What is TDS?

TDS or Tax Deducted at Source is an advanced tax deduction system specially designed and presented by the Income Tax Department of India. The methodology behind this system is to deduct a certain percentage of tax at the source of payment. The deduction varies between 1% to 10% depending on the individual’s monthly income.


Purpose of Form 24Q

When paying an employee(deductee)his/her monthly allowance, the firm(deductor) deducts TDS under Section 192. The firm would need to submit Form 24Q every quarter of the financial year to indicate TDS for salary. Form 24Q indicates the total remuneration paid to the deductee and the TDS deducted on the employee’s salary. No firm must refrain from abiding by the norms to file Form 24Q when required.


Who can deduct TDS on salaries?

Every employer is required to deduct TDS on salaries , if they exceed basic exemption limit. Employer can be an Individual, HUF, firm or a company.The employer should file TDS return on deduction of tax on salaries under Form 24Q quarterly.


Requirements for filing Form 24Q

For TDS deduction and filing Form 24Q one should have TAN i.e (Tax deduction Account Number) and other requirement for filing Form 24Q is as under:

  • Challan details
    1. Challan Number
    2. Challan Date
    3. Challan Amount
  • Employee Details
    1. PAN of the employee
    2. Other income details

Classification of Form 24Q

Form 24Q is classified into Annexure I and Annexure-II.

Annexure-I has to be filed for all the quarters of the financial year whereas Annexure II has to be filed for the last quarter only. i.e from January to March.

Form 24Q-Annexure 1: Contents:

  • Challan Details:
    1. The serial number of the challan.
    2. BSR (Basis Statistical Returns) code of the branch.,
    3. The date of deposit.
    4. Sum of TDS and interest to be allocated between the deductees.
  • Details of the Deductee:
    1. Employee reference number, if available
    2. Name of Employee
    3. PAN of Employee
    4. Date of Payment
    5. Amount Paid
    6. TDS Amount
    7. TDS Section Code
    8. Education Cess
Form 24Q- Annexure 1: Contents:

It contains the salary details of the employee such as– salary break up, deductions to be claimed, other sources of income, assets and tax liability.

Note: If the employer/firm (deductee) does not deduct TDS or deducts the same at a significantly lower rate, he or she must produce a valid reason for the same.

TDS Section Code:

  • Section 192A – Remuneration given to the Government employees apart from the employees of the Union Government.
  • Section 192B – Remuneration given to the non-government employees.
  • Section 192C – Remuneration is given to the employees of the Union government.

Time Schedule for Form 24Q?

Quarter Due Date 
April to June 31st of July of the same F.Y.
July to September 31st of Oct of the same F.Y.
October to December 31st of Jan of the same F.Y.
January to March 31st of May of the following F.Y.

Interest on Form 24Q

  • If TDS is not deducted, the rate of interest would be 1%/month from the date of deduction to the due date.
  • If TDS is not deposited, then the rate of interest would be 1.5%/month from the date of deduction to the date of payment.

Penalty for a late submission

According to section 234E, a penalty of Rs. 200/day will be levied till the return is filed. Also, the above-mentioned amount needs to be paid until the total amount gets equalized to the TDS amount.

The penalty under Section 271H

Under Section 271H, a penalty will be levied between the amounts of Rs. 10,000 and a maximum of Rs. 1,00,000.

Under Section 271H, Penalties will not be levied under the following scenarios:

  • If TDS is made towards the government.
  • If the late filing charge and associated interest are already deposited.
  • If the TDS return is submitted before 1 year from the date of expiry.

Annexure-II:

Form 24Q of the 4th Quarter (January to March) is crucial. Since the employer or deductor calculates the total tax to be paid by the deductee or employee post which the details of the remuneration is mentioned in the form. Annexure-II, as mentioned, is submitted in the 4th Quarter.

Difference Between Form 24Q in the Fourth Quarter vs First, Second & Third Quarter.

Fourth Quarter First, Second & Third Quarter.
Annexure II is required Annexure II is not required
Details required for fourth quarter: Salary details of complete financial year
  • Of Employee or Deductee
Details required for the first three quarters:
  • Deductor
  • Deductee
  • Challan

No Statement for the Fourth Quarter, Why?

Many people ask whether they need to produce the salary details of the employees mentioned in the 1st, 2nd, and 3rd Quarters, If there is no deduction in the last quarter. In such a scenario, if no deduction is made in the last quarter, but TDS is filed under Form 24Q for the 1st, 2nd, and 3rd quarters, then Annexure-II must be submitted.


If an employee is a part of your firm for a short period.

If an employee is employed for a short period then to file TDS, Annexure-II is not required for the first three quarters, however, in the fourth quarter, the details of his/her remuneration are to be mentioned for the served tenure at the firm. To generate a TDS certificate, filing of salary details is crucial


Is a TDS certificate crucial to all the employees in the firm?

As per Section 203 of the Income Tax Act of 1961, every individual or firm deducting tax is liable to provide the payee with a TDS certificate. It allows the employee to claim the amount deducted under TDS.


Where can I obtain a form for TDS returns?

Apart from Form 24Q, there are three more forms for TDS returns, Form 26Q, Form 27Q, and Form 27EQ. While downloading the form, you must choose the required form and file the return accordingly.

Steps to download the form:

Step I - Go to the NSDL website - https://www.tin-nsdl.com/

Step II - Click on the “Downloads” button and select the E-TDS/E-TCS option from the drop-down list.

Step III - Go to the Quarterly Returns tab and select Regular.

Step IV - Thereafter, you will be sent to a new page.

Step V - From there, you can select Form 24Q and select download.


Steps to submit Form 24Q?

Form 24Q can be submitted in two ways – online and offline, along with the relevant documents. However, for certain individuals filing the quarterly return online is mandatory. n Deductor such as-

  • If the deductor is a government institution.
  • The principal officer of a company.
  • If you had your accounts audited for the last year under the Income Tax Act, Section 44AB.
  • If the records of the employees in a report are more than 20 during any period of the financial year

You can file your returns online through the Return Preparation Utility (RPU). There are multiple third-party applications with the which you can file your E-TDS return. You can also use the TDS-RPU designed by the Government of India. It is available on the official website of NSDL.


Format for Form 24Q

According to the prescribed formats, an e-TDS/e-TCS return should be prepared in an ASCII format. The file extension should be ‘.txt’. One can get his/her e-TDS/e-TCS return prepared with the help of any software or the NSDL e-TDS Return Preparation Utility. If you want to take a look at the Income-tax department-approved format, click on - tin-nsdl.com/downloads/e-tds/download/24Q_01042015.pdf.

Once you have created the file according to the approved format, you need to validate it. Form 24Q can be validated with the File Validation Utility (FVU), an NSDL e-Gov /platform. In case the file that you have prepared has any mistakes, the File Validation Utility (FVU) will provide the report with those mistakes. It will enable you to correct those mistakes and re-verify with the help of the FVU. You must furnish the error-free generated file and validate it using the File Validation Utility (FVU) to the TIN-FC.


Difference between Form 24Q and Form 26Q

  • Form 24Q should be filed for TDS when the deductee is a salaried professional.
  • Form 26Q should be produced on TDS for domestic payments apart from salary.

Points to remember when filing TDS using Form 26Q

  • Make sure that all the details furnished by you are correct and have the appropriate documentation as proof to support those if required.
  • Make sure to verify all the PAN details before producing them.
  • Do keep in mind any mistake in the form can lead to the cancellation.
  • The CBDT often extends the last date for filing the TDS Form 24Q for a financial year on a case to case basis. If you have not filed your returns on time, you can utilise such announcements as great opportunities, to keep a track on various information portals. It will benefit you in the long run. However, not all information portals are reliable please make a well-informed choice and look for a reliable website.
  • Time to time certain changes is introduced in the Forms. ou must keep yourself informed about those, else you might go on the wrong track.

Conclusion

The information above should help you understand the Form 24Q properly and will help you get it done without making any mistakes. No matter what, filing TDS return on time is important. As a responsible citizen who wants to contribute to the growth and development of India, you must pay your taxes on time.

Frequently Asked Questions

Q- What is Form 27A of income tax?

The control chart of quarterly TDS/TCS statements which is supposed to be filed by deductors/collectors along with quarterly statements is known as form 27A of Income Tax. It contains control totals of 'amount paid' and 'income tax deducted at source' along with the summary of TDS/TCS returns . For each TDS/TCS return, a separate Form No. 27A is to be filed.


Q- What is TDS return filing?

At the time of making a payment, the tax has to be deducted under the TDS Scheme of the government. The Income Tax department demands the submission of a quarterly statement which is called TDS Return. The submission of a TDS Return is mandatory for the deductor. TDS Return contains the details of TDS deducted as well as of the deposits.


Q- What is TDS refund?

The TDS refund when an amount which is higher from the actual tax liability gets deducted from the tax amount. One can claim TDS refund on Excess Paid or Interest. The amount of tax deducted from the employees salary by the employer or any other deductor and then is deposited to the IT Department is known as TDS or Tax Deducted at Source.

Q- What is Form 24Q,,26Q ,27Q and 27EQ?

These are all the income tax return forms used to declare the TDS (Tax Deducted at Source) and are supposed to be submitted to the Income Tax department. TDS is considered as an advanced type of tax ,a part of which the Government receives which the transaction is made. The particular amount goes to the government as a form of tax and all these forms are subjected for the use under different categories.

Q- What is Form No 16?

Form 16 is a certain kind of TDS certificate issued by the employer to the employee which TDS is deducted by them. As the Income Tax Act requires the issuance of a certificate where the details of the deducted tax and deposits is certified. Form 16 becomes the essential document for TDS deducted from the salaries of the employees. It has two parts - Part A and Part B, both of which are required at the time of authentication.

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.