How to file TDS returns for reimbursement of expenses?

Posted In | Finance | Accounting Software | India Accounting Tax

TDS or Tax Deducted at Source is a system introduced by the Income Tax Department, where the person responsible for making specified payments, such as salary, commission, professional fees, interest, rent, etc. is liable to deduct a certain percentage of tax before making payment in full to the receiver of the payment. When it comes to reimbursement of expenses, it is essential to understand how to file TDS returns correctly to avoid any legal issues. This article will guide you step by step on how to do it.

 

1. Understand what is TDS Return

A TDS Return is a quarterly statement which has to be submitted to the income tax department. The TDS return contains details of TDS deducted and deposited by deductor. If you have deducted TDS from any payment, then you must file a TDS return. It’s important to remember that failing to comply with the TDS rules can result in penalties and other legal issues.

 

2. Collect Necessary Documents

Before filing your TDS return for reimbursement of expenses, make sure you have collected all the necessary documents. These include the TAN of the deductor, PAN of the deductees, details of the tax paid to the government, and the TDS challan information. You should also have a valid digital signature.

 

3. Prepare Your TDS Return

Next, you need to prepare your TDS return using the data in your TDS certificates. You can do this using return preparation software available on the NSDL website. Alternatively, you can use other approved software. In the TDS return form, you need to provide details about the deductor, deductees, and challans.

 

4. Validate Your TDS Return

Once you have prepared your TDS return, you need to validate it. This can be done using File Validation Utility (FVU) which is available free of cost on the NSDL website. The utility will validate the data structure of the file and generate an error report if any discrepancies are found.

 

5. Submit Your TDS Return

After validating your TDS return, you can submit it. This can be done online on the NSDL website or offline at TIN-FCs. You can also submit it through a registered post or courier. You will receive a provisional receipt for your TDS return. Keep this receipt safe as it serves as an acknowledgement of your TDS return submission.

 

6. Revise Your TDS Return if Required

If you have made any mistakes in your TDS return, you can revise it. The process of revising a TDS return is similar to the process of filing a TDS return. However, you need to select the option of revising a return instead of filing a new return.

 

Filing TDS returns for reimbursement of expenses can be a complex task. However, with the right knowledge and tools, you can easily file your TDS returns and stay compliant with the tax laws. If you need professional help, consider hiring a tax consultant or a chartered accountant.