The TDS collection process is managed and controlled by the Indian Revenue Service under the Department of Revenue. The Indian Revenue Service is a part of the Central Board of Direct Taxes (CBDT). This department is extremely important for the government or legal boards in conducting audits.
In this case, the source can be employers, promoters, contractors, or any payer who pays someone else. Employees, part-timers, freelancers, and others who pay others must also file TDS returns. The payee must file quarterly TDS returns to CBDT. Also, the TDS return details must include information on the total TDS deducted, payment to the government in that particular quarter etc.
|Illustration – If person X makes payment to a person Y, the payer X has to deduct TDS on certain occasions. And this payment does not include the payment of salary and must be non-salary income, and the payer has to file a TDS return in FORM 26Q.|
Submission of Form 26Q:
Form 26Q is submitted every quarter. The total amount paid to the payee during the particular quarter and the TDS deducted on such payments have to be furnished in Form 26Q.
All non-government deductors will be required to quote the PAN, whereas, government deductors will be quoting ‘PANNOTREQD’ on the form.
List of Sections Covered under Form 26Q:
|Section||Nature of Payment||Section Code|
|193||Interest on securities||193|
|194A||Interest on than interest on securities||94A|
|194B||Winnings from lotteries and crossword puzzles||94B|
|194BB||Winnings from horse race||4BB|
|194C||Payment of contractor and sub-contractor||94C|
|194EE||Payment with regards to the deposits under the national savings scheme||4EE|
|194F||Payments made on re-purchase of any units by UTI or Mutual Funds||94F|
|194G||Commission, prize etc., on sale of lottery tickets||94G|
|194H||Commission or Brokerage||94H|
|194J||Fees for Professional or Technical Services||94J|
|194LA||Compensation Payment any immovable property acquisition||4LA|
|194LBA||Certain income from units of a business trust||4BA|
|194DA||Payment in respect of life insurance policy||4DA|
|192A||Payment of accumulated balance due to an employee from the trustees of the Employees’ Provident Fund Scheme, 1952||92A|
|194LBB||Income in respect of units of investment fund||LBB|
|194IA||Payment on transferring any immovable property ( This does not include any agricultural land)||9IA|
|194LBC||Income in respect of investment in securitization trust||LBC|
Need for Filing TDS:
Both the government and the taxpayers are benefitted from receiving and paying TDS respectively. The advantages are as follows –
- TDS helps the government to collect taxes regularly
- It enables a regular flow of income to the government
- Paying TDS quarterly has reduced the overall burden of paying a huge tax amount all at once.
- TDS helps to distribute the tax payment into parts spread over several months making it easier for the taxpayer.
- Taxpayers are also provided with an easy mode of tax payment through TDS.
Deductor Category under Form 26Q:
- Statutory Body ( Central government)
- Statutory Body (State government)
- Autonomous Body (Central government)
- Autonomous Body (State government)
- Local Authority (Central government)
- Local Authority (State government)
- Branch/ Division of Company
- Association of Persons (AOP)
- Association of Person (Trust)
- Artificial Juridical Person
- Body of Individuals
Due Dates for Filing Form 26Q
|April to June||31st July|
|July to September||31st October|
|October to December||31st January|
|January to March||31st April|
Penalties for not Filing Form 26Q:
When a deductor does not submit Form 26Q within the deadline, then they will be subjected to one or more of the penalties listed below:
- If a deductor does not file the TDS on the submission date, he/she/they may have to pay a late filing fee.
- The deductor also has to pay interest on the TDS amount, if he misses the submission deadline.
- The deductor is charged with a larger penalty when they fail to file TDS within the deadline or fail to deposit the amount within the given one-year time period from the actual due date.
The modified rules, effective from April 1, 2017, can make you liable to pay a maximum penalty of ₹10,000.
To summarize, the government views TDS deduction as a method of collecting revenue. They require the deduction of revenue from various sectors and individual entities to ensure the government’s smooth operation. This reflects the country’s financial and other advancements. It also encourages taxpayers to pay their taxes in quarterly installments rather than all at once.