Taxation and tax laws are such a delicate issue. It involves lots of formalities to be completed. These formalities may relate to TDS deduction, submitting it to the government, filing TDS return, income tax procedures, tax calculations, filing returns etc. Even a single formality left and this will mean charging of interest, penalty or even imprisonment. Do you know what exactly is TDS and why is it deducted ?
TDS forms an important part of direct tax regime of the country. It stands for Tax Deducted at Source. Just as the name says, this is the tax deducted while making some payment. This basically is a part of income tax to be charged which is collected at the source of payment.
As per the income tax rules, it is necessary to deduct TDS on every payment made. The basic purpose of deducting TDS is to ensure compliance with the provisions of Income Tax Act and payment of tax. Every individual or corporate, after deducting the TDS needs to submit it to the account of government and thus file quarterly return.
The new trend to file return gives way for online return filing through a recent launched system called TDS-CPC which gives way for a stepwise procedure regarding “How to file nil tds return”.
What is TDS-CPC?
Filing of returns is a cumbersome process whether it belongs to TDS or otherwise. But now the online facility to file returns has made this process quite easy. Earlier, we showed how to file IT returns step by wise
A new website named TDS-CPC has been launched which stands for Centralised Processing Cell for TDS. This website has specifically designed to provide tax deductors and tax payers various online services related to TDS. It provides various services like viewing and downloading of various forms like Form 16, Form 16A, Form 26AS, downloading TDS certificates, view challan status, manage profile etc. These services are provided through a system named TDS Reconciliation, Analysis, and Correction Enabling System (TRACES).
Various modes of communication have also been established to provide deductors and deductees solution to their problems related to correction, reconciliation and TDS payments. Now the online correction statements can be filed in case of wrong deduction of TDS amount so as to subsidize the difficulties faced by deductees.
** A call centre has been functioning to solve the grievances of deductors and deductees with the toll free number 18001030344. A mail can also be dropped on email@example.com for the same.
What is NIL TDS?
There are some cases when the TDS of a tax payer is nil. These cases are-
- As per section 194C, if the transporter provides PAN (Permanent Account Number). no TDS is required to be deducted.
- As per section 194C, the assessing officer can issue a nil certificate to parties satisfying certain conditions. In such case, no TDS is required to be deducted from such parties.
- If the payment made to the parties is less than the minimum exemption limits for such corresponding sections, no TDS is required to be deducted.
(E.g. Exemption limit for 194J is Rs. 30000 while this is Rs. 5000 for 194H)
In all these cases, TDS amount shall be nil. So, file zero TDS return online and all formalities are done.
Although the old provisions (Section 200(3) of the Income Tax Cat, 1961) stated that TDS return is to be filed only if some TDS is deducted and so no return for nil TDS, amended rule 31A of the Income Tax Act, 1961 states otherwise.
With the amended Rule 31A effective from 1 st April, 2011, out of the above three cases, the tax payers have to file quarterly nil TDS return in Form 26Q for amounts paid and TDS not deducted for payments under section 194C and section 197 of the Income Tax Cat, 1961. You can read in detail about sec 194c for TDS on Contractors
There is no change for the third case. This means no TDS return is needed to be filed in case the payment amounts are less than the minimum exemption limits. Before we go onto read the right procedure to file NIL TDS online, you can read our special tutorial for TDS on salary
Procedure-How to file NIL TDS return
To file Nil TDS return, one need to have Nil amount challan and the deductee details with remarks tags “A”, “B”, “T”, “Z”,”Y”.
These remarks tags distinguish specific class of taxpayers which is as follows-
“A” – Under section 197 for lower deduction or no deduction under certificate
“B” – Under section 197A for no deduction under declaration
“T” – Under section 194C for no deduction for transporters (PAN provided)
“Z” – Under section 197(1F) for no deduction for payment being notified
“Y” – No deduction for payment below minimum exemption limits
To file zero tds return online or a nil TDS return, there are two main steps-
- Enter Challan details:
The first thing is to create a nil value challan and enter the corresponding details into the return.
** In case the payment has been made through the bank, it would be easy to enter such details into the return. In other cases, nil value challan is required to be created.
** How to create NIL TDS challan:
In case there is no challan, nil challan can be created in the following manner-