TDS is an abbreviated form of Tax Deducted at Source which is required to be deducted while making payment to parties at a given rate. There are some identified expenses/payments against which income tax department has prescribed a specific rate of deduction and the threshold limit on which it is required to be deducted. The person deducting the tax at source is required to deposit the tax deducted to the credit of Central Government - quoting the TAN number. Individuals who are salaried are not required to obtain TAN or deduct tax at source. However, a proprietorship business and other entities must deduct tax at source while making certain payment like salary, payments to contractor or sub-contractors, payment of rent exceeding Rs.1,80,000 per year, etc. SS Corporate Law House can help obtain TAN Registration.
The entity making a payment (which is subject to TDS) deducts a certain percentage of the amount paid as tax and pays the balance to the recipient. The recipient also gets a certificate from the deductor stating the amount of TDS. The deductee can claim this TDS amount as tax paid by him (i.e. the deductee) for the financial year in which it is deducted.
The deductor is duty bound to deposit the TDS with the government. Once deposited this amount reflects ..
One must remember that TDS on specified transactions is deducted only when the value of payment is above the specified threshold level. No TDS will be deducted if the value does not cross the specified level
Different threshold levels are specified by the Income Tax department for different payments such as salaries, interest received etc.
If a person expects that his total income in a financial year will be below the exemption limit, he can ask the payer not to deduct TDS by submitting Form 15G/15H.
While receiving payment which is subject to TDS, deductee is required to provide his PAN details to avoid tax deduction at the higher rates.
TDS stands for tax deducted at source. The payer of income deducts the tax from the gross payment due and pays the net amount (i.e. net of tax).
No, TDS is not deducted at the same rate from all incomes which are subject to TDS. There are different TDS rates for different types of incomes
A deductor is the person responsible for deducting tax. The person who receives the payment after the deduction of tax is called the deductee.
How can I check if TDS is deposited with the government?
Once the TDS is deposited with the government by the deductor, then the TDS amount deposited will be reflected in your Form 26AS. Further, the deductor is required to issue you a TDS certificate.
|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|
Filing Tax Deducted at Source 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 26QTDS on all payments except salaries
Q1 – 31st July
Q2 – 31st January
Q4 – 31st May October
Q3 – 31st
The person who is making the payment is responsible for deducting the tax and depositing the same with government. TDS stands for 'Tax Deducted at Source'. It was introduced to collect tax at the source from where an individual's income is generated
TDS stands for 'Tax Deducted at Source'. It was introduced to collect tax at the source from where an individual's income is generated. The government uses TDS as a tool to collect tax in order to minimise tax evasion by taxing the income (partially or wholly) at the time it is generated rather than at a later date.
TDS is applicable on various incomes such as salaries, interest received, commission received, dividends etc.
TDS is not applicable to all incomes and persons for all transactions. Different TDS rates have been prescribed by the Income Tax Act for different payments and different categories of recipients. For example, payment of redemption proceeds by a debt mutual fund to a resident individual is not subject to TDS but for a Non-resident Indian is subject to TDS.
TDS works on the concept that every person making specified type of payments to any person shall deduct tax at the rates prescribed in the Income Tax Act at source and deposit the same into the government's account.
The person who is making the payment is responsible for deducting the tax and depositing the same with government. This person is known as 'deductor'. On the other hand, the person who receives the payment after the tax deduction is called 'deductee'. Form26AS is a statement.
Rates prescribed for different types of payments
There are different rates for TDS described in the different sections of the Act, depending on the nature of the payments.
The government with effect from May 14, 2020 has reduced the TDS rates by 25% on non-salaried payments such as rent, interest received from fixed deposits, dividends etc. However one must remember that no changes have been made with regards to TDS on salaries. Therefore, tax on salaries will be deducted at the tax rates applicable to your income (inclusive of cess at 4%).
Also, one must remember that the reduced TDS rate on the non-salaried payments will be applicable till March 31, 2021.
Given below are some of the TDS rates on salaried and non-salaried payments applicable from May 14, 2020 to March 31, 2021.