What is Form 24Q - TDS Return on Salary Payment

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 Income Tax Form 24Q every quarter of the financial year to indicate TDS for salary. Form 24Q of the Income Tax indicates the total remuneration paid to the deductee and the TDS deducted from 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?

Employers must deduct TDS on salaries if they exceed the basic exemption limit. An employer can be an Individual, HUF, firm, or company. The employer should file a TDS return on the 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 another requirement for filing Form 24Q is as follows:

Challan details

1. Challan Number: This is the unique identification number assigned to the challan (payment slip) used to deposit the deducted TDS to the government.
2. Challan Date: The date on which you deposited the TDS through the challan.
3. Challan Amount: The total amount of TDS deposited using the challan.

Employee Details

1. PAN of the employee: Mandatory for TDS filing.
2. Amount paid or credited: The total salary amount paid/credited to the employee.
3. Employee reference number (if available): This helps identify specific employees within your organization.
4. Name of the employee.
5. TDS Section Code: The specific income tax section under which TDS was deducted from the employee's salary.
6. Date of payment/credit: The date on which the salary was paid or credited to the employee's account.
7. TDS amount: The amount of TDS deducted from the employee's salary.

Note:

• It's crucial to ensure the PAN details in Annexure I for all quarters match the PAN details in Annexure II (filed in the fourth quarter).
• Use a unique employee reference number consistently for each employee throughout the year.
• There's no requirement to file a NIL return (filing with no TDS deducted) unless it's the fourth quarter.

Classification of Form 24Q

Form 24Q is a type of ITR Form that 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.

TDS should be deducted from the salary as per the income tax slab after considering all the deductions and exemptions (if investment proofs have been submitted).

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. The total amount of the challan
5. A sum of TDS and interest is 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 is 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.

Due Dates for Filing Form 24Q?

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 have already been deposited.
• If the TDS return is submitted before one 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 the details of the remuneration are 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.

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.

How to download Form 24Q from Traces

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. Deductors 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 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 NSDL website.

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’.

Each record having the last record must begin on a new line and end with a new line character. The hex values include OD and OA.

Please ensure that constant values such as 'Record Type' and 'Upload Type' are written exclusively in BLOCK letters. When indicating 'File Header' for 'Record Type', please use 'FH' instead of 'fh.'

All amount fields must be populated with decimal values up to a precision of 2 digits. For instance: 900.70 or 9878.00. Note that for certain amount fields where fractional portions are not allowed, the value should include a decimal point followed by two zeros, like this: 2345.00 is acceptable, but 2345 will not be accepted.

When entering the tax deduction rate (DD), ensure the decimal precision is 4. For example, if the rate is 7, it should be indicated as 7.0000.

The letter 'M' signifies that a field is mandatory, while 'O' indicates it's optional to fill the field.

Date formats should adhere to 'ddmmyyyy.' Future dates are not permitted.

For nil challans or transfer vouchers, deductee records must include a flag 'A' or 'B' in the remarks section in case of lower or non-deduction.

Submission of Annexure I and Annexure II forms is mandatory. Annexure I needs to be filled for all four quarters of the year, while Annexure II is required only for the final quarter.

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 that any mistake in the form can lead to cancellation.
• Verify the challans and try to match them with NSDL and OLTAS.
• Signed form 27A has to be filed along with the TDS return.
• 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 utilize such announcements as great opportunities to keep track of various information portals. It will benefit you in the long run. However, not all information portals are reliable, so please make a well-informed choice and look for a reliable website.
• From time to time, certain changes are introduced in the Forms. You must keep yourself informed about those, or else you might go on the wrong track.

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