Entities (both corporate and non-corporate deductors) making payments (specified under Income Tax Act) to third parties (deductees) are required to deduct tax at source (Tax Deducted at Source-TDS) from these payments and deposit the same at any of the designated branches of banks authorised to collect taxes on behalf of Government of India. They should also furnish TDS returns containing details of deductee(s) and challan details relating to deposit of tax to ITD.
There exists an "Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003”, applicable to all deductors furnishing their TDS return in electronic form. As per this scheme:
- It is mandatory (w.e.f. June 1, 2003) for corporate deductors to furnish their TDS returns in electronic form (e-TDS return).
- From F.Y. 2004-2005 onwards furnishing TDS returns in electronic form is also mandatory for government deductors in addition to corporate deductors.
- Deductors (other than government and corporates) may file TDS return in electronic or physical form.