Under Section 192 of the Income Tax Act of 1961, employers are required to deduct TDS (Tax Deducted at Source) on their employees’ salaries. This advanced tax can also be claimed later by the employees when filing their income tax returns. Companies are mandated to report the TDS deductions in detail, and these reports have to be prepared quarterly. This exercise is essential for bookkeeping and taxation purposes.
To fulfil this obligation, companies have to fill and file Form 24Q TDS. It is a TDS returns form that outlines details of salaries paid and TDS deductions.
TDS meaning
TDS is an advanced tax in the Indian taxation system. You may have noticed TDS payments in your monthly salary. TDS is a tax that is deducted from your income before it is credited to your account. It applies to various forms of income like salaries, rent, and interest. As it is deducted at the source, the government can count on it for stable revenue. At the same time, it also reduces the chances of tax evasion as it does not depend on self-reporting.
TDS is always deducted by the sender of a payment before crediting the amount to the receiver. The deduction is made on the total payable amount, and the remainder is paid out afterwards.
What is Form 24Q
Form 24Q is a mandatory return filed by companies to report details of TDS deductions that they have made in a particular quarter. Employers can deduct TDS on the payouts of their employees that fall under the following categories:
- Individuals
- Firms
- Hindu Undivided Family (HUF) units
Components of Form 24Q TDS
Form 24Q is divided into two sections—Annexure I and Annexure II.
Annexure I includes information concerning the deductor and deductees. It contains details of all the challans issued and a breakdown of the TDS deductions. All these details are important from an accounting perspective and invaluable when the deductees file their income tax returns using the various available provisions like Form 12BB.
Annexure II covers the salary details of each employee, including compensation and deduction.
What is crucial to note here is that Annexure I must be submitted every quarter by the company. This is a mandatory requirement. On the other hand, Annexure II is only to be submitted in the last quarter of a fiscal year.
When is Form 24Q due?
Form 24Q is submitted every quarter. The return for the first quarter must be submitted by 31st July, the second quarter by 31st October, the third quarter by 31st January, and the last quarter by 31st May.
How to submit Form 24Q
There are two methods to submit Form 24Q. You can submit the form online or offline. In some cases, filing the fourth quarter return online may be necessary. Online returns can be filed through the online software at the Return Preparation Utility (RTU). You can also file the returns through the other available third-party software. If you want to rely on the official portal, you can access the official National Securities Depository Limited (NSDL) website.
Also read: Form DPT- 3
Penalties and fees associated with Form 24Q TDS
Along with TDS deductions and Form 24Q filing, there are several potential fees and penalties that must be understood. Some of the major ones are:
- If the deductor fails to deduct the TDS, they are liable to pay 1% interest per month on the amount. This applies from the month the TDS should have been deducted to the month it is actually deducted.
- If the deductor fails to deposit the TDS, they are liable to pay 1.5% interest per month from the deduction date to the payment date.
- There is also a fee levied for late filing. If a deductor fails to file the TDS returns on time, they are fined at Rs. 200 per day. This accrues until the total fines equal the amount of the TDS returns. This directive is covered under Section 234E of the Income Tax Act.
- The concerned Administrative Officer can also levy an additional penalty under Section 271H. The exact criteria for the penalty may vary, but it would not be imposed if:
- The TDS has been deposited with the government
- The late fee and penalties have also been cleared
- Even if delayed, the return is filed within a year from the due date
Conclusion
Form 24Q plays a crucial role in the Indian taxation system, particularly for employers and employees. Through this form, you as an employer can report the Tax Deducted at Source (TDS) on your employees' salaries, ensuring compliance with Section 192 of the Income Tax Act. Understanding the components of Form 24Q, including Annexure I and Annexure II, is essential for accurate reporting and timely submission. Failure to adhere to the deadlines and requirements outlined for Form 24Q TDS can result in significant penalties and fees, emphasising the importance of proper compliance. Therefore, employers must sincerely fulfil their obligations to deduct and report TDS, while employees can benefit from the transparency and accountability facilitated by this process when filing their income tax returns.
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