Describe the TDS process in a company, from deduction to issuing certificates.
What the interviewer wants to hear
- Identify payments that attract TDS and the applicable section and rate
- Deduct at the time of credit or payment, whichever is earlier
- Deposit to the government by the due date
- File quarterly TDS returns
- Issue Form 16 or 16A and reconcile with Form 26AS
Model answer
First I identify which payments attract TDS, such as salaries, contractor payments, professional fees, rent and commission, and set up the correct section and rate for each vendor in the accounting system, with their PAN. TDS is generally deducted at the time of crediting the party’s account or paying them, whichever comes first, so I deduct it when booking the invoice, not just at payment. The deducted amount sits in a TDS payable ledger and is deposited to the government by the monthly due date. Each quarter we file TDS returns, 24Q for salaries and 26Q for most other resident payments, and download certificates from TRACES: Form 16 for employees and Form 16A for others. Finally, I reconcile the TDS ledgers with the returns and check that deductees’ credits appear in Form 26AS, fixing PAN or challan errors quickly.
Can you answer it under time pressure?
Take a timed medium round and get scored on every answer.
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