All About TDS - Tax Deducted at source - Deduction, Payment and Return filing

What is TDS?

The concept of TDS has been introduced by the Government to ensure that tax has been collected from the very source of income i.e., from the person who is making payment to another person.

So, accordingly a person (Deductor) who is making payment of specified nature like rent, commission, interest, salary, professional fees, dividend or payment to contractors etc. to any other person (Deductee) shall deduct tax at source and remit the amount so deducted into the account of Central Government.

Further, the deductee can avail credit of the amount of tax deducted from his income on the basis of Form 26AS or TDS certificates issued by the Deductor.

Example:

XYZ Pvt. Ltd. makes payment of office rent to the owner of property amounting to Rs. 1,00,000/-per month. Now XYZ Pvt. Ltd. deduct 10% TDS before making payment to property owner i.e., Rs 10,000 and then make net payment to owner of Rs. 90,000.

Now the owner of property will add Rs. 1,00,000 in his gross total income and can take credit of the amount already deducted i.e., Rs 10,000 from his final tax liability.
 

When TDS is to be deducted and by whom?

Any person who is making specified payments which are mentioned under the Income Tax Act like rent, salary interest etc. to another person shall require to deduct TDS at the time of making such payment.

No TDS shall be required to be deducted if the person making the payment is an individual or HUF (Hindu Undivided Family) whose books of accounts are not required to be audited.

However, as per announced budget 2017, individual and HUF are required to deduct TDS@5% on making rent payment exceeding Rs. 50,000/- per month even if such individual or HUF are not liable for tax audit.

And for deducting TDS they need to apply for TAN as well.

For instance,Mr. Vidit pays rent of Rs. 60,000 per month to the landlord then TDS calculation and liability will be as under:

TDS on total rent paid in a year will be deducted once in a year.

And rent paid in last month of the year will be paid to the landlord after deducting TDS i.e., Rs. 24,000 (60,000-36,000) and in all other months Rs. 60,000 will be paid to landlord.

 

What is the due date of depositing TDS?

TDS deducted must be deposited to the account of Central Government by 7th of following month in which TDS is deducted.

That is if TDS is deducted in May then TDS must be paid to Government upto 7th June.

However, TDS deducted in the month of March can be paid to government upto 30th April.

Further, in case of TDS deducted on rent and purchase of property, can be paid to government upto 30 days from the end of the month in which TDS is deducted.

 

How to deposit TDS?

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

What are the due dates for filing TDS returns?

All persons who have deducted TDS are mandatorily required to file quarterly returns. There are different types of return forms depending on deduction of TDS made.

Various types of returns forms and its due dates are as follows:

 

What are TDS certificates?

The person who is deducting TDS needs to issue TDS Certificate to the assessee from whose income TDS was deducted. When TDS is deducted it is important to issue TDS certificate so that the payee/assessee knows how much tax he has paid on his income and the same has been deposited with the government.

Below are the various TDS certificates along with their last date of issuance:

We tried to cover here all aspects regarding TDS. However, to know about specified payments which are eligible for TDS deduction and the rate of TDS on such specified payments read our upcoming article.

We have team of experts who can help you in all your TDS compliances, fell free to share your queries or to know more about our services on our contact page or you can also mail us at agam@hubco.in