top of page

 

 ALL ABOUT TDS FILING AND RETURN

​

What is TDS?

 

TDS or Tax Deducted at Source is income tax reduced from the money paid at the time of making specified payments such as rent, commission, professional fees, salary, interest etc. by the persons making such payments. Usually, the person receiving income is liable to pay income tax. But the government with the help of Tax Deducted at Source provisions makes sure that income tax is deducted in advance from the payments being made by you. The recipient of income receives the net amount (after reducing TDS). The recipient will add the gross amount to his income and the amount of TDS is adjusted against his final tax liability. The recipient takes credit of the amount already deducted and paid on his behalf.   

 

When should TDS be deducted and by whom?

Any person making specified payments mentioned under the Income Tax Act are required to deduct TDS at the time of making such specified payment. But no TDS has to deducted if the person making the payment is an individual or HUF whose books are not required to be audited. However, in case of rent payments made by individuals and HUF exceeding Rs 50,000 per month, are required to deduct TDS @ 5% even if the individual or HUF is not liable for a tax audit. Also, such Individuals and HUF liable to deduct TDS @ 5% need not apply for TAN. Your employer deducts TDS at the income tax slab rate applicable. Banks deduct TDS @10%. Or they may deduct @ 20% if they do not have your PAN information. For most payments rates of TDS are set in the income tax act and TDS is deducted by payer basis these specified rates. If you submit investment proofs (for claiming deductions) to your employer and your total taxable income is below the taxable limit – you do not have to pay any tax. And therefore, no TDS should be deducted on your income. Similarly, you can submit Form 15G and Form 15H to the bank if your total income is below taxable limit so that they don’t deduct TDS on your interest income. In case you have not been able to submit proofs to your employer or if your employer or bank has already deducted TDS and your total income is below the taxable limit) – you can file a return and claim a refund of this TDS. The complete list of Specified Payments eligible for TDS deduction along with the rate of TDS.

​

Types of TDS

​

Here are some of the income sources that qualify for TDS:

  • Salary

  • Amount under LIC

  • Bank Interest

  • Brokerage or Commission

  • Commission payments

  • Compensation on acquiring immovable property

  • Contractor payments

  • Deemed Dividend

  • Insurance Commission

  • Interest apart from interest on securities

  • Interest on securities

  • Payment of rent

  • Remuneration paid to the director of a company, etc

  • Transfer of immovable property

  • Winning from games like a crossword puzzle, card, lottery, etc.

 

What is the TDS rate on salary?

​

TDS rate on salary are the same as the tax slab rates applicable to individuals. If you are less than 60 years of age, your TDS liability will be nil in case your income is less than Rs.2.5 lakh. Individuals who earn between Rs.2.5 lakh and Rs.5 lakh will be subject to TDS at 5%, while those who earn between Rs.5 lakh and Rs.10 lakh will have a TDS liability of 20%, and those who earn more than Rs.10 lakh will be subject to a TDS rate of 30%

Under the new tax regime, no TDS will need to be paid for an annual income of up to Rs.2.5 lakh. In case the annual income is between Rs.2.5 lakh and Rs.5 lakh, the TDS liability is 5%. In case the annual income is between Rs.5 lakh and Rs.7.5 lakh, the TDS liability is 10%. In case the annual income is between Rs.7.5 lakh and Rs.10 lakh, the TDS liability is 15%. In case the annual income is between Rs.10 lakh and Rs.12.5 lakh, the TDS liability is 20%. In case the annual income is between Rs.12.5 lakh and Rs.15 lakh, the TDS liability is 25%. In case the annual income is above Rs.15 lakh, the TDS liability is 30%.

​

What is TDS Return?

 

Apart from depositing the tax, the deductor should also file a TDS return.

TDS return is a quarterly statement to be given to the I-T department. It is compulsory for deductors to submit a TDS return on time. The details required to file TDS returns are:

  • PAN of the deductor and the deductee

  • Amount of tax paid to the government

  • TDS challan information

  • Others, if any

 

Eligibility Criteria for TDS Return

 

TDS return can be filed by employers or organizations who avail a valid Tax Collection and Deduction Account Number (TAN). Any person making specified payments mentioned under the I-T Act are required to deduct tax at source and needs to deposit within the stipulated time for the following payments :

  • Payment of Salary

  • Income by way of “Income on Securities”

  • Income by way of winning lottery, puzzles and others

  • Income from winning horse races

  • Insurance Commission

  • Payment in respect of National Saving Scheme and many others

 

How to File TDS return online?

​

In order to file your TDS return, there are few things you must ensure. They are as follows:

  • You must have a valid Tax Deduction and Collection Account Number (TAN) and make sure it is registered for e-filing

  • Prepare your TDS statements using Return Preparation Utility before validating the same using File Validation Utility

  • You must have a valid Digital Signature Certificate that is registered for e-Filing in case you want to upload your returns using DSC

  • Provide the demat account or bank account details of your principal contact, or ensure that his/her PAN is linked with his/her Aadhaar in case you want to upload your returns using Electronic Verification Code

 

Steps to upload TDS statements

​

Here is a simple guide to upload your TDS statements on the official website of the Income Tax Department :

  1. Visit https://www.incometaxindiaefiling.gov.in/home. On the right side of the page, you will see ‘Registered User?’ followed by the ‘Login Here’ option.

  2. Click on the aforementioned option and fill in your login information before clicking on ‘Login’. Your TAN will be your user ID.

  3. After you have logged in, locate the ‘TDS’ drop-down menu where you will have to select ‘Upload TDS’.

  4. A form will appear, and you will have to choose the right details before clicking on ‘Validate’.

  5. You will then have to validate your returns using either DSC or EVC.

 

Challan for TDS Payment

​

Challan ITNS 281 is the Challan form for online payment of TDS (Tax Deducted at Source) and TCS (Tax collected at source). Challan No. 281 is applicable for Tax Deducted at Source / Tax Collected at Source (TDS/TCS) from corporates and non-corporates. TDS exception is essentially a mechanism developed by the Indian Government where in there is a tax deduction at the source of an income, calculated at a specific rate and thereby becomes payable to the department of income tax.

Penalty for Late Filing TDS Return

Here are the penalties levied by the Income Tax Department for the failure to submit or defaults in submitting your

 

TDS return/statements:

  • Failure to submit your returns: Under Section 272A (2) of the Income Tax Act, a penalty of Rs.100 will be levied for each day that the returns remain unsubmitted, subject to a maximum of the TDS amount.

  • Failure to file your returns on time: Under Section 234E of the Income Tax Act, a penalty of Rs.200 will be levied for each day that the returns remain unfiled, subject to a maximum of the TDS amount.

  • For defaults in the filing of TDS statement: Under Section 271H of the Income Tax Act, a penalty of Rs.10,000 to Rs.1 lakh will be levied in case the deductor defaults at the time of filing TDS return within the due date.

  • For incorrect details: Under Section 271H of the Income Tax Act, a penalty of Rs.10,000 to Rs.1 lakh will be charged in case the deductor submits incorrect information pertaining to PAN, challan particulars, TDS amount, etc.

  • For non-payment of TDS: Under Section 201A of the Income Tax Act, interest will also be levied along with the penalty in case TDS is not paid within the due date. In case a part of the tax amount or the whole of it is not deducted at source, interest will be charged at 1.5% every month starting from the date on which the tax was deductible to the date on which the tax is actually deducted.

 

Steps to check TDS Deduction Status

one needs to follow the steps mentioned below to check their status of TDS

  1. Visit the official website of the Income Tax Department.

  2. Provide your details and login to the portal.

  3. Under the ‘My Accounts’ tab, click on ‘view Form 26AS (Tax Credit)’.

  4. Select the year and PDF format to download the file.

  5. Your downloaded PDF file is password protected. The password here will be the date of birth mentioned on your PAN. For example, if your date of birth is 5 March 2000 then the password will be 05032000.

  6. You can then view all the details related to the TDS deduction.

  7. You can use your bank’s net banking facility to check whether your TDS has been deducted provided your PAN is linked to it.

 

How to Claim TDS Refund?

Individuals can claim TDS refund on the Income Tax website. However, the Income Tax Returns must be filed, and the TDS refund must be shown. Once the ITR is filed, the TDS refund will be processed by the Income Tax Department. The refund might be credited to the bank account within 6 months. Individuals can also check the status of the refund on the official website of the Income Tax Department.

 

What is a TDS Certificate?

TDS Certificates are of two types: form 16 and Form 16A. Under Section 203 of the Income Tax Act, 1961, a certificate must be provided to the deductee showing the amount that has been subtracted as tax. The deductor is liable to provide this form to the deductee.

  • For salaried class: In case of salaried employees, employers are required to provide them with Form 16 with a mention of the amount that has been deducted as TDS. Form 16 contains a host of details such as the computation of tax, the deduction of tax, and the payment of TDS. Employers must issue this form to their employees before May 31 of the following financial year.

  • For non-salaried class: The deductor provides the deductee with form 16A, and it contains all the details regarding the computation of tax, the deduction of TDS, and payments.

 

Advantages of TDS

​

Some of the advantages of TDS are:

  1. It ensures that people do not evade payment of taxes.

  2. TDS acts as a steady source of revenue for the Government.

  3. It is much more convenient for the deductee as the tax amount payable is automatically deducted.

  4. The burden on Tax Collection Agencies to collect tax significantly reduces.

 

 

DISCLAIMER- These materials are public information and have been prepared solely for educational purposes. These materials reflect only the personal views of the author and are not individual legal advice.

It is understood that each case is fact specific and that the appropriate solution in any case will vary. Finally, the owner will not be accountable for any loses injuries or damages from the exposures or usage of this information.

​

​

bottom of page