Human Resource Management System and Tax Deduction at Source (TDS)

Human Resource Management System (HRMS)

In Government, during 2020-21, the year of Good Governance most of the functions are being done through transparency, and modules are being implemented in all Departments, Boards, Corporations, Autonomous Bodies to facilitate the organization for fixing responsibilities, stoppage of pay of an employee whenever required, effective use of e-Servicebook, and regulating employees' leaves properly. Apart from it, the promotions, pay fixation, and disciplinary proceedings are also being made part of the HRMS module in Government. To facilitate organizations, a module is designed. 

Purpose of Training Module:

The main objective of the above course is to build and enhance the capacities of officers in maintaining service records using Human Resource Management System and also enhance their capacities to compute accurate TDS and to submit quarterly return of e-TDS using the portal of Haryana Treasuries Department as per the latest instructions of the Haryana Government.

Target Group

This course is intended for Administrative and Finance Officers/Officials including Head of Offices, Class II Officers supporting Head of Offices, Finance Officers working in coordination with Head of Offices, and Class III Officials supporting Head of Offices and Finance Officers to perform the duties. 

By the end of this course, participants will be able to:

•     Describe and Perform Various Functions relating to maintaining Service Records on Human Resource Management System (HRMS).

•     Describe and Compute the Income Tax Liabilities of the employees and deduct the accurate amount of TDS from their salaries.

•     Process 24Q and 26Q i.e. Quarterly e-TDS Return as per the provisions of Income Tax Act and as per the latest orders of Finance Department using Haryana Treasuries Portal.

How to get Training organized:

As per the Haryana State Training Policy 2020, the Training Coordinators will identify the Officers/Officials requiring any training like above on "HRMS and TDS" and write a letter to the concerned Course Director through email to organize the course. The above module is developed by Dr. Lalit Kumar, Faculty of Financial Management, HIPA, Gurugram. He may be contacted at lalits.hipa@nic.in for organizing this training for the Officers/officials of the Haryana Government.

Payment of Tax Deduction of Source (TDS)

Tax Deduction at Source (TDS) is one type of advance tax required to be deducted by the person who made the payment and thereafter declared the same and submit to the Income Tax Department in the desired form meant for the deposit of the TDS. After deposit of the TDS amount in the Income Tax Department, it is required to file TDS Return for mentioning the Permanent Account Number (PAN) of the payee; only then the TDS is reflected in the Tax Credit Statement (26 AS) of the payee.
From the Financial year 2020-21, the employees have to declare their option to adopt either old regime tax rates (with deductions and exemptions) or new regime tax rates (without deductions and exemptions), and the Drawing and Disbursing Officers (DDOs) will deduct the TDS accordingly.

I. Why to deduct Tax Deduction at Source (TDS):

The TDS is deducted before making payments and its purpose is to prevent tax evasion and timely collection of due tax on certain taxable financial transactions. The TDS maybe required to be deducted by a person known as deductor including Individual, Hindu Undivided Family (HUF), Limited Liability Companies (LLP), Partnership Firm, Body of Individuals (BoI), Association of Individuals (AoI), and Local Authority. The tax is deducted on various types of payments including salaries, commission, professional fees, interest earned, rent, etc. The person who deducts the TDS is known as Deductor and the person whose TDS is deducted is known as Deductee. Section 206 states mandatory filing of e-TDS by the following:

(i) Government and Corporate Deductors or Collectors

(ii) The Deductors / Collectors whose accounts are audited under section 44AB

(iii) Deductors wherever number of deductees becomes more than or equal to 20.

In case, an assessee is not covered in the above three cases, then the TDS may be furnished either in physical or electronic format.

II. Types of Forms used for filing TDS Return:

There are various types of forms filled to declare and submit the Tax Deduction at Source (TDS), and filing of return of the TDS. Which type of form should be filed by whom, depends upon the nature of the financial transaction for which the TDS has been deducted by the deductor.

(i) Form 24Q:

It is provided under section 192 of the Income Tax Act that an employer will have to deduct TDS on payment of salaries paid to the employees. The TDS will be an amount based on the expected taxable income of the concerned employee. Form 24Q is a statement by which TDS on Salaries is declared by the Deductors and this form contains details of salaries paid and TDS deducted.

There are two annexures in this form; annexure-1 comprises the details of the deductor, deductees and challans and annexure-2 comprises the details relating to the amount of salaries of the deductees. Annexure-1 is required to be submitted at the end of each quarter of the financial year while annexure-2 is required to be submitted only at the end of the financial year providing details of salaries paid during the entire year.

(ii) Form 26Q:

It is provided in TDS is deducted on payments other than salaries under section 193, 194, and 200 (3) of the Income Tax Act, 1961. The TDS on payments other than salaries includes the payments like interest on securities, dividend securities, professional fees, director’s remuneration, etc. It is required to deduct TDS on the rates specified in Income Tax Act. Form 26Q contains only one Annexure. It is a statement by which TDS is declared on all payments except salaries:

• 193 – Interest on securities
• 194 – Dividend 
• 194A – Interest other than Interest on Securities
• 194B – Winnings from lotteries and crossword puzzles
• 194BB – Winnings from horse race
• 194C – Payment of contractor and subcontractor
• 194D – Insurance commission
• 194EE – Payment in respect of deposit under national savings scheme
• 194F – Payments on account of repurchase of units by Mutual Funds or UTI 94F
• 194G – Commission, prize, etc., on sale of lottery tickets
• 194H – Commission or Brokerage
• 194I(a) – Rent
•  194I(b) – Rent
•  194J – Fees for Professional or Technical Services
• 194LA – Payment of Compensation on acquisition of certain immovable property
• 194LBA – Certain income from units of a business trust
• 194DA – Payment in respect of life insurance policy
• 194LBB – Income in respect of units of investment fund
• 194IA – Payment on transfer of certain immovable property other than agricultural land 9IA
• 194LBC – Income in respect of investment in securitization trust

(iii) Form 27Q:

In case, payments are made to the Non-Resident Indians and Foreigners other than salaries; then it is required to deduct TDS and furnish in Form 27Q. The payments may include interest, dividend, bonus, or any additional sum which is an income for the Non-Resident.

(iv) Form 27EQ:

It is provided under section 206C of the Income Tax Act, 1961 that a seller will collect the tax from the payments made by the buyers of certain goods or commodities. Since the tax is collected on the payment received from the buyer, the seller, it is the tax collected at source (TCS) and Form 27EQ is used in case of collection of tax at source.

(v) Form 26QB:

The TDS on Property is furnished in Form 26QB since it is a challan-cum-return form; there is no need to submit a TDS return separately in the case of Form 26QB.

III. Due dates of filing TDS Returns:

The due dates of filing 24Q, 26Q, and 27Q for first, second, third, and fourth quarters are 31^st July, 31^st October, 31^st January, and 31^st May respectively. However, in the case of filing 27EQ the due date for the first, second, third, and fourth quarters are 15^th July, 15^th October, 15^th January, and 15^th May respectively.

IV. Procedure of filling TDS Forms:

First of all, go to the website of TIN NSDL i.e. https://www.tin-nsdl.com/. Then choose the desired TDS Form in the Downloads Tab. After that click upon ‘Quarterly Returns’ and choose ‘Regular’. It will redirect you to a new page containing desired TDS Return Form.

(i) Downloading Utility or Software for e-filing TDS:

A deductor is required to download software or utility known as Return Preparation Utility (RPU) for filling TDS form. The RPU software or utility can be downloaded from https://www.tin-nsdl.com/etds-etcs/eTDS-RPU.php as it is provided free of cost by NSDL e-Governance Infrastructure Limited to facilitate the deductors. Apart from RPU, there are many other various paid software which can be used to file TDS Return. The paid software is provided by the software companies such as BUSY, ClearTDS, TDSMAN, Tally.ERP 9 etc. The list of such software is available at https://www.tin-nsdl.com/services/etds-etcs/etds-swproviders-etds.html.

(ii) Filling Desired Information and Generating 27A and FVU File:

The software demands the desired information and creates form 27A and also generates a few files including the TDS.fvu file. Form 27A is a verification form to be signed by the deductor who is filing the TDS Return and the files including TDS.fvu file are required to be uploaded through TIN Facilitation Centre.

For each TDS return, it is mandatory to submit Form 27A summarizing the totals of amount paid in the transactions and ‘TDS Deducted in Transactions’ so that the same can be used to fix the liability of the deductees by the Income Tax Department in case income tax return (ITR) is not filed by them.

(iii) Submission of TDS Return:

The NSDL operates TIN Website where the TDS return can be furnished online. However, for submission of TDS online, the deductor should have Digital Signatures to digitally sign the TDS return. Secondly, the NSDL also set up TIN Facilitation Centres for submission of the TDS return.

After submission of TDS return either online or through TIN Facilitation center, a token number known as provisional receipt number is issued to the deductor as acknowledgment. The submitted TDS return may be accepted or rejected; in case of rejection, the reasons are also stated for rejection of the TDS return on the non-acceptance memo issued by the NSDL.

(iv) Charges for submission of TDS Return:

In case, the TDS return is submitted online using TIN Website with Digital Signatures; no charges are taken by the NSDL from the deductors. But in case, the TDS return is uploaded through TIN Facilitation Centres, the charges are imposed based on the number of deductee records in TDS Return i.e. (a) up to 100 records à Rs. 31.15, (b) 101 to 1000 records à Rs. 178, (c) More than 1000 records à Rs. 578.5. These charges are excluding service tax, which means the service tax is also charged on these uploading charges.

(v) Checking the status of submitted TDS Return:

After furnishing the TDS return, the status of the same can be checked by providing PAN number of Assessee along with the Token Number or Provisional Receipt Number of submitted TDS Return on the following link of the NSDL website:

https://onlineservices.tin.egov-nsdl.com/TIN/JSP/tds/linktoUnAuthorizedInput.jsp

V. Rate of Interest in case TDS is not deducted or not deposited:

In case, TDS is not deducted under sections 193, 194, and 200(3) of the Income Tax Act, 1961 then interest @1% per month is charged for the period from the due date of deduction to the actual date of deduction. In case, the TDS is deducted but not deposited, then interest @1.5% per month is charged for the period from actual date of deduction to actual date of payment.

VI. Penalty for non-filing or delay in filing of TDS Return:

The TDS Return should be furnished by its due date and in case of delay in filing of TDS Return, a penalty of Rs. 200 per day is imposed on the assessee under section 234E of the Income Tax Act. However, the penalty cannot exceed the total amount of tax deducted. In case, the TDS Return is not filed within 1 year from the due date of filing TDS Return, then under section 271H, in addition to the fees to be paid under section 234E; a penalty for non-filing of TDS Return is also imposed amounting to Rs. 10,000 to Rs. 1,00,000.

However, penalty under section 271H is not imposed in the case, the return is filed before the expiry of 1 year, with late filing fees and interest (if any).

VII. Revising or Correcting the TDS Return:

After submission of the TDS Return, if there are any errors noticed after submission; the deductor can file a revised TDS Return by incorporating the changes. However, charges for filing Revised or Corrected TDS Return are required to be paid separately as paid while submitting the original TDS Return.

VIII. Issue of TDS Certificates:

In case of TDS other than Salaries, it is required to issue the TDS Certificate to the deductees from whom incomes, TDS has been deducted. TDS Certificate in Form No. 16A is required to be generated from the website of the Income Tax Department within one month and 15 days after the quarter i.e. 15^th August for First Quarter, 15^th November for Second Quarter, 15^th February for Third Quarter, and 15^th May for Fourth Quarter. In case, the TDS certificate is not issued on time, then it will result in a penalty of Rs. 100 per day of default up to a maximum of tax-deductible or collectible.

Note: The Deductors can use PAN-TAN master facility available at TRACES portal to verify the correctness of PAN of the deductees. In case, there is no transaction liable to TDS/TCS is done during the quarter, the declaration in this regard should be intimated by using ‘Declaration for non-filing to avoid notice for non-filing of TDS Statement.

*Copyright © 2019 Dr. Lalit Kumar. All rights reserved.

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