How to file TDS returns for commission income?

Posted In | Finance | Accounting Software | India Accounting Tax

Filing TDS (Tax Deducted at Source) returns for commission income can seem a bit daunting, especially for those who are doing it for the first time. However, with the right understanding of the process and the requirements, it can be a straightforward task. This article will guide you on how to file your TDS returns for commission income.

 

Understanding TDS on Commission Income

Before we delve into how to file TDS returns, it's necessary to understand what it means. The Income Tax Act requires every person liable to make payment of specified nature to deduct a certain percentage of such payment as tax at source, which is referred to as TDS. Commission income is among the specified nature of payments that attract TDS under section 194H.

 

Steps to File TDS Returns for Commission Income

The following steps detail how to file your TDS returns for commission income:
 

1. Gathering Necessary Documents

Before you begin the process of filing your TDS returns, ensure you have all the necessary documents. These include your PAN card, TAN of the deductor, bank statements, and proof of any tax-saving investments. In case of commission income, you will also need to have the details of the commission received, TDS deducted, and the commission payer's TAN.
 

2. Prepare your TDS Return

The next step is to prepare your TDS return in a prescribed data format, i.e., a .txt format. This process can be done by using the Return Preparation Utility (RPU) provided by the NSDL or by using a software available in the market.
 

3. Validate Your TDS Return

After preparing your TDS return, you need to validate it using the File Validation Utility (FVU). Any errors found during the validation must be rectified before the return is considered valid.
 

4. Submit Your TDS Return

Once the TDS return is validated without any errors, it needs to be submitted along with a signed verification in Form 27A. This can be done either online through the NSDL's website or offline at TIN-FCs.
 

5. Retain the Provisional Receipt

Upon successful submission of your TDS return, you will receive a provisional receipt. This receipt is an acknowledgement that your TDS return has been filed. It is advisable to keep this receipt for future reference.

 

Filing TDS returns for commission income is not as complicated as it seems. With the right steps and documents, you can comfortably file your TDS returns. Remember to file your returns timely to avoid penalties and ensure compliance with the Income Tax Act.