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Tax Deducted at Source (TDS) is a procedure implemented by the Indian government to collect taxes at the source of income. A certain percentage of tax is deducted by the payer at the time of making payments to the receiver, and this amount is then remitted to the government. TDS is applicable to a wide range of income categories such as salaries, interest on fixed deposits, rent, commissions, etc. TDS helps prevent tax evasion and understanding it is crucial for both payers and receivers of income in India.
TDS has to be deducted at the rates prescribed by the tax department. The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deducted.
It is the deductor’s responsibility to deduct TDS before making the payment and deposit the same with the government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is linked to the PAN of the deductor and deducted.
Various Commonly Used TDS Rate Are As Follow:
TDS Section List | Nature of Payment | Threshold | Individual or HUF | Others |
192 | Payment in the form of Salary | 2,50,000 | Slab rate | Slab rate |
192A | Employee provident fund withdrawal premature | 50,000 | 10% | 10% |
193 | Interest earned on securities including listed debentures | ₹ 10,000 | 10% | 10% |
194 | Payment of dividends by domestic Co | 5,000 | 10% | 10% |
194A | Interest on deposits from banks or post offices | ₹ 40,000 ₹ 50,000(senior citizens) | 10% | 10% |
Interest income other than securities | 5,000 | |||
194C | Payments made to contractors or sub-contractors (one time) | 30,000 | 1% | 2% |
Payments made to contractors or sub-contractors on an aggregate basis | 1,00,000 | 1% | 2% | |
194H | Commission or brokerage fees | 15,000 | 5% | 5% |
194I | Rent paid for land, building, or furniture | 2,40,000 | 10% | 10% |
Rent paid for plant and machinery | 2% | 2% | ||
194IA | Payment for the transfer of immovable property excluding agricultural land | 50,00,000 | 1% | 1% |
194IB | Rent payment made by an individual or HUF not covered under section 194I | ₹ 50,000 (per month) | 50,000 | N.A. |
194J | Fees paid for professional and technical services (doctor/CA etc. | 30,000 | 10% | 10% |
Royalty paid for the sale, distribution, or exhibition of cinematographic films | 30,000 | 2% | 2% | |
194Q | Payments made for the purchase of goods | 50,00,000 | .10% | .10% |
206AA | TDS applicable in case of non-availability of PAN | 20% | 20% |
When and How to File TDS Returns in India
Who Needs to File TDS?
Anyone responsible for deducting TDS is required to file returns. This comprises firms, corporations, and individuals paying payments including salary, rent, and commissions.
Filing Frequency
Tax Deducted at Source returns are submitted quarterly. Here are the due dates:
- Q1 (April-June): July 31st
- Q2 (July-September): October 31st
- Q3 (October-December): January 31st
- Q4 (January-March): May 31st
Information Required for TDS Returns
Filing Tax Deducted at Source returns requires details such as:
- TAN (Tax Deduction and Collection Account Number)
- Amount of Tax Deducted at Source deducted
- Type of payment
- PAN (Permanent Account Number) of the deductee
Choosing the Right TDS Form
The type of Tax Deducted at Source return form depends on the nature of the payment:
- Form 26Q: For all payments except salaries.
- Form 24Q: For TDS deducted from salaries.
- Form 27Q: For TDS on payments to non-residents (except salaries).
- Form 26QB: For TDS on the sale of property (filed within 30 days of deduction).
- Form 26QC: For TDS on rent payments (filed within 30 days of deduction).
TDS Certificates and their Forms
Here is a table listing the different Tax Deducted at Source certificates and their corresponding forms:
TDS Certificate | TDS Form |
Form 16 | Form 24Q |
Form 16A | Form 26Q |
Form 16B | Form 26QB |
Form 16C | Form 26QC |
How to Know the Deducted TDS Amount
The following steps are how to check the deducted Tax Deducted at Source amount: Check Out here
- Registration: Visit the TDS official website (Income Tax Department) and register using your PAN if you’re a first-time user.
- Login: Enter your registered ID and password. Navigate to the “My Account” area and choose “View Form 26AS (Tax Credit Statement).”
- Form 26AS: This form contains a consolidated statement of all TDS deducted under your PAN from various sources.
- Access Details: You will be sent to the TRACES portal, which includes complete information on your transactions.
How to Upload TDS Statements on the Income Tax Website
Here’s a step-by-step guide
- Visit the Income Tax Department’s website (incometaxindiaefiling.gov.in).
- Enter your TAN (Tax Deduction and Collection Account Number).
- Go to dashboard > Click on “e-File”. Click on the “Income Tax Forms” > Select “File Income Tax Forms.”
- Choose the right form (Form 26Q for payments other than salaries) and fill out the necessary details.
- Validate your final submission using one of the ways listed below:
- Linking a bank account, demat account, or PAN number to Aadhaar is mandatory for the Electronic Verification Code (EVC) and
- Digital Signature Certificate (DSC).
Consequence of non-compliance of TDS Provision:
- Disallowance Under section 40(a)(ia) of the Act.
- Interest u/s 201(1A) 1% per month for non-deduction and 1.5% for non-payment.
- Late fees u/s 234E for non-filing of TDS statement 200 per days during which default continue.
- Penalty for non-payment of TDS or non-filing of TDS return.
- Prosecution in some specified case.
Conclusion
Understanding India’s tax deduction at source system is critical for both individuals and corporations. No compliance of TDS provision amount to interest, penalty, late fees & prosecution.
