Tax Deducted at Source, abbreviated as TDS is used by the government as a tool to collect tax at the source to minimize tax evasion by taxing the income right at the time of generation and not later. TDS is applicable on several types of income such as salaries, interests, commissions, dividends, etc.
Since this is such a common phenomenon in a working professional’s life, there are various FAQs that have been recorded in the recent past.
Let us throw some light on 8 such common queries and their answers:
- What is Form No. 27A?
- When should TDS be deducted?
- What is e-TDS/TCS intermediary?
- What is a TDS certificate?
- What is TAN?
- What is a quarterly e-TDS/TCS statement?
- What are Form 24, 26, 27 and 27E?
What is Form No. 27A?
While filing tax returns (e-TDS/TCS), Form 27A is required to be furnished separately in the form of a summary of the same (Form 24Q, 26Q, 27Q & 27EQ). It involves the control totals of ‘Amount Paid’, ‘Income Tax Deducted at Source’, and ‘Tax Deducted (Total Challan Amount)’. The control totals mentioned in Form 27A should match with the corresponding ones in e-TDS/TCS return file. It is mandatory to submit Form 27A generated by TDS/TCS FVU (File Validation Utility) duly signed, along with the TDS/TCS statement(s). If any form other than Form 27A is submitted, it will be considered invalid submission and the same will be rejected by TIN-FC branches.
When should TDS be deducted?
TDS is deducted when a person makes any of the specified payments mentioned under the Income Tax Act. If the person making the payment is an individual or HUF whose books don’t need to be audited, then no TDS has to be deducted.
There is an exception here. If the individual or HUF pays a rent of over INR 50,000, the person is liable to pay TDS @5% even if there is no tax audit. They also do not need to apply for TAN.
Who is an e-TDS/TCS Intermediary?
National Securities Depository Limited, Mumbai is appointed by ITD as the e-TDS/TCS Intermediary. On behalf of ITD, the body receives e-TCS returns from the deductors. It has established TIN Facilitation Centres (TIN-FCs) PAN India to facilitate deductors/collectors file their e-TDS/TCS returns.
During the current financial year, 5.78 crore individuals filed returns disclosing income of financial year 2018-19” – CBDT
What is the TDS Certificate?
On behalf of the employees, when taxes are deducted by the employer, Form 16/16A is known as TDS certificate. This certificate of deduction of tax provides all the details of TDS/TCS for various transactions between the deductee and the deductor.
What is TAN and how to apply for TAN?
TAN, short for Tax Deduction and Collection Account Number is the 10-digit alphanumeric number. For every TDS return, TDS payment, and other communication related to TDS with the Income Tax Department, the assessee must apply for TAN No. and quote the same at the time of tax deduction.
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What is the quarterly eTDS/eTCS Statement?
Quarterly TDS/TCS statements are the returns filed in electronic form as per section 200(3)/206(C), as amended by Finance Act, 2005. Form No.s 24Q, 26Q, and 27Q are used for quarterly e-TDS statements and Form No. 27EQ is used for e-TCS statements. From FY 2005-06 onwards, these quarterly statements need to be furnished as per the Income Tax Act. In case of both e-TDS/TCS, these statements are filed in CD/Floppy and should be accompanied by a signed verification in Form 27A.
What are Form 24, 26, 27 and 27E?
To declare the Tax Deducted at Source (TDS), these forms, i.e., 24Q, 26Q, 27Q, 27EQ, and 27D are submitted to the Income Tax Department. Although each of these forms has a different purpose but they are all connected with Income Tax. In these forms, the company needs to generally declare the TDS in detail.