Do you know in each month two statements shall require to submit to the tax circle on tax deducted or collected at sources? These two monthly tax return filing on TDS at prescribed format are provided under rule 18(7) and rule 21 of the Income Tax Ordinance 1984.
If the statements are not submitted to the tax authority within due date then a penalty shall be imposed by the Deputy Commissioner of Taxes (DCT). What are the penalties as per tax law?
Today from this article, you will learn everything about the above two monthly tax return submission on tax deducted or collected at sources. First, we will discuss about the statement require to submit as mentioned in section 58. And then we will discuss about the monthly tax return filing on tax deducted under the head “Salaries”.
Tax return filing under section 58
As per section 58, every person who has deducted or collected any tax shall furnish a statement to tax authority as per prescribed manner. This statement shall include all the tax deducted or collected at sources during the previous month except tax deducted under section 50. Because, the tax deducted under the head “salaries” shall be furnished in separate statement which we will be discussed in below.
You must know where the TDS is applicable to comply with this statement. Therefore, you should have full TDS rates with section references which will help you to know whether you have to deduct or collect tax during making any payment. However, deduction or collection of tax at source is not the only responsibility, you have to deposit such deducted or collected tax to the government treasury within due date following the prescribed manner.
So, you have deducted or collected tax as per tax law and deposited accordingly. Now, you have to prepare the statement as prescribed format under rule 18(7) to file the tax circle.
As per rule 18(7), a monthly statement to the income tax authority shall be sent by the person where any deduction or collection is made by the 20th day of the month following the end of the month. If you enjoy watching video then you may watch the below video on this article.
This statement consists name, address and TIN of the person from whom you have deducted or collected tax. So, you have to collect the TIN from the supplier. The amount of tax deducted or collected under mentioning the section reference, amount of tax deposited to the government treasury through tax challan shall incorporated in this statement.
The easy way to prepare this monthly tax return is to maintain excel sheet which will help you each month to update the statement.
So, we have learned everything about monthly tax return filing under section 58. And now we will know about another monthly statement on tax deducted under the head “Salaries”.
Tax return filing for tax deducted under the head salaries
You know, if salary of any employee is taxable then the responsible person making the payment shall deduct tax at source during salary disbursement. And this deduction of tax at source from employee salary shall be made at average rate and shall be deposited to the government treasury within due date. You shall consider the full year salary income of each taxable employee considering the exemptions and investment allowance to find out the tax rebate.
Additionally, if the salary income of any employee increased or decreased in the year and due to that the monthly tax deduction amount shall also be increased or decreased. In the rest months following the increase or decrease of salary, you have to adjust the tax amount.
In this case, you may also develop a single page tax calculation excel sheet for each employee which will help you to complete the calculation within few minutes. After deducting and depositing the deducted tax from salary, you have to submit the statement as prescribed format under rule 21.
As per rule 21, a statement of deduction of tax under section 50 shall be sent by the person making the deduction by the 20th day of the month following the end of the month in which the deduction is made. This statement shall be sent to the DCT under whose jurisdiction the employee is assessed or to such other income tax authority or authorities as the Board may specify.
So, we have learned everything about the two monthly tax return filings. If any person fails to submit these statements then what will be the legal consequences?
What are the penalties for failure to submit the above statement?
As per section 124, where any person without reasonable cause has failed to file or furnish any return under section 58 as discussed above, the DCT may impose upon such person a penalty amounting to BDT 5,000. In addition to that, in the case of a continuing defaults, a further penalty of BDT 1,000 for every month or fraction thereof.
We have provided you all the references in this article, so you may also go these sections and rules of the Income Tax Ordinance 1984 for further information.