee Details
- What: The deduction Details
- When: The Challan Details
Deductor is the person, who is making a payment to deductee. While making the TDS return, deductor should furnish the major details like:
- Contact Details: This basically includes the name and address of the Deductor
- Responsible person: The responsible person means [refer Section 206]
- The principal officer in the case of every company
- The prescribed person as per Rule 36 in the case of “every local authority” or “other public body or association” or “every office of Government”
- Principal private employer [Including Firms/Partnerships/etc]
- TAN: It is mandatory for the person responsible to deduct tax, to have the Tax Deduction Account Number [TAN]. [refer Section 203A]
- Verifying correct TAN: To verify the TAN to be proper,
- Visit, http://incometaxindiaefiling.gov.in/knowtan/knowtan.jsp and verify it, either by TAN or name of the deductor.
- PAN: It is mandatory for all the deductors [other than government] to mention their PAN while preparing the Regular Return.
Deductee is the person, from whom the tax is being deducted or believed for deduction. Depending on the nature of the deduction being made, deductees and respective submission forms are categorized to 4 types:
- Salaries: In case of salaries, the deductee is termed as an Employee. All the information of deductions and payments in this category should be submitted in Form 24Q.
- Non-Salaries - Resident: In case of non-salaries and the payment is made to a resident in India, the deductee is termed as a Deductee or a Party. All the information of deductions and payments in this category should be submitted in Form 26Q.
- Non-Salaries – NonResident: In case of non-salaries and the payment is made to a non-resident of India, the deductee is termed as a Deductee or a Party. All the information of deductions and payments in this category should be submitted in Form 27Q.
Valid PAN Percentage:
As mentioned earlier, PAN of the deductee plays a crucial role. The percentage of deductions with Valid PAN over the total number Deductions in the respective Form is called Valid PAN Percentage [VPP].
VPP = [Total Number of Deductions with VALID PAN /Total Number of Deduction] * 100
With effect from September 2007, it has been made that certain percentage of VALID PAN is mandatory before filing a TDS return. The minimum percentages are as below:
- The returns filed after 30th September 2007 and before 31st March 2008:
- Form 24Q: Minimum VPP is 90%
- Form 26Q: Minimum VPP is 70%
- Form 27Q: VPP is not applicable
- Form 27EQ: Minimum VPP is 70%
- The returns filed after 31st March 2008:
- Form 24Q: Minimum VPP is 95%
- Form 26Q: Minimum VPP is 85%
- Form 27Q: VPP is not applicable
- Form 27EQ: Minimum VPP is 85%
* Due date for filing of TDS returns for 2nd quarter of 2007-08, has been extended up to 29th Feb 2008, due to order date 01/10/2007.
PAN request letters
It is good to send the PAN request letters to the Deductees who do not have a Proper PAN give to deductor.
Companies and Non Companies deductee
The type of the deductee should be properly mentioned in the regular return. This will help the department to identify the tax rates of the company/others [Their MIS operations].
Each payment accounted by the deductor, where the TDS is applicable should be shown as a deduction. [Refer Rule 31A]. While mentioning the deductions in the regular return, following are to be considered:
- Amount Paid/Credited date: this should contain the date, when the amount has been paid or credited to the party [whichever is earlier].
- Sections: For each deduction being shown at regular return should be entered corresponding to a section.
- Tax rates: For each deduction, the corresponding tax rate referred by the deductor while making the deduction should be specified. The care should be taken to comply with “rates in force”.
- Surcharge & Education cess: These 2 additional components are also to be considered while showing the Tax rates in the return.
- New rates applicability: There may be new rate of TDS or changes in Threshold limit in the Financial Budget. But this will be applicable only after the presidential assent to the budget [usually from 01st June]. Till then old rates should be referred.
- Threshold limits for payments: Even though this is not going to matter on the filing of TDS return, it is recommended to recheck the threshold limit, while passing the deduction to return.
- Tax Deducted Date: This is the main criterion, which will categorize a particular deduction to the respective quarter in the year.
- Reference Challan: It is compulsory for each deduction to refer a particular challan, through which the deducted amount has been paid. If a deduction is having TDS as ZERO, then the system automatically takes care of referring it to a NIL Challan [as defined by NSDL file structure].
- Non deduction reasons: All the deductions, which are referred for Non-Deduction or a Lower Deduction under section 197 or 197A, should be mentioned appropriately in the return. However, as the system is getting tightly linked electronically between Deductor-NSDL-DIT-Assessee, it is not mandatory to show this.
In case of Salaries, the TDS return being submitted for the Last-Quarter of the FY should contain the Salary details for each employee throughout the year. However, for first 3 quarters, there is no need to provide the salary details in the return.
Following are the certain points to be considered while mentioning the salary details.
- It should contain the Salary details for each employee and will be referred through his PAN in the return.
- The Salary details mentioned here should be pertaining one record for an employee for the duration of whole year [irrespective of quarter or a month].
- It should contain the employees who have:
- Got their Gross total Income above the taxable threshold limit.
- Worked with the deductor in any part or full of the financial year [irrespective of last quarter]
- The Interest paid on housing loan should be shown in “Add any other income reported” column as a loss [negative value]. Note that, employee cannot declare losses under any head other than house property [Refer Section 192(2B)].
- It should also contain the TDS made details, which has been:
- Entered in deduction details
- Not entered in deduction details, due to separate data file or outsourcing.
- Done under employee’s previous employment
For all the Forms, TDS return should contain the details of payments done to central government account, for TDS. This pertains to all the entries, with respect to deductions [tax deducted date] made in that quarter.
Few things to be considered while providing the challan details in the return:
- Challan Identification number: This makes the return successful by booking each challan details in the return against each entry of OLTAS uploaded by receiving bank. The CIN should be entered as below:
- Challan Serial No: This is the number uploaded by bank in the OLTAS return with reference to the challan paid by the deductor. This should be referred through the “Challan Verification process”
- Date of Challan: This is basically the challan tender date, which has been put by receiving Bank in OLTAS.
- BSR Code: This is the bank Branch Code of the Receiving Bank with maximum of 7 digits. This has been allotted by RBI to all the Banks authorized to collect TDS from deductors
- Mode of payment: This refers to the mode through which the amount has been paid to the bank. It comes with 3 categories. Namely:
- Cheque: The payment has been done through check to the bank.
- Cheque date: this should contain the date written on the cheque.
- Drawn on bank: This should contain the name of the bank, from which deductor has issued the cheque [the bank branch name where deductor holds the account for that cheque book]
- Cash: This is for the payment done as below
- Directly through Cash: In this case the payment has been made by remitting cash at the receiving bank, along with ITNS 281.
- Where deductor himself is a bank: In this case, deductor will make the payment through his internal records. This is also treated as cash.
- E Payment: In this case, the deductor has paid online through e-Payment facility provided by NSDL/I-T Department
- Transfer voucher: This is where the payment has been done by a government deductor to the government treasury.
- Applicability: this is applicable only where the deductor is a Government office/organization.
Challan and Deduction link verification:
This plays very crucial role in making the correct Regular return.
Challan Link: Referring the deduction to a particular challan is known as Challan Link.
The points to be observed here are:
- No deductions have been left UNLINKED for the deductions made in that quarter.
- No deductions have been over linked to a challan. That means, total of deduction linked to a particular challan should not exceed the challan amount.
- Verify and confirm the challans, where challan amount is exceeding the total of deductions linked to it.