TDS - What is TDS | Types of TDS | Benifits of TDS | TDS payment dates | Process Fillig TDS return | TDS Refund

TDS (Tax Deducted at Source)

Hello guys,

So, we are back with a new post and in this post, we will learn about TDS (Tax Deducted at Sources), so let’s start:-

The full form of TDS is “Tax Deducted at Sources”. TDS is the tax that can be levied on various sources of income. It helps in preventing tax evasion and also relieves tax from the burden of paying the tax collected at the end of the financial year. Therefore, through TDS, the government on one hand ensures a steady inflow of revenue throughout the year and also reduces the financial stress at the end of the year for the taxpayer.

On this page-

• Know about TDS Tax Deduction
• Types of TDS
• Things to keep in mind before deducting TDS
• Benefits of TDS Tax
• TDS Certificate
• Date of TDS payment
• Process of E-filing TDS Return
• Important Points 
• TDS Refund Process 

Know about TDS tax deduction-

As per the Income Tax Act, 1961, the policy and rules relating to deduction of TDS are managed by the CBDT (Central Board of Direct Taxes). The tax deducted on TDS is part of the Indian Revenue Service Department (IRS). The person responsible for deducting TDS is called the deductor and the person from whose account the deduction is made is called the deductee.

As per the TDS rule, at the time of payment of salary (if the income is more than the limit already fixed), the tax deductor should deduct TDS and pay this tax to the government on behalf of the taxpayer. It is the duty of the deductor to pay TDS within the stipulated time frame. After filing the return, the tax deductor has to get the TDS deduction certificate issued by the government.

 

Following are the types of TDS-

• Salary – paid by the company to the employee.
• Interest on Security.
• On dividend.
• On the interest of the share.
• Amount won in games like puzzles, cards, lottery, etc.
• Contractor's payments
• On commission from selling insurance
• Brokerage or commission
• Transfer of immovable property
• Compensation on acquisition of immovable property
• Payment of rent
• Commission payment
• Bank interest
• Payments to be made to the directors of the company etc.

Things to keep in mind before deducting TDS -

• Section 192 to 194L of the Income Tax Act gives a complete list of expenses and sources of income under TDS.
• If a person does not come under the purview of income tax, he can give Form 15G or Form 15H to the deductor of tax in advance for not deducting TDS.
• Form 15H is for senior citizens.
• Form 15G is for all other persons.
• Some payments are subject to TDS as mentioned above.
• There is a fixed limit for TDS and it is applicable to all types of income.
• TDS is deducted according to the income tax slab rate for salaried individuals.
• For other taxpayers, TDS is deducted at a fixed percentage on each type of income.

 

Tax Deduction Rates -

Section	Source of Income and Expenditures	Threshold limit	TDS Rates (%)
			For Individuals/HUF	For others
192	payment of salary income	As per income slab	-	-
192A	EPF the time of the first draw	Rs. 50,000	10%, Without pan of state in 20%	10%, Without pan of state in 20%
193	securities interest	Rs. 10,000	10%	10%
193	interest on debentures	Rs. 5,000	10%	10%
194	Divident income ( Section 115 of the addition )	not applicable	10%	10%
194 A	Bank deposit account on interest , loan 's interest , post office in deposits at interest etc .	Bank , banking institutions , post office and found the amount of for Rs. 10, 000    Other 's to amount Rs. 5000	10%	10%
194 B	Lottery , game as the meet that amount	Rs. 10,000	30%	30%
194 BB	Horses of Racing and Jackpot as to meet that amount	Rs. 10,000	30%	30%
194 C	Payment of contractors and sub- contractors	single payment Rs. 30,000  Annual payment Rs. 1,00,000	1%	2%
194 DA	insurance company maturity	Rs. 100,000	5%	5%
194 D	Insurance company by its agent the Commission	Rs. 15,000	1%	1%
194 EE	national savings scheme	Rs. 2,500	10%	not applicable
194 AF	Mutual Fund or Union Trust of India	not applicable	20%	20%
194 H	Brokrej the Commission	Rs. 15000	5%	5%
194 I	land and building	Rs. 180,000	10%	10%
194 IA	agricultural land , real estate	Rs. 50,000,00 to	1%	1%
194 J	Royalty , Professional , Technical Service	Rs. 30,000	10%	10%
194LA	Compensation on immovable property	Rs. 2,50,000 to	10%	10%

 

TDS is not applicable in the following cases:

• When the amount is paid to the government or any government body and the Reserve Bank of India.
• The amount is paid to the mutual fund notified under section 10(23D).
• When the taxpayer has a certificate of tax exemption under section 192 of the Income Tax Act.
• When the amount is paid to state or central financial corporations.
• Interest has been deposited.
• Bank or banking company.
• Life Insurance Corporation or any other insurance company.
• National Savings Certificate.
• Kisan Vikas Patra.
• Non-resident external account.
• Banking Co-operative Society.
• Savings accounts and recurring deposits of banks and co-operative societies.
• Notified body for non-deduction of tax. 

 

Benefits of TDS

• It helps in preventing tax evasion.
• TDS is deducted throughout the financial year and it is the way of earning revenue.
• It is a method of tax collection.
• It is a way of sharing the responsibility of tax collection between the government and the tax deductor.

  

TDS certificate

According to section 203 of the Income Tax Act, whoever is deducting TDS, he has to show the certificate related to the amount deducted as tax along with all other information from whose TDS is being deducted. This is called TDS certificate.

 in case of employed 

• The company gives its employee Form 16 which contains all the information related to the tax amount.
• The form contains all the information like computation, deduction and payment of tax etc.
• The form has to be submitted by 31st May of the next financial year.

  in non-employed cases

• Form 16A is given by the deductor which contains all the information related to tax computation, tax exemption and payment.
• Certificate has to be issued to the deductors within 15 days from the due date of filing TDS return. 

TCS: is a certificate containing information related to tax exemption and tax payment issued in Form 27D.

 

Depositing TDS to the Central Government

• The deductor of TDS has to deposit TDS to the Central Government by paying through NSDL, which can be deposited in authorized bank branches.
• This payment can be made online through the official portal of NSDL using Challan 281 and through Net Banking.
• TDS amount has to be deposited before filing TDS return.
• E-payment is mandatory for all those who can get audited under section 44AB.

 

TDS payments to date

Month	Date
April	Before 7th May
May	7th June or earlier
June	7th July or earlier
July	7th August or earlier
August	7th September or earlier
September	7th October or earlier
October	7th November or earlier
November	7th December or earlier
December	7th January or earlier
January	7th February or earlier
February	7th March or earlier
March	7th April or earlier

 

Failure to comply with the rules may result in the tax deductor having to pay a fine. The following are the fines-

In case of non-deduction of TDS:

If a TDS deductor does not deduct tax, then for this the tax deductor does not get the benefit given by the Income Tax Officer.

 

On late deducting TDS:

Interest of 1% per month is to be paid on deducting TDS a day or a few days after payment or purchase.

 

On late payment of TDS:-

In such a situation, the tax deductor will have to pay interest on the TDS amount at the rate of 1.5% every month.

The deductor of TDS has to file TDS return on the due date every three months. There are different TDS forms for different types of TDS deduction.

TDS files to the form -

Form	Objective of TDS Deduction
Form 24Q	Salaries of for TDS
Form 26Q	Pay the addition of payment for order
Form 27 Q	Overseas Indians of interest and other payments on TDS
Form 27EQ	TCS 's quarterly statement of for

 

TDS return can be filed both offline and online. However, as per Section 206 of the IT Act, it is mandatory to file TDS return electronically for the following:

• For all private companies
• For all government departments
• If the deductor can be audited under section 44AB
• If there is a record in the statement of the deductor of the quarter (three months) that he has deducted TDS of 20 or more people during this period.

 

Certain pre-requisites for e-filing TDS return

• The tax deductor should be registered in e-filing and should also have a valid TAN.
• Download Refund Preparation Utility (RPU) and File Validation Utility (FVU) from NSDL website https://www.tin-nsdl.com
• Keeping this in mind the TDS statement should be prepared.
• Register for valid DSC in e-filing site.

 

Process of E-filing TDS Return

• Go to the main page of e-filing.
• Log in using the User ID and Password given at the time of registration.
• Go to TDS section and select 'upload TCS' option.
• Select and fill all the details correctly and 'Confirm'.
• Upload TDS/TCS (Prepared by information downloaded from NSDL website).
• For e-filing the tax deductor has to do digital signature. Generate and submit the digital signature file using DSC.
• Click on the Upload button and you will receive a confirmation message.

TDS to file loaded to date   

quarter	Duration (Quarter period)	TDS files to the date
first quarter	April to June	31 July from a single financial year
second quarter	July to September	31 October from a single financial year
third quarter	October to December	31 January from a single financial year
fourth quarter	January to March	31 May from the next financial year to

 

Important Points:

• As per Section 203A of the Income Tax Act, every person deducting TDS must have TAN (Tax Deduction and Recovery Account Number).
• TAN is a mandatory requirement while filing TDS return and should also be mentioned on the TDS certificate issued.
• TDS deduction is linked to your PAN. It is necessary to have PAN information to deduct TDS.
• Link the tax deductor with the PAN of each taxpayer.
• The tax deductor has to produce a certificate of TDS paid for total tax paid.
• TDS information can be checked by crediting tax form 26AS.
• This tax information gives you the information about the TDS deducted by the taxpayer for all the payments.
• For late filing ITR. 

If the tax deductor is not able to file TDS return on or before the due date, then he/she can pay Rs.200/- per day till the date of default. shall be liable to pay a fine of Rs. And the total amount of such fine plus the amount of tax deducted should not exceed the total amount.

• For not filing ITR.
• If the tax deductor does not file TDS return within one year of the due date of TDS return, then he will have to pay Rs. A fine of up to Rs 1 lakh may have to be paid.
• This is applicable for cases in which wrong information has been provided by the tax deductor.
• TDS is refunded.
• If the TDS deducted exceeds the total amount of tax you have to pay in a year, then you are eligible to claim the TDS amount.
• When your total income is not taxable, you can claim for refund.

  

For example, you are a freelancer who works on contract with different companies. Let's say Rs 10,000 for a work done by you. TDS of Rs. But, your total income in that year was up to Rs 1.8 lakh which is in the tax exemption limit. In such a situation, you can claim refund as your annual income is out of tax net.

If your income is outside the tax net, you can make a request for non-deduction of tax at source. There are two ways for this-

• Submit Form 15G/15H. By which you can declare that your annual income is outside the tax net in the relevant financial year hence tax should not be deducted at source.
• Declaration holds good only for that particular financial year. Hence, it needs to be deposited every year in which your taxable income is less than the limit.
• You can place an application for short deduction or no deduction of TDS.
• The filled Form 13 has to be submitted to the Income Tax Officer. 

TDS Refund Process

TDS refund can be claimed through Income Tax site. You have to file income tax return and show TDS refund. After filing the Income Tax Return, the Income Tax Department will process the TDS refund request. This amount can be credited to your account within 6 months. You can check the status of TDS return online.