TDS Return filing for non-salary deductions

There are penalties for non-deduction of TDS, non-payment into the government account and other delays.

April 28, 2019 3:19 IST | India Infoline News Service
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TDS has to be deducted not only for salary payments but also for other payments including rentals, interest, fees, commissions, etc. All these non-salary TDS deductions are covered under a comprehensive Form 26Q. The Income Tax Act also defines threshold beyond which TDS has to be deducted and also the rates of TDS applicable in each of these cases.

Understanding what the Form 26Q is all about
While making payments to the payee, the payer has to deduct TDS based on pre-set thresholds and at the extant rates. All payments other than salary are covered under Form 26Q and the returns for the same have to be filed on a quarterly basis. The total amount paid to concerned persons along with their respective PAN numbers and the amount so deducted has to be disclosed in detail as part of Form 26Q. This is an umbrella section and encompasses all payments outside of salary payments.

Section 26Q covers the following (list is broadly indicative, not exhaustive)
  • Section 193 – Interest on securities
  • Section 194 – Dividend
  • Section 194A – Other Interest
  • Section 194B – Winnings from lotteries and crossword puzzles
  • Section 194BB – Winnings from horse race
  • Section 194C – Payment to contractors and subcontractors
  • Section 194D – Insurance commission
  • Section 194EE – Payment in respect of deposit under NSS
  • Section 194F – Payments on account of repurchase of Units by Mutual Funds
  • Section 194G – Commission, prize on sale of lottery tickets
  • Section 194H – Commission or Brokerage of any form
  • Section 194I(a & b) – Rent
  • Section 194J – Fees for Professional or Technical Services
  • Section 194LA – Compensation on acquisition of certain immovable property
  • Section 194LBA – Income from units of a business trust
  • Section 194DA – Payment in respect of life insurance policy
  • Section 194LBB – Income in respect of units of investment fund
  • Section 194IA – Payment on transfer of non-agricultural immovable property
  • Section 194LBC – Income in respect of investment in securitization trust
Key checklists while filing Form 26Q

The following is a checklist for filing Form 26Q
  • Form 26Q consists of 1 annexure as against two in case of Form 24Q.
  • Cross check Challan details (BSR code, date of payment, total amount etc.). TDS code is a combination of challan number, BSR code and date and is the key to tracking.
  • In case the deductor hasn’t deducted TDS in some cases or deducted at a lower rate, the reasons for the same must be disclosed.
  • Remember the due dates for filing Form 26Q: June Quarter (31st July), September Quarter (31st Oct), December Quarter (31st Jan) and March Quarter (31st May).

Penalties and penal interest for late filing of Form 26Q
  • It is incumbent to file the Form 26Q on time. There are penalties for non-deduction of TDS, non-payment into the government account and other delays.
  • If TDS is not deducted, where due, penal interest of 1% per month will be charged from due date to actual deduction date.
  • If TDS deducted is not deposited, penal interest at 1.5% per month will be charged from date of deduction to actual payment.
  • Under Section 234E, late filing fee of Rs. 200 per day is to be paid until the return is filed. This amount applies to each day until the total fine becomes equal to the TDS.
  • In addition, the tax department may also charge penalty of minimum Rs10,000 and maximum Rs1,00,000 under Section 271H. This penalty is waived if returns are filed within 1 year of the due date and the TDS and other fines are paid.
  • Finally, as a measure of safety, ensure that you verify all the PAN numbers, challan numbers and also match the same with details available in the OLTAS and the NSDL websites. This can make your job easier.

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