A Complete Guide And Handbook To Understanding Tax Deduction at Source

Tax Deducted at Source, or TDS is the amount of income tax that is deducted from the money that the individuals making certain payments, such as rent, commission, professional fees, salary, interest, etc., pay. 

Generally, income recipients are required to pay income taxes. However, the government ensures that income tax is withheld in advance from your payments with the use of Tax Deducted at Source rules. 

The net amount is given to the income recipient (after lowering TDS). The receiver deducts the amount of TDS from his ultimate tax due and adds the gross amount to his income. For the money that has already been withheld and paid on his behalf, the recipient accepts credit.  

Income Sources From Which TDS Is Deducted

  • Salary
  • Commission earned
  • Rent
  • Interest payment by banks
  • Professional or consultant fees
  • Contractor payments
  • Amount under LIC
  • Compensation for acquiring immovable property
  • Brokerage or Commission
  • Insurance Commission
  • Interest on securities
  • Remuneration paid to the director of a company, etc
  • Winning from games like a crossword puzzle, card, lottery, etc.
  • Interest apart from interest on securities
  • Deemed Dividend
  • Transfer of immovable property

Who Can Deduct TDS and How Does It Work?

There will be a TDS deduction due from the payer. The person or entity has the responsibility of withholding the amount at a fixed percentage and submitting it to the government throughout each fiscal year. Additionally, they are accountable for imposing Tax Deducted at Source at the subsequent rate. The  TDS will be attracted at a rate of 20% in the absence of PAN unless a specific rate (such as MMR) is specified.

TDS Return and the Associated Forms

Form Number Significance   Frequency of submission
Form 24Q The statement that includes information about TDS deducted from pay Quarterly
Form 26Q The document that lists all TDS deductions made from earnings, except salaries Quarterly
Form 26QB Statement with information on TDS deducted from revenue from the sale of real estate (except agricultural property) Should be submitted within 30 days from the end of the month when the deduction is made.
Form 26QC The statement with information on TDS deducted from rent payments Should be submitted within 30 days from the end of a particular month when the deduction is made.
Form 27Q Statement detailing the TDS deducted from earnings received as dividends, interest, or other amounts payable Quarterly

Different Types Of TDS Certificates

TDS Certificate Respective TDS return form Due date Frequency of issue
Form 16 Form 24Q Within 15th June of a Financial Year which succeeds a Financial Year when the tax is deducted Annually
Form 16A Form 26Q Within 15 days of submitting Form 26Q Once every quarter
Form 16B Form 26QB Within 15 days of submitting Form 26QB Monthly 
Form 16C Form 26QC Within 15 days of submitting Form 26QC Monthly

Due Dates of Different Forms

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

How To Upload TDS Statements

To upload TDS statements to the Income Tax Department website, use the instructions below:

  • Go to the Income Tax website. Using your TAN, log in.
  • Choose Income Tax Forms > e-File. Utilize the dashboard to file income tax forms.
  • Choose the appropriate form and complete the fields.
  • Use DSC or EVC to validate the return.

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