TDS stands for withholding tax, which is an integral part of income tax. Under the TDS system, the specific amount is deducted as tax directly from income at source. It is levied on various types of payment such as salaries, interest payments by banks, commission and rent payments, consulting fees and professional fees. This amount of tax also helps the government collect direct income taxes very efficiently.
Here is a guide to know the meaning of TDS, where it is applicable and the online payment process of TDS along with other essential details.
What is withholding tax (TDS)
The TDS forms part of the direct tax mechanism which is regarded as one of the modes of levying tax under the Income Tax Act 1961. It was introduced for the sole purpose of levying taxes from the source of the income itself or during the period of payment of income.
TDS refers to the amount of tax, which is deducted by the deductor, and then the same amount is paid into the central government account. The debtor to whom this amount was withheld is eligible to receive the credit of the same amount based on Form 26AS for the TDS certificate issued by the debtor.
Here, a deductible refers to anyone who is required to make payments according to the Income Tax Act and therefore has to pay TDS when specified payments are made. This amount of tax is deducted at source at predetermined TDS rates and the tax so deducted must be deposited with the government within a specified period. For example, the monthly due dates for TDS payment are as follows:
What is the Tax Deduction and Collection Account Number (TAN)?
The Tax Deduction and Collection Account Number (TAN) is a ten-digit alphanumeric number issued by the tax authorities to each assessee who is required to deduct TDS. This number is mentioned in TDS declarations, payments and any other related communication with the tax department.
And, if someone does not mention TAN, there is a penalty for the same. However, a person can apply for a TAN in Form 49B on the National Securities Depository Limited (NSDL) website.
Where is the TDS applicable?
- Wage income
- interest income
- Sale of property
- Insurance commission
- Consulting fees
- Commission or brokerage fees
- Professional fees
- Transfer of any real estate
You can consult the complete list of these payments as well as the TDS rates to be deducted via this TDS fee schedule for the 2022-23 financial year.
How to make a TDS payment online?
Timely payment of TDS is very important to avoid penalties. The user can opt for both online and offline procedures to pay this tax. The procedure for making the TDS payment online is as follows:
Step 1: Go to the official website of NSDL. Go to “e-payment” under “Service” and click on “pay taxes online”.
2nd step: Then you will see the list of several challans, you need to click on the option ‘CHALLAN NO./ITNS 281’ and select ‘continue’.
Step 3: Then you will be taken to a different landing page, where you have to fill in the required details such as time of payment, nature of payment, method of payment.
Step 4: After submitting this information mentioned above, you will be redirected to a new page. Fill in the details regarding tax applicability, TAN, tax year, PIN and state, payment method and payment type should be filled.
Step 5: After that, you will need to fill in the captcha code and then click “Continue” to move forward with the process.
Step 6: Your form is submitted now and the TAN will be verified. When verifying the TAN, the full name of the taxpayer will appear on the screen.
Step 7: You will be redirected to the bank’s net banking site for online payment of TDS. You need to login to your online banking profile and make the TDS online payment.
Step 8: After successful payment, a challan stub will be generated, which contains the Challan Identification Number (CIN) and necessary payment details such as bank branch code and date of challan submission.
Online TDS payments are mandatory for:
- Government offices.
- Persons required to have their accounts audited under Section 44AB of the Income Tax Act 1961
- Holders declaring more than 20 count records for any quarter of the fiscal year
Online verification of TDS
Once you have made the TDS payment online, you can now easily track the status of the challan deposited in the bank online by following these steps:
Step 1: Access the NSDL-TIN Website and click on “Challan Status Inquiry”.
Step 2: Type the verification code and continue.
Step 3: Submit important details of your TAN number with PAN.
Step 4: Select the tax year and the type of declarations and click on “go”.
Step 5: You will now be able to check the status of your TDS payment online.
Advantages of making a TDS payment online
- Ease of making payment.
- No need to submit the physical challan.
- TDS is delivered instantly through your account.
- Can be paid easily on behalf of business, business and others
- Immediately receive the acknowledgment of receipt of payment.
- Your e-challan will go directly to the income tax department.
Frequently Asked Questions
What is the TDS Payments Late Deposit Fee?
Under Section 234E, the person who is required to deduct the TDS shall bear a fine of INR 200 per day until he files the TDS return.
How is the TDS calculated on wage income?
Is there a time limit for TDS payments?
Can I rectify my challan TDS?