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TDS full form refers to Tax Deducted at Source by an authorized deductor while paying any bill. It is remitted to the Central Government of India and is applicable to any income. There are 27 sections under TDS with different provisions of deduction and a threshold limit of exemption.
TDS falls under the act of advanced Income Tax, 1961, and all organizations or individuals are liable to pay it. The TDS concept is a tool by the Government to minimize tax evasion and collect at the income source. Source of income includes salary, interest, rent, brokerage, professional service, etc.
If TDS in a fiscal year exceeds income tax liability, the excess amount can be refunded by filing ITR and claiming TDS on the basis of Form 26AS/TDS certificate issued by the deductor. If a payee/deductee fails to give a PAN card, then it may incur higher TDS on the income. TAN and Pan are the two most important documents to deposit TDS.
An organization (other than Individuals or HUFs) is liable to deduct TDS from certain payments, subject to threshold limits and pay it to the government by way of TDS challan. Individuals or HUFs can deduct TDS on certain payments if they carry a ‘business’ whose turnover or sales or receipts exceeds ₹1 crore (in case of ‘profession’, the limit is ₹50 lakhs.
The deductor should deposit the TDS in the Government account on and before the 7th day of every month. Different products and services have different rates of TDS deductions.
TDS is to be deducted at the time when it becomes due or at the time of actual payment whichever is earlier. If an invoice is of May 2024 but payment is to be made in June 2024, TDS becomes due in May (the time of raising invoice) hence it should be deducted in May and paid by the 7th of June.
As per the revisions made by TDS new rules in Budget 2024, here is the updated TDS rate chart, which varies according to various sections. Budget 2024 reduced the TDS rates in specified payments as follows:
However, if you cannot submit a PAN card, it will be deducted at 20%
The TDS concept is to deduct the income at the source and remit it to the Government. Therefore, the deducting organization/individual is duty-bound to deposit it to the Government. Following is the process of depositing TDS:
When learning about TDS meaning, individuals must also have knowledge about TDS return. It is returning the excess amount deducted as TDS to a taxpayer.
Now you may wonder if TDS is a part of income tax, then even after paying it, why do individuals have an income tax liability at the end of every year?
Here, you must understand that TDS is tax deducted at the source of income to avoid payment delays. In case the total TDS paid in a year exceeds your tax liability, the Government will return the excess amount.
To get this return, you should ask your deductor how to get a TDS certificate. A TDS certificate is necessary while filing a TDS return.
You can do TDS filing within the specified date for separate transactions every quarter of the year. TAN, PAN of deductee, payment type, and the amount deducted need to be furnished during filing.
Following are the TDS return due dates:
To file a TDS return, follow these steps:
You can now view the filed TDS return by clicking on View File TDS under the TDS tab on the navigation bar.
The 7th day of the subsequent month is the TDS deposit due date. For example, if you have deducted TDS between 1st to 30th September, you must deposit it by 7th October. However, it differs in two cases:
By knowing the answer to the question of what a TDS certificate is, you can get the solution of all problems related to the deduction of TDS at different sources of income. It is a type of certificate issued by the entity deducting TDS to the person from whom TDS is deducted or the assessee. It serves as proof that the TDS deducted from you is deposited into the Government account.
TDS certificate is also useful to a deductee as it ensures that the amount deducted from your end is not forfeited and deposited with the Government. Therefore, you can claim a TDS return on time exhibiting this relevant document.
Another most important thing to know is what TDS certificate type is and what are the various types of TDS certificates you should ask for.
You may ask for the TDS certificate from the deductor or find it online using the following steps:
For Late filing of return
Not filing tax is a punishable offence; however, late payment incurs a penalty. The late fine is ₹200 for each day starting from the due date of payment until you file it. If the late fine exceeds the total payable amount, the late fine will be equal to the TDS payable amount.
For instance, your TDS payable amount is ₹5000, and the due date is 20th May. You filed the return of quarter 1 on 24th November. So, you are late by 105 days.
₹200 x 105 Days = ₹21000
However, your payable TDS amount is ₹5000, which is lower than ₹21000. Therefore, you just have to pay ₹5000 as a penalty.
For Late Deposit of TDS
If TDS is deducted on time but not paid within the due date of deposit of TDS, then interest @1.5% per month is levied on TDS amount up to the actual date of TDS payment.
If TDS is not deducted at all, interest @1% per month is levied from the date when TDS was required to be deducted to the actual date of deduction.
Here are some common circumstances when taxpayers can claim a TDS refund or reduction:
You may avoid TDS deduction by submitting form 15G/15H. Form 13 can be submitted for claiming a refund or non-reduction of TDS.
Each taxpayer should thoroughly know what TDS is, TDS full form, and why it is deducted to file the return and get maximum benefits. It is a payee-friendly act to justify the income tax payment seamlessly.
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Important articles about TDS
Disclaimer: This information is added only for informative purposes and collected from different sources across the Internet. Digit Insurance is not promoting or recommending anything here. Please verify the information before making any decisions.
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