TDS abbreviates Tax Deducted at Source is a means of indirect tax collection by the concept of pay as you earn” and “collect as it is being earned” by Indian authorities according to the Income Tax Act, 1961 and it is managed by the Central Board of Direct Taxes (CBDT), which comes under the Indian Revenue Services (IRS).
What is TDS?
Tax Deducted at Source is an indirect system of deduction of Tax by Indian authorities according to the Income Tax Act, 1961 at the point of generation of income tax. Tax is deducted by the payer and is remitted to the government by the payer, on behalf of the payee. TDS Return is a statement which the taxpayers have to file quarterly in a year and submitted to the Income Tax Department. It is mandatory to submit a TDS return if you are a deductor.
The deducted sum is required to be submitted to the credit of the Central Government. The recipient income tax has been deducted at the source gets the credit of the amount deducted in his personal assessment on the basis of the certificate issued by the deductor.
How TDS Deducted?
It is a percentage of the overall payment is withdrawn from the source (a person or an organization) that is making payments. The source is known as the Deductor and the person whose payment is getting deducted is called the Deductee. For instance, a deductor is an employer paying salary to an employee (the deductee).
Rates of TDS deducted
1- In the case of a person other than a company
1.1 Where the person is resident in India
|Section||Particulars||TDS Rates in %||Threshold limits|
|192||Salary||As per the rates of Income Slab||As per the rates of Income Slab|
|192A||Payment of the accumulated balance of provident fund which is taxable in the hands of an employee||10||–|
|193||Interest on securities|
|a) Interest on Securities||10||Nil|
|b) Interest on Debentures;||10||Nil|
(other than the listed companies)
|194A||Income by way of interest other than interest on securities||10||Rs. 5,000|
|194B||Winnings from lotteries/ puzzles/card games.||30||Rs. 10,000|
|194BB||Income by way of Winnings from horse races||30||Rs. 5,000|
|194C||Payment to contractor/sub- contractor
|194D||Insurance commission||5||Rs. 20,000|
|194DA||Payment in respect of life insurance policy||1||–|
|194EE||Payment of NSS Deposits||10||Rs. 2,500|
|194F||Payment on account of repurchase of the unit by Mutual Fund or Unit trust of India||20||Nil|
|194G||Commission on sale of lottery tickets||5||Rs. 1,000|
|194H||Commission or brokerage||5||Rs. 5,000|
a) Plant & Machinery) Land or building or furniture or fitting
|Rs. 1.8 lakhs|
|194-IA||Payment on transfer of certain immovable property other than agricultural land||1||–|
|194-IB||Payment of rent by individual or HUF not liable to a tax audit||5||–|
|194-IC||Payment of monetary consideration under Joint Development Agreements||10||–|
Any sum paid by way of
|194LA||Payment of compensation on acquisition of certain immovable property||10||Rs. 1 lakh|
|194LBA||Income distribution by a Business Trust u/s 115UA||10||–|
|194LBB||Income distribution by an Investment Fund u/s 115UB||10||–|
|194LBC||Income distribution by a Securitisation Trust u/s 115TCA||25% in case of Individual or HUF 30% in case of another individual||–|
|Any other Income||10||–|
Procedure to file TDS returns
Challan for TDS Payment
Challan No. 281 is used for depositing TDS and TCS by corporate as well as non-corporate entities. TDS is a mechanism introduced by the Government in which the person (deductor) before making the payment of specified nature (such as salary, rent, etc.) to the payee (deducted) shall deduct tax at a specified percentage of such amount payable and deposit it to the Income Tax Department. TCS or Tax Collected at Source is the tax collected by the seller from the buyer at the time of sale of specified goods.
The due date for Non-government assessee:
- Tax is to be deposited for months other than March – 7th of the next month. For example, if the TDS is to be deposited for the month of August 2016, the due date shall be September 7, 2016.
- Tax is to be deposited for the month of March – 30th April. For example, if the TDS is to be deposited for the month of March 2017, the due date shall be April 30, 2017.
The due date for Government assessee:
Tax Deposited without challan – Same day
Tax deposited with challan – 7th of the next month. For example, if the TDS is to be deposited for the month of May 2017, the due date shall be June 7, 2017
Unlike for non-government assesses, in the case of government assesses, for the month of March also, the payment is to be made by the 7th of the next month. Hence if the TDS is to be deposited for the month of March 2017, the due date shall be April 7, 2017.
How to file your e-TDS Returns
There are different Tax Deducted at Source Forms that have been set depending on the reason for the deduction. The various TDS forms are as follows:-
|Form 24Q||Statement for TDS from salaries|
|Form 26Q||Statement for tax deducted at source on all payments except salaries|
|Form 27Q||Statement for deduction of tax payable to NRI|
|Form 27EQ||Statement of collection of tax at source|
TDS Return Due Date
|Quarter||Quarter Period||TDS Return Due Date|
|1st Quarter||1st April to 30th June||31st July 2017|
|2nd Quarter||1st July to 30th September||31st Oct 2017|
|3rd Quarter||1st October to 31st December||31st Jan 2018|
|4th Quarter||1st January to 31st March||31st May 2018|
Interest on late payment of TDS
|Section||Nature of Default||Interest subject to TDS/TCS amount||Period for which interest is to be paid|
Non-deduction of tax at source, either in whole or in part
1% per month
From the date on which tax-deductible to the date on which tax is actually deducted
After deduction of tax, non-payment of tax either in
After deduction of tax, non-payment of tax either in
From the date of deduction to the date of payment
Applicability Of TDS
The employer deducts Tax Deducted at Source on total income; including income other than salary after taking into account all deductions and exemptions.
TDS rate: It is applicable to an individual based on his income and deductions.
TDS is deducted by banks on FDs and RDs if the interest exceeds Rs 10,000 a year. TDS does not end tax liability. Someone in a higher tax slab will need to pay additional taxes. Those individuals which come under the lower income bracket can seek a tax refund.
TDS rate: TDS is 10% of income If PAN has been provided, Otherwise it is 20% of income.
PDF means Employee Provident Fund and if any employee withdraws before five years of service then TDS should be deducted. However, no TDS on EPF deducted on withdrawals of less than Rs 50,000 Earlier limit was Rs.30,000. After 5 Yrs. No TDS will deduct on EPF withdrawals.
TDS rate: If PAN has been provided, TDS is 10% of the withdrawal. Otherwise, it is 30% of the amount.
It is not permitted to submit Form 15G and Form 15H for NRIs and TDS is mandatory on all incomes. In the case of resident Indians, TDS strikes only if interest exceeds Rs 10,000 a year.
Non – Applicability
TDS can be avoided by submitting Form 15G or 15H. Form 15H is for senior citizens and they can submit if there is no tax on total income. Form 15G is for everybody else and they can file if the tax on total income is nil and total interest income is less than the basic exemption limit except NRIs.
Form 16 is your salary TDS certificate issued by the employer deducting the tax while making payment to an employee. If an employer deducts Tax Deducted at Source on salary as per the Income-tax rules of India then he must issue Form 16.
Form 16A is a TDS Certificate that certifies the TDS amount deducted and deposited on all other payments except salary.
Tax Deducted at Source on salaries is deducted at the average rate of estimated income (as per the Slab Rates ), TDS on interest, Rent, etc. is to be deducted at the rates specified by the government.
All details that are there in Form 16A are available on Form 26AS. This can be used to file your return. But the same is not in the case of Form 16. All the Details of Form 16 that are available in Form 26AS is only deducted by the employer.
It is a consolidated tax credit statement issued under Rule 31-AB of Income Tax Rules to PAN holders.
This statement with respect to a financial year will include details of:
a) All financial transactions involving TDS/TCS
c) Advance tax/self-assessment tax/regular assessment tax etc
d) Verification of Refunds details, if the refunds issued by the Income Tax Department.
e) Details of Annual Information Report Transactions.
f) TDS on sale of immovable Property (both for buyer & seller)
g) Verification of Corporate Identity Number in Non-TDS payments
The requirement of deducting TDS
Under the Section of 206AA, if PAN No. is not furnished by the taxpayer then the withholding tax rate would be at 20% or at the rates in force or whichever is higher. PAN is not mandatory for the Non-residents where taxes have been deducted.
Penalty for Late Filing of TDS Return
If the deductor/collector does not file the return as per the due dates each quarter then there are monetary penalties for the taxpayer.
Section 234E-Levy of Fees
In this case, if you forget or delay to file your TDS return, then as long as the return is not filed, a number of fees of Rs. 200 per day will be charged on the deductor,
Before the Tax Deducted at Source filing, such fee should be paid and it will be shown in the TDS return.
Deductor has to pay a penalty which has a range from a minimum of Rs. 10,000/- to Rs. 1, 00,000
- Exceeds one-year time limit to File Tax Deducted at Source Statement by the deductor
- Wrong details like PAN, TDS Amount, Payment of Challan, etc. by the deductor
For any help on ITR Filing feel free to consult the tax experts at LegalRaasta. You can file ITR yourself via our ITR software or get CA’s help on filing an income tax return. You can also use the option of Business Return, Bulk Return, or Revised Return Filing.