What Is TDS?
TDS falls under the act of advanced Income Tax, 1961, and all organizations or individuals are liable to pay it. The TDS concept is a tool by the Government to minimize tax evasion and collect at the income source. Source of income includes salary, interest, rent, brokerage, professional service, etc.
If TDS in a fiscal year exceeds income tax liability, you can get back the amount by submitting Form 26AS/TDS certificate. If a receiver fails to give a PAN card, then it may incur higher TDS on the income. TAN and Pan are the two most important documents to deposit TDS.
Who Can Deduct TDS?
An organization whose book of account is audited and is liable to make payments under TDS is eligible to deduct from a bill paid. Individuals or HUFs cannot deduct TDS as they are not authorized to make such deductions.
The deductor should deposit the TDS in the Government account on and before the 7th day of every month. Different products and services have different rates of TDS deductions.
When Should TDS be Deducted?
The answer to why TDS is deducted can simplify the concept of when it is deducted. TDS is a part of income tax applicable at the source of income without waiting for a later date. Therefore, the ideal time to deduct it is while paying an amount or bill.
What Is the TDS Rate for Different Types of Payments?
The TDS rate varies according to various sections.
Have a look at the following table to understand the different TDS rates.
| Section and Nature of Payment | Payer | Applicable Rate |
| Section 192, Salary | Salaried individual | Applicable Income Tax slab |
| Section 192A, Premature withdrawal of EPF | Individual | 10% of the total sum |
| Section 193, Interest amount on securities | Individual | 10% |
| Section 194, Dividends | Domestic companies | 10% |
| Section 194A, Interest on assets & securities | Individuals except for taxpayers and HUF liable for audit | 10% |
| Section 194B, Applicable on money earned through any competition or lottery | Individual | 30% |
| Section 194BB, Prize amount on winning horse race | Any individual | 30% |
| Section 194C, Contractors | Individuals except for taxpayers and HUF liable for audit | 1% for individuals and HUF, 2% for other taxpayers |
| Section 194D, Insurance commission | Insurance aggregator | 5% for individuals and HUF and 10% for other agents |
| Section 194DA, Life insurance policy | Individual | 1% |
| Section 194E, Payments to a non-residential sportsperson | Individual | 20% |
| Section 194EE, Deposit under NSS | Individual | 10% |
| Section 194G, Commission from the sale of lottery ticket | Individual | 5% |
| Section 194H, TDS on commission or brokerage earned | Individuals except for taxpayers and HUF liable for audit | 5% |
| Section 194I, TDS on rent | Individuals except for taxpayers and HUF liable for audit | 2% |
| Section 194IA, TDS on funds earned for transfer of immovable assets (except agricultural land) | Individual | 1% |
| Section 194IB, Rent by individuals & HUF | Individuals except for taxpayers and HUF liable for audit | 5% |
| Section 194IC, Payment on agreement | Individual | 10% |
| Section 194J, Professional or technical services | Individuals except for taxpayers and HUF liable for audit | 10% |
| Section 194LA, Compensation for acquisition of an immovable asset | Individual | 10% |
| Section 194LB, Income from infrastructure debt fund interest | Infrastructure debt funds | 5% |
| Section 194LBA, Income from units of a business trust | Business trusts | 10% for resident individuals and 5% for NRI |
| Section 194LBB, Income from units of investment funds | Investment funds | 10% for residents |
| Section 194 LBC, TDS on income earned from investments of securitization trusts | Securitization trusts | 25% for individuals and HUF and 30% for investor |
| Section 194LC, Income from an Indian company | Indian companies and business trusts | 5% |
| Section 194LD, TDS on income earned from certain Government security and bond’s interest | Individual | 5% |
| Section 195, Payment to a non-organizational entity or foreign company | Individual | As specified by DTAA or Income Tax Act |
However, if you cannot submit a PAN card, it will be deducted at 20%
How to Deposit TDS?
The concept of TDS is to deduct the income at the source and remit it to the Government. Therefore, the deducting organization/individual is duty-bound to deposit it to the Government. Following is the process of depositing TDS:
- Log in to NSDL’s website for e-payment.
- Select Challan No ITNS 281 under the section TCS/TDS. Here you have to enter TAN, assessment year, PIN code, and mode of payment.
- Next, select between TDS on regular assessment and TDS deducted or payable. Click on “Submit”.
- A confirmation message will appear with TAN and the full name of the taxpayer according to master data.
- Now, this will take you to the payment page. Here, make your payment.
Upon successful payment, a counterfoil with CIN, payment confirmation, and bank details will come as payment proof. Now you have to file a TDS return.
What Is TDS Return?
When learning about TDS meaning, individuals must also have knowledge about TDS return. It is returning the excess amount deducted as TDS to a taxpayer.
Now you may wonder if TDS is a part of income tax, then even after paying it, why do individuals have an income tax liability at the end of every year?
Here, you must understand that TDS is tax deducted at the source of income to avoid payment delays. In case the total TDS paid in a year exceeds your tax liability, the Government will return the excess amount.
To get this return, you should ask your deductor how to get a TDS certificate. A TDS certificate is necessary while filing a TDS return.
When to File TDS Return?
You can file a TDS return within the specified date for separate transactions every quarter of the year. TAN, Pan of deductee, payment type, and the amount deducted needs to be furnished during filing.
Followings are the TDS return filing dates –
| Form No. | TDS Deducted on Transaction Type | Due Dates of Return Filing |
| 24Q | Salary | Q1 – 31st July, Q2 – 31st October, Q3 – 31st January, Q4 – 31st May |
| 27Q | Any payment to non-residents (not salary) | Q1 – 31st July, Q2 – 31st October, Q3 – 31st January, Q4 – 31st May |
| 26QB | Sale of property | 30 days from the end of the month of TDS deduction |
| 26QC | Rent | 30 days from the end of the month of TDS deduction |
How to File TDS Return?
To file a TDS return –
1. You have to log in to the website of the Indian Government Income Tax Department.
2. Click on “Upload TDS” under the TDS tab on the navigation bar.
3. Enter the following statement details and then validate –
- FVU version
- Financial year
- Form name
- Quarter
- Upload type
4. Now you have to upload the zip file of TDS. Now you have to attach a signature file or DSC. After choosing all files, then click on “Upload”.
5. A mail on your given mail ID and SMS in the given mobile number will come if the TDS is successfully filed.
You can now view the filed TDS return by clicking on View File TDS under the TDS tab on the navigation bar.
The Due Date to Deposit TDS to the Government
The 7th day of the subsequent month is the due date for depositing the TDS to the Government. E.g. if you have deducted TDS any time between 1st to 30th September, you have to deposit it by 7th October. However, it differs in two cases:
- If TDS is deducted in March, you can deposit it until 30th April of that calendar year.
- TDS deducted on rent or purchase of any property can be deposited within 30 days from the end of the month you have deducted TDS.
What Is a TDS Certificate?
By knowing the answer to the question of what a TDS certificate is, you can get the solution of all problems related to the deduction of TDS at different sources of income. It is a type of certificate issued by the entity deducting TDS to the person from whom TDS is deducted or the assessee. It serves as proof that the TDS deducted from you is deposited into the Government account.
Another most important thing to know is what TDS certificate type is and what are the various types of TDS certificates you should ask for.
| Form | Certificate for Type of Payment | Frequency & Due Date |
| Form 16 | Salary payment | Yearly, 31st May |
| Form 16 A | Non-salary payments | Quarterly, 15 days from the due date of filing the return |
| Form 16 B | Sale of property | Every transaction, 15 days from the due date of filing the return |
| Form 16 C | Rent | Every transaction, 15 days from the due date of filing the return |
Steps to View TDS Certificates
You may ask for the TDS certificate from the deductor or find it online using the following steps:
1. Visit the official portal of TRACES. Enter Captcha code and hit “Proceed”.
2. Provide documents, including –
- TAN of deductor
- PAN of payer
- TDS certificate number
- Financial year
- Source of income
- TDS amount as per certificate
3. Click on “Validate”.
4. To download the TDS certificate again, provide data regarding –
- PAN
- TAN
- Fiscal year
- Quarter
- Type of Return
Now click on “Go to downloads”.
How Is the ‘TDS Certificate’ Option Useful to a Deductee?
TDS certificate ensures that the amount deducted from your end is not forfeited and deposited with the Government. Therefore, you can claim a TDS return on time exhibiting this relevant document.
What Are the Penalty Provisions of Late or Non Filing of TDS?
Not filing tax is a punishable offence; however, late payment incurs a penalty. The late fine is ₹200 for each day starting from the due date of payment until you file it. If the late fine exceeds the total payable amount, the late fine will be equal to the TDS payable amount.
For instance, your TDS payable amount is ₹5000, and the due date is 20th May. You filed the return of quarter1 on 24th November. So you are late by 105 days.
₹200 X Days 105 = ₹21000.
However, your payable TDS amount is ₹5000, which is lower than ₹21000. Therefore, you just have to pay ₹5000 as a penalty.
Under What Circumstances Can Taxpayers Claim Refund or Reduction of Applicable TDS?
- The total income is not within the income tax payable slab.
- TDS paid is more than tax payable liability.
- The taxpayer has got a loss of income in the current month.
- The previous year loss carried forward in the present year.
- The taxpayer is eligible for tax exemption.
You may avoid TDS deduction by submitting form 15G/15H. Form 13 can be submitted for claiming a refund or non-reduction of TDS.
Each taxpayer should thoroughly know what TDS is and why it is deducted to file the return and get maximum benefits. It is a payee-friendly act to justify the income tax payment seamlessly.