Ranjan Goenka is Founder & Director of PDS Infotech, Kolkata,PDS Infotech is into developing software products in Tax related products & Services.
TDS (Tax Deducted at Source) is an amount deducted while making specified payments such as salary, rent, commission, professional fees, salary, interest etc. and subsequently deposited with the Income Tax Dept. TDS is not a tax, but advance deposit towards Income Tax on behalf of the recipient earning the revenue from the person making the payment. This provision ensures a continuous flow of revenue to the Government.
The recipient of payment receives the net amount (after reducing TDS). The amount of TDS during the course of the year is accumulated and is used to adjust this against the final computed liability of Income Tax. In case liability is lower than the TDS amount, one can claim for refund which is duly refunded with interest by the Income Tax Dept.
The tax deductor acts as a facilitator to collect tax and deposit with the Department. Their basic compliance requirement includes:
§ Correct deduction of tax
§ Timely deposit of TDS to the Income Tax Dept.
§ Filing TDS Returns
associating the deposits with details of individual tax deductions –
TDS return is to be filed every quarter, which may sound too frequent and procedure-oriented (read: tedious). To put it simply, TDS Return is a quarterly statement submitted by the tax deductor to the Income Tax Department. Based on this statement, tax credits are provided to the deductees/employees.
With a high focus on digital in an all-encompassing manner, the eco-system around TDS has become simpler and more accessible through digital means. One should carefully evaluate and opt for a TDS preparing software that is easy, versatile and comprehensive that helps in simplify the procedures & challenges for smooth and error-free compliance.
There are quite a few software available for preparing TDS & TCS Returns that meets the specified statutory requirements. These are available either as an on-premise installation or deployed on the cloud. As the pricing models may vary, however, one can opt based on specific needs in terms of volumes, accessibility, etc. Typically, TDS software covers features like tax calculations, data validation for error detection and rectification, integration to Income Tax portals among others. These are ideal for MSMEs (Micro Small & Medium Enterprises) having small to medium level set-ups.
In case of enterprises having large data volumes, multi-locations, multi-divisions, hierarchy of users – such as Banks, Insurance, Public Sector, Government, Local Bodies among others, for TDS compliances, one will need to look at a more versatile and reliable infrastructure. Enterprise-level Cloud-based solutions are probably most suitable that helps integrate all locations, division, users under a single software platform. Not only does this encourage discipline through standardization, but it also helps improve efficiency across the board. Most importantly, auto reminders for compliances, dashboard at each user level, collaborative working would help enterprises to be more cohesive and in turn be better compliant.
Filing of returns is not optional but mandatory. One needs to file TDS returns every quarter. The system helps in regular collection of taxes, ensures a flow of regular income to the government and reduces concealment of income. Further, deduction on account of tax in bits and pieces seemingly reduces the tax burden and makes it more convenient for tax compliance.
Using relevant & efficient software by the Tax Deductors for the purpose goes a long way in easing and streamlining the compliance for TDS Returns.
Hence, you will find TDS, no longer tedious!