TAN registration is required for making tax deduction or tax collection at source, remittance of TDS payments and issuance of TDS certificates.
TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.
The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deductee. It is the deductor’s responsibility to deduct TDS before making the payment and deposit the same with the government. TDS is deducted irrespective of the mode of payment–cash, cheque or credit–and is linked to the PAN of the deductor and deductee.
TDS is deducted on the following types of payments:
- Interest payments by banks
- Commission payments
- Rent payments
- Consultation fees
- Professional fees
However, individuals are not required to deduct TDS when they make rent payments or pay fees to professionals like lawyers and doctors.
TDS is one kind of advance tax. It is tax that is to be deposited with the government periodically and the onus of the doing the same on time lies with the deductor. For the deductee, the deducted TDS can be claimed in the form of a tax refund after they file their income tax return.
TDS Return Online
A deductor has to deposit the deducted TDS to the government and the details of the same have to be filed in the form of a TDS return. A TDS return has to be filed quarterly. Different types of TDS deductions have to be filed using different TDS return forms.
How is it Calculated?
The recipient of income receives the net amount (after deducted of tax at source). The recipient will add the gross amount to his income and the amount deducted at source is adjusted against his final tax liability. Basically take credit of the amount already deducted and paid on his behalf.
TDS is deducted on salaries, interest payment by banks, payment of commission, while paying rent, payments made to consultants, payments to lawyers or freelancers. (Some of these requirements to deduct tax are not applicable to individuals – for e.g. individuals are not expected to deduct TDS while paying rent or while paying fees to doctors or lawyers).
What are the due dates of submission of quarterly TDS Returns?
|Quarter||Period||TDS Return Due Date|
|Q1||1st April to 30th June||31st July|
|Q2||1st July to 30th September||31st October|
|Q3||1st October to 31th December||31st January|
|Q4||1st January to 31th March||31st May|
What happens if I do not file my TDS returns on time?
In case you have not deposited TDS by the correct date, the following penalties are applicable:
- Late filing fee (if you do not file by the deadline)
- Interest (if you do not deposit the TDS amount in time)
- Penalty (if TDS is not filed within one year of the due date)
No penalty under section 271H will be levied in case of delay in filing the TDS/TCS return if following conditions are satisfied:
- The tax deducted/collected at source is paid to the credit of the Government.
- Late filing fees and interest (if any) is paid to the credit of the Government.
- The TDS/TCD return is filed before the expiry of a period of one year from the due date specified in this behalf.