TDS stands for Tax Deducted at Source. TDS means an amount of money that the employer of an assessee deducts as tax. The employer further deposits this tax amount on behalf of the assessee to the Income Tax Department. The amount is deducted from salary, rent, professional fees, etc. TDS is implemented according to the Income Tax Act 1961 Government of India. TDS keeps the tax payment legal as the tax is deducted during the payment.
The procedure of TDS deduction
- TDS is meant to be deducted at the time of making a payment. But according to the Income Tax Act, the TDS can’t be deducted from an individual or Hindu Undivided Family.
- If a person is paying rent of more than 50,000, then the person is liable to pay a TDS of 5%. A specific Tax Deduction Account Number is not required for this deduction.
- For the working professionals, the employer can deduct the TDS as per the current income tax rates.
- If an employee doesn’t have a PAN number, then the 20% TDS will be deducted from the employee’s bank account. If the employee has shared his PAN details, the TDS deduction will be 10%.
- When the employee shares all the investment details with the employer and his income is less than the income tax eligibility criteria, then there will be no TDS deduction from the employee’s salary by the employer.
- Suppose the employee doesn’t submit the investment details to the employer, and the bank cuts off the TDS from the employee’s salary. In that case, there is a provision for a claim for returning the deducted amount. But the amount will only be returned if the employee’s salary is less than the taxable limit.
TDS types and their rates on salary
The different types of investments or account credits that comes under the TDS deductions are given below:
- Insurance commission and commission payments
- Salary and Bank interest
- Rent payment and brokerage
- Deemed dividend and contractor payments
- Transfer and compensation on immovable property acquisition
- LIC and securities interest
- The winning amount of the lottery or game
Rates of TDS on Salary
- The TDS salary rates and tax slab rates are identical and can apply to individuals and employees.
- If the person’s annual income is less than 2.5 lakh and their age is less than 60 years, there will be no TDS deductions.
- If the person’s annual income is between 2.5- 5 lakh, the TDS deductions will be 5%.
- For individuals with annual salaries between 5 to 10 lakh, the TDS deduction is kept at 20%.
- The TDS deductions are 30% for the employees whose salary is above 10 lakh per annum.
Procedure to file TDS return online
The procedure of filing of TDS return online is very common and easy. All you need to do is follow these simple steps:
- You must have a Tax Deduction and Collection Account Number ( TAN). This TAN number must be registered with the income tax e filing.
- The TDS statements must be prepared by yourself, and these statements can be prepared using the Preparation Utility.
- The next step is a validation of TDS statements. This can be done with the help of a file validation utility.
- A digital signature certificate of the applicant is required, which must be valid. Suppose the applicant wants to file the return by using DSC then in that case, the digital signature must be registered with the e-filing.
- The applicant needs to provide the details of a bank account or Demat account. The bank account must have a contact number linked with the Adhaar card of the applicant.
- To upload the TDS statement, you need to visit https://www.incometaxindialfiling.gov.in/home.
- This will direct you to the home page, where two options will be shown: ‘ registered users’ and ‘login here.’
- If you haven’t registered yet, register yourself with the asked details and set your username and password.
- Once you are registered, log in to your account; on the next page, you will be directed to a drop-down menu where you have to select upload TDS.
- Fill in the required information and choose the details given once. Then click on the validate option.
- You can validate the return by DSC or EVS process.
Advantages of TDS
- TDS makes sure that every individual taxable pay the tax and doesn’t evade tax payment.
- TDS system is very convenient for the tax payees and income tax department to collect the tax.
- It reduces the work of the income tax department to collect the tax from individuals.
- TDS is deducted by the salaried employees and self-employed individuals whose annual income is more than 2.5 lakh per annum.
- TDS can be deducted with the PAN card details of an individual.
- The government gets a steady revenue in the form of TDS.
Frequently Asked Questions?
1. What happens if I do not pay my TDS?
- If an individual does not pay their TDS, he is liable for a penalty under sections 234E and 201A of IPC.
- The interest of 1% is charged to the individual from the due date of TDS to the date TDS is filled, and it is like a penalty for the late submission of TDS.
- Suppose the employer doesn’t file the TDS of its employees. In that case, there is the provision of the penalty of ₹ 10,000 to 1 lakh under section 271H and section 234E.
- Suppose the company deducts the TDS from the salary of its employees but doesn’t fill it to the income tax department on time. In that case, an interest of 1.5% will be charged on TDS under the section TDS.
2. How do I get the proof of my TDS deduction?
- Go to the official website of Income Tax and login into your account.
- Click on my accounts and select view ‘Form 26AS’.
- Select the year you want to see the TDS details and select the pdf format.
- A pdf file will be downloaded about your TDS details, password protected.
- You will get password-related details on the website.
- The TDS deductions can be checked through net banking by using your bank account linked with your PAN card.