TDS

1. Tax Deducted at Source
(TDS)

2. Topics to be covered:
Introduction to TDS
Applicability of TDS
What is a TDS Challan
How to deposit TDS

3. TDS
TDS or Tax Deducted at Source is income tax reduced from
the money paid at the time of making specified payments
such as rent, commission, professional fees, salary, interest
etc. by the persons making such payments.
The recipient of income receives the net amount (after
reducing TDS). The recipient will add the gross amount to his
income and the amount of TDS is adjusted against his final
tax liability. The recipient takes credit for the amount already
deducted and paid on his behalf.

4. For instance:
Akash Pvt Ltd makes a payment for office rent of Rs 70,000
per month to the owner of the property. TDS is required to be
deducted at 10%.
Akash Pvt ltd must deduct TDS of Rs 7000 and pay the
balance of Rs 63,000 to the owner of the property.
Thus, the recipient of income i.e. the owner of the property in
the above case receives the net amount of Rs 63,000 after
deduction of tax at the source.
He will add the gross amount i.e. Rs 70,000 to his income
and can take credit of the amount already deducted i.e. Rs
7,000 by Akash Pvt ltd against his final tax liability.

5. Applicability of TDS
Any person making specified payments mentioned
under the Income Tax Act is required to deduct TDS
at the time of making such specified payment. But no
TDS has to be deducted if the person making the
payment is an individual or HUF whose books are
not required to be audited.

6. What is a tax audit?
As the name itself suggests, tax audit is an
examination or review of accounts of any
business or profession carried out by
taxpayers from an income tax viewpoint. It
makes the process of income computation for
filing of return of income easier.

7. Who is mandatorily subject to tax audit?
A taxpayer is required to have a tax audit carried out if the sales,
turnover or gross receipts of business exceed Rs 1 crore in the
financial year. However, a taxpayer may be required to get their
accounts audited in certain other circumstances.
Amendments in the above provision:
Finance Act 2020: The threshold limit of Rs 1 crore turnover for a tax audit is
proposed to be increased to Rs 5 crore with effect from AY 2020-21 (FY 2019-
20) if the taxpayer’s cash receipts are limited to 5% of the gross receipts or
turnover, and if the taxpayer’s cash payments are limited to 5% of the
aggregate payments.
Finance Act 2021: With effect from 1st April 2021, the threshold limit of Rs 5
crores is increased to Rs 10 crores in case cash transactions do not exceed
5% of the total transactions.

8. Points to be noted
However, in case of rent payments made by individuals and
HUF exceeding Rs 50,000 per month, are required to deduct
TDS @ 5% even if the individual or HUF is not liable for a
tax audit. Also, such Individuals and HUF liable to deduct
TDS @ 5% need not apply for TAN.
In case of acquisition of real estate greater than equal to 50
lacs, TDS is to be deducted @1%
Your employer deducts TDS at the income tax slab rates
applicable.
 Banks deduct TDS @10%. Or they may deduct @ 20% if
they do not have your PAN information.

9. What is a TDS Challan?
 TDS Challan is a form used for depositing Tax Deducted Source
(TDS) and Tax Collected at Source (TCS) to the Government.
 TDS Challan was introduced in 2004 to minimize human error and
facilitate online transaction of tax deposit, collection, and TDS
refund.
 Under Challan for TDS, an individual or payer responsible for
making specified payments like salary, interest, rent, commission,
and similar others is accountable to deduct a stipulated
percentage of amount before paying it to its payee or employee.
 Every individual, who makes TDS payment challan 281, is also

10. Types of Challan for TDS
TDS Challan 280 – is specifically for depositing
income tax.
TDS 281 Challan – is specifically for Tax Deducted at
Source (TDS) and Tax Collected at Source (TCS).
TDS Challan 282 – is for depositing gift tax, wealth
tax, transaction or security tax, and similar other forms
of indirect tax.

11. TDS Challan 281 Online Compliance
TDS 281 Challan is issued when a taxpayer deposits TDS and TCS, for which
they must comply with the timelines specified for depositing tax.
Due date for depositing TDS 281 Challan:
 TDS Challan for payments excluding property purchase –7th of every
subsequent month.
 TDS Challan for the purchase of property –30th of every subsequent
month.
 TDS Payment Challan 281 issued in March – April 30.
Interest of 1.5% is charged per month if TDS payment challan 281 is
delayed.

12. How to deposit TDS?
Tax Deducted at Source has to be
deposited using Challan ITNS-281
on the government portal.

13. How to Make TDS Payment
Step 1: Go to NSDL’s website for e-
payment of taxes
Step 2: Select ‘CHALLAN NO./ITNS 281’
under TDS/TCS section. You will be
directed to the e-payment page.

14. Step 3: In this page the following details have to
be entered
 Under ‘Tax Applicable’ select ‘Company Deductees’ if the TDS
deducted by you is while making payment to a company. In any
other case select ‘Non-Company Deductees’.
 Enter the TAN and Assessment Year for which the payment is
made.
 Enter the ‘Pin Code’ and select ‘State’ from the drop down.
 Select whether the payment is made for TDS deducted and
payable by you or TDS on regular assessment.
 Select the ‘Nature of Payment’ and ‘Mode of Payment’ from the
drop-down.
 Click on ‘Submit’ button.

15. Step 4: On submission, a confirmation
screen will be displayed. If TAN is valid, the
full name of the taxpayer as per the master
will be displayed on the confirmation screen.
Step 5: On confirmation of the data entered,
you will be directed to the net banking site
your bank.

16. Step 6:The taxpayer should log in to the net
banking site with the user id and password
provided by the bank and make the payment.
Step 7: On successful payment, a challan
counterfoil will be displayed containing CIN
(Challan Identification Number), payment
details and bank name through which e-
payment has been made. This counterfoil is a
proof of the payment made. After payment of
TDS, you have to file your TDS return.

17. Thank you!