TDS or Withholding Tax

TDS and Withholding Tax Advisory Services | SIGMAC & Co.

 

Ensure Seamless Compliance with Expert TDS and Withholding Tax Advisory Solutions

In today’s highly regulated business environment, it is essential to ensure compliance with tax regulations. TDS (Tax Deducted at Source), also known as Withholding Tax, is a significant part of business tax obligations in India. It ensures that the government collects tax at the time income is generated rather than waiting for it to be declared. At SIGMAC & Co., we provide comprehensive TDS and Withholding Tax advisory services that help businesses manage this process efficiently while staying fully compliant with statutory requirements.

What is TDS or Withholding Tax?

TDS is a system introduced under the Income Tax Act, 1961, that allows the government to collect tax at the source of income. It is applicable to various types of payments such as salaries, interest, professional fees, rent, and more. The payer is responsible for deducting the tax before making the payment to the recipient and subsequently depositing it with the government.

 

Statutory Requirements for TDS Under the Income Tax Act

The Income Tax Act outlines specific provisions for TDS deductions:

• Deduction rates: Vary based on the nature of payment and the recipient’s status (resident or non-resident).
• Thresholds: Payments below certain amounts are exempt from TDS.
• TDS Returns: Businesses are required to file quarterly TDS returns in Forms 24Q, 26Q, 27Q, etc.

Failure to comply with TDS obligations can result in penalties, interest, and disallowances in income tax deductions.

 

Benefits of TDS for a Business Entity

• Streamlined Tax Collection: TDS helps ensure timely and systematic collection of taxes, reducing the financial burden at the end of the year.
• Legal Compliance: Regular deduction and filing of TDS returns keep businesses compliant with tax regulations, avoiding penalties.
• Efficient Cash Flow: TDS helps businesses manage cash flow better, as taxes are deducted throughout the year.

 

Why TDS is Required for a Business Entity

TDS obligations are vital for businesses to:

• Ensure compliance with the Income Tax Act.
• Avoid legal penalties and disallowances in expenses due to non-deduction or late deposit of TDS.
• Maintain a transparent financial system that satisfies regulatory audits and investor expectations.

 

Why You Need a Chartered Accountant for TDS Advisory

TDS compliance can be complex, involving ever-changing tax laws, timely deposits, and accurate filing of returns. This is why a Chartered Accountant (CA) plays a crucial role. A CA ensures:

• Accurate computation of TDS for various types of payments.
• Timely deposits of TDS with the tax authorities.
• Proper filing of TDS returns and addressing discrepancies in TDS credit.

 

Complications in Managing TDS

Some challenges that businesses face with TDS include:

• Constantly evolving tax laws, which can lead to errors.
• Mismatch in TDS returns, leading to notices from tax authorities.
• Penalties and interest for late deductions, deposits, or returns.

At SIGMAC & Co., we help mitigate these challenges by offering continuous support, helping you stay on top of regulatory requirements.

 

Cost Comparison: Chartered Accountant vs. In-House TDS Management

Aspect	Chartered Accountant	In-House Team
Cost (₹/year)	₹75,000 – ₹1,50,000	₹3,00,000+ (salary + tools)
Expertise	Highly specialized in TDS & taxation	May lack deep expertise
Compliance Guarantee	High, as CAs are tax experts	Variable, depending on skills
Time Efficiency	High, saves in-house time	Time-consuming process
Technology & Tools	Uses advanced tax compliance software	May require investment in software
Risk of Errors & Penalties	Minimal, due to expertise	Higher risk due to inexperience
Up-to-Date Knowledge	CAs are required to stay updated on tax laws	Requires continuous training

How to Choose the Right Partner for TDS Advisory

Choosing the right partner for your TDS compliance is critical to ensuring smooth operations. Here’s what you should look for:

• Experience: Select a CA firm with extensive experience in handling TDS for businesses like yours.
• Technological Capability: The firm should use advanced tax compliance software to ensure accuracy and efficiency.
• Client-Centric Approach: A firm that understands your specific needs and provides personalized support.

 

What SIGMAC & Co. Can Offer

At SIGMAC & Co., we offer:

• Complete TDS compliance: From calculation to deposit and return filing.
• Advisory on complex transactions: We provide guidance on TDS implications for cross-border payments, employee salaries, and other intricate transactions.
• Real-time updates: Ensuring that your business stays compliant with changing tax laws.
• Audit representation: We handle all communication with tax authorities in case of any discrepancies or audits.

 

Why Choose SIGMAC & Co. for Your TDS Advisory?

• Industry Expertise: We have handled TDS compliance for businesses across industries, ensuring a deep understanding of different tax implications.
• Tailored Solutions: Our team of expert CAs provides customized solutions to fit the unique needs of your business.
• Error-Free Compliance: We take a proactive approach to ensure that your TDS obligations are met without any errors or delays.
• Ongoing Support: Our support doesn’t end with filing returns; we are available year-round to answer queries and resolve any TDS-related issues.

 

Benefits of Partnering with SIGMAC & Co.

• Peace of Mind: With our expert team managing your TDS, you can focus on growing your business.
• Cost-Effective: Our services help you avoid penalties and disallowances while saving you the overhead cost of managing TDS in-house.
• Enhanced Compliance: We ensure that your business remains compliant with all TDS regulations, reducing the risk of scrutiny by tax authorities.

 

FAQs on TDS and Withholding Tax Advisory

What is the threshold for deducting TDS?

TDS is applicable based on payment types and thresholds specified by the Income Tax Act.

When should TDS be deposited?

TDS must be deposited by the 7th of the following month, except for March, where the deadline is April 30th.

What happens if TDS is not deducted or deposited on time?

Penalties and interest may apply for late deductions or deposits, and disallowances in tax deductions can also occur.

Is TDS applicable on foreign payments?

Yes, TDS is applicable on certain payments made to non-residents as per the Income Tax Act.

Can TDS be refunded?

If excess TDS has been deducted, the taxpayer can claim a refund when filing their income tax return.

Who is responsible for filing TDS returns?

The person deducting the TDS (payer) is responsible for filing quarterly TDS returns.

What forms are used to file TDS returns?

Forms 24Q, 26Q, and 27Q are used depending on the nature of the payment and the payee’s status.

How can I check if TDS has been credited to my account?

You can verify your TDS credit using Form 26AS, which is available on the Income Tax portal.

What is the penalty for non-filing of TDS returns?

A penalty of ₹200 per day may be levied for delayed filing, up to the TDS amount.

Do all payments require TDS deduction?

No, certain payments below specified thresholds or payments made to exempt entities may not require TDS deduction.