Form 26Q: TDS Returns for Non-Salary Deductions

Everyone knows that pay income is subject to TDS deductions. However, TDS serves more purposes than that in actuality. Tax is withheld at source from everything that a person earns. TDS is withheld by the payer before crediting the payment amount when a non-salary payment is made to a person or an organisation, just like with any other type of payment. Form 26Q is presented with TDS returns for any payments received to the payee other than salary. Only citizens of India are eligible for this payout. Payments made to any person or organisation that is not an Indian resident should not be made using form 26Q.

What is Form 26Q?

Taxes are paid by taxpayers on all forms of income. In India, one kind of TDS (Tax Deducted at Source) return form is Form 26Q. Reporting TDS deductions on payments other than salary is the only application for it. The deductor, who is in charge of deducting TDS, files Form 26Q to give details regarding the TDS deductions taken from different resident payments. Reporting TDS deductions on payments made to residents for non-salary items such as rent, commission, professional fees, interest, and other expenses is the main objective of Form 26Q.

Payments Covered under Form 26Q

It is mandatory for all deductors who make specific types of payments to deduct TDS from the total amount received. The types of payments handled by this form are listed below.

Payments to contractors
Commissions or brokers
Payment of insurance commissions
Payment for life insurance policies
Rent on property
Dividends
Interest on securities
Payments other than interest on securities
Payments for professional or technical services
Prizes commissions on the sale of lottery tickets
Winning from horse races
Winning from games, puzzles, and lotteries
Compensation or commissions to directors of the company

Applicability of Form 26Q

Form 26Q determines its applicability in the context of TDS governed by Section 200(3) of the Income Tax Act. Its main purpose is to serve as the TDS declaration for all payments—except those classified as salary disbursements. To effectively submit this form, a deductor must provide their TAN (Tax Deduction and Collection Account Number). Government deductors have to enter "PANNOTREQD" n Form 26Q, while non-government deductors must submit their PAN.

Form 26Q Format

Form 26Q is divided into four parts and an appendix. The TAN, PAN, financial year and kind of deductor are requested in the first section. The information in the second and third parts must be completed by the deductor and the person in charge of the tax deduction.

Details to Fill Out in Form 26Q

The following details have to be filled in Form 26Q:

Challan details:

Serial number of the challan
BSR Code
TDS amount
Surcharge
Amount of interest
Education cess amount
The number of demand drafts or the cheque (if applicable)
Total tax deposit
Tax deposit date
Collection code
Method of TDS deposition

Payer Details:

Name
Address
Contact details
PAN Number

Payee Details:

Name

Full Address
Email ID
PAN Number
Telephone number

The deductor should mention the reason for not deducting TDS or deducting it, whichever is applicable.

Sections under Form 26Q

Form 26Q is applicable for the tax deducted at source for all payments, with the exception of salaries and payments to non-residents, per Section 200(3) of the Income Tax Act, 1961. The provisions of this law specify the circumstances in which TDS is applied and the maximum amount above which it is not.

Section 192: Income taxes are not withheld from salaries at the source Limit: The net income, also known as the taxable income, is less than the 2.5 lakhs tax threshold for individuals, 3 lakhs for citizens 60 years of age or older, and 5 lakhs for persons 80 years of age or more.
Section 192A: This section states that taxes are not withheld from an employee's provident fund at the source. Limit: Less than Rs. 50,000 has been paid.
Section 193: TDS not deducted when interest on debenture received from the public limited business by individual and HUF through account payee cheque. Limit: The sum must not exceed Rs. 5,000.
Section 193: Interest on taxable 8% savings bonds issued in 2003 is earned without tax withheld at source. Limit: The total amount, whether paid or due, is limited to Rs. 10,000.
Section 194: If a resident receives a dividend via an account payee cheque, no TDS is withheld. Limit: The dividend amount must not exceed Rs. 5000.
Section 194A: The interest paid by a bank, co-op society, or post office is not subject to TDS. Interest on items other than securities should be paid. Limit: The maximum interest amount is Rs. 40000 (or Rs. 50000 for senior citizens).
Section 194A: Interest generated on assets other than securities is not subject to TDS deductions. Limit: The interest rate must not exceed Rs. 5,000.
Section 194A: No Tax withholding is applied to the interest granted by the Motor Accident Claims Tribunal Limit: The interest amount that has been paid or is due to be paid must not exceed Rs. 50,000.
Section 194B: No tax is withheld at source from winnings from lotteries or crossword puzzles Limit: The total earnings are limited to ten thousand rupees.
Section 194BB: Tax on horse race winnings is not withheld at the source Limit: The total money gained is not more than Rs. 10,000.
Section 194C: No TDS is withheld from the amount paid to a contractor in this fiscal year. Limit: No more than Rs. 30,000 can be paid in one payment, whether it is already paid in full or not. The total amount paid or due to be paid to the contractor is limited to Rs. 1,00,000.
Section 194D: During the fiscal year, no tax is withheld at source from the insurance commission received. Limit: The total must not be more than Rs. 15,000.
Section 194DA: This section states that no tax is withheld at the source from the sum owed to the policyholder by the life insurance company. It also comes with a bonus. Limit: The total amount owed must not exceed Rs. 1,00,000.
Section 194EE: Payments made under NSS deposits are not subject to TDS deductions. Limit: The limit is that the money must not exceed Rs. 2,500.
Section 194G: The commission received from selling lottery tickets is not subject to source deduction of taxes. Limit: The total commission received is not more than Rs. 15,000.
Section 194H: No tax is withheld at the source from earnings on commissions or brokerage. Limit: No more than Rs. 15,000 can be earned. Furthermore, MTNL and BSNL are not required to deduct any TDS from the commission that they pay to the PCO franchisee.
Section 194-I: Rent payments for buildings, land, machinery and plant, furnishings, and fittings are not subject to source-withholding tax. Limit: During the fiscal year, the rent paid should not have exceeded Rs. 240000.
Section 194-IA: The sum to be paid as consideration for the purchase of immovable property is subject to no TDS deduction. The land used for agriculture is exempt from the rule. Limit: The interest amount that is paid or that needs to be paid must not exceed Rs. 5000000.
Section 194-IB: When an individual or HUF pays rent to an individual for a building, land, or both, no tax is withheld at the source. Under section 44AB, neither party's books should be needed for the audit. Limit: The monthly rent or portion of a monthly rent payment must not exceed Rs. fifty thousand.
Section 194J: There is no TDS when paying royalties, technical fees, professional fees, or director compensation. Limit: 30,000 rupees is the maximum amount that can be paid or made payable.
Section 194LA: Reimbursement for the compulsory acquisition of land other than agricultural land is paid without tax being withheld at source. Limit: The total amount paid or due for the fiscal year must not exceed Rs. 2,50,000.
Section 206A: If the interest is paid on a quarterly return to the individual, no tax is withheld at source. Securities interest is not included. Limit: If the payer is a bank or cooperative society, the interest paid or due is less than Rs. 10,000. In all other cases, the maximum is raised to Rs. 5000.

Due Date of Filing the Form 26Q

It is required of all taxpayers to promptly and consistently file the TDS return along with form 26Q. The following deadlines apply to the quarterly filing of form 26Q:

Quarter 1: 31st July
Quarter 2: 31st Oct
Quarter 3: 31st Jan
Quarter 4: 31st May

The payer is required to deduct the TDS amount at the appropriate rate at the time of payment. This money should be promptly deposited using the challan ITNS 281 to the credit of the government exchequer. It can also be submitted online using the TIN website. The penalty is assessed as follows if the deduction and deposition procedures are not completed on time. Additionally, according to section 197 of the Income Tax Act of 1961, the payee must get a lower deduction certificate if the TDS is withheld at a lower rate. Assume that the payee receives the lesser deduction certificate. The TDS is then subtracted according to the certificate's stated rate, which will appear in the form.

Late Fees & Penalties

Depending on the amount and the lateness of the returns, the taxpayer may be required to pay penalties if Form 26Q is not filed by the deadlines specified above. Form 26Q must be filed by the deadline, or else a late filing fee of Rs. 200 per day will be assessed in accordance with Section 234E until the penalty equals the amount of TDS.

Penalty for not filing:

Similarly, in accordance with section 271H, the penalty for failing to file Form 26Q within a year of the deadline and filing it incorrectly is at least Rs. 10,000 but not more than Rs. 1,00,000. Section 271H does not impose penalties if the following requirements are satisfied:

TDS is deposited to the government.
Interest and penalty for late filing are deposited.
The return was submitted earlier than the one-year deadline.

In addition, if TDS returns are not deducted or deposited, the government may impose interest. If the TDS is not deducted on schedule, interest is assessed at the rate of one percent (1% p.m.) for the day that passes between the deduction's actual date and its due date. A 1.5% interest rate is applied to the amount of time that passes between the actual date of deduction and the actual date of deposition if the TDS is not deposited on time.

How to Download Form 26Q?

The TDS Return Form has been divided into four categories. A taxpayer can easily get the 26Q by following the instructions indicated below:

Step 1: Visit the official NSDL website at https://www.tin-nsdl.com/.

Step 2: Click the "Downloads" tab and opt for E-TDS/E-TCS from the drop-down list.

Step 3: After selecting "Quarterly Returns," choose "Regular."

Step 4: You will be on a new page.

Step 5: Select Form 26Q to download from the "Form" section.

Revision of Form 26Q

The deductor may file a rectification statement if, after submitting the TDS returns, a mistake or inconsistency is discovered in the form. This is not a free procedure, of course. There will be fees associated with submitting a revised return for the deductor. However, submitting the corrected form is unlimited. Multiple Revised Returns may be filed by the deductor. It is best to avoid making many of the adjustments that are readily incorporated into the TDS returns that have already been filed. The fees assessed each time are a significant factor in the need to double-check all the information before submitting it.

Conclusion

In summary, people and organisations involved in financial transactions subject to TDS must understand the significance and goal of Form 26Q. Following the guidelines, getting the form correctly, and turning it in on time will help to guarantee a simple, trouble-free procedure that maintains you in conformity with tax laws.

FAQ

Q1. What is the TDS form for non-salary deduction?

A TDS Return or Statement, or Form 26Q, is a document that provides information about TDS withheld from non-salary payments. It must be turned in on time, on a quarterly basis, before the deadline. This form contains information about the payments made and the TDS that the deductor withheld from those payments.

Q2. What is the purpose of Form 26Q?

The paperwork used to report TDS information for payments other than salary is Form 26Q. This form gives details on the total amount paid in a given quarter together with the associated amount of TDS deducted. Quarterly submission of Form 26Q is required.

Q3. Who can file Form 26Q?

The deductor, who is in charge of withholding TDS, sends form 26Q to provide information about the TDS deductions made on resident payments. Form 26Q is primarily used to record TDS withholdings on different types of payments. It could cover things like commission, interest, professional fees, rent, and other non-salary payments given to local people or organisations.

Q4. What is the difference between 24Q and 26Q?

When the person receiving the payment (the deductee) is an employee of the business, Form 24Q is the valid form. Conversely, 26Q is applicable to other domestic incomes (but not salaries).

Q5. Can I move the deduction entry from Q1 and Q2?

Yes, you can do it, but you will have to file a revised return for Q1 before filing the return for Q2.