Considering the tendency of taxpayers to adopt tax evasion measures, Income tax provisions provide for deduction of tax at source/collection of tax source. And if someone misses that a TDS Defaulter letter is needed.
The idea of TDS became added with an intention to gather tax from the very supply of profits. As in line with this idea, a person (deductor) who’s susceptible to make a charge of designated nature to some other person (deductee) shall deduct tax at supply and remit the equal into the account of the Central Government. The deductee from whose profits tax has been deducted at supply might be entitled to get the credit score of the quantity so deducted on the idea of Form 26AS or TDS certificates issued via way of means of the deductor.
How you can create your TDS Defaulter letter Online?
- Click on Generate Now button and a form will appear where you need to answer few questions.
- Our system will generate the offer letter for paid intern automatically.
- Pay a nominal fee INR 29.
- Download the PDF and email it to the selected candidate.
When should TDS be deducted and by whom?
Any person making specified payments mentioned under the Income Tax Act is required to deduct TDS at the time of making such specified payment. But no TDS has to be deducted if the person making the payment is an individual or HUF whose books are not required to be audited.
Here’s how your TDS Defaulter letter looks like-
What are TDS Defaults?
Small businesses are not much aware of the overall implications of noncompliances of the TDS/ TCS provisions and end up paying the higher penal charges due to not following the deadlines.
- Late deduction and/or deposit of TDS.
- Late return filing.
- Furnishing incorrect information.
- Late download of TDS certificate from TRACES website.
Do you want to generate a Termination Letter?Click here to generate now!
What is Traces?
TRACES means TDS Reconciliation Analysis and Correction Enabling System. It is the online portal for the administration and implementation of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source).
What to add in a TDS Defaulter letter?
- Name of the company
- Amount to be deposited
- The issue for being TDS Defaulter
- What can be done to change
- Next Step
- Acceptance statement and signature section with a response deadline
What are the rules for Tax Deducted at Source?
There are rules concerning not just income tax return filing but also concerning TDS. If an individual or organization meets with these rules adequately, they will be able to avoid penalties, fees, or interest. The main rules related to TDS are:
1. One of the first essential rules is that Tax Deducted at Source needs to be deducted at the time when the payment either gets due or when the actual amount is made, whichever is earlier.
2. Delay in deduction of TDS will attract the interest of 1% per month until the tax is deducted.
3. Every person, whether an employer or otherwise, needs to credit the tax deducted to the government’s account by the 7th day of the following month.
4. In case of late or non-payment of TDS, an interest of 1.5% per month will be levied until the tax has not been deposited.
FAQ related to TDS Defaulter Letter
What is TDS in simple words?
TDS stands for tax deducted at source. TDS has to be deducted at the rates prescribed by the tax department. The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deducted.
Can I file Correction TDS Return on the basis of ‘Default Summary’ available on TRACES?
Yes, you can make an online correction on the basis of the default summary. However, it is advisable to download the updated Justification Report from TRACES. Justification Report provides detailed information about the defaults/errors that needs to be rectified by filing a Correction TDS Return.
Who needs to file Form 26QC?
The Form 26QC needs to be filed by the tenant of the property, who is making rent payments to the resident landlord. TDS is deducted at 5% on rent payments made by the tenant.