TDS Filing for Salary Payments: Understanding Form 24Q

Tax Deducted at Source (TDS) is a key part of India's tax collection system, where the employer or payer is responsible for deducting tax before making a payment to the employee or payee. Form 24Q is the specific TDS return form used for reporting TDS deductions on salaries paid by an employer to an employee. It is essential for ensuring that TDS on salary is correctly deducted and remitted to the Income Tax Department, while also providing employees with accurate tax information for filing their personal income tax returns.

In this blog, we will explain everything you need to know about Form 24Q, including its significance, filing process, and common issues that may arise during the process.

What is Form 24Q?

Form 24Q is the TDS return form for salary payments, filed by employers who deduct TDS from their employees' salaries. This form provides a detailed record of the TDS deducted and deposited with the Income Tax Department. The form also includes the information of each employee from whom TDS is deducted, their respective salary, the tax deducted, and other necessary details.

Key Components of Form 24Q:

• Details of the Deductor (Employer): Name, TAN, and address of the employer.

• Details of the Deductee (Employee): Name, PAN, address, and other personal details of the employee.

• TDS Deductions: Amount of TDS deducted on salary during the financial year.

• Challan Details: Details of the challans used to deposit the deducted tax with the government.

When is Form 24Q Filed?

Form 24Q is filed by the employer on a quarterly basis. The filing due dates are as follows:

• For Q1 (April to June): July 31st

• For Q2 (July to September): October 31st

• For Q3 (October to December): January 31st

• For Q4 (January to March): May 31st

It's essential to file Form 24Q on time to avoid penalties for late filing or non-compliance. The tax deducted during the previous quarter should be reflected in the return for that specific quarter.

How to File Form 24Q?

Filing Form 24Q is an online process that requires you to follow these steps:

Step 1: Register on the TRACES Portal

Before filing Form 24Q, you must first register on the TRACES portal (TDS Reconciliation Analysis and Correction Enabling System). This is the official portal for filing TDS returns and generating TDS certificates (like Form 16).

1. Visit the TRACES website: https://www.tdscpc.gov.in

2. Click on "Register" for new users and fill in the necessary details, including TAN, PAN, and contact information.

3. Once registered, you will receive a password to access your account.

Step 2: Download the TDS Return Preparation Utility (RPU)

To prepare the Form 24Q return, you need the Return Preparation Utility (RPU). This utility helps you enter all the relevant data in a structured format and validates it before uploading it to the TRACES portal.

1. Download the RPU from the TRACES portal under the "Downloads" section.

2. Choose the appropriate form type (Form 24Q for salary payments) and the quarter for which you are filing the return.

3. Open the RPU file and enter the required details, including:

   • Employer (deductor) information

   • Employee (deductee) details, such as name, PAN, and salary

   • TDS deduction details, including the amount of tax deducted for each employee

   • Challan details (payment made to the government)

Step 3: Validate the RPU

Once the necessary information is entered into the utility, click on the "Validate" button to ensure there are no errors or discrepancies. If there are any validation errors, the utility will highlight them for correction. You need to correct these errors before proceeding with the upload.

Step 4: Generate and Upload the TDS Return

After validation, the RPU will generate a .txt file that contains the TDS return data.

1. Log in to the TRACES portal using your TAN and password.

2. Go to the "File TDS Return" section.

3. Upload the validated .txt file by selecting Form 24Q for salary TDS.

4. After uploading, the portal will check for errors and validate the file. If no errors are found, it will allow you to submit the return.

Once successfully uploaded, you will receive an acknowledgment receipt with a 15-digit acknowledgment number. This serves as proof that the return has been successfully filed.

Form 24Q - Key Fields Explained

1. Deductor’s Details:Includes employer information such as name, TAN, and address.

2. Deductee’s Details:Information about the employees, such as:

   • PAN

   • Name

   • Address

   • Salary paid

   • TDS deducted

3. Challan Details:Details of the challans used to deposit the TDS amount with the government.

4. Breakup of Salary Payments:Detailed breakup of salary paid to employees, including:

   • Basic salary

   • Allowances

   • Perquisites

   • Bonuses

   • Other taxable components

5. TDS Deduction Summary:Total TDS deducted for the quarter, including any adjustments or corrections for previous periods.

Common Issues While Filing Form 24Q

1. Incorrect PAN Details:Ensure the PAN details of employees are correct. Mismatched PANs can lead to rejection of the return.

2. Mismatched Salary Details:Verify the salary details are correctly entered, including deductions, exemptions, and TDS. Any discrepancies can result in a mismatch between the Form 26AS (the taxpayer’s TDS statement) and the filed return.

3. Challan Mismatch:Ensure that the challan details you enter match the actual payment made to the government. Incorrect challan numbers or amounts can delay processing.

4. Late Filing:Filing TDS returns after the due date can attract late fees and penalties under Section 234E. Always file on time to avoid additional costs.

Importance of Filing Form 24Q Correctly

1. Compliance with Income Tax Act:Filing Form 24Q on time ensures that you comply with the statutory requirements under the Income Tax Act and avoid penalties.

2. Accuracy in Employee Taxation:Form 24Q provides employees with accurate tax information, which is crucial for filing their own income tax returns. It helps them claim credit for TDS deductions.

3. Avoid Penalties and Interest:Late or incorrect filings can attract penalties and interest, increasing the overall tax burden.

4. Easier Form 16 Generation:Proper filing of Form 24Q makes it easier to generate Form 16 for your employees, which they need when filing their personal tax returns.

Conclusion

Filing TDS returns using Form 24Q for salary payments is an essential requirement for employers. The process may seem complex at first, but following the steps outlined in this blog will help you ensure compliance. By registering on the TRACES portal, downloading the TDS utility, validating the return, and submitting it correctly, you can file your TDS returns without issues.

Remember, timely filing, accurate data entry, and keeping up with quarterly deadlines will help you avoid penalties and keep your business in good standing with the Income Tax Department.

If you face any difficulties or errors during the filing process, consider consulting a tax professional or expert who can guide you through the process and help you stay compliant.