Assets Taxable Under Wealth Tax in India

What is TDS?

The full form of TDS is Tax Deducted at Source. TDS is a way for the government to collect income tax by deducting it from specific payments you receive, such as salary or interest, before the payment reaches you. Typically, individuals are responsible for paying their income tax directly, but TDS simplifies this by withholding a portion of the tax at the source.

Income Sources Subject to TDS Deduction

TDS applies to various income sources, including:

• Salary
• Commission earned
• Rent payments
• Bank interest
• Professional or consultation fees
• Contractor payments
• Amounts under Life Insurance Corporation (LIC)
• Compensation for acquiring immovable property
• Brokerage or commission
• Insurance commission
• Interest on securities
• Remuneration for company directors
• Prizes from lotteries, card games, crossword puzzles, etc.
• Deemed dividends
• Interest (excluding interest on securities)
• Sale or transfer of immovable property
• Income from online gaming

How Does TDS Work?

When TDS is deducted from your payment, you receive a lower amount than the original due to the tax withholding. Later, you add the full payment amount to your income while calculating taxes. The TDS already deducted is subtracted from your tax liability, simplifying your tax payments.

When and Who Should Deduct TDS?

According to the Income Tax Act, TDS must be deducted by specific individuals or organizations making certain payments:

• Who Deducts TDS: Generally, the payer is responsible for deducting TDS from specified payments.
• Exemptions: Individuals and Hindu Undivided Families (HUFs) not subject to a tax audit are exempt from TDS.
• 5% TDS on Rent Payments: For individuals and HUFs, a 5% TDS must be deducted on rent payments exceeding ₹50,000 per month, even if a tax audit isn’t required.
• Employers Deducting TDS: Employers deduct TDS based on applicable income tax slabs for employees. Banks usually deduct 10% or 20% TDS if the Permanent Account Number (PAN) of the account holder is not available.
• Avoiding TDS with Investment Proof: If your taxable income falls below the threshold, you can submit investment proof to avoid TDS.
• Preventing TDS on Interest Income: Submit Form 15G or Form 15H to avoid TDS on interest income if your income is below the taxable limit.
• Claiming a Refund for Excess TDS: If TDS is deducted despite your income being below the taxable limit, you can claim a refund by filing an income tax return.

Penalties for Non-Compliance with TDS

Non-compliance with TDS regulations can lead to penalties, such as additional interest and fees:

• Failure to Deduct TDS: If TDS is not deducted on time, a penalty of 1% interest per month is charged until the tax is deducted. Failing to deduct TDS may also limit deductions when calculating total taxable income.
• Late Payment of TDS: TDS payments must be made to the government by the 7th of the following month. Late payments are subject to a penalty of 1.5% per month until the amount is deposited.
• Delayed TDS Return Filing: TDS returns are due quarterly, typically on January 31, July 31, May 31, and October 31. Late filing results in a penalty of ₹200 per day until the return is filed, up to the total TDS amount due (as per Section 234E of the Income Tax Act of India).

Due Date for TDS Deposit

TDS must be deposited with the government by the 7th day of the month following the deduction.

How to Make TDS Payment Online

Follow these steps to make a TDS payment online:

1. Go to NSDL’s e-payment website.
2. Select CHALLAN NO./ITNS 281 under the TDS/TCS section.
3. Choose Company Deductees for company payments or Non-Company Deductees for others.
4. Enter the TAN and Assessment Year.
5. Provide the Pin Code and select the State.
6. Indicate if the payment is for TDS payable or regular assessment.
7. Select the Nature of Payment and Mode of Payment.
8. Submit the form and confirm the details.
9. You’ll be directed to your bank’s net banking portal. Log in and make the payment.
10. After payment, a challan counterfoil will be displayed as proof, containing the CIN (Challan Identification Number) and payment details.

How to Check the Status of TDS Payments Online

To verify the status of your TDS payment:

1. Visit the TIN-NSDL Oltas challan status inquiry website.
2. You can search by CIN-Based View or TAN-Based View:
• CIN-Based View: Enter details like BSR code, challan date, serial number, and optional amount.
• TAN-Based View: Provide the TAN and date range for the challan.

The information shown includes challan number, deposit date, TAN/PAN, and payment confirmation.

Filing TDS Returns

Filing TDS returns is mandatory for anyone who deducts TDS. Returns are submitted quarterly and must include details like TAN, total TDS deducted, payment nature, PAN of the payee, and more. The form required depends on the purpose of the TDS deduction.

By understanding TDS processes, you can ensure compliance and manage tax obligations effectively.