Since the government of India instituted TDS Online Payment system, millions of Indians have found it pretty useful. This taxation system is both easy and stress-free, this guide will give you a glimpse of what it is.
TDS stands for Tax Deducted at Source, recently instituted by the Income Tax Department of India collects tax at the source of income. This type of indirect tax is applied to all forms of payments and transactions that are non-commercial in nature. A TDS online payment can be made quite easily without going through a lot of bureaucracy.
Understanding Tax Deducted At Source (TDS)
TDS follows a simple concept that the deductor must subtract a specific amount of tax before making either a full payment or in instalments to the deductee. Thereafter, the deducted amount must be sent away to the Central Government as the tax paid.
How to calculate TDS?
Tax deduction at Source is applicable for salaried employees, freelancers, tenants, commissioned-employees, consultants who are paid for their services.
A salaried person receives his/her salary after TDS is deducted depending on the income tax slab rates. In this case, the individual’s tax deduction isn’t taken into consideration but he/she can at any time declare and submit their proof of investment to file a return and claim a refund for the TDS.
What do you require to pay TDS?
Firstly, all persons who are responsible for deducting or collecting tax must get a TAN or Tax Deduction Account number from the Income Tax Department. To get the TAN, you need to fill out an online Form 49B. Without TAN at hand, you cannot file a TDS return.
What is a TDS certificate?
TDS certificates are meant to be issued by the deductor to the deductee. Hence, this is classified into two types.
1. Form 16: Issued by the employer to the employee that contains details of tax deductions made by the employer for the whole year.
2. Form 16A: Issued in cases that do not involve paying a salary.
How to make a TDS Payment?
There are two ways to make a TDS payment as discussed below.
- E-TDS Payment:
The Income Tax Department in India provides a TDS online payment facility to every Indian resident. This form of payment is mandatory for corporate assessee and assessee.
- Challan 281 for TDS payment:
A challan Income Tax National Security 281 can be used to make payment of TDS and TCS. You will also need the 10-digit TAN along with the address of deductor on every challan.
What is the TDS Return due date?
Due dates for each quarter are the end of the following month. Therefore,
Q1: 1st April to 30th June has the last filing date at 31st July Q2: 1st July to 30th September has the last filing date 31st October Q3: 1st October to 31st December has the last filing date 31st January Q4: 1st January to 31st March has the last filing date 31st May
The penalty for late filing of TDS return
Failing to file a TDS return within the specified due date will result in a penalty of Rs.200 per day until the return is filed. This penalty will continue until it equals the total liable amount.