All about TDS- Payment, Deduction, Return Filing

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Taxes have always been the objects of reverence and curiosity among masses. More so when the taxation environment is so rapidly changing. This week we will deal with one such topic – Tax Deducted at Source (TDS). What is TDS and when it is to be deducted will be dealt with over here.

What is TDS?

TDS or Tax Deducted at Source means the tax withheld at the time of making some kind of payments. How much is deducted is dependent upon the nature of payment made? These rates for various payments have been notified in the Income Tax Act and Rules. Payments can be in the nature of contractual fees, salaries, professional services, etc.

Who is required to deduct TDS?

The payer is required to deduct TDS. This is a way of the Govt/ITD to block tax evasions. Irrespective of the mode of payment (cash/cheque/credit). The person (individual or an organization) is known as the Deductor. The person whose payment is getting deducted is called the Deductee.

What is Form 26 AS?

Form26AS is a statement that shows the amount of tax deducted and deposited in a person’s name/PAN. 

 

Know how to download Form 26 AS – How to view Tax Credit Statement ( Form 26AS ) Online ?

 

 

What is the rate of TDS to be deducted?

Different rates of TDS have been specified for different payments. There are different rates that are applicable to residents and non-residents taxpayers. Rates are dependent upon the nature of payments to be made, the type of person to whom the payment is being made (company or Individual), the residential status of the person, etc.

Threshold Levels:

Different threshold levels have been prescribed in the Income Tax Act, 1961 and allied Rules for different transactions. TDS is to be deducted only when such levels are crossed. 

Rates of TDS on Specified Services for the FY 2017-18 (For Domestic Companies):

Particulars

TDS Rates

Section 193: Interest on securities:

a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a Central, State or Provincial Act;

b) any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;

c) any security of the Central or State Government;

d) interest on any other security

 

 

 

 

 

10

Section 194: Dividend

10

Section 194A: Income by way of interest other than “Interest on securities”

10

Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort

30

Section 194BB: Income by way of winnings from horse races

30

Section 194C: Payment to contractor/sub-contractor

a) HUF/Individuals
b) Others

 

1
2

Section 194D: Insurance commission

10

Section 194DA: Payment in respect of life insurance policy

1

(  w.e.f 01.06.2016)

(2% from 01.04.2015 to 31.05.2016)

Section 194EE: Payment in respect of deposit under National Savings scheme

10

(w.e.f 01.06.2016)

(20% from 01.04.2015 to 31.05.2016)

Section 194F: Payment on account of repurchase of unit by Mutual Fund or Unit Trust of India

20

Section 194G: Commission, etc., on sale of lottery tickets

10

(w.e.f  01.06.2016)

(10 % from 01.04.2015 to 31.05.2016)

Section 194H: Commission or brokerage

5

(w.e.f  01.06.2016)

(10 % from 01.04.2015 to 31.05.2016)

Section 194-I: Rent

a) Plant & Machinery
b) Land or building or furniture or fitting

2
10

Section 194-IA: Payment on transfer of certain immovable property other than agricultural land

1

Section 194J: Any sum paid by way of

a) Fee for professional services,
b) Fee for technical services
c) Royalty,
d) Remuneration/fee/commission to a director or
e) For not carrying out any activity in relation to any business
f) For not sharing any know-how, patent, copyright etc.

 

 

10

Section 194LA: Payment of Compensation on acquisition of certain immovable property

10

Section 194LBA: Certain income distributed by a business trust to its unit holder

10

Any Other Income

10

 Download:

  1. Rates – Resident Individuals
  2. TDS Rates for Non-Resident Indians
  3. TDS Rates for Other Than Domestic Companies

TDS Payment

TDS is to be paid online. The e-Payment service facilitates the payment of direct taxes online. The taxpayer will require having the net-banking services from any of the authorized banks.

Challan for TDS Payment

Challan ITNS 281 is the Challan form for payment of TDS (Tax Deducted at Source) and TCS (Tax Collected at Source). Challan No. 281 is applicable for Tax Deducted at Source / Tax Collected at Source (TDS/TCS) from corporates as well as non-corporates.

 Challan TDS 281

The challan no. 281 is used for deposits of TDS/TCS. By using the form, you will need to mention the correct 10-digit Tax Deduction Account Number (TAN), name, and address of the deductor on each challan used for depositing tax. You can verify the TAN details from Income Tax Department website – www.incometaxindia.gov.in prior to depositing TDS/TCS. As a taxpayer, you will require using separate challans to deposit tax deducted under each section and indicate the correct nature of payment code in the relevant column in the challan.

TDS Return

TDS return has to be filed so that TDS refunds can be obtained. Just like IT returns, one can head Income Tax Department’s website, sign into account and file the returns. Once done, returns have to be verified, only after which will return filing process is deemed to be completed. The deductor will need to sign onto the website by using the existing credential or by registering for the services.

Is there penalty for late filing TDS returns?

Yes, penalties will get attracted for late filing of TDS. The current penalty is Rs. 200 per day subject to a ceiling of actual tax amount. If non-compliance continues for a period beyond a year or wrong PAN details are furnished, penalty ranging from Rs. 10000 to Rs. 100000 will get attracted.

 

If you need help with your TDS payments, return filing or any other ancillary issue, you can reach out to us at Tax and Legal Compliance Retainer.

 

 

 

TDS Certificate:

As TDS is collected on an ongoing basis, it can be difficult to keep track of deductions by an individual. As per Section 203 of the ITA, the deductor has to furnish a certificate of TDS payment to the deductee/payee. This certificate is also offered by banks making deductions on pension payments etc. The certificate is typically issued at the deductor’s own letterhead. Individuals are advised to request for TDS certificate wherever applicable, and if not already provided.

 

 

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Taxmantra Global assists 40K+ businesses globally with their tax and regulatory compliance.

Reach us at https://taxmantra.com/compliance-retainer-india or call us at 1800-102-7550 for any support/query/feedback.

 

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