Tax Deducted at Source (TDS) compliance is an essential responsibility for deductors under the Income Tax Act, 1961. If you are not required to submit the relevant statement, it is advised to submit a declaration via the TRACES portal. However, if filing is mandatory, it is crucial to adhere to the provisions outlined by the Central Board of Direct Taxes (CBDT) to avoid penalties and ensure smooth tax credit availability for deductees.
1. Mandatory Filing of TDS Statements
As per Section 200(3) of the Income Tax Act, 1961, read with Rule 31A, every person responsible for deducting tax under Chapter XVII-B must submit quarterly TDS statements to the Director General of Income-tax (Systems) or an authorized representative. These statements include:
- Form 24Q: For tax deductions under Section 192 (Salaries)
- Form 27Q: For tax deductions under Sections 193 to 196D, applicable to non-residents (excluding companies), foreign companies, or resident but not ordinarily resident (RNOR) individuals
- Form 26Q: For tax deductions under Sections 193 to 196D applicable to all other deductees
It is advisable to file the applicable TDS statements at the earliest to comply with these provisions and avoid penalties.
2. Implications of Non/Late Filing of TDS Statements
For Deductors:
Late filing of TDS statements results in a penalty under Section 234E, which states:
- A fee of ₹200 per day shall be levied for each day the failure continues until the statement is filed.
For Taxpayers (Deductees):
- Non/Late filing of TDS statements impacts TDS credit availability for deductees.
- Deductees may not be able to claim the credit for tax already deducted from payments made to them.
- TDS Certificates cannot be issued until the TDS statements are duly filed.
3. Actions to be Taken
To ensure compliance and avoid unnecessary penalties, the following steps should be taken:
- File the relevant TDS Statement without any further delay.
- Submit a Declaration for Non-Filing, if not required to file, by logging into TRACES and navigating to the “Statements/Payments” menu, then selecting “Declaration for Non-Filing of Statements”.
- Issue TDS Certificates only after generating and downloading them from the TRACES portal. TDS Certificates obtained exclusively from TRACES are considered valid.
Ensuring timely compliance with TDS filing requirements is essential to avoid penalties and ensure smooth tax credit availability for taxpayers. Stay updated with CBDT notifications and provisions of the Income Tax Act to remain compliant.
