The Income-tax Act has incorporated a system of deduction of tax at the point of generation of income for quick and efficient collection of taxes. This system is called “Tax Deducted at Source” commonly known as TDS. Under this system, tax is deducted at the point of origination of income. Tax is deducted by the payer and the same is directly paid to the Government by the payer on behalf of the payee. The provisions of tax deducted at source presently apply to several payments like salary, interest, commission, brokerage, professional fees, royalty, etc.
Tax Deduction Account Number (TAN)
Tax Deduction Account Number or known as TAN is a 10-digit alphanumeric number issued by the Income-tax Department. All the persons who are responsible to deduct tax at source (TDS) TAN are required to be obtain TAN except in case of a person who is responsible to deduct tax at source under Section 194-IA where he can use PAN instead of TAN.
TAN is mandatory when quoting:
• TDS statements i.e. return
• Challans for payment of TDS
• TDS certificates
• Other documents
Application for allotment of TAN can be made in duplicate in Form No. 49B at any TIN Facilitation Centers (TIN-FC) or online application can be filed as well at a fee of Rs. 55 plus as applicable service tax.
TDS rates and Payment
As per the rates specified and according to in the relevant provision of the Income-tax Act a deductor is required to deduct tax at source but if PAN of the recipient is not intimated to the deductor tax is deducted at source at the rate specified in the relevant provision of this Act; or the rate or rates in force; or at the rate of 20%.
When any person located in a particularly notified area of jurisdiction he is entitled to receive any sum or income or amount on which tax is subject to TDS, the tax is deducted according to the highest at the rate or rates in force or the rate specified in the relevant provisions of this Act or at the rate of 30%.
Taxes deducted at source shall be deposited to the credit of the Central Government via E-Payment (online) or physically by filing the Challan no. 281 at the authorized branch of the bank. However, E-Payment is mandatory for all the corporate assesses and assesses other than company to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.
There are different provisions for Due date for deposit of TDS to the credit of Central Government:
1) In case deductor is an office of the Government when tax is paid without production of an income-tax challan on the same day when tax is deducted and when tax is paid accompanied by an income-tax challan, on or before 7 days from the end of the month in which the deduction is made or income-tax is due.
2) In case of any other deductor when the amount is credited or paid in the month of March On or before 30th day of April or else in any other case On or before 7 days from the end of the month in which the deduction is made or income-tax is due.
Every person liable for deduction of tax must file quarterly statements in respect thereof using Form 24Q/Form 27Q/Form 26Q according to his prescribed condition.
But in case tax is deducted under section 194-IA, the deductor must file a challan-cum-statement in Form 26QB within a period of seven days from the end of the month of deduction.
Due date for filing of TDS return both for Government and other Deductor are:
• 31st July of the financial year
• 30th September-31st October of the financial year
• 31st December-31st January of the financial year
• 31st March-15th May of the financial year immediately following the financial year in which deduction is made