TDS payment and return due date

TDS is among the many taxes that people earning an income or profit must pay to the government, under the income tax laws. This guide will help you understand the nitty-gritties of TDS, TDS full form, TDS payment and TDS payment online.

 

 

TDS full form

TDS stands for Tax Deducted at Source. The concept behind TDS is to collect tax at the source of income generation, ensuring a steady flow of revenue to the government and preventing tax evasion. Under this system that is introduced to curb tax evasions, individuals or companies making payments to others are liable to deduct a certain amount of tax before making the payment. The deducted tax amount is submitted to the government on behalf of the recipient. For instance, when an employer pays an employee their salary, it deducts a certain percentage of tax from the salary amount before handing it over to the employee and submits the TDS to the government.

 

See also: All about TDS on sale of property under Section 194IA

 

TDS: How tax deduction at source works?

To keep a check on evasion of tax payments, income tax laws in India prescribe deduction of taxes at the source of the income. To effectuate this system, the payers of an income or profit are responsible for deduction of TDS. This is why employers deduct TDS from salaries, home buyers deduct TDS from the payment made to the seller and tenants deduct TDS from the rent amount.

For example, if you buy a property worth over Rs 50 lakhs, you are required to deduct 1% of the property value as TDS. As a buyer, you are obliged to pay this amount to the government and issue a TDS certificate to the property seller.

In all these cases, the receiver of the income – the employee, the seller or the landlord – receives the income after tax deduction by the payer. The recipient must declare the gross income at the time of filing the ITR so that the amount of TDS can be adjusted against the final tax liability.

See also: All about Section 80C

Who deducts TDS?

The Income Tax Act states that those making payments are required to deduct TDS before making the payments, not the person receiving the income or profit.

Hence, with respect to payments to which the TDS provisions apply, the payer has to deduct tax at source on the payments made by him and deposit the TDS to the credit of the government.

Also read all about TDS on rent payment

 

TDS is deducted on which payments?

Under the income tax laws, the TDS is deducted on several payments such: Salary

Interest

Commission

Brokerage

Professional fees

Royalty

Contract payments

Rent, etc.

A total of 31 sections under the Income tax Act deal with different types of payments to residents, where the withholding tax rates vary from 0.1-30%.

This had led to a call for simplification of TDS.

“The government may provide a more rationalised TDS framework to reduce the complexity and compliance burden for taxpayers. There could be simplification in the TDS procedures pertaining to NR (non-resident) individuals,” said EY in its pre-Budget wishlist. “Investment and production-linked incentives may be considered for strategic sectors that can strengthen ‘sustainability’ or lead to energy efficiency,” it added said.

 

TDS deduction threshold

TDS is deducted only when the payments exceed a certain threshold. Mentioned below are the threshold limit for TDS under various sections:

 

Source: Income Tax Department

 

TDS payment due date

TDS must be deposited to the government by the seventh of each month. This means that if you deduct the TDS in June 2022, it must be submitted by July 7, 2022. However, there are exceptions to this rule. For example, the TDS deducted in March of any year can be deposited till April 30 of that year. Similarly, for the TDS deducted on rent and home purchase, the due date is 30 days from the end of the month in which the TDS is deducted.

 

Types of TDS forms

Different forms are available for filing different TDS returns.

Form 24Q: Tax deducted at source from salaries. Form 26Q: Tax deducted at source on all payments other than salaries. Form 27Q: Tax deduction on income received from interest, dividends, or any other sum payable to non-residents. Form 27EQ: Statement of collection of tax at source.

See also: Everything you wanted to know about ITR or income tax return

 

Is TAN must for TDS deduction?

PAN stands for the Permanent Account Number while TAN stands for the Tax Deduction Account Number. TAN must be obtained by the person responsible to deduct tax. The TAN must be quoted in all the TDS-related documents and correspondence with the Income-Tax Department.

 

How is TDS paid online?

TDS can be paid online by following some simple steps. Check out our guide on TDS online payment to understand the process.

 

What is a TDS certificate?

Those deducting TDS have to issue a TDS certificate to the person on whose behalf the TDS has been deducted and paid. For example, your employer issues Form 16 to you when TDS is deducted on your salary.

 

TDS certificate

 

Form type	Transaction type	Frequency	Due date
Form 16	TDS on salary payment	Annual	May 31
Form 16 A	TDS on non-salary payment	Quarterly	15 days from the due date of filing return
Form 16 B	TDS on property sale	For each TDS deduction	15 days from the due date of filing return
Form 16 C	TDS on rent	For each TDS deduction	15 days from the due date of filing return

 

TDS credit in Form 26AS

In case TDS has been deducted on your behalf, it would find a mention in Form 26AS, a consolidated statement made available to all PAN holders. All the TDS deductions linked to your PAN are reported in Form 26AS.

 

What to do if the TDS credit is not reflected in Form 26AS?

If the TDS credit is not reflected in Form 26AS, it can be due to non-filing of TDS statement by the payer or quoting incorrect PAN of the deductee in the TDS statement. In such cases, the payee must contact the payer, to ascertain the reasons for non-reflection of the TDS credit in Form 26AS.

Benefits of TDS

• Stops tax evasion
• Effective against tax fraud
• Hassle free payment of tax

Standard rate of TDS

Entities responsible to deduct TDS or Tax Deducted at Source under the Income Tax (I-T) law must deduct a certain portion of the payment involved and submit it to the I-T Department. The TDS rate on income may vary between 10% and 30%.

 

Who is eligible for TDS?

Those paying the income have been made responsible to deduct TDS. For instance, in case of salary, the employer deducts the TDS on behalf of the employee. In case of home purchases, the buyer deducts TDS on behalf of the seller.

 

How much tax needs to be deducted from salary?

Here is a detailed list of TDS rate on salary:

Tax slab under new tax regime 

 

Income	New tax regime slab
Up to Rs 3 lakh	Nil
From Rs 3 lakh to Rs 6 lakh	5%
From Rs 6 lakhs to Rs 9 lakh	10%
From Rs 9 lakh to Rs 12 lakh	15%
From Rs 12 lakhs to Rs 15 lakh	20%
Above Rs 15 lakh	30%
Source: Budget 2023-24

 

TDS on salary under old tax regime

 

Income tax slabs for individual aged below 60 years & HUF (old tax regime)

Income	Old tax regime slab
Up to Rs 2.50 lakh	Nil
From Rs 2.50 lakh-Rs 5 lakh	5%
From Rs 5 lakh-Rs 7.50 lakh	20%
From Rs 7.5 lakh-Rs 10 lakh	20%
From Rs 10 lakh-Rs 12.50 lakh	30%
From Rs 12.50 lakh-Rs 15 lakh	30%
Above Rs 15 lakh	30%

 

Income tax slabs for individual aged between 60-80 years 

Income	Old tax regime slab
Up to Rs 3 lakh	Nil
From Rs 3 lakh-Rs 5 lakh	5%
From Rs 5 lakh-Rs 10 lakh	20%
Over Rs 10 lakh	30%

 

Income tax slabs for individual aged over 80 years 

Income	Old tax regime slab
Up to Rs 5 lakh	Nil
From Rs 5 lakh-Rs 10 lakh	20%
Above Rs 10 lakh	30%

 

 

FAQs

What is TDS?

Under the TDS system, tax is deducted at the origin of the income.

Who deducts TDS?

TDS is deducted by the payer and is remitted to the government by the payer on behalf of the payee.

What is TDS full form?

TDS full form is tax deducted at source.

What to do if I have not received TDS certificate from the deductor?

The TDS credit will be reflected in your Form 26AS. The claim of TDS in your income tax return should be strictly as per the TDS credit reflected in Form 26AS. If there are any discrepancies in the tax actually deducted and the tax credit reflected in Form 26AS, you should intimate the same to the deductor and reconcile the difference.