Any entity making payment to third party is required to deduct tax at source from these payments and deposit the same at banks who are authorized to collect taxes on behalf of Government. They are also required to furnish TDS returns and challan details to Income Tax Department.

TDS is basically a part of income tax which must be deducted by a person making certain payments such as rent, commission, professional fees, salary, interest etc. at the rates specified in the relevant provisions of the Act or the First Schedule to the Finance Act

TDS needs to be deducted at the time when the payment gets due or when the actual payment is made, whichever is earlier.

TAN (Tax Deduction Account Number) should be obtained by the person responsible to deduct TDS and he is required to quote TAN in all the documents relating to TDS.

Any individual/HUF who deducts tax at source and deposits it with the government is not required to obtain TAN.

The Tax Deducted at Source shall be deposited to the government by 7th day of the following month by using Challan ITNS-281 on the government portal https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp

Tax deducted or collected at source shall be deposited to the Central Government by following modes:

  • Electronic mode
  • Physical Mode

E-Payment is mandatory for

a) All corporate assesses; and

b) All assesses (other than company) to whom provisions of section 44ABof the Income Tax Act, 1961 are applicable

Exemption from deduction of TDS:

  • submit tax saving Investment proofs to the employer for claiming deductions and if the total taxable income goes below the taxable limit, TDS won’t be deducted by employer.
  • submit Form 15G and Form 15H to the bank stating that total taxable income is below the taxable limit, TDS won’t be deducted by banks.

Tax Deducted at Source- TDS under Income Tax, 1961

Refund of TDS:

One can claim refund of TDS by filing his Income Tax Return. If the total taxable income is below the taxable limit or if the amount of TDS deducted is more than his total tax liability, the excess amount of TDS deducted will be refunded by government.

TDS return shall be submitted quarterly. TDS due dates of FY 2021-22 for Return Filing are:

Quarter Period Last Date of Filing
1st Quarter 1st April to 30th June 31st July 2021
2nd Quarter 1st July to 30th September 31st October 2021
3rd Quarter 1st October to 31st December 31st Jan 2022
4th Quarter 1st January to 31st March 31st May 2022

Rates for tax deduction at source for Assessment year 2022-23:

Section Particulars TDS Rates (in %)
192 Payment of salary Normal Slab Rate
194 Income by way of dividend 10
194A Income by way of interest other than “Interest on securities” 10
194C Payment to contractor/sub-contractor:
a) HUF/Individuals 1
b) Others 2
194H Commission or brokerage 5
194I Rent:
a) Plant & Machinery 2
b) Land or building or furniture or fitting 10
194J  Fees for professional or technical services:
i)  sum paid or payable towards fees for technical services 2
ii)  sum paid or payable towards royalty in consideration for sale, distribution or exhibition of cinematographic films; 2
iii)  Any other sum 10

other TDS rates- https://www.incometaxindia.gov.in/Pages/Deposit_TDS_TCS.aspx

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I am a Practicing Company Secretary, I have handled the following works so far: GST Registration, GST Returns, Private and Public Company Registration, LLP Registration, Annual Filing of Company and LLP, RBI Compliance, FC-GPR, FC-TRS, and FLA, Recovery of Shares from IEPF, Strike Off of Company, R View Full Profile

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