To "file TDS credit" generally refers to the process of claiming the Tax Deducted at Source (TDS) as a credit against your tax liability. As a recipient (deductee) from whom tax has been deducted, you are entitled to claim this credit. The method varies depending on whether the TDS is under the Goods and Services Tax (GST) regime or the Income Tax Act.
Understanding TDS Credit for Recipients
TDS credit represents the amount of tax that has already been deducted from your payments by a deductor (the entity making the payment) and deposited with the government. As a recipient, this amount effectively reduces your overall tax payable or becomes a refund if the credit exceeds your liability.
It is crucial for recipients to claim this credit accurately and on time to avoid paying tax twice or to receive due refunds.
Claiming TDS Credit Under GST
For businesses registered under GST, certain government departments, local authorities, and specified persons are required to deduct TDS on payments made to suppliers for taxable supplies of goods or services (or both) where the total value of such supply under a contract exceeds ₹2.5 lakh.
The Process on the GST Portal
Claiming TDS credit under GST is a streamlined process available on the GST portal:
- Log In to the GST Portal: Access the official Goods and Services Tax portal using your credentials.
- Navigate to the Return Dashboard: After logging in, proceed to your return dashboard.
- Access 'TDS and TCS Credit Received' Tile: On the return dashboard, you will find and click on the 'TDS and TCS credit received' tile. This tile specifically enables GST portal users to manage the credit that has been deducted or collected by their corresponding Government deductor or e-commerce operator.
- Claim or Reject Credit: This section will display the TDS/TCS amounts reported by your deductors in their GSTR-7 (for TDS) or by e-commerce operators. You will have the option to either claim the credit (accept it) or reject it if there's a discrepancy.
- Utilize Credit in Returns: Once claimed, this credit becomes available in your electronic cash ledger and can be used to offset your outward GST liability when filing your regular GSTR-3B return.
Key Considerations for GST TDS Credit
- Auto-population: The TDS details are automatically populated based on the GSTR-7 filed by the deductor. It's essential that the deductor files their GSTR-7 correctly and on time for the credit to reflect in your account.
- Matching: Ensure that the TDS amount reflecting on the portal matches your records and invoices. Any discrepancies should be promptly communicated to the deductor for rectification.
- Reconciliation: Periodically reconcile the TDS credit appearing on the GST portal with your internal records to ensure accuracy and timely claim.
Claiming TDS Credit Under Income Tax
For individuals and entities under the Income Tax Act, TDS is deducted on various incomes such as salary, interest, rent, professional fees, etc.
The Process through Income Tax Return (ITR)
- Verify Form 26AS: Before filing your Income Tax Return (ITR), it is crucial to verify your Form 26AS. This annual statement provides a consolidated view of all tax credits linked to your Permanent Account Number (PAN), including TDS deducted by various deductors, Tax Collected at Source (TCS), advance tax paid, and self-assessment tax paid.
- Match with Records: Compare the TDS entries in your Form 26AS with your income statements, salary slips, interest certificates, and other financial documents to ensure all deductions are correctly reflected.
- File Your Income Tax Return: While filing your ITR, you will declare your total income and claim the TDS credit available in your Form 26AS. The ITR forms have specific sections where you input the TDS details.
- Credit Adjustment/Refund: The claimed TDS credit is adjusted against your final income tax liability. If the total TDS credit exceeds your tax liability, you will be eligible for a refund.
Key Considerations for Income Tax TDS Credit
- Correct PAN: Ensure your PAN is correctly quoted to all deductors, as TDS credits are linked to it.
- Timely Filing by Deductor: The credit will reflect in your Form 26AS only after the deductor files their TDS return (e.g., Form 24Q for salaries, Form 26Q for non-salary payments) and deposits the tax.
- Rectification: If there are discrepancies in Form 26AS, you must contact the deductor to get them corrected by filing a revised TDS return.
Practical Insights and Tips
- Regular Monitoring: Regularly check your 'TDS and TCS credit received' tile on the GST portal and your Form 26AS on the Income Tax portal.
- Proactive Communication: Maintain open communication with your deductors to ensure timely deduction, deposit, and correct reporting of TDS.
- Maintain Records: Keep meticulous records of all invoices, agreements, and payment receipts to facilitate reconciliation and dispute resolution if needed.
Comparison of TDS Credit Claim
| Feature | TDS Credit under GST | TDS Credit under Income Tax |
|---|---|---|
| Portal | GST Portal | Income Tax e-filing portal |
| Verification | 'TDS and TCS credit received' tile on dashboard | Form 26AS |
| Claim Process | Log in, navigate to tile, claim/reject credit | Match Form 26AS with records, claim in ITR |
| Utilization | Reduces GSTR-3B liability, available in cash ledger | Reduces final Income Tax liability, may lead to refund |
| Key Forms | GSTR-7 (by deductor), GSTR-3B (by deductee) | Form 24Q, 26Q etc. (by deductor), ITR forms (by deductee) |
