What are the TDS Compliance procedures?

What are the TDS Compliance procedures?

What is TDS ?

TDS stands for Tax deducted at source. The concept of TDS is with the aim to collect tax from the very source of income. As per the Income Tax Act, any person or company (Deductor) while making payment after the threshold limit defined is required to deduct the tax at source and deposit the TDS with the Government. On the other side the person (Deductee) whose TDS is deducted get the benefit of the same while filling his Income Tax return.

The deductor must have TAN (Tax Deduction and Collection Account Number), 10 digit alphanumeric number allotted to those who are required to deduct the TDS.


When is TDS required to be deducted?

Any person making the specified payments after the limits prescribed in the Sections are required to deduct the TDS while making the payments such as Professional Fees, Interest, Rent, Commission, but in the case where tax audit is not required in those cases individuals and HUF are exempted from deducting the TDS. However, in certain cases, in case of rent payments made by individuals and HUF exceeding 50,000 per month, are required to deduct the TDS @5% even if the individual or HUF is not required for a Tax audit. For most of the payments TDS rates are set in the Income Tax Act and TDS is deducted as per the specified rates mentioned. For example:- In case of Salary Income the employer deducts TDS as per the Income Tax slabs applicable ,Employer after claiming all the investment proofs deduct the TDS if the Net income exceeds the maximum amount not chargeable to tax.


What is the due date to deposit the TDS?

The TDS deducted by the deductor must be deposited to the Government by 7th of the subsequent month. However, the TDS deducted for the month of March can be deposited till 30th April.


How to deposit TDS?

Tax deducted at source has to be deposited by visiting on TIN site using Challan No. 281 after filing the prescribed information.


How and when to file the TDS return?

It is mandatory to file the TDS return for all the persons who have deducted TDS.

It is required to be submitted quarterly and various details need to be furnished like the PAN no. of the Deductee, the amount paid, Rate at which the tax is deducted at source and the amount of TDS with the Challan details. Form 24Q is required to filed if TDS is deducted on Salary and other than Salary Form 26Q is required to be filed. Also, Form 27Q is filed in case of payment made to NRIs.


Due date of filing TDS returns

Quarter-1 (Apr-Jun)               31st July

Quarter-2 (Jul-Sep)               31st October

Quarter-3 (Oct-Dec)              31st December

Quarter-4 (Jan-Mar)              31st May (Extended to 30th Jun, 2020 for Jan’2020 to Mar’2020)                   


What is TDS Certificate?

TDS Certificate is required to be issued by the deductor to the deductee from whose income TDS was deducted while making the payment. Form-16 is issued to Salaried employees and Form -16A is issued to other than Salaried. The TDS Certificates should be issued within 15 days from the due date of furnishing of TDS returns.


How to get the credit of the TDS deducted?

TDS deductions are linked to the PAN numbers for both the deductor and deductee. If TDS is deducted the same will be reflected in Form 26AS on Income tax site and the deductee can claim the credit of the TDS credit while filing the Income tax return.


You can also reach at our related topic on TDS Rates on the following suggested articles

  • Relaxation in TDS Rates in FY 2020-21 as a Tax Reform in Covid-19 package