TDS Filing – Beginner’s Guide
Are you new to the Income Tax world and are confused about TDS or TDS Filing is?
TDS or Tax Deducted at source can be simply defined as some amount that you pay as tax to the Government of India at the time of the transaction itself instead of later. Beginners need to understand TDS because it is a part of income tax. When you pay rent or receive your first salary, you will notice that the receipt shows the TDS that has been deducted. The amount that you receive is calculated only after subtracting the TDS on rent or TDS on Salary from the total amount.
In this article, we have included all the basics about TDS that a beginner should know such as What TDS is, TDS returns, TDS rates, etc.
Understanding TDS Filing
The TDS full form is Tax deducted at source. It is a process of tax deduction which occurs either at the time of payment or when the money is credited to the payee’s account.
According to the Income Tax rules, certain specified payments like rent, commission, salary, etc need to have advanced income tax subtracted from the payment when it exceeds a certain amount.
The TDS that is paid by the payee reduces the total amount received by him. However, the TDS is later adjusted against the person’s tax liability. The main purpose of TDS payment is to reduce tax evasion.
Under the Income Tax Act, of 1961 different TDS rates have been given for different payments and different categories of recipients. TDS payment generally ranges from 1% to 10%.
The kinds of TDS deductions are
- TDS on Salary
- TDS on Commission earned
- TDS on rent
- TDS on Interest payments by banks
- TDS on professional or consultant fees.
Who Is Not Liable For TDS Filing?
The proposal of the Budget 2022 states that individuals or HUF are not liable for TDS payment, if
- Business turnover less than or equal to Rs 1 crore, or
- Turnover from profession less than or equal to Rs 50 lakhs, or
- Income under any head except ‘Profits and gains of business’ less than ₹50,000 or,
- Profession and the value of consideration transferred to a Resident in respect to virtual digital assets that are less than ₹50,000
TDS Filing Deposit Due Date
Now that we have cleared the question – of what is TDS, you must be wondering when do I have to pay TDS? The 7th of the subsequent month is usually the deposit due date for the TDS payment. This is the date by which the deposit has to be deposited to the government.
For the TDS on rent and purchase of property, the time limit by which the money has to be deposited to the Government is 30 days from the last day of the month in which the TDS was deducted.
TDS On Cryptocurrency
In the Union Budget of 2O22-23, The Finance Minister Nirmala Sitaraman announced that crypto investments will be taxed at 30% and an additional 1% will be deducted as tax deduction at source. This taxation will come into effect from July 1,2022. Individuals/HUF who are required to have their accounts audited under the IT act will be charged with this 1% TDS if their limit is ₹50,000 a year. This 1% TDS will be applicable on every trade.
The purpose of the Government behind this TDS is to stop tax evasions as well as to trace the transactions.
TDS Under Goods And Service Tax
A TDS of 2% is to be deducted from the payment made to the supplier of goods or services or taxable. The value of such goods or services or both needs to exceed ₹2.5 lakhs under a contract for GST TDS applicability. The GST TDS applicability is not present in cases where there is a difference in location of the State or Union Territory of the supplier/ the place of supply and the registered place of the recipient.
The TDS payment has to be deposited by the diductor by the 10th day of the subsequent month in which the tax was deducted.
|Nature of Payment||Section||Threshold (in Rupees)||TDS rate (%)|
|Salaries||192||–||As per the employee’s IT declaration.|
|Premature withdrawal of EPF||192A||50000||10|
|Interest on securities||193||10000||10|
|Single contractor payment||194C||30000||1 (Individual/HUF), 2 (Others)|
|Aggregate contractor payment||194C||1 Lakh||1 (Individual/HUF), 2 (Others)|
|Insurance Commission (15G-15H allowed)||194D||15000||5 (Individual/HUF), 10 (Others)|
|Life insurance policy||194DA||1 Lakh||1|
|Repurchase units by MFs||194F||–||20|
|Commission – lottery||194G||15000||5|
|Commission / Brokerage||194H||15000||5|
|Rent of Plant / Machinery / Equipment||194 I(a)||2.40 Lakh||2|
|Rent of Land Building & Furniture||194 I(b)||2.40 Lakh||10|
|Transfer of certain immovable property other than agricultural land||194IA||50 Lakh||1|
|Rent by Individual / HUF (w.e.f 01.06.2017)||194IB||50000/PM||5|
|Payment under specified agreement applicable for F.Y: 2017-18 onwards||194IC||–||10|
|Fees-tech services, call center, royalty for sale etc.||194J (a)||30000||2|
|Fee for professional service or royalty etc.||194J (b)||30000||10|
|Payment of dividends by mutual funds||194K||5000||10|
|Compensation on the transfer of certain immovable property other than agricultural land||194LA||2.50 Lakh||10|
|Immovable property (TDS exempted under RFCTLARR Act (w.e.f 01.04.2017)||194LA||–||–|
|Income on infrastructure debt fund(non-resident)||194LB||–||5|
|Income from a business trust (applicable from 01.10.2014)||194LBA||–||10|
|Income from a business trust to non-resident (applicable from 01.10.2014)||194LBA||–||5|
|Interest on certain bonds and Govt. securities (from 01.06.2013)||194LD||–||5|
|Payment to commission or brokerage by individual & HUF||194M||50 Lakh||5|
|Cash withdrawal exceeding 1 crore during the previous year from 1 or more accounts with a bank or co-operative society (w.e.f 01.09.2019)||194N||1 Cr||2|
|TDS on e-commerce participants||194O||5 Lakh||1|
|Purchase of Goods||194Q||50 Lakh||0.10|
What Is TDS Return?
The TDS return is a quarterly statement which needs to be filed to the IT department by the diductor of the TDS payment. TDS return is mandatory for every diductor. There are a few documents that are necessary for TDS return filing. These are:
- PAN of the person who has deducted the TDS (diductor) and of the person whose TDS was deducted (deducted).
- Amount of tax given to the government.
- TDS challan information.
- Other information, if needed.
There is an eligibility criteria for tax return filing and an application procedure too.
TDS Return Forms
There are various forms available for filing TDS returns. These vary based on the purpose of tax deduction.
|Form 24Q||TDS on salary|
|Form 27Q||TDS on all payments made to non-residents except salaries|
|Form 26QB||TDS on property sales|
|Form 26QC||TDS on rent|
Eligibility Criteria For TDS Returns
A valid TAN (Tax Collection and Deduction Account Number) is a must have for TDS filing. A specified payments transaction made under the Income Tax Act needs to have tax deducted at source and deposited within the allotted TDS return due date by an individual. When the following kinds of payments are made, the TDS returns needs to be filed:
- Salary payment.
- Income earned by way of winning lotteries, puzzles, etc.
- Income earned from securities.
- Income from winning horse races.
- Rent payment.
- Insurance commission.
- Earnings from interests.
- Sale/ purchase of immovable property.
- Payment concerning National Saving Scheme and others.
When To File TDS returns?
Different kinds of payments have different stipulated time under which the TDS payment returns need to be filed. These are as follows:
|Form 24Q||Q1– 31st JulyQ2 – 31st OctoberQ3 – 31st JanuaryQ4 – 31st May|
|Form 27Q||Q1 – 31st JulyQ2 – 31st OctoberQ3 – 31st JanuaryQ4 – 31st May|
|Form 26QB||30 days after the month in which the TDS payment was deducted.|
|Form 26QC||30 days after the month in which the TDS payment was deducted|
Process Of TDS Filing
An individual can know whether or not their TDS payment has been deducted or not and whether it has been credited to TDS dedicatee’s account or not by a simple online process. The process is as follows:
- Visit the official website of the Income Tax department of India.
- If you have a registered ID and password, log in into your account. If you are a new user, you will need to register with your PAN.
- Select the option to view your tax credit statement or Form 26 AS. The form 26AS is a detailed report of an individual’s TDS deducted during the fiscal year.
- The website will then take you to a page that will show you all the taxpayers details including TDS payment deducted.
What is TDS full form and what kind of tax is it?
The TDS full form is Tax deducted at source and TDS is a type of advance tax. Instead of being paid as a lump sum at the end of the fiscal year, it is paid much in advance.
Why is TDS required?
The TDS is a tool that the Government uses to minimize tax evasions. It allows the Government to have a steady source of income. With TDS, the burden on the diductor and agencies that collect tax is reduced to a great extent. All these benefits make TDS payment a necessary requirement.
Is TDS refundable?
TDS refunds are possible in case the tax that is deducted is higher than the actual tax liability. Tax refund can be easily claimed online by visiting the official Income tax website and filing the form that is applicable to you.
What if TDS is not deducted?
There are various penalties, fees, and interest that are levied in case of non-compliance of TDS provisions. In case of non-deduction of TDS often the whole of those payments are disallowed. If the deductor fails to deposit the TDS deposit before the TDS return due date, he/she shall be liable to pay a penalty of ₹200 per day till the failure continues.