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TDS is basically a part of income tax. It has to be deducted by a person for certain payments made by them. In this article, we will discuss in detail about the TDS provisions under the Income Tax Act.

  1. What is TDS?
  2. When should TDS be deducted and by whom?
  3. What is the due date for depositing the TDS to the government?
  4. How to deposit TDS?
  5. How and When to file TDS returns?
  6. What is a TDS certificate?

 

1. What is TDS?

TDS or Tax Deduction 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 TDS provisions makes sure that income tax is deducted in advance from the payments being made by you.tds

For instance, Shine Pvt Ltd make 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%. Shine pvt ltd must deduct TDS of Rs 8000 and pay balance 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 source. He will add 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.

 

2. 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.

The complete list of Specified Payments eligible for TDS deduction along with the rate of TDS can be accessed here.

 

3. What is the due date for depositing the TDS to the government?

The TDS deducted must be deposited to the government by 7th of the subsequent month. For instance, TDS deducted in the month of June must be paid to the government by 7th July. However, the TDS deducted in the month of March can be deposited till 30th April.

For TDS deducted on rent and purchase of property, the due date is 30 days from the end of the month in which TDS is deducted.

 

4. How to deposit TDS?

TDS has to be deposited using Challan ITNS-281 on the government portal.

Read our article for a step by step guide to deposit TDS.

 

5. How and When to file TDS returns?:

Filing TDS returns is mandatory for all the persons who have deducted TDS. 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. Also, different forms are prescribed for filing returns depending upon the purpose of the deduction of TDS. Various types of return forms are as follows:

Form No Transactions reported in return Due date
Form 24Q TDS on Salary Q1 – 31st July

Q2 – 31st October

Q3 – 31st January

Q4 – 31st May

Form 26Q TDS on all payments 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

 

6. What is a TDS certificate?

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

For instance, banks issue Form 16A to the depositor when TDS is deducted on interest from fixed deposits. Form 16 is issued by the employer to the employee.

Form Certificate of Frequency Due date
Form 16 TDS on salary payment Yearly 31st May
Form 16 A TDS on non-salary payments Quarterly 15 days from due date of filing return
Form 16 B TDS on sale of property Every transaction 15 days from due date of filing return
Form 16 C TDS on rent Every transaction 15 days from due date of filing return

 

You can easily file your TDS returns through ClearTax software i.e. ClearTDS. It is an online TDS software that requires no download or desktop installation or software update. It helps you to prepare regular & correction e-TDS statements online easily with just a few clicks on your computer. It is also compatible with TDS returns of previous financial years for easy import.

Also, you can generate your TDS certificates using ClearTDS.          

 

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