Preparation of TDS Return: The TDS return has to be prepared as per the prescribed format depending upon the type of return. Such return should be prepared in the file format as per the instructions prescribed by TIN-NSDL. Such e-return should be in ASCII clean format with ‘txt’ as file extension. The user can use any software for preparation of such return. To facilitate the return preparation, NSDL has also provided software known as Return Preparation Utility (e-TDS RPU-Light) to file the TDS return online.
File Validation Utility (FVU): Once the file is prepared, the same has to be verified by using FVU i.e. File Validation Utility provided by NSDL. This utility is mandatorily required to be used before filing the returns. This facility tool provides report on errors, if any, in the return prepared. On receiving the error report, the user should correct the errors in the file and again check the validation using the FVU.
- Furnishing of Return: Once the file has been verified, ‘upload file’ is generated by FVU. This return can be submitted by the user at any of the TIN – Facilitation Centers of NSDL or uploaded online. In case the return is uploaded online, the user would be required to register at NSDL website. On registration, he should upload the return. He will also be required to sign through digital signatures. If the return is complete, provisional receipt or token number is generated as an acknowledgment of the return submitted. However, if the return is not accepted due to any reason, non-acceptance memo is generated stating the reasons of rejection.
About NSDL and NSDL e-Governance Infrastructure Limited
NSDL or National Securities Depository Limited is the first and largest depository in India. It was established in 1996 for the purpose of handling securities in dematerialized form. Prior to the establishment of the depository, securities in Indian capital market were held in physical form. This led to the problems of bad delivery, delayed transfer of title documents, etc. In August 1996, the Indian lawmakers enacted the Depositories Act which led to the formation of NSDL.
It was promoted by IDBI Bank Limited (erstwhile Industrial Development Bank of India), NSE Strategic Investment Corporation Limited (erstwhile National Stock Exchange of India) and Administrator of the Specified Undertaking of the Unit Trust of India – DRF (erstwhile Unit Trust of India).
e-Governance is the use of information technology to facilitate better governance and administration. In January 2013, NSDL demerged itself and two companies were formed, NSDL e- Governance Infrastructure Limited (NSDL e-Gov) and National Securities Depository Limited. The objective of NSDL e-Gov is to work with various government agencies for designing, managing and implementing e-governance projects.
TDS or Tax Deducted at Source is a taxation mechanism under which the person, before making a specified payment, deducts tax at a specified percentage from such amount payable and deposits it to the Income Tax department. TCS or Tax Collected at Source is the tax collected by the seller from the buyer at the time of sale of specified goods.
Such amount is to be deposited at the specified bank branches that are authorized to collect taxes on behalf of government. TDS return furnishing the details of the tax deducted at source also needs to be submitted within the prescribed time period.
NSDL and TDS
As one of the e-governance projects, Tax Information Network or TIN was established by NSDL e- Governance Infrastructure Limited on behalf of Income Tax Department. It acts as a repository for tax related information. The objective of formation of TIN is modernization of current taxation system so that information technology can be used for the purpose of collecting, monitoring, processing and thus accounting of all direct tax in India.
TIN has three sub systems:
ERACS or Electronic Return Acceptance and Consolidation System: It consists of a nationwide network of TIN– Facilitation Centers which act as interfaces for tax payers. It is a completely online platform that enhances the uploading of e-returns of TDS/ TCS and Annual Information Return to the central system of TIN.
OLTAS or Online Tax Accounting System: It facilitates daily upload of tax deposit details to the central system that have been done in multiple branches of tax collection across the country.
CPLGS or Central PAN Ledger Generation System: It is a central system that accumulates and manages the entire data for each and every PAN number:
- The entire details of the tax that is deducted by TDS or collected of behalf of TCS is matched against the available data submitted by the tax collectors and the deductors by way of tax challan, deposit slip, etc. and other information with the banks.
The entire details of Advance Tax that is self-deposited by the assesse on anticipation of higher taxation or self-assessment and the Fringe Benefit Tax.
To automate the process of collection, compilation and processing of TDS return, The Income Tax Department introduced "Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003”. Under this scheme, it has been mandated for all corporate and government tax deductors to file their returns online. Other deductors shall have an option of filing the returns online or in physical mode. NSDL e-Gov acts as an intermediary to receive all the TDS returns filed by the deductors.
TCS or Tax Collected at Source is the amount collected by the seller from the buyer on the sale of specified goods. Such tax collected by the seller/collector has to be deposited with the bank branches authorized to collect taxes on behalf of government.
Similar to TDS, for TCS also the Income Tax Department introduced "Electronic Filing of Returns of Tax Collected at Source” Scheme for collection, automation and compilation of TCS returns. Hence, all corporate and government tax deductors are required to file their returns online. However, other deductors may file it online or in physical mode.
These TDS/TCS returns may be submitted through TIN facilitation centers (TIN–FC) established by NSDL or may be uploaded online on the NSDL website.
Steps to file TDS/TCS Returns
Return Preparation Utility
The NSDL e-Gov Return Preparation Utility is a Java based utility which can be used for preparing quarterly TDS/ TCS statements. It is not mandatory to use RPU for preparation of returns. This utility can be downloaded by following steps:
- Go to TIN-NSDL website
- Click on Downloads tab
- Select Quarterly returns and Regular
- Click on e-TDS/TCS Return Preparation Utility Ver 1.8 to download NSDL e-Gov RPU.
File Validation Utility
The NSDL e-Gov File Validation Utility is a Java based utility. This facility has been developed by NSDL e-Gov to ensure that the statement submitted does not contain any format level errors. The user should ensure that the Quarterly TDS/TCS Statement is validated by the latest FVU provided by NSDL e–Gov only before submission. The same can be downloaded using the link available on TIN-NSDL website. Once the statement is uploaded, it either generates an error file or .fvu file. In case of errors, the error file displays the error location, error code as well as description of the error code. A Statement Statistic Report is generated by validating the file though FVU. This statement is generated only in case there are no errors in file and valid file is generated. Following this, totals appear in the said statement:
- Number of Deductee records: In case of Form 24Q, it reflects the number of employees in respect of which TDS is deducted and return is filed. In case of Form 26Q/27Q, it reflects the total number of times tax is deducted. For example, if 10 payments are made to same deductee, it will reflect 10 records.
- Amount Paid: This reflects the total amount that has been paid on which tax is deducted. In case of Form 24Q, it reflects the total amount paid to the employees as salary which is chargeable to tax. In case of Form 26Q/27Q, it reflects the total amount which has been paid on which TDS is deducted.
- Tax Deducted: This reflects the total amount of tax that has been deducted at source from all the payments made.
- Tax Deposited: It is the total amount that has been deposited with Income Tax Department as TDS, it is the total of all deposit challans. Ideally, this amount should be equal to tax deducted, however, in certain cases if may differ due to interest or other amount.
These control totals should match with the error or response file. In case if there is any mismatch such e-TDS/TCS return shall not be accepted by TIN-FC.
Forms prescribed for filing TDS return
Following are the forms prescribed for filing TDS returns:
- Form 24Q: This form is applicable is case of tax deducted at source from salaries paid
- Form 26Q: This form is applicable is case of tax deducted on all the payment except salary. In case different kinds of payments are made, single Form 26Q should be furnished along with separate annexure for each type of payment. For example, if payment is made to contractors and interest payment is made, in such case Form 26Q shall be submitted along with two annexure one for each challan in respect of each type of payment.
- Form 27Q: This form is applicable on tax deducted from the payments made to Non Resident Indians in the nature of interest, dividend or any other sum on which TDS is deductible.
- Form 27EQ: This is applicable in case of Tax Collected at Source.
In addition to the above forms, Form 27A is also required to be submitted along with quarterly e-TDS/TCS statements. It is a control chart which contains summary of e-TDS/TCS returns. It contains the total amount paid and amount of TDS deducted. The amount reflected in Form 27A should match with the corresponding totals in the e-TDS/TCS return.
Following points should be kept in mind in case of Form 27A:
- Form 27A is generated by File Validation Utility of TIN-NSDL.
- It should be ensured that the form is completely filled and there is no overwriting. Otherwise, necessary changes should be made in file, the same should be validated again and new Form 27A should be generated.
Following details should be clearly mentioned on Form 27A:
- Name of the deductor
- Tax Deduction Account Number( TAN) of the deductor
- Amount paid
- Amount of TDS deducted
- The form should be signed by the person authorized or designated to sign.
Following points should be kept in mind in case of TDS filing through TIN-NSDL:
- In case a deductor has more than one office or branch, he shall have two options for filing TDS/TCS returns. One, he can file the return separately for each branch and two, he can file a consolidated return for all the branches and quote one TAN. However, to file separate returns for each branch, different TAN numbers need to be obtained for each branch.
- In case no TDS is deducted, no return is required to be filed. Similarly, in case TDS is deducted at a lower rate, return should be filed only in respect of the TDS deducted and no statement/certificate needs to be filed for deducting tax at a lower rate along with the return.
- TDS certificates and challans are not required to be submitted along with e TDS/TCS certificates.
TDS/ TCS Correction
In addition to filing quarterly returns for TDS/TCS, TIN NSDL also facilitates correction of TDS/TCS returns filed. In case the details furnished at the time of return filing is incorrect, credit of the same is not reflected in the Form 26AS of the deductees. In such case correction statement needs to be filed. The process of filing and submission of correction statement is same as that of challan. Following types of correction can be made:
- Details of deductor such as name and address
- Challan details such as serial number, BSR code, challan amount, challan tender date, etc.
- Additions, removal or updation of deductee details.
- Addition or deletion in salary records
- Update PAN or salary details of deductee
- Add new challan or underlying deductee