What is TDS (Tax deduction at source) ?

Description: Know in depth about Tax deduction at source, TDS filing, key dates, compliances, consequence of non- compliances. TDS stands for Tax deduction at source, the concept of TDS was introduced by Income tax department, which makes it mandatory for specified class of people who are making specified expenses or payments like rent, salary, commissions etc. to deduct certain amount (known as TDS) from amount to be paid. In simple terms, suppose Mr. A has to clear an invoice for professional fees, of INR 40000 raised by Mr. B, Mr. A will deduct 10 percent over this amount in advance before making the payment to Mr. B. This amount so deducted by Mr. A is to be directly deposited to central government and is known as TDS i.e. TAX DEDUCTED AT SOURCE. TDS is generally deducted on all kinds of invoices be it professional fees invoices raised by freelancers or payments to be made in terms of rent or salary etc. TDS deducted is deposited with reference to TAN i.e Tax Deduction Account Number.

When TDS is to be deposited: TDS Dues Dates

TDS is required to be deducted on payments to be made and TDS return is required to file on quarterly basis. Due dates for TDS payment and returns are as follows :
Month Quarter ending Due date of TDS Payment Due Date of TDS return
April 30th June 7th May 31st July
May 30th June 7th June 31st July
June 30th June 7th July 31st July
July 30th September 7th August 31st October
Aug 30th September 7th September 31st October
Sep 30th September 7th October 31st October
October 31st December 7th November 31st January
November 31st December 7th December 31st January
December 31st December 7th January 31st January
January 31st March 7th February 31st May
February 31st March 7th March 31st May
March 31st March 30th April 31st May

Consequences of Non- Compliance or Non-filing of TDS returns:

1. Consequence of Non – deduction or Late deposit of TDS
In case TDS is deducted and not deposited before the due date, 1.5% interest per month is required to be paid from date of deduction till date of payment. In case TDS is not deducted wholly or partly, 1% per month is required to be paid from date on which tax is deductible to date on which tax is actually deducted.

2. Consequence of Late filing of TDS return
Deductor is liable to file the TDS return and is liable to pay INR 200 per day in case of any late filing from next day of due date for the filing of TDS return to actual date of filing TDS return. Further, in case of non-compliance, person may face penalty of INR 10,000/- to INR 1,00,000/- as may be directed by the Assessing Officer.

Other important points:
One important point we need to remember in case of TDS deduction is that the person or the legal entity deducting TDS must issue the TDS certificate. There are majorly three types of TDS returns based on categories such as- Salary, non-salaried and foreign payments. There are mainly two types of TDS certificates issued by the deductor. Form 16: which is issued by the employer to the employee incorporating details of tax deducted by the employer throughout the year, and Form 16A: This is issued in all cases other than salary. TDS certificate issued by the deductor can also be verified by the taxpayer through online government portal.

When TDS shall be deducted?

Tax deduction at source is mandatory whenever a prescribed threshold limit of prescribed expenses cross. This tax deduction is applicable on service providers, salaried persons, interest earned on Fixed deposits etc. TDS deduction rates are different for different sources and types of expenses.

Do all companies have to file for TDS returns?

Companies registered in India must file for TDS returns, Company360 provides monthly TDS return filing services for start-ups, small medium enterprises and other body corporates. The fees for TDS Filing depends on number of TDS applicable transactions

In case you wish to proceed with TDS filings please register a request above or drop mail at info@company360.in or call +91 8800926725

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