TDS Filing

An Ultimate Guide To TDS - All You Need To Know


A lot of people nowadays have no adequate knowledge of TDS (Tax Deducted at Source) and how it is relayed to their taxation. Do you know why TDS is deducted from your salary or remuneration and how it can be claimed? If not, read on to know more.

Here’s all you need to know about TDS - Tax Deducted at Source.

TDS - Tax Deducted at Source

TDS - Tax Deducted at Source is a means of collecting tax and is definitely a part of Income Tax. In TDS, tax is collected at the source. This article is all about TDS, its benefits, everyone eligible to file TDS, and a walk-through of the entire process.

To explain TDS in simpler means, any person earning income above Rs.2.5 lakhs is supposed to pay tax to the Government. According to TDS, the tax amount of a person is deducted in advance from the source and then the net amount is received as a person’s income (amount apart from the deducted tax). This deducted tax amount is adjusted later against his/her final tax liability. TDS Return is filed through which part of this amount can be claimed later on. He/she receives credit for the amount that is deducted and already paid on his/her behalf.

A better view can always be attained through examples. Let us assume an employee working in a company gets a monthly salary of Rs.50000. But the employee would not get Rs.50000 in hand. Instead, he/she would get an amount of Rs.45000 after the tax payable has been already deducted by the employee. This certain amount being deducted at source will be paid to our government. This process is called Tax Deducted at Source (TDS). Generally, the tax deductions fall in the range of 1% - 10 %

When should TDS be deducted?

Now, if you are wondering if this, is applicable to everyone? It certainly is not. Mentioned below is the list of criteria that says who is applicable for filing TDS and who it is not. Firstly, any individual making payments that come under the Income Tax Act is supposed to deduct TDS at the time of making such payments.

  • Also, this need not be done for any individual or Hindu Undivided Family (HUF) whose accounts do not require any auditing.
  • However, in a case such as rent payments that are made by either individuals or Hindu Undivided Families (HUF) crossing Rs.50000 are supposed to deduct TDS at a rate of 5% even if they are not liable for a tax audit without TAN(Tax Deduction and Collection Number).
  • The rates at which a person deducts TDS vary. An employer deducts according to the income tax slab rates whereas a bank can deduct at 10% and can also deduct at 20% if it is without a PAN card.
  • There is also a possibility of not deducting taxes. If proper investment proofs are being submitted to an employer beforehand and your total income becomes less than Rs.250000, then TDS cannot be deducted and you do not need to pay tax.
  • In the same way, you can submit Form 15G and Form 15H to the bank. The bank won't deduct TDS from the interest provided your income is less than the taxable limit.
  • Suppose if TDS has already been deducted even if it shouldn’t have, it can be reclaimed by filing a return.
Benefits of TDS Filing

“Is there any need for us to do all this?” is a question that needs to be answered. Firstly, we need to abide by the laws of our Government as this is mandatory as per the IT Act of 1961. There are a lot of benefits to TDS but the most important one is to prevent tax evasion. TDS makes sure that the tax is paid by all of us on time and that the government can use it for our welfare. TDS also makes finance much easier as an equal amount is deducted every month and not a large amount once every financial year. So, it helps in paying taxes on time without any penalties.

TDS is a very simple process and can be done online. There wouldn’t be any mistakes as it is all computerized making tax calculations easier and more accurate. No paperwork needs to be done in this process which also saves us time. Since the amount that is to be deducted each month will already be known by a person, they can plan their monthly needs accordingly and also needn’t worry about saving money to pay their taxes later on.

How can we deposit TDS?

As we already know, TDS will be deducted at the start of every month for example from a salary. The person who is responsible for deducting these amounts is the one who is responsible for depositing the deducted amounts to the government on a given due date. The TDS can be deposited using the challan ITNS-281 via the government portal. A person must deposit the sum by the 7th of the consequent month. For example, if TDS is being deducted on May 1st, the amount must be deposited by June 7th. However, there is one exception. TDS deducted on March 1st has time to be deposited until April 30th. TDS that is deducted for purchasing properties or on rents are all 30 days due from the month-end that TDS is being deducted.

Steps To Make TDS Payments Online:

Payments can be deposited online easily by doing the following steps.

  • Open the NSDL’s official website and click on “e-payment of taxes”. Here challan number ITNS 281’ should be selected which will re-direct you to another page.
  • Select the challan and all the details that are to be filled will be shown.
  • There will be an option “Tax Applicable”. Under this, “Company Deductees” should be selected if the payment has been made to a company, else “Non-Company Deductees” should be selected.
  • The assessment year and TAN has to be entered. TAN is the Tax Deduction and Collection Number. This is a mandatory 10-digit number that all the people deducting, collecting, and depositing the deducted amount to the government should have.
  • Also, enter basic details such as “Pin Code” and “State”.
  • Select the correct nature and mode of payment according to your needs and submit it.
  • Now, a confirmation screen will be visible. The taxpayer’s full name will be displayed only if the TAN has been entered correctly. So make sure that the TAN entered is correct.
  • After it has been verified, the next step is to make the payment. The webpage will be re-directed to your net banking site and so you will need to enter your login credentials and make the required payment.
  • A counterfoil will be received on successful payment which will have the CIN number, bank, and payment details. It will act as proof of the payment you have made.
  • Now, you have successfully done the TDS payment and have to do the TDS Return filing which is a quarterly filing.

Online payment can be used by all those who can do net banking. The status can also be checked using two methods, either the CIN-based view or the TAN-based view.

Checking the status online:

  • Visit  this website and enter the captcha to proceed through this website.
  • Click Here Visit Above website
  • Enter the PAN of the deductee and the TAN of the deductor.
  • Also enter the financial year, quarter, and type of return and select “go”.
  • Now, you can view the status in the e-filing of the website.

If a person doesn’t complete it before the deadline then they will have to pay a small interest at a rate of 1.5%. So, this is all about TDS and the entire process of deducting and depositing the deducted amount.

When should we File a TDS Return?

Now, let’s learn how to file TDS Returns online. TDS Returns must be filed quarterly and details like TAN, type of payment, amount of TDS deducted, and PAN of deductee and deductor, amount of tax paid to the government is required. Also, there are different forms that exist for filing TDS returns depending on the purpose of TDS deduction. Firstly, Form 26QTDS on all payments except - Q1 - 31st July, Q2 - 31st October, Q3 - 31st January, Q4- 31st May.

Form Number Due Date Transactions mentioned in the return
Form 24Q Q1 - 31st July, Q2 - 31st October, Q3 - 31st January, Q4- 31st May TDS on salary
Form 27Q Q1 - 31st July, Q2 - 31st October, Q3 - 31st January, Q4- 31st May TDS on all payments made to non-residents except salaries
Form 26QB 30 days from the end of the month during which TDS is deducted TDS on sale of a property
Form 26QC 30 days from the end of the month during which TDS is deducted TDS on rent
Documents Required for TDS Filing
  • Details of TAN (Tax Deduction and Collection Account Number).
  • Details of PAN (Permanent Account Number)
  • The filings of the last TDS if available
  • The date of incorporation of the business with the period of TDS to be filed.
  • Name of the entity and the number of transactions for filing the TDS returns.
How to File TDS Returns?

    1. A clear step-by-step process of how to file TDS Returns Online is listed below.

    2. Form 27A must be filled out completely. If a hard copy of the form is filled, it must be verified along with the e-TDS return that was filed digitally.

    3. Next, the TDS and the total amount paid must be filled in correctly and tallied in their respective forms.

    4. The TAN of the organization must be mentioned in Form 27A. Otherwise, the verification process becomes difficult.

    5. The challan number, mode of payment, and tax details must be mentioned in TDS Returns. There will be a mismatch in case of any errors and the TDS might have to be filed all over again.

    6. The 7-digit BSR number must be entered.

    7. The hard copy of a TDS Return must be submitted at the TIN-FC. If TDS Returns are filed online, they can be submitted via the official NSDL TIN website. But, a level 2 digital signature must be used by the deductor while doing so.

    8. If the provided information is correct, a token number or provisional receipt will be issued. This works as an acknowledgment that TDS Returns were filed.

    9. In case a TDS Return gets rejected due to errors the amount credited as tax will not be reflected in Form 16A/ Form 26A. A non–acceptance memo with the reason will be issued and the TDS Return must be filed again.

Prerequisites for filing a revised TDS Return
  • A revised TDS can be filed only if the TIN central system accepts the original return.
  • The status of the revised TDS Return Filing can be checked by providing the Provisional Number Receipt and the PAN details on the official NSDL website.
  • The revised TDS Return must be done using the latest TDS statement. The latest statement can be downloaded from the TRACES website.

Eligibility criteria for filing TDS Return

Now, let’s have a look at the eligibility criteria for filing TDS Return.

A company or employer that has a valid TAN - Tax Collection and Deduction Account Number can file an online TDS return. As per the Income Tax Act, it is mandatory to file TDS for the payments mentioned below.

  • Salary Payment
  • Insurance Commission
  • Income generated by Income on Securities
  • Income generated from winning horse races
  • Any profits gained by winning the lottery, puzzles, and similar games
  • Payments made towards National Savings Scheme or other similar schemes.

An assessee can submit an e-TDS return if the same was deducted from his/her income. The assessees eligible to file TDS Return digitally every quarter are

  • A person whose account is audited u/s44AB
  • A person holding an office under the government
  • Company
Final Thoughts

Hence, TDS is an integral component of Income Tax Law in India that help reduce our tax filing burden while ensuring that the government receives continuous revenue. It is highly recommended that businesses and individuals establish a control mechanism to ensure that TDS guidelines are followed correctly. Or, you can avoid any difficulties or confusion by using the services of our experts at FreeTaxFiler.

Hence, TDS is an integral component of Income Tax Law in India that help reduce our tax filing burden while ensuring that the government receives continuous revenue. It is highly recommended that businesses and individuals establish a control mechanism to ensure that TDS guidelines are followed correctly. Or, you can avoid any difficulties or confusion by using the services of our experts at FreeTaxFiler.

Frequently Asked Questions:

1. What is TDS?

TDS means “Tax Deducted at Source” which is the process of collecting tax from the taxpayers in advance at their source of income.

2. Is TAN mandatory for those who collect the deductible amount?

Yes, TAN is compulsory to deduct and deposit the deductible amount to the government.

3. What is the due date to submit the TDS payment? The payment is to be submitted before the 7th of each consecutive month.

4. Can the amount that is deducted by TDS be claimed or refunded?

Yes, given the proper submission of documents of Proof Of Investments it will be refunded when the TDS Return is filed

5. In how many quarters is the TDS Return filing to be filed?

It is filed in four quarters with three months in each. Q1 - 31st July, Q2 - 31st October, Q3 - 31st January, Q4- 31st May

6. Can TDS be filed online?

Yes, it can be filed online easily by an individual having the needed documents and details.

7. What happens if the TDS payment is not deposited on time?

If a person has not deposited before the given due date then he/she will have to pay a fine of a minimum of Rs.10000 to a maximum amount of Rs.100000.

8. What is the fine for late filing of TDS?

A person has to pay Rs.200 per day until it has been filed.

9. What are the due dates for quarterly returns?

The due date for April to June is the 31 of July, for July to September it is the 31 of October, for October to December it is the 31 of January and for January to March, it is the 31 of May.

10. On what basis is TDS deducted?

It is deducted if the annual income is above the taxable limit and from the income every month.

TDS Filing

Tax Deducted at Source or TDS is a source of collecting tax by Government of India at the time when a transaction takes place. Here, the tax is required to be deducted at the time money is credited to the payee’s account or at the time of payment, whichever is earlier..

In case of payment of salary or life insurance policy, tax is deducted at the time of payment. The deductor then deposits this TDS amount to the Income Tax (I-T) department. Through TDS, some portion of your tax is automatically paid to the I-T department. Thus, TDS is considered as a method of reducing tax evasion.

Tax is deducted usually over a range of 1% to 10%.

Due Dates for Payment of TDS:

Amount paid/credited Due date of TDS deposit
Government Office Without Challan
With Challan
On perquisites opt to be deposited by employer
Same Day
7th of next month
7th of next month
Others In month of March
In other months
30th April
7th of next month

What is TDS Return?

Apart from depositing the tax, the deductor should also file a TDS return.

TDS return is a quarterly statement to be given to the I-T department. It is compulsory for deductors to submit a TDS return on time. The details required to file TDS returns are:

  • PAN of the deductor and the deductee
  • Amount of tax paid to the government
  • TDS challan information
  • Others, if any
  • Eligibility Criteria for TDS Return TDS return can be filed by employers or organizations who avail a valid Tax Collection and Deduction Account Number (TAN). Any person making specified payments mentioned under the I-T Act are required to deduct tax at source and needs to deposit within the stipulated time for the following payments :
  • Payment of Salary
  • Income by way of “Income on Securities”
  • Income by way of winning lottery, puzzles and others
  • Income from winning horse races
  • Insurance Commission
  • Payment in respect of National Saving Scheme and many others.
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