Worried about Corona virus spreading in India? Buy Health Insurance and get coverage now. View Plans
Take informed decisions with IIFL Insurance:

What is TDS – Tax Deducted at Source

Introduction

Jatin was running his business, and he was earning well. Meanwhile, when the plague arrived, he saw businesses were closing, and individuals were accusing him that the government wasn’t paying attention to them. Jatin agreed with them, then a man named Arun asked them, how many of them pay their income tax? They told him it was all a tactic of the government to take money from ordinary people. Then Arun told them how the government uses these funds for their citizens and how people directly contribute to raising the government fund, which comes back to them in terms of government services they offer. After hearing this, people understood why tds are essential. 

What is TDS?

The TDS full form is Tax Deducted at Source and it is a part of a payment that is deducted when paid, such as a salary, commission, rent, interest, professional fees, etc.  

Tax Deducted at Source (TDS) Types

TDS is applicable on the following types of income:

  • Amount under LIC
  • Bank Interest
  • Compensation on acquiring immovable property
  • Payment of rent
  • Salary
  • Interest on securities
  • Interest apart from interest on securities
  • Deemed Dividend
  • Insurance Commission
  • Contractor payments
  • Commission payments
  • Transfer of immovable property
  • Brokerage or Commission

 

When does TDS have to be deducted, and who would be liable for removing it?

  • TDS will be charged at the time of any payment that falls under the Income Tax Act’s definition. If you are a Hindu Undivided Family (HUF) person, zero TDS will be deducted, plus your books will not be audited.
  • Although if your books are not subject to a tax audit, a TDS of 5% will be taken if you pay the rent as an individual or as a member of a HUF and the amount payable above Rs.50,000. If you are needed to have TDS deducted at a rate of 5%, you would not be expected to apply for a Tax Deduction Account Number (TAN).
  • If you present your investment evidence to your company and your total taxable income is less than the entire taxable limit, you will not be supposed to pay any tax. In this situation, no TDS would be deducted. 
  • Your employer will deduct TDS according to the appropriate income tax slab rates if you are employed. TDS will be removed at a rate of 10% by the bank with whom you have an active account. TDS at a rate of 20% will be deducted if they do not have your PAN data. TDS rates are specified under the Income Tax Act for most payments, and the payer deducts TDS according to the rates.

 

How to File TDS Return online? 

  • Ensure you own a valid Tax Deduction and Collection Account Number (TAN) and that it is set up for e-filing.
  • Use the Return Preparation Utility to prepare your TDS statements before verifying them with the File Validation Utility.
  • If you wish to use DSC to submit your returns, you should have a valid Digital Signature Certificate registered for e-Filing.
  • If you wish to submit your returns using Electronic Verification Code, provide the Demat account or bank account data of your primary contact, or make sure his or her PAN is connected to his or her Aadhaar card.

 

TDS Due Dates of FY 2020-21 for Return Filing

The following are the TDS Payment filing deadlines for FY 2020-21:

Quarter Period Due Date for filing
Quarter 1 April 2020 to 30 June 2020 31 March 2021
Quarter 2 July 2020 to September 2020 31 March 2021
Quarter 3 October 2020 to December 2020 31 January 2021
Quarter 4 January 2021 to March 2021 30 June 2021

 

Penalty for Late Filing TDS Return

Following are the  TDS deduction rules for late filing:

  • Non-payment of TDS: If TDS is not paid by the due date, interest will be assessed in addition to the penalty under Section 201A of the Income Tax Act. If a portion or all of the tax is not claimed at the source, the interest of 1.5 per cent per month will be assessed from the date the tax was deductible until the tax is deducted.
  • For incorrect details: If the deductor provides misleading information related to PAN, challan particulars, TDS amount, etc. A fine of Rs.10,000 to Rs.1 lakh would be assessed as Section 271H of the Income Tax Act.
  • Defaults in the filing of TDS statement: If the deductor fails to file the TDS return by the required date, a fine of Rs.10,000 to Rs.1 lakh would be imposed under Section 271H of the Income Tax Act.
  • Failure to submit your tax returns on time: A charge of Rs.200 shall be imposed under Section 234E of the Income Tax Act per day if the returns continue to be unfiled, up to the TDS amount.

 

Steps to check TDS Deduction Status

To check one’s TDS applicability status, one must complete the steps outlined below.

  1. Browse the Income Tax Department official website.
  2. Fill up your information and log in to the site.
  3. Tap ‘View Form 26AS (Tax Credit)’ under the ‘My Accounts’ option.
  4. To download the files, choose the year and the PDF format.
  5. Your password-protected PDF file has been downloaded. The password will be your PAN number plus your date of birth.
  6. You could then see all of the information about the TDS deduction.
  7. If your PAN is linked to your bank’s net banking service, you may verify if either your TDS has been deducted.

FAQs:

What are the benefits of paying TDS?

TDS has several advantages, including:
TDS provides the government with a consistent stream of money.
The tax collection load on tax collection agencies is greatly reduced.
Because the tax amount due is automatically taken, it is considerably more convenient for the deductee.

How can a person seek a TDS refund?

Individuals can request a TDS refund on the IRS website which is liable to deduct tds. The Income Tax Department will make the TDS refund when the ITR is filed. Following 6 months, the return might be credited to your bank account. People can also check the status of their refund on the Internal Revenue Service's official website.

Buy Insurance - 18002101330