What is TDS?

TDS is an abbreviation of Tax Deducted at Source. TDS is the tax that is collected at a certain percentage from the source of income at the time of making payment.

According to the Indian Income Tax Act of 1961, at the time of making payments, any company or person who makes the payment should deduct tax at source in case such payment exceeds the threshold limits prescribed by the Income Tax Department.

TDS has to be deducted at the rates prescribed by the Income Tax Department. The threshold limits are decided by the government and may vary with time. TDS is a part of tax which is deducted and paid by the deductor, on behalf of another taxpayer.

Who are referred to as Deductor and Deductee with respect to TDS?

The person making a deduction is referred to as "Deductor" and the person from whom the payment is deducted is referred to as "Deductee".

The Deductor

a) Deducts TDS from the payment to be made

b) Deposits the deducted TDS Amount with the Government

c) Files TDS Returns

d) Issues a TDS Certificate

The Deductee

a) Issues a Bill

b) Collects Payment

c) Collects TDS Certificate

d) Verifies the TDS deducted online

e) Makes an Adjustment of the deducted TDS amount with his income tax liability while filing his income tax returns.

TDS may be deducted on payments such as Salaries, Commissions, Bank Deposit Interests, Professional Fees, Rent, Professional Fees etc.

TDS is similar to advance tax and has to be periodically deposited to the government.

The deductee can claim a refund of tax deducted while filing Income Tax Returns based on the Form 26AS or TDS certificate issued by the deductor after they file their ITR.

While the deductor deducts TDS at the time of making payments, the same should be deposited with the government within specified dates.

The TDS deducted during each month is to be deposited by the 7^th of next month with the government. However, TDS deducted during the month of March can be deposited by 30^th April, and not 7^th April.

The various due dates for TDS Payments as well as Return Filing are shown in the Table in the sections that follow.

For instance, Suppose ABC Pvt Ltd has to pay Rs 2,00,000 to a professional Mr A as his professional fee. The rate of TDS for professional fees is 10%.

TDS required to be deducted at the rate of 10% on Rs 2,00,000 is Rs 20,000

In the Total payment to be made to Mr A, this TDS Amount of Rs. 20,000 is deducted and the net payment made to him is Rs 1,80,000.

TDS to be deposited to Government by ABC Pvt Ltd = Rs 20,000

When should TDS be deducted?

In the following situations, TDS should be deducted on the date of recording of the bill received or on the date of payment, whichever is earlier,:

a) Salary Payment by Employer

b) Payment in respect of life insurance policy to policy holder

c) At the time of Payment of Dividends

d) Payment on the account of life insurance policy to policy holder

e) Payment by deposits under National Saving Schemes

f) Payment by repurchase of units of Mutual Funds or Unit Trust of India

g) During the Payment of the accumulated balance of Employee's EPF

h) Payment from Winnings by lottery or crossword puzzles.

i) Payment from Winnings by horse races

j) Payment of compensation on account of the compulsory acquisition of certain immovable property.

For instance, ABC Ltd. has to pay Mr. X Rs.50,000 on account of receiving professional services from him. In this case, TDS liability may arise in 3 ways:

Case A) Mr. X receives an advance amount of Rs.30,000 on January 15 ^th, against an invoice which he raises upon completion of work. ABC Ltd should deduct TDS at 10% on the advance of Rs.30,000 i.e Rs.3,000. Since the total payment for the service is Rs.50,000 and the respective TDS amount Rs.5,000, an amount of Rs.2,000 will be deducted as TDS while making the balance payment (Rs.5,000 - Rs.3,000 being TDS made on advance payment.)

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Case B) Mr. X raises the invoice on 15^th January and receives the entire payment on 31^st January. In this situation, Rs.5,000 deduction is made on 15^th January when the invoice is raised and he receives a net payment of Rs.45,000 on 31^st of January.

Case C) Mr. X receives the entire amount of Rs.50,000 in the form of advance payment. Here, ABC Ltd. deducts Rs.5,000 when the advance is paid and no tax is deducted while making bill due entry.

When should TDS be deducted and by whom? Who is liable to deduct TDS?

An Individual or a company who makes specific payments (such as salary, commission, rent, professional fees etc. ) should deduct a specific percentage of tax, before making the full payment to the receiver. However, if the payer is an individual or a HUF, the books of whom need not be audited, then, such a party need not deduct TDS while making payments.

In certain cases, when the rent payments by individuals or HUF exceeds Rs.50,000 per month, a TDS of 5% should be deducted even if such parties do not have to get their books audited.

In case of private employment, employers may deduct TDS on salary payment to employee, at the income tax slab rates prescribed by the central government. However, if the employee submits proof of investment for claiming deductions, and the taxable income of such an employee is below the taxable limit, he need not pay tax and so, no TDS is deducted. Even if the TDS is deducted, the employer has to provide Form 16/16A (or TDS certificate), with details of deductions made, and the refund of the same can be claimed by filing an Income Tax Return.

Banks may deduct TDS at the time of making Interest Payment on deposits based on the criteria that if PAN details are provided, a TDS of 10% is deducted, otherwise a TDS of 20% is deducted. For this deducted amount, banks also provide a TDS certificate. However, in case the total income of parties is below the taxable limit and such parties submit Form 15G or Form 15H to the bank, TDS may not be deducted from the interest income. In case TDS is deducted, a refund can be claimed filing an Income Tax Return.

A list of Specified Payments eligible for TDS deduction along with the rate of TDS is provided in the subsequent sections.

What is the Due date for depositing TDS?

The TDS deducted should be deposited with the central government within the specified due date. It should be noted that payment of TDS to the Central Government at the end of every month and filing of quarterly return of TDS are different processes and both these processes have different due dates.

The due date for depositing the TDS to the central government is 7th of the subsequent month.

The Tax Deducted at Source must be deposited to the government by 7th of the month succeeding the month in which the deduction is made. But for the TDS deducted in the month of March, an extension is given and the respective due date is April 30th.

In some special cases, there is a variation of due date. Some such cases are described below.

In case TDS deducted on rent payment and property purchases, or TDS deducted on the account of sale of immovable property (Section 194IA) and TDS from rent by Individual or HUF (Section 194IB), the due date is 30 days from the end of the month in which TDS is deducted.

In case of electronic payment methods, payments made after 8 p.m. are processed on the subsequent working day. Hence, if the payments are made after this time, such payments may be considered as delayed payments and interest may be applicable.

TDS Due Dates

Deduction Month	Considered Quarter End	Due date for the Payment of TDS Payment by means of Challan		Return filing Due Dates from the FY 2016-17	Return filing Due Dates for filing of Returns for FY 2015-16
		*For Govt. Deductors	For Other Deductors		For Govt. Deductor	For Other Deductor
April	30th June	7th May		31st July	31st July	15th July
May		7th June
June		7th July
July	30th September	7th August		31st October	31st October	15th October
August		7th September
September		7th October
October	31st December	7th November		31st January	31st January	15th January
November		7th December
December		7th January
January	31st March	7th Feb		31st May	15th May	15th May
February		7th March
March		7th April	30th April

*All sums deducted in accordance with the provisions of Chapter XVII-B by an office of the Government without challan (Treasury Challan) should be deposited on the same day of deduction.

Note: The last date for filing TDS Returns of Q4 of FY 2019-20 was 31 ^st July 2020. Also, the Due dates for Q1 and Q2 of 2020-21 have been extended to 31^st March 2021.

In case you have not deposited TDS by the correct date, the following penalties are applicable:

• Late filing fee (if you do not file the return by cut-off date)

· Interest (if you do not deposit the TDS amount in time)

· Penalty (if TDS is not filed within one year from the due date)

What are the Due Dates for depositing TDS and filing TDS Returns for special cases?

Case 1: When TDS is deducted by an office of the Government and tax is paid without production of an income-tax challan, the Due dates for government's offices or who have any special permission from Assessing Officer is on the same day on which tax is deducted.

Case 2: When TDS is deducted by an office of the Government and tax deposited is accompanied by an income-tax challan, the due date is on or before 7 days from the end of the month in which tax is deducted.

Case 3: In certain cases (other than the office of the government), with prior approval from the joint commissioner, the Assessing Officer may allow the quarterly payment of TDS under section 192, 194A, 194D and 194H. In such cases, the last date for the payment of TDS is 7th of the next month after each quarter and 30th April for the last quarter, as shown.

Quarter	Due Date for Filing TDS Return
1st April to 30th June	7th July
1st July to 30th September	7th October
1st October to 31st December	7th January
1st January to 31st March	30th April

What happens if the due date for payment of TDS falls on a Government Holiday

In case if the due date for payment of TDS falls on a Government Holiday or a Sunday, the next working day is considered as the due date.

How to deposit TDS Online? / How to make TDS Payment to the Government?

Tax Deducted at Source can be deposited online on the government portal by means of Challan ITNS-281, which is a challan issued while depositing TDS or TCS in the Online Tax Accounting System.

The steps for payment of TDS are described below:-

Step 1: Visit the TIN website [ https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp ] e-payment of taxes

Step 2: Select 'CHALLAN NO./ITNS 281' under TDS/TCS section and click Proceed. You will be directed to the e-payment page.

Step 3: In this page the you need to enter the details mentioned below:

1. For 'Tax Applicable' section, in case the TDS deducted is to a Company, select 'Company Deductees', otherwise select 'Non-Company Deductees'.

2. Select the 'Type of Payment' and 'Nature of Payment' based on relevant section.

3. Select the 'Mode of Payment' and Bank.

4. Next, enter the TAN and Assessment Year relevant to the payment being made.

5. Enter the address, Select the 'State' and enter the 'Pin Code', 'Email Id' and 'Phone No'.

6. Click on 'Proceed' button and make the payment.

Step 4: A confirmation screen will be displayed if all the details entered are corret and the full name of the taxpayer will be shown on the confirmation screen.

Step 5: You will be directed to the net banking site of your bank where you can log in to make the payment.

Step 6: Once the payment is successful, a challan counterfoil will be displayed which contains the CIN, payment details and bank name from where the e-payment was made, as a proof of the payment made.

Step 7: After the TDS payment, TDS return can be filed.

How and when to file TDS returns?

For all the persons or organisations who have deducted TDS, it is mandatory to file Quarterly TDS Returns.

The following assesses may file their TDS Returns electronically.

a. If the assessee is an Office of the Government

b. If the assessee is a Corporate

c. If the assessee is a person who has to get his accounts audited under section 44AB in the immediately preceding financial year

d. In case the number of deductees' records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty

In the quarterly TDS returns that the assesses file, the details that are required to be furnished are TAN, amount of TDS deducted, type of payment, PAN of deductee, and so on. Also, different forms are prescribed for filing returns depending upon the purpose of the deduction of TDS. Different TDS forms as applicable are described in the following section.

What are the relevant forms needed for submitting TDS Statements?

Form Name	Details	Due Dates
Form 24Q	Tax deduction from salary according to the Section 192	Q1 - 31st July Q2 - 31st October Q3 - 31st January Q4 - 31st May
Form 27Q	Tax deduction when made to Non Residents other than Salaries
Form 26Q	Tax deduction on all payments other than salaries
Form 26QB	TDS in case of Sale of Property	30 days from the end of the subsequent month in which TDS is deducted
Form 26QC	TDS in case of Rent Payment

What is a TDS Certificate?

TDS certificates have to be issued by the deductor of TDS to the assessee from whom the TDS was deducted at the time of payment.

Some of the TDS Certificates are Form 16, Form 16A, Form 16B and Form 16C.

Form Name	Certificate For	Due date	Frequency
Form 16	Tax Deducted on Payment of Salary	31st May	Yearly
Form 16 A	Tax Deducted on payments other than salaries	15 days from due date of filing return	Quarterly
Form 16 B	Tax Deducted on sale of property	15 days from due date of filing return	Every transaction
Form 16 C	Tax Deducted on Rent Payment	15 days from due date of filing return	Every transaction

How is your TDS linked to PAN? What is Form 26AS?

TDS deductions are linked to PAN numbers of both the deductor and deductee. When TDS has been deducted from any income, the relevant Tax Credit Form is Form 26AS which is a consolidated tax statement available to all PAN holders. All TDS deducted are linked to the PAN. The Form 26AS contains details of every TDS amount deducted by various deductors for all payments made to the PAN holder. Hence, this form represents the income tax paid by a PAN holder.

Benefits of SMS alerts from Income tax department

Inorder to address the cases of TDS mismatches at the time of income tax filing, and also to increase transparency, the income tax department sends SMS alerts to the taxpayers with information about the TDS against the relevant PAN of the taxpayer. This alert informs the PAN holders about the TDS credited in respect of the income from salary, interest etc., during every quarter. The accumulated TDS amount for the respective financial year is shown in the Form 26AS. Since one of the common reasons for incorrect income tax return filing is TDS mismatch, the Taxpayers can verify the details provided in the SMS with the data on the payment receipts to ensure there is no mismatch.

What happens when TDS is not deposited by deductor?

When TDS is not deposited by the deductors with the Government, the details of the same will not reflect in the deductee's Form 26AS, and will result in TDS Mismatch. The deductee will not be able to claim the refund or credit of the deducted amount. Hence, it is necessary to check the individual Form 26AS to verify, and in case of discrepencies, the deductor must be informed.

What can you do in such a situation?

The TDS mismatch discrepancy should be brought to the notice of the deductor and request must be made to him to make the payment deposit before the deadline. If, in spite of your repeated reminders and complaints, the deductor does not address the issue, the tax authorities can be approached.

The income tax department specifies that in case of failure to deposit TDS, the demand to pay must not be made on the taxpayer and the tax dues must be recovered from the deductor.

If the deductor fails to take action regarding this, the tax department can be informed by providing a complaint in writing to the assessing officer.

How to view filed TDS statement on income tax department website ?

The TDS statement can be checked online on the income tax e-filing portal by the deductors of TDS through their respective logins by viewing the filed TDS in 'TDS' Tab under 'View Filed TDS'. Here the financial year, form name, and quarter, for which the TDS statement was uploaded can be selected from the dropdown menus to view the relevant TDS details. The status of the TDS deposited can be checked from here.

TDS Refund - How to claim TDS Refund

The need for TDS Refund comes up when the TDS paid is greater than the actual tax payable by the person/company, calculated for the Financial Year. In such a case, TDS refund can be claimed by filing appropriate income tax returns in the e-filing portal. When the returns are filed, an acknowledgement is generated. The returns will be processed and refunds, if any, will be credited to the bank account of the tax payer mentioned while filing returns. The TDS refund status can be checked by logging into the Income Tax India Filing Portal.

What is Form 13 - Non-Deduction / Lower Deduction of TDS

There are certain circumstances where a taxpayer can pay lower taxes or no tax. In case the person who makes the payment has to deduct tax, then a process must be followed for lower deduction of tax. Form 13 and supporting documents to be submitted are also detailed in the article.

In certain circumstances, some persons or businesses, especially those undergoing losses, even tax deductions (assumed at 10%) would hurt the liquidity. Even if they could claim the same as refunds, they will have to wait for 1 year to get the refunds. Such parties may obtain Nil Deduction Certificate or Lower Deduction Certificate by filing an application through Form 13 with the Assessing Officer, who will issue such a certificate based on the merits of the claim.

What are the points to remember while filing TDS return?

• All PAN Numbers must be verified

· All challans must be verified and matched through OLTAS or NSDL

· Along with the TDS return, a signed Form-27A is to be filed

TDS deposit processing takes atleast 2-3 days. Hence it is better to do the same atleast 3-4 days before the deadline inorder to avoid late fees.

What is a TDS correction statement?

In case the original TDS return filed is incomplete or inaccurate with respect to the TAN, challan details or PAN of the deductee(s), the Deductors must provide a correction statement.

One TDS statement in one single form for a TAN every quarter must be submitted by the Deductors. In Case if any additions or updates are to be made with respect to the TDS returns, the deductor is required to submit a correction statement.

It must be noted that the tax credit will not reflect in the Form 26AS of the deductees in case of errors with the actual returns. Deductors must fix the error and file the correction statement.

What are the key checklists for filing Form 26Q

The following is a checklist for filing Form 26Q

Form 26Q consists of 1 annexure as against two in case of Form 24Q.

Cross check Challan details (BSR code, date of payment, total amount etc.). TDS code is a combination of challan number, BSR code and date and is the key to tracking.

In case the deductor hasn't deducted TDS in some cases or deducted at a lower rate, the reasons for the same must be disclosed.

Remember the due dates for filing Form 26Q: June Quarter (31st July), September Quarter (31st Oct), December Quarter (31st January) and March Quarter (31st May).

How to view filed TDS statement on income tax department website

Employers and organisations that deduct tax at source can check the TDS statement after filing the statement, to ensure everything is correct. Here is the step-by-step procedure to do it.

Step 1: Visit the income tax e-filing portal at the URL http://www.incometaxindiaefiling.gov.in/home .

Step 2: Log in to the e-filing portal with your log in credentials.

Step 3: Select the 'View Filed TDS' option under the ' TDS' tab.

Step 4: Select the Financial Year, Form Name, and Quarter, from the dropdown menu for which the TDS statement was uploaded. Click on the 'View Details' button.

Step 5: The details of the TDS statement will be displayed. Once you upload the TDS statement, the 'Status' column will be shown as 'Uploaded'. Upon validation, the status will either be ' Accepted' or 'Rejected'. The final judgement will be reflected on the portal within a period of 24 hours from the time of upload.

Step 6: If the statement is rejected, it will state the reasons for rejecting it. Click on the token number to view the rejection reasons.

Step 7: If the status is 'Accepted', click on the token number to view the acknowledgement details of the uploaded TDS statement.