What is TDS Returns? How to file TDS Returns?

Last Updated: 3 May 2023

Tax deducted at source (TDS) is the practice of reducing tax evasion and spillage by making it mandatory to deduct TDS from payments at pre-defined rates. Whether your employer pays you salary, or your client pays you fees or the bank pays you interest on deposits; there are clear rules and rates prescribed for deduction of TDS. The payer is required to deduct the TDS and deposit the same with the government of India. The payee receives the amount net of TDS. This is considered as part of tax paid and in case excess TDS has been deducted then one can file returns and claim the refund from the Income Tax Department.

TDS is not just about deducting tax; TDS returns need to be filed too

Apart from deducting the tax and depositing the tax in the government account, the deductor is also required to file the TDS return which as to be done in the form of a quarterly statement to the I-T department. Such TDS returns can be filed online, and the same shows up in the Form 26AS of the payee. It is compulsory for the tax deductor to submit TDS returns on time.

The TDS return filed should contain details of the TAN and PAN number of the deductor, PAN number of the payee, amount of tax paid, details of TDS challan, mode of payment etc. To file TDS return the employer or the organization deducting TDS must have a valid Tax Collection and Deduction Account Number (TAN). Any person making specified payments mentioned under the I-T Act are required to deduct tax at source and needs to deposit within the stipulated time. Key payments for which TDS needs to be deducted include:

• Payment of Salary, fees and commissions
• Income earned on Securities
• Any winning from lottery, puzzles, horse races etc
• Insurance Commission
• Payment in respect of National Saving Scheme and many others

Process for filing TDS returns

To avoid procedural hassles in the future, it is better to ensure that the process of filing TDS returns is taken due care of. Key steps are as under:

Firstly, the Form 27A has multiple columns that must be filled. This hard copy of the form is verified with the e-TDS return filed electronically.

The totals of the amount paid and the tax deducted at source have to be correctly filled and tallied with the respective forms.

Form 27A must contain the TAN number of the organization filing the TDS return. Any error in filling the TAN number can make matching and verification difficult.

The TDS return must mention the details of tax paid with the mode of payment and the appropriate challan number. Again, any mistake in filling the challan numbers or dates of payment can lead to mismatch at a later date and the need to re-file.

The basic form that has been used for e-TDS return recommended by the department is mandatory to bring consistency. Input the 7-digit BSR code precisely to enable easy tallying with the actual tax deposited.

In case of physical TDS returns, they can be submitted at any TIN-FC’s managed by NSDL. If returns are filed online, they can be submitted directly at NSDL TIN website. In this case, the deductor has to mandatorily sign the return using level 2 digital signature.

If all the information mentioned in the TDS return is accurate, a provisional receipt / token number will be issued. This is an acknowledgment, stating that the return has been filed. In case, the return is rejected, a non-acceptance memo is issued along with the reasons for rejections. In that case, the returns will have to be re-filed.