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TDS ( Tax Deducted at Source ) is a concept introduced by the government for collecting taxes at the very source of your income. In this guide by H&R Block, we will discuss in detail about TDS Payment, Due Dates and how to file it online.

TDS – Deduction Rules & Payment Methods

Last Update Date : June 20, 2018

TDS - Tax Deducted At Source

The main concept and objective of Tax Deducted at Source (TDS) is to collect taxes at the very source of income. According to this concept any person who is liable to make payment of a specified nature to another person (deductee), he has to deduct tax at source and deposit the same in the Central Government’s account. In this guide, we will be discussing TDS in detail.

What is TDS?

The full form of TDS is Tax Deducted at Source, as the name suggests, it is a collection of tax at the source of income. TDS is a method of collecting income tax in India as per the Income Tax Act, 1961. It is an indirect method of tax collection with concepts such as ’pay as you earn’ and ‘collect as it is earned.’ According to TDS rules, the employer/deductor is supposed to deduct a specified amount of tax before making payments to the receiver/deductee. The tax is deducted from a person’s income either on a periodical or on an occasional basis. And, then the deducted amount is deposited with the central government.

TDS Deduction

In case the TDS deduction exceeds the liable tax amount then, the deductee can file a claim for a refund of the excess amount. A portion of the overall payment is withheld by the deductor while making payment to a person. Here, the person or the organization that deducts TDS is called the ‘deductor’ and the person, whose payment is being deducted is known as the ‘deductee.’

TDS Calculation

TDS is applicable for salaries, interest payment by banks, payment of commission, payment of rent, payments made to consultants, fees to lawyers or freelancers. In case of a salaried individual, the employer deducts TDS based on income tax slab rates. For interest earned on money in bank account, the banks will deduct TDS @10% and if the bank does not have PAN information of the customer then it will deduct TDS @20%.

As TDS is collected at the source of income, therefore tax deduction of an individual is not taken into account. So, the individual can, later on, declare and submit his/her investment proof to file a return and then claim for the TDS refund.

TDS on Salary

If you want to calculate TDS on salary, then, first of all, you need to arrive at the gross income from salary plus from other income sources. Then calculate investments & exemptions. After, you arrive at the total sum, then deduct investments & exemptions from your salary, doing so you will arrive at your annual income that will be taxed based on the income tax slab rates.

Modes of TDS Payment

There are two modes of payment of TDS.

Electronic Mode: e-TDS Payment

The IT department provides an option for online payment of taxes. E-payment is compulsory for all corporate assesses and every assessee (other than a company) to whom provisions of section 44AB of the Income Tax Act, 1961 are applicable.

Physical Mode: Challan 281 for TDS Payment

Challan ITNS (Income Tax National Security) 281 is the form for making payment of TDS and TCS. This form is applicable for TDS/TCS from corporates and non-corporates.

Challan no. 281 is useful for depositing TDS/TCS. For depositing tax through this form, you will have to provide the 10-digit Tax Deduction Account Number (TAN), name along with the address of the deductor on every challan. A taxpayer is supposed to use separate challans in order to deposit tax deducted under each section and specify the exact nature of payment code in the appropriate column in the challan.

TDS Return

TDS return is necessary for maintaining the financial record. Also, a person must file TDS return to receive TDS refunds. TDS return can be filed through the government website. Make sure that you file TDS return within the due date. You should fill the form based on the income category you fall in and then furnish the documents for kick-starting the refund process. After registration and subsequent submission of the return, you will have to authenticate the TDS Return File.

[ File Your TDS Return Online ]

TDS Return Due Date

TDS last dates/due dates of FY 2017-18 are mentioned in the table below:

Quarter Quarter Period Last Date of Filing
1st Quarter 1st April to 30th June 31st July 2017
2nd Quarter 1st July to 30th September 31st October 2017
3rd Quarter 1st October to 31st December 31st January 2018
4th Quarter 1st January to 31st March 31st May 2018

TCS Return Due Date

TCS last dates of FY 2017-18 are mentioned in the table below:

Quarter Quarter Period Last Date of Filing
1st Quarter 1st April to 30th June 15th July 2017
2nd Quarter 1st July to 30th September 15th October 2017
3rd Quarter 1st October to 31st December 15th January 2018
4th Quarter 1st January to 31st March 15th May 2018

Penalty for Late Filing of TDS Return

If you fail to file the TDS return within the due date, then you will be liable to pay a penalty of Rs.200/day till you file the return. This fine is applicable each day until the fine amount equals the total liable TDS amount.

In case the taxpayer crosses 1-year time limit to file the return or provides wrong details of PAN, TDS sum, then the taxpayer will be required to pay a fine of minimum Rs.10,000 to maximum Rs.1 lakh.

[ Read: Penalties for delay in submission of TDS Returns ]

TDS Certificate

TDS certificate is a certificate of deduction of tax at source. According to section 203 of the Income Tax Act, the deductor is required to provide a certificate to the deductee, wherein the details are provided regarding TDS/TCS for several transactions between the deductor and the deductee. Banks, too issue this certificate for deductions made on pension payments. The certificate is issued on deductor’s own letterhead. The issue of TDS certificates to taxpayers is mandatory.

Benefit of TDS

  • Responsibility is shared between the deductor and the tax collection organizations.
  • Avoids tax evasion.
  • Broadens the base of tax collection.
  • A stable source of revenue for the central government.
  • The deductee is tension free as the tax is collected automatically and subsequently deposited with the central government.

People Also Ask

Section Type of Income When to deduct TDS Rates (in%)
192 Payment of Salary Monthly basis – while making payment, where estimated annual net taxable salary surpasses tax-free limit. On the average

rates on the basis of

per rates for

individuals. (30% in case of invalid PAN

192A Payment of the accumulated balance of provident fund which is taxable in the hands of the employee (with effect from 01.06.2015) Payment amount or aggregate payment amount surpasses Rs.30,000 Threshold Limit

Increased to Rs.50,000 from 01-06-2016

10%

(30% in case of invalid PAN)

193 Interest earned on securities

a)     any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;

b)     any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;

c)     any security of the Central or State Government;

d)     interest earned on any other security

During credit or payment, whichever is earlier, when the amount surpasses Rs.10,000

With respect to Debentures, threshold limit is Rs.5,000

10%

(20% in case of invalid PAN)

194 Dividend other than the dividend as referred to in Section 115-O Prior to making payment to shareholder other than dividend declared u/s 115-O, if the sum surpasses Rs.2,500 10%

(20% in case of invalid PAN)

194A Income by way of interest other than “Interest on securities” During credit or payment, whichever is earlier, when the sum surpasses Rs. 5,000

But, the threshold limit is Rs.10,000 if interest is credited by banks including co‑operative banks to its members.

10%

(20% in case of invalid PAN)

194B Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort Rs.5,000 (01-04-2016 to 31-05-2016)

Rs.10,000 (on or after 01-06-2016)

30%

(30% in case of invalid PAN)

194BB Income by way of winnings from horse races Rs.5,000 (01-04-2016 to 31-05-2016)

Rs.10,000 (on or after 01-06-2016)

30%

(30% in case of invalid PAN)

194C Payment to contractor/sub-contractor During credit or payment, whichever is earlier, when the amount of a specific contract surpasses Rs.30,000 or the total amount of contract throughout the entire year surpasses Rs.75,000

(Increased to Rs.1,00,000  from 01.06.2016)

 

2% – In case of payments made to contractor/Sub-contractor, who is not an individual or HUF

(20% in case of invalid PAN)

1% – In case of contractor/Sub-contractor, who is an individual/HUF

(20% in case of invalid PAN)

194D Insurance Commission During credit or payment, whichever is earlier, when the amount surpasses Rs.20,000 (01-04-2016 to 31-05-2016) or Rs.15,000 (on or after 01-06-2016) 10% from

01.04.2016 to

31.05.2016

5% from

01.06.2016)

(20% in case of invalid

PAN)

194DA Payment in respect of life insurance policy During payment when the amount or the total amount throughout the entire year surpasses Rs.1,00,000 2%

(1% from

01.06.2016)

(20% in case of invalid

PAN)

194E Payment to Non-Resident

Sportsmen or Sports

Association

During credit or payment, whichever

is earlier

20%

(20% in case of invalid PAN)

194EE Payment in respect of deposit under National Savings scheme During credit or payment, whichever

is earlier

when the sum surpasses Rs.2,500

20% (01-04-2016 to 31-05-2016)

10% (on or after 01-

06-2016)

(20% in case of invalid PAN)

 

194F Payment on account of repurchase of the unit by Mutual Fund or Unit Trust of India During credit or payment, whichever

is earlier

20%

(20% in case of invalid PAN)

194G Commission, etc., on the sale of lottery tickets During credit or payment, whichever

is earlier, when the sum surpasses

Rs. 1,000/- (01-04-2016 to 31-05-2016)

or

Rs. 15,000 from 01-06-2016

10% from

01.04.2016 to

31.05.2016

5% from  01.06.2016

(20% in case of invalid PAN)

194H Commission or brokerage During credit or payment whichever is

earlier, when the sum surpasses Rs.5,000

(Rs.15,000 from 01-06-2016)

10% from

01.04.2016 to

31.05.2016

5% from 01.06.2016

(20% in case of invalid PAN)

194I Rent During credit or payment whichever is

earlier, when the sum surpasses Rs.1,80,000

10%  – in case rent is from building, furniture or fitting

(20% in case of invalid PAN)

2% – in case rent is from machinery, plant or equipment

(20% in case of invalid PAN)

194IA Payment on transfer of certain immovable property other than agricultural land During credit or payment whichever is

earlier, when the land is located in the specified area and the sum surpasses Rs.50,00,000

1%

(20% in case of invalid PAN)

194IB Rent payable by an individual

or HUF not covered u/s. 194I

(from 01.06.2017)

Tax shall be deducted on such income at the

time of credit of rent, for the last month of

the previous year or the last month of

tenancy if the property is vacated during the

year, as the case may be, to the account of

the payee or at the time of payment thereof

in cash or by the issue of a cheque or draft or

by any other mode, whichever is earlier.

Threshold limit a Rs.50,000/per month.

TDS to be deducted

@ 5%

194IC Payment of Consideration

(not being in kind) under Joint

Development Agreement or

other similar agreement

During credit or payment whichever is

earlier

Threshold limit Rs.Zero

TDS to be

deducted @ 10%

(Applicable from

01.04.2017)

194J Any sum paid by way of

a) Fee for professional services,

b) Fee for technical services

c) Royalty,

d) Remuneration/fee/commission to a director or

e) For not carrying out any activity in relation to any business

f) For not sharing any know-how, patent, copyright etc.

During credit or payment whichever is

earlier, when the sum surpasses Rs.30,000

10%

2% where payments are received or credited to a payee, who is a person involved in the business of operation of the call centre from 01-06-2017

(20% in case of invalid PAN)

194K Income in respect of Units Omitted from 01.06.2016 because the Section was non-operational.
194L Payment of Compensation on

acquisition of Capital Asset

Omitted from 01.06.2016 because the Section was non-operational.
194LA Payment of Compensation on the acquisition of certain immovable property During credit or payment whichever is

earlier, when the sum surpasses Rs.2,00,000 between 01-04-2016 to 31-05-2016

or

Rs.2,50,000 after 01-06-2016

10%

(20% in case of invalid PAN)

194LB Payment of interest on

infrastructure debt fund to

non-resident or foreign

company

During credit or payment whichever is

earlier

5%

(20% in case of invalid PAN)

194LBC Income in respect of

investment in securitisation

trust (From 01.06.2016)

  25% in case of residents individual or HUFs &

30% in case of  other residents

40% in case of non-residents companies &

30% in case of non-residents other than

Company

194LBA Certain income from units of a

business trust(applicable from

01.10.2014

During credit or payment whichever is

earlier

10%

(20% in case of invalid PAN)

194LBA 194LBA – Certain income

from units of a business trust

to non-resident (applicable

from 01.10.2014)

During credit or payment whichever is

earlier

5%

(20% in case of invalid PAN)

194LBB Investment fund paying an

income to a unitholder [other

than income which is exempt

under Section 10(23FBB)]

shall deduct tax therefrom

(with effect from 01.06.2015)

During credit or payment whichever is

earlier

10% from 01-04-

2016 to 31-05-

2016

40% in case of Non-Residents (1-Jun-

2016 to 31-Mar-

2017)

30 % in case of Non-Residents (on or

after 01-06-2016 )

(20% or rate

applicable

whichever is higher

in case of invalid PAN)

194LC Payment of interest by an

Indian Company or a business

trust in respect of money

borrowed in foreign currency

under a loan agreement or by

the way of issue of long-term

bonds (including long-term

infrastructure bond)

During credit or payment whichever is

earlier

5%

concessional rate

of 5% TDS

on interest

payment under this

the section will now be

available in respect

of borrowings made

before 1st July,

2020

194LD Payment of interest on rupee

denominated bond of an

Indian Company or

Government securities to a

Foreign Institutional Investor

or a Qualified Foreign Investor

During credit or payment whichever is

earlier

5%
195 Other sums During credit or payment whichever is

earlier

Average rates as

applicable

196A Foreign comp unitholder of

MF

During credit or payment whichever is

earlier

10 % In case of a

Company

20% In the case of

a person other

than a company

196B Income from units (including

long-term capital gain on

transfer of such units) to an

offshore fund

During credit or payment whichever is

earlier

10%

(20% in case of invalid PAN)

196C Income from foreign currency

bonds or GDR (including long-term

capital gains on transfer

of such bonds) (not being

dividend)

During credit or payment whichever is

Earlier

10%

(20% in case of invalid PAN)

196D Income of FIIs from securities During credit or payment whichever is

Earlier

20%

(20% in case of invalid PAN)

It is the responsibility of the deductor to provide you with the TDS certificate or Form 16 and 16A, wherein you can get the information regarding the amount of TDS that has been deducted. Log-in to the Income Tax e-filing portal and go through your Form 26AS or ‘View Your Tax Credit’ option available on the menu.

The deductor is responsible for deduction and deposition of TDS. The deductee cannot be held responsible for this.

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