All About Tax Deducted At Source – TDS Meaning, Filing, Return & Due Dates

TDS stands for Tax Deducted at Source. Through TDS mechanism, tax is paid to the government as and when your income is earned, for certain types of transactions like like salary, rent, interest, and professional fees.

Key Highlights

• TDS deducted against your income can be claimed as a refund through ITR filing, when your total tax payable is less than TDS deducted.
• You can submit Form 15G and 15H and avoid TDS deduction, when your total income is below the taxable limit.
• You can use Form 26AS to check the details of TDS deducted against your income.

Applicability of TDS

TDS is applicable for a variety of transactions at different rates when the payments cross specified threshold limit. They include:

• Salary - Section 192
• Dividend - Section 194
• Interest - Section 194A
• Professional and consultation fees - Section 194J
• Contract payments - Section 194C
• Casual income like gaming income, lottery winnings, etc - Section 194B
• Cash withdrawals - Section 194N
• Commission, brokerage, etc - Section 194H

Time of TDS Deduction

• Usually, TDS needs to be deducted at the time of payment or credit in the books, whichever is earlier. 
• However, for certain payments like salary, TDS needs to be deducted at the time of payment. 

Example of TDS

Shine Pvt. Ltd makes a payment for office rent of Rs 80,000 per month to the owner of the property. TDS is required to be deducted at 10% under Section 194I of the Income Tax Act, 1961. Shine Pvt ltd must deduct TDS of Rs 8,000 (i.e., Rs 80,000*10%) and pay the balance of Rs 72,000 to the owner of the property. 

Thus, the recipient of income i.e. the owner of the property in the above case receives the net amount of Rs 72,000 after deduction of tax at the source. He will add the gross amount i.e. Rs 80,000 to his income and can take credit of the amount already deducted i.e. Rs 8,000 by Shine Pvt. Ltd against his final tax liability.

TDS Due Dates

TDS must be deposited to the government on or before the 7th of the following month in which the tax is deducted.

• For example, TDS deducted in June must be deposited by 7th July.
• TDS deducted in March, however, can be deposited up to 31st May.
• In the case of TDS on purchase of property (Section 194-IA), the due date is 30 days from the end of the month in which TDS is deducted.

The TDS statements have to be furnished on a quarterly basis as follows:

Missing the due date may attract interest and penalties under the Income Tax Act.

TDS returns

TDS return is to be submitted quarterly and various details need to be furnished like TAN, amount of TDS deducted, type of payment, PAN of deductee, etc. Various types of return forms are as follows: 

What is a TDS Certificate?

TDS certificates have to be issued by a person deducting TDS to the assessee from whose income TDS was deducted while making payment. Form 16, Form 16A, Form 16B and Form 16C  are all TDS certificates. 

TDS Credits in Form 26AS

• TDS deductions are directly linked to the PAN of both the deductor and the deductee. If TDS has been deducted from your income, you must refer to Form 26AS, a consolidated tax statement available to all PAN holders on the income tax portal.
• Form 26AS provides a complete summary of all TDS deducted and deposited against your PAN, including payments like salary, interest, commission, etc. It also reflects advance tax or self-assessment tax paid by you. 
• Since TDS credit can only be claimed for amounts that appear in Form 26AS, it is crucial to ensure your PAN is correctly quoted wherever TDS is applicable. Regularly checking your 26AS helps you verify whether the deductor has accurately deposited the TDS.
• Failing to reconcile TDS credits may lead to incorrect claims and notices from the Income Tax Department. This is especially important for businesses where multiple clients or vendors deduct TDS.

Penalty for Late Filing of TDS Returns

A late fee of ₹200 per day is levied under Section 234E for the delayed submission of TDS/TCS returns to the Income Tax Department (ITD). This means that the fee accumulates for each day the return is late, up to a maximum limit equal to the total TDS amount. It's important to pay this late fee before submitting the TDS/TCS return.

Difference between TDS and Income Tax

The following table explains the difference between TDS and Income Tax:

Other TDS Articles: 
1. What is Tax Deducted at Source 
2. TDS Rate Chart  
3. How to claim TDS Refund 
4. How to Make TDS Payment Online 
5. TDS Interest Calculator 
6. Section 194LBC of Income Tax Act 
7. Tax Deductions on Tips Given to Hotel Employees