All you need to know about “How to file Nil TDS Return?”

Introduction

TDS Reconciliation Analysis and Correction Enabling System (TRACES) has implemented a new procedure for Nil TDS return filing with the fiscal year 2014-15. This is applicable to taxpayers who did not deduct any taxes during the applicable quarter. In this system, the deductor is required to state the reason for not filing a TDS return for a specific quarter. As a result, the deductor will not get notifications for failing to file TDS returns for that quarter. The deductor community will sigh relief as they save money, resources, and important manpower. The thorough information in this article will help you know more about the Nil declaration, the Procedure to file Nil TDS Return, and some frequently asked questions for filing TDS Returns.

What is Nil TDS Return?

A NIL TDS Return is a specific type of Tax Deducted at Source (TDS) return filed by an entity when no tax has been deducted or collected during a tax period. This return is necessary for compliance with tax regulations, even in cases where the entity, known as the ‘deductor’, has not made any tax-deductible payments.

What does a NIL Declaration of TDS Statement mean?

A NIL Declaration is made when you don’t need to file TDS (Tax Deducted at Source) Statements. If you didn’t have to deduct any taxes in a quarter, you submit this declaration. It’s also for those who didn’t file the required TDS Statement under Section 200(3) of the Income Tax Act, 1961 for any quarter.

Useful Details on Declaration of Non-filing of Statement

• If a Deductor is exempt from filing a statement for a specific period, he can avoid receiving an Intimation or Show Reason notice from the Department by filing a Non-Filing declaration.
• Non-filing Declaration is applied beginning with the 2013–2014 fiscal year.
• The reason for not filing a statement should always be chosen from the drop-down list.
• After finishing the Non-Filing Declaration, a confirmation email is issued to the Deductor at the provided email address.

Instructions for Non-Filing Declaration

• Only one non-filing-to-filing transition is permitted.
• A statement that has previously been filed cannot be submitted as a non-filing declaration.

What is the procedure to file Nil TDS Return?

The step-by-step procedure to file Nil TDS Return is as follows-: 

Step 1. Login to www.tdscppc.gov.in by using your registered id to log in ( TRACES site)

Step 2. Click the “Statement/Payments TAB after logging in > Declaration for Non-Filing of TDS statement” page.

Step 3. Fill in the necessary information, including the Financial Year, Quarter, Form Type, and the reason of return was not filed.

Step 4. Next, select “Add Statement Details.”

Step 5. After adding the declaration, select “Proceed”.

Step 6. Then “Check the Declaration Box” as instructed by the department.

Step 7. After accepting the declaration, check the information and complete the transaction.

Step 8. The deductor will receive a confirmation email on their registered email address.

FAQ’s on filing NIL TDS Return

1. Is it necessary to file NIL TDS Return?

Yes, it is necessary to file a NIL TDS Return to comply with tax regulations, even if no tax was deducted during the period. This ensures proper documentation and avoids potential penalties.

2. What are the advantages of submitting a Nil TDS Statement?

The advantage of this feature is that one only needs to update the status to non-filing Statement rather than filing a Nil TDS/TCS Statement for a specific quarter or period. After updating the status, TDS Centralized Processing Cell (CPC) won’t send any notices for failure to file TDS Statements.

3. What is an assessee’s situation if they haven’t paid any TDS at all in a quarter?

The deductor is not required to file TDS returns if no payments have been made using that particular form unless instructed to do so by the IT Department or National Securities Depository Limited (NSDL). Only if tax has been deducted at source, there will be a requirement to file a quarterly TDS Return. In cases when no tax has been deducted at source, there is technically no requirement to file a quarterly TDS Return/Statement. NSDL further holds the opinion that filing a NIL return is not at all required if the deductor has not withheld any tax at source or if there have been no transactions for a specific time period.

4. When is the Assessee expected to submit NIL TDS return?

The Assessee is expected to submit NIL TDS return only when payment is subject to TDS, but no tax has been deducted at the source because the deductee has shown the assessing officer a certificate stating that the tax rate is NIL

5. What can we do with Challan and the deduction Link for Zero Deduction?

In the output file, a NIL challan should be connected to a Zero Deduction only.