Tax Deducted at Source (TDS) mechanism in the Indian taxation system mandates that tax be withheld by the payer at the time of making certain specific payments, such as TDS on rent and TDS on salary. Taxpayers can now easily make TDS payments online through a variety of platforms whereby also checking all TDS paid online.
For making payment, a TDS challan will be generated which serves as a payment voucher. The TDS amount must then be paid electronically. The taxpayer's TDS refund status can also be checked online. The Income Tax Department offers taxpayers access to a variety of TDS-related services through TDS Traces, including filing TDS returns and viewing TDS challan status. To avoid penalties or interest charges, it is crucial to submit TDS returns by the deadlines. The use of online tools like TDS Traces login and e-payment of Tax Deducted at Source (TDS) systems by taxpayers can smoothly file their returns within the TDS return due date to avoid any interest on TDS late payment
The following updates were made in the Union Budget- 2023.
Let us take an example to understand how TDS works.
Let's say, Lotus Services Pvt Ltd is required to pay Rs. 50,000 rent per month to Mr X for its corporate office and Rs. 20,000 per month for its maintenance to Mr Y. The total amount spent in a year is Rs. 6,00,000 and Rs. 2,40,000 respectively.
In case of rent payment to Mr X., Lotus Services Pvt Ltd will be required to deduct TDS under section 194J @10% which is Rs. 5000 Per month and pay a balance of Rs. 45,000 to Mr X. In the same manner, Lotus Services Pvt Ltd will be required to deduct Tax Deducted at Source (TDS) under section 194C @1% which is Rs. 200 and pay the balance amount of Rs. 19,800 to Mr Y. Now, Lotus Services Pvt Ltd will file the TDS returns to the Income Tax Department and give credit to Mr X and Mr Y based on their pan number. After processing such a TDS return, the TDS amounts will reflect in Form 26AS of Mr X and Mr Y and they can take credit of TDS while filing their income tax return to the I.T. department.
The Income Tax Act stipulates that Tax Deducted at Source must be withheld at the time of making certain payments, and this requirement applies to everyone. However, if the payer is an individual or HUF whose books are exempt from audit, no TDS will be deducted.
Although neither the individual nor the HUF is subject to a tax audit, Tax Deducted at Source (TDS) at 5% must be withheld from rent payments made by individuals and HUF that exceed Rs 50,000 per month. Furthermore, such Individuals and HUF required to deduct TDS @ 5% are exempt from applying for TAN. In the case of Salary payments, the employer deducts TDS at the average slab rates applicable to the employees. Normally, banks deduct TDS @ 10%, however, if you do not submit your PAN details, they may deduct TDS @ 20%.
The bank will not deduct Tax Deducted at Source from your interest income if you submit Forms 15G and 15H and your total income is below the taxable limit. If your employer or bank has already deducted TDS and your total income is below the taxable limit, you may be able to file a return and request a refund of this TDS if you were unable to provide your employer with the necessary documentation.
The due date of payment of Tax Deducted at Source (TDS) is the 7th of the subsequent month from the end of the month in which TDS was deducted. For example, if TDS is deducted on all payments made between 1st June to 30th June, then all TDS deducted amount has to be deposited with the government by 7th of July. However, TDS deducted in the month of March will be required to be deposited till 30th April.
Also, in the following payments, the deductor is required to deposit such Tax Deducted at Source within 30 days from the end of the month in which the TDS was deducted.
There are two methods of depositing Tax Deducted at Source (TDS) to the Government. First online and second offline through banks. Let us understand both methods.
There is a complete change in making TDS online payments nowadays.
Now the method of creating TDS challan payment has completely shifted to the Income Tax Portal. When you click on the NSDL site a pop-up will appear.
For making payment of Tax Deducted at Source (TDS) online, you need to go to https://www.incometax.gov.in/iec/foportal/ and select “e-Pay Tax” from the Quick links. Fill the details in the appropriate head and Proceed to pay by clicking “Continue”.
There is also a change in making payments of Tax Deducted at Source (TDS) through banks. Earlier banks were accepting offline challan generated through the NSDL portal.
Now, it has to be generated from the income tax portal. Go to “e-Pay Tax” from the Quick links. Fill the details in the appropriate head and select “Pay at Bank Counter” select Bank name and Download the Challan.
However, Tax Deducted at Source (TDS) deducted under sections 194IA, 194IB and 194M shall be deposited through a challan-cum-statement.
The Tax Deducted at Source (TDS) is required to be deducted at the time of crediting the account of the payee in the books or at the time of payment, whichever is earlier basis. Here are the different types of payments on which TDS is required to be deducted as per the provisions of the Income Tax Act, of 1961.
However, in the following types of payments, Tax Deducted at Source (TDS) is only deducted at the time of payments
There are the latest updates in filing TDS return online from the financial year 2023-24. Now you need to file your Tax Deducted at Source (TDS) returns through Income Tax Portal Online. Let’s discuss step by step process of filing a TDS return online.
|Sr. No.||Date||Particular||Pan No.||Section||Taxable Amount||TDS||Interest (if any)||Total payment||Company/ Non-company deductee|
|Sr. No.||Date||BSR Code||Challan Number||TDS Amount||Interest (if any)||Late fees (if any)||Total Amount|
(Note- CSI file is the system-generated challan payment file, which needs to be entered in Return Preparation Utility)
You can verify your Tax Deducted at Source (TDS) returns by the following three methods.
To download the TDS e-Acknowledgement you need to login to Income Tax Portal, go to e-File Tab and select “View Filed Returns” and download the latest filed returns e-Acknowledgement PDF file.
Once the TDS returns have been filed with the income tax department, it will be processed. After processing of Tax Deducted at Source (TDS) returns has been done, it will be credited into Form 26AS of individuals whose TDS was deducted. Now the person whose TDS deducted can see the TDS deducted details by downloading Form 26AS from the Income tax portal.
It should be noted that for claiming TDS Refund, the person must file their income tax return with the government. Once the ITR has been filed, it will take a little time to process and after its processing is done, the TDS refund amount will be credited to the bank account of the payee. On the Income Tax Department's official website, individuals can also check the status of their refund.
A TDS certificate is a document issued by the deductor to the deductee as proof of the TDS deduction. It contains details such as the amount of TDS deducted, the TDS rate, and other relevant information. The deductee can use this certificate to claim the Tax Deducted at Source (TDS) amount while filing their income tax return.
|Forms||TDS Certificates||Periodicity||Due Date|
|Form – 16||Salaried Person||Yearly||31st May of every year
|Form – 16A||Non-salaried Person||Quarterly||Within 15 days from the date of furnishing TDS return|
|Form – 16B||Transfer of Immovable Properties||For Every Transaction||Within 15 days from the date of furnishing TDS return|
|Form – 16C||Rent under section 194-IB||For Every Transaction||Within 15 days from the date of furnishing TDS return|
|Section||Nature of Default||Interest on Late Deduction/ on Late Payment|
|201(1A)(i)||TDS not deducted (Whether Partially or Fully)||Interest @ 1% per month or part of the month on the amount of TDS from the date on which TDS was deductible till the date on which TDS actually deducted.|
|201(1A)(ii)||TDS deducted but not Deposited to the Government within the due dates. (Whether Partially or Fully)||Interest @ 1.5% per month or part of the month on the amount of TDS from the date on which TDS was actually deducted till the date on which TDS actually paid to the government.|
However, it is to be noted that the maximum interest charged will not exceed the Tax Deducted at Source (TDS) amount itself.
|Form No.||Type||Period||Due Date|
|Form 24Q||TDS statement for TDS deducted on Salary||Quarterly||30 days from the end of the Quarter|
|Form 26Q||TDS statement for TDS deducted other than on Salary||Quarterly||30 days from the end of the Quarter|
||Challan-cum-statement for TDS on payment of the purchase of immovable property under section 194IA||Transaction wise||30 days from the end of the month in which TDS was deducted|
|Form 26QC||Challan-cum-statement for TDS deducted on rent by Individuals/ HUFs covered under section 194IB||Transaction wise||30 days from the end of the month in which TDS was deducted|
|Form 26QD||Challan-cum-statement TDS deducted on various payments under section 194M by Individuals/ HUFs not liable for tax audit||Transaction wise||30 days from the end of the month in which TDS was deducted|
|Form 27Q||Quarterly TDS statement for tax deducted from payments made to non-residents (which are not companies) and foreign companies (other than salaries).||Quarterly||30 days from the end of the Quarter|
It is to be noted that in filing Form 24Q, Form 26Q and Form 27Q for the last quarter ending on 31st March, the due date will be 31st May.
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