TDS by Government bodies

Did you know that government entities handle TDS (Tax Deducted at Source) differently than private organizations? Here’s a quick guide to how it works and why the Book Identification Number (BIN) is crucial in this process.

What is BIN?

The Book Identification Number (BIN) is a unique number used to track TDS payments made by government entities through book adjustments instead of physical challans. It ensures that the deducted TDS is accurately recorded and linked with TDS returns.

Key Components of BIN

BIN consists of three parts:
1️⃣ Receipt Number: A unique ID for each transaction.
2️⃣ Date of Receipt: The date when TDS was credited to the government account.
3️⃣ DDO Code: Identifies the Drawing and Disbursing Officer (DDO) responsible for the payment.

How is BIN Generated?

• Generated by the Pay and Accounts Office (PAO) or equivalent authority when TDS is deposited.

• Shared with the Tax Information Network (TIN) system managed by NSDL to ensure reconciliation with TDS returns.

Why is BIN Important?

🔗 BIN replaces the physical challan in the challan-less system, streamlining government TDS payments.
✅ Ensures accurate linkage between TDS deducted and returns filed (Forms 24Q, 26Q, etc.).
📊 Avoids mismatches and errors in tax records, benefitting both deductors and deductees.

The Challan-less Mechanism

Unlike private organizations that pay TDS through challans, government entities deposit TDS directly into the Consolidated Fund of India/State using book adjustments. BIN serves as the reference in this process.

Filing TDS Returns with BIN

• BIN details are included in Form 24G, summarizing all TDS payments made.

• Government deductors use BIN to file quarterly TDS returns (e.g., Form 24Q, 26Q, 27Q).

Penalties for Non-Compliance 🚨

Late filing or incorrect TDS returns can lead to penalties:

• ₹200/day under Section 234E (up to the total TDS amount).

• Interest for late deduction or deposit:

  • 1% per month for late deduction.

  • 1.5% per month for late deposit.

Takeaway

For government entities, BIN ensures seamless TDS compliance without the need for physical challans. For taxpayers, it guarantees proper credit of TDS in their tax records.