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TDS

TDS Online

Last Updated 21st Sep 2020

  • Tax Deducted at Source or TDS is an income tax provision wherein a person or a company making a payment deduct a certain amount based on a specified threshold.
  • The deducted amount is to be submitted by the deductee (person or company who deducted the amount) with the income tax department within a specified time period.
  • Some popular payment types in which TDS is deducted are; salary, consultation fee, commission fee, rent, etc.
  • TDS is paid online through CHALLAN/ITNS. 281 on the website of NDSL via net banking.
  • Covid-19 Relief Atmanirbhar Rs 20 lakh Crore Package ( 13th May 2020 ): TDS Rates for non-salaried specified payments made to residents reduced by 25% and reduced rates will remain valid till March 31, 2021. Payment for contract, professional fees, interest, rent, dividend, commission, brokerage etc will all be eligible for this reduced TDS.
INCOME TAX CALCULATOR

What is TDS?

As per the Income Tax Act, 1961 every person or company making a payment of certain kind above a specified threshold limit is required to deduct tax at source. The full form of TDS is Tax Deducted at Source. The tax is to be deducted based on the provisions specified in the Act. The company who is deducting tax at source is called deductor and the person or company who is receiving the payment after the deduction of tax at source is called the deductee.

The burden of deducting the tax at source and depositing it with the government is on the deductor. Some of the type of payments where tax is deducted at source are:
a) Interest payments by banks
b) Salaries
c) Consultation fee
d) Rent
e) Professional fee
f) Commission fee

TDS is a kind of advance tax and needs to be deducted irrespective of the mode of payment. Since TDS is a part of income tax, both deductor and deductee’s PAN is linked to it. In case PAN of deductee is not updated, the deductor must deduct TDS at higher of the following rates:
a) the rate as prescribed in the Act;
b) at the rate mentioned in the Finance Act; or
c) at the rate of 20%.

When TDS Deducted and by Whom?

TDS needs to be deducted by a person or company making specified payments under the Income Tax Act for which TDS is required to be deducted. However, no TDS is required to be deducted if the person or company making the payment is an individual or HUF whose books are not required to be audited, except in case of rent payment.

When it comes to rent payment of Rs. 50,000 and above per month the individuals and HUF are required to deduct TDS @ 5% without applying for TAN.

TDS on salary is deducted based on the applicable slab rate, and the bank deducts TDS on interest @10%. In case PAN card is not submitted TDS deducted by the bank is @20%. For other specified payments, the TDS rates are mentioned in the Act, and TDS is deducted based on those specified rates.

If you are submitting investment proofs to your employer to claim the deduction and your total income is below the taxable limit, then you are not required to pay income tax, and hence no TDS shall be deducted. Similarly, you can submit Form 15G and Form 15H to the bank declaring that your total income is below the taxable limit and hence no TDS shall be deducted on your interest income.

In case you are unable to submit proof of your investments to your employer and the employer or bank has already deducted TDS, then you can also file the return to claim a refund of deducted TDS.

How to Deposit TDS?

To deposit TDS follow these steps:

  • Firstly visit the NSDL website for paying taxes online https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
  • Now select ‘CHALLAN NO./ITNS 281’ under the section ‘TDS/TCS’.
  • On the e-payment page, enter the required details:
    • Select ‘Company Deductee’ if you are a company otherwise select ‘Non-Company Deductee’ in ‘Tax Applicable’ section.
    • Next, you have to enter the TAN and the Assessment year for which you are making the payment. Follow it up by entering ‘Pin code’ and selecting ‘State’.
    • In the next step, select whether the payment you are making is for TDS deducted and payable by you or it is TDS for regular assessment.
    • Now, select the ‘Nature of Payment’ and ‘Mode of Payment’ and then click on ‘Submit’.
  • After submission on the confirmation page, your full name of the taxpayer will be displayed if the TAN is entered right.
  • After you have confirmed the data entered, you will be redirected to the net banking website of your choice, and you have to make the payment by logging in to your net banking account.
  • After the payment is successful a challan, counterfoil will be displayed which will have the CIN, payment details and the bank name from which you have made the payment. This counterfoil is a proof of payment which you will require while filing the TDS return.

TDS Deduction

TDS applies to most forms of income including salary, professional income, commission, etc.

TDS simply stands for tax deducted at source that is where the income gets generated. As per mentioned in the income tax act, a person who makes payments is required to deduct TDS at prescribed rates and deposit the same with the income tax department. The amount is adjustable by the tax department against the tax liability of the person or entity (identified by its PAN number) whose tax has been deducted. TDS is deducted as per the income tax rate for a particular financial year. TDS can be deducted from salaried employees, freelancers, commission payments etc.
The TDS is required to be deducted by any person who is making the payment, as mentioned in the Income Tax Act. However, if the person making the payment is an individual or HUF whose books are not mandatory to be audited, in such case, no TDS deduction is required. The liability to pay the TDS to Income Tax Authorities is on the person who has made the deduction.

TDS Return

TDS Return Form

There are different forms for different taxpayers to file TDS returns. The following forms are:

TDS Return Form Deductee type
Form 24Q Deductions made in case of salaried employees
Form 26Q Deductions made in case of other than salaried employees
Form 27Q Deductions made in case of Non-Resident

TDS Return Due Date

Quarter Due Date for filing of Return for all deductors
30th June 31st July
30th September 31st October
31st December 31st January
31st March 31st May

TDS Refund

TDS is deducted in advance and most often there is an inconsistency in the investment claimed to be made in the year and the actual investment made. Hence, there is a chance of excess TDS deduction which is refundable by the government in accordance with the procedure as per TDS refund.

TDS Refund Process

  • There is no specific form that is required to be filled. You can claim your TDS refund while filling your income tax return. You have to show the computation of your income and the total TDS deducted. The income tax software will automatically check the details filled by you and will reflect your excess TDS if there is any.
  • Once you apply for the TDS refund, it may take few months on part of income tax officer in sanctioning the refund. However, if the amount of TDS refund is more than 10% of total tax paid for the year, then government will be liable to pay you interest at the rate of 6% per annum for the delayed refund.

TDS Refund- Check Status Online

You can visit the website https://tin.tin.nsdl.com/oltas/refundstatuslogin.html to check the status of your refund. You are required to furnish your PAN details and the year for which the refund was filed.
You can also check the status of your refund by contacting the help desk of SBI through email at itro@sbi.co.in

What is a TDS Certificate?

The certificates issued by the person or company deducting TDS to the assessee whose tax has been deducted is called TDS certificate. These TDS certificates include complete information of the TDS deducted based on the nature of the payment. Form 16, Form 16 A, Form 16B, and Form 16C are all TDS certificates.

The employer issues form 16 for deducting TDS on salary, whereas the bank issues form 16A for deducting TDS on interest income.

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

TDS on Sale of Property

As per section 194- IA of Income Tax Act, when a buyer buys an immovable property costing more than ₹ 50 Lakh, he has to deduct TDS when he pays to seller. The immovable property can be any piece of land or building other than the agricultural land. The buyer is required to deduct 1% TDS of the total sale consideration. The notification on TDS on immovable property was announced in budget for the year 2013-14.

Key Points
  • TDS is to be deducted by buyer not the seller
  • Property should cost more than ₹ 50 Lakh and then only TDS will be deducted.
  • TDS will be deducted on the entire amount of sale
  • Buyer does not need to obtain TAN number.
  • In case the property is purchased by seller, PAN number is required or TDS will be deducted at the rate of 20%. Buyer is also required to show his PAN number.
  • TDS has to be deposited along with Form 26QB within 7 days from the end of the month in which TDS was deducted.
  • Buyer is required to present the TDS certificate to the seller. Seller is required to obtain Form 16 and buyer requires Form 26QB.
  • TDS is required to be deducted in all cases irrespective of the capital gains arising to seller.
  • In case of home loan, TDS is to be deducted at the time of making payment to the seller, not at the time of paying EMI to the bank.
  • In case of two or more buyers, separate Form 26QB is to be filled.
  • Both buyer and seller are required to file income tax return in the year of purchase.

Note: In case there are two buyers and the share of each individual is less than ₹ 5 Lakh but aggregate value of land is more than ₹ 50 Lakh, the same procedure of deducting the TDS will be followed by buyer.

Penalty for Nonpayment or Delayed TDS on Property

  • In case TDS is not deducted by the buyer then he is required to pay interest at the rate of 1% per month as penalty on the amount not deducted.
  • In case TDS is deducted but not paid on time, then the buyer has to pay interest at the rate of 1.5% per month as penalty for delayed TDS payment.

Penalty for Late Filing of Form 26QB

In case the buyer gets late in filing TDS return, a penalty of ₹ 200 per day would be levied.

FAQs

What is the TDS rate?

The rate based on which the payee makes a certain deduction on account of tax deducted at source under a specific section of the Income Tax Act is called the TDS rate.

On what amount TDS is deducted?

TDS is deducted on the gross amount, which is to be paid by the payee to the receiver.

How is TDS on salary calculated?

Calculate the total income by adding all the salary, commission, bonus, etc. Then add the income received from any investments. Deduct any eligible exemptions from the resulting taxable income, and calculate the TDS as per the average rates applicable.

Who is liable to deduct TDS?

The liability to deduct TDS is on the deductor or the person who is making the payment. However, individuals and HUFs whose books are not required to be audited. However, when the rent payment for each month exceeds ₹ 50,000 per month, then individuals and HUF are required to deduct TDS @ 5%, even if their books are not required to be audited.

Why do we deduct TDS?

Deduction of TDS is mandatory as per the Income Tax Act, 1961 as and when required. The government introduced the deduction of tax at source to minimise the activities of tax evasion by taxing at the source of income generation.

How can I get a TDS refund?

To get a TDS refund, you need to first declare it in your IT return, following which the Income Tax department will automatically credit it in your bank account.

Is TDS and Income Tax the same?

The basic difference between TDS and income tax is that TDS is levied at the source where income is generated under specified cases like salary, interest from the bank, rent, professional fee, etc. Whereas, income tax is levied on assessee whose income is above the tax limit in a particular period.

What is the minimum amount for TDS deduction?

The minimum amount for TDS deduction varies with each payment type. For example, in the case of payment made to the contractor, TDS is deducted when total payment in a financial year exceeds ₹ 30,000.

What is the TDS rate for contractors?

The TDS rate for contractors is 1% when the payment is made to an individual or HUF and 2% in case the payment is made to any other person.


Our News - Sep 2020
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    Income tax authorities are likely to start the faceless tax assessment from 25 September. The objective is to make the tax assessments seamless, painless and faceless. It will bring in transparency and objectivity in tax assessments, foster taxpayer’s trust and confidence, and boost voluntary compliance.
  • 2020-09-10 : CBDT issues over ₹1,01,308 crore refund to 27.55 lakh taxpayers
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  • 2020-09-03 : Banks, post offices can now check ITR filing status
    Banks can now check the status of ITRs of their customers based on their PAN. Through this facility banks or post, offices can get the applicable rate of TDS using the PAN of the person withdrawing cash.
  • 2020-08-31 : IT Department to intimate taxpayers under scrutiny about faceless assessment
    The income tax department will start sending out intimation to assessees undergoing scrutiny that such cases would be handled under faceless assessment. Under faceless scrutiny assessment, a central computer picks up tax returns for scrutiny based on risk parameters and mismatch and then allots them randomly to a team of officers.
  • 2020-08-31 : Banks asked to refund charges collected for UPI, digital payments after Jan 1
    CBDT informed that any charge including the MDR shall not be applicable on or after 1st January 2020 on payment made through prescribed electronic modes. Further, the banks were instructed to refund charges collected from customers for the digital transaction on or after January 1, 2020.The aim is to encourage digital payments in the country.
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