Whenever we earn some income, we are entitled to pay the Government taxes. Whether it’s business or salaries, we ought to pay the government some taxes based on our accounts.
There are various types of taxes like GST, Income Tax, VAT, Capital Gain tax, Excise duty, etc. One of the taxes that is important to be noted is Tax Deducted at Source or TDS.
TDS is one of the most common taxes which is deducted from your income. In this article, we will discuss what is Tax Deducted at source means, when should TDS deducated, due dates, TDS returns, and much more.
What is TDS?
TDS stands for Tax Deduction at Source, signifying the obligation to collect tax on income, dividends, or asset sales at the source by the intermediary and pay back the balance amount to the beneficiary i.e. paying you back.
TDS is managed by the Central Board for Direct Taxes (CBDT) which comes under the Income tax department and the assesse must file returns quarterly to state the TDS paid.
Example of TDS Deduction
Let’s say there is ABC Pvt Ltd. paying rent of Rs.1,00,000/- per month to the building owner. The rent TDS deduction is set as @10%, therefore, a 10% deduction from the rent amount comes out as Rs.10,000/-.
ABC Pvt Ltd has to deduct Rs.10,000/- from Rs.1,00,000/- at source and pay the remaining amount to the building owner. The building owner then has to file for a TDS return where he/she can show the tax payable as per their slab or file for a refund.
When Should TDS be Deducted and by Whom?
Any person generating income in the category mentioned below is liable to pay taxes at source. However, as per the Income Tax Act, if the entity is an individual or HUF who does not need a book audit, then there is no need for TDS. Rent payment that exceeds Rs.50,000/- including HUF and Individuals are required to deduct TDS @ 5% with no requirement of TAN.
If you are an employee of a firm then the firm will deduct a TDS as per your income tax slab rate. the bank deducts @10% for any TDS on an FD account or other saving instruments, the tax rate of 20% is deducted if you do not provide your PAN Card information.
In case you submit a poof to your employer and your total taxable income is less than the taxable limit, then you do not need to pay any tax and therefore no TDS will be deducted from your Income.
Also, you can submit Form 15G and Form 15H to the bank if your total income is below the taxable limit so that they don’t deduct TDS on your interest income.
In case of deduction of the TDS from your employer or Bank, then you can claim back your TDS deduction. You’ll have to file a return and claim back the amount.
Types of TDS Deduction
The following are some of the income sources that are eligible for TDS deduction-
- Salary
- Payments to Contractor
- Commission payments
- Sale of House
- Insurance Commission
- Interest on securities
- Interest other than interest on securities
- Rent Payment
- Professional fees
- Online Gaming
- Winning from games like a lottery, crossword puzzle, card, etc.
What is the Due Date for Depositing the TDS to the Government?
The TDS deduction must be deposited to the Government by the 7th of the subsequent month. For TDS on rent and purchase of property, the TDS payment due date is 30 days from the end of the month.
What is TDS Return?
TDS Returns are the quarterly statement or summary of all the TDS-related transactions made during a specific period usually a quarter. It contains details of all the TDS collected & deposited in that specific period by the deductors.
When to File TDS Returns?
The following are the dates that you’ll have to keep in mind for filling out the TDS return-
| Form No | Transactions reported in the return | Due date |
| Form 24Q | TDS on Salary | Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
| Form 27Q | TDS on all payments made to non-residents except salaries | Q1 – 31st July Q2 – 31st October Q3 – 31st January Q4 – 31st May |
| Form 26QB | TDS on sale of property | 30 days from the end of the month in which TDS is deducted |
| Form 26QC | TDS on rent | 30 days from the end of the month in which TDS is deducted |
What is a TDS Certificate?
Whenever the deductor deducts TDS, they will have to serve you a TDS certificate against the deduction. This certificate can be used while filing your income Tax return to ensure a tally of your accounts. The following are the TDS certificates issued for various reasons-
| Form | Certificate of | Frequency | Due date |
| Form 16 | TDS on salary payment | Yearly | 31st May |
| Form 16A | TDS on non-salary payments | Quarterly | 15 days from the due date of filing the return |
| Form 16B | TDS on sale of property | Every transaction | 15 days from the due date of filing the return |
| Form 16C | TDS on rent | Every transaction | 15 days from the due date of filing the return |
FAQ
TDS is deposited using ca challan called ITNS-281. The challan is available on the Government portal and you can fill the challan to deposit the TDS.
TDS Returns are the quarterly statement or summary of all the TDS-related transactions made during a specific period usually a quarter. It contains details of all the TDS collected & deposited in that specific period by the deductors.
As per the Income Tax Act, the rate of TDS deduction on the salary ranges from 10 to 30%. the deduction of the taxes will depend on the tax slab you fall into. In case, you’ve paid extra taxes then you can also claim back the paid tax on your TDS return. Your liability of the taxes will be as per the Income Tax Slab.
