Introduction:

Have you ever wondered how TDS works? Well, simply put, the Tax Deducted at Source is nothing but the tax amount deducted by the appropriate deductor and paid to the government on the assessee’s behalf. Sounds a bit confusing? Don’t worry! Let us help you understand it better.

What is TDS?

TDS or Tax Deducted at Source was created with the goal of collecting tax from the source of revenue. According to this notion, an entity (deductor) who is required to make a defined payment to another entity (deductee) must deduct tax before making the payment and send it to the Central Government Tax Department. The deductee for whom the deductor has paid income tax is eligible to credit for the amount deducted on the grounds of the deductor’s TDS certificate or Form 26AS.

How to pay TDS online?

Here is a step-by-step breakdown of the procedure of how to pay TDS online via NSDL’s official website.

  1. Go to the NSDL official website > Click on ‘Services’ > Select ‘e-payment’. Select ‘Click to pay tax online on the homepage.
  2. Select ‘CHALLAN NO. /ITNS 281’ from the provided list of suitable challans displays on the website’s home page.
  3. You will be routed to a different website where you must fill out the necessary information.
  4. You will be transferred to a new website. This site requires you to fill out the information about the tax application, the TAN, the AY, your Pin Code and your State, preferred payment option, and the kind of transaction. After all of the sections have been completed, the user must enter the Captcha and hit the ‘Proceed’ option.
  5. Your TAN will be confirmed after the application is uploaded. If the authentication is satisfactory, the taxpayer’s entire name will be displayed on the page.
  6. After the user validates the input, he or she will be forwarded to their bank’s net banking page.
  7. You will need to enter your online banking account to initiate the TDS transaction.
  8. A challan will be created and shown on the webpage after a successful transaction. This challan will include the CIN (Corporate Identity Number), payment information, and the banking institution through which the TDS payment was done. This challan needs to be downloaded for future use.

Who is eligible for TDS Payment?

Tax Deducted at Source can be deducted only if your overall taxable income exceeds the entire taxable limitation. If the sum is less than the taxable limitation, no Tax Deducted at Source is deducted. The Indian Income Tax Department specifies several threshold amounts for various sorts of income sources such as interest, wages, and so on. So, if your income from Fixed Deposit interests is less than 40,000 INR, TDS will not be deducted.

When does TDS need to be paid?

TDS payment schedules differ for government taxpayers and non-government assessees. The following are their respective due dates:

Government Tax-payers TDS Payment Deadlines

For Tax Remittance without any challan

The Deduction Day

Tax Remittance with a challan

Following Month’s 7th Day

Taxes levied on perquisites remitted by an employer

Following Month’s 7th Day

Non-government Tax-payers TDS Payment Deadlines

Deductible Tax in March

Following Year’s 30th April

Deductible Tax in any other month

Following Month’s 7th Day

The Assessing Officer may allow taxpayers to pay TDS online quarterly. However, this may only be performed with the Joint Commissioner’s agreement. The following are the quarterly payment deadlines:

Quarter Ending on 30th June

7th July

Quarter Ending on 30th September

7th October

Quarter Ending on 31st December

7th January

Quarter Ending on 31st March

30th April

How to check online TDS payment status?

You may track the progress of your online TDS payment by doing the following steps:

  1. Visit the TRACES portal.
  2. Enter the verification key and select ‘Proceed.’
  3. Please include your TAN and PAN information.
  4. Choose the fiscal year, then the quarter and the kind of returns.
  5. Click the ‘Go’ button. The current status of your online TDS payment will be displayed.

Alternative way:

  1. Visit the India e-Filing website.
  2. If you’re a new visitor, you must first register to continue. If you are already registered, use your login details to access the portal.
  3. Navigate to ‘My Account,’ then to ‘View Form 26AS.’
  4. Choose the current year and PDF type, then save the document. The document will be password-protected, and your provided birth date will serve as the password for the file to open.

You may also utilise online banking to check the progress of your online TDS payment. Nevertheless, in order to monitor the progress of your online TDS payment, your PAN Card must be synced with your net banking login. This monitoring system further encourages individuals to pay TDS online.

Why should you pay TDS online?

The benefits of digital TDS payment are listed below.

  1. Payments may be made from anywhere.
  2. 24×7 Facility
  3. There is no need to submit a paper challan.
  4. Can make payments on behalf of a company, firm, or others.
  5. Receive payment confirmation right away.
  6. The e-challan payment will be delivered to the Government Income Tax Department immediately.

What occurs if you fail to pay TDS on time?

In the event of a delayed TDS payment owing to tax non-deduction, a monthly interest rate of 1% is applied to the outstanding amount. This interest is levied from the date the TDS was deductible until the real deduction is realised.

In the event of a TDS payment delay following the TDS deduction, an interest rate of 1.5% is applied to the outstanding amount. The interest is assessed for each month or portion of a month when the payment is late. The interest rate is calculated from the day the tax amount is deducted.

Thus, it is highly recommended to pay TDS online and on time.

Conclusion:

To sum up, TDS is nothing but the tax deducted and paid by the deductor on behalf of the assessee. All in all, the system is beneficial for both the assessee and the deductor. Tax deductions are calculated accurately and promptly, and it helps keep the government updated on your finances throughout the year. Yet, many of us aren’t aware of its existence – this is something we’ll have to change soon.


FAQ’s

Your account number for tax deduction will be offered by the Indian Tax Department. Anyone who is a TDS deductee is required to get a TAN.


Anyone obligated to make payments under the IT Act needs to subtract TDS when making a payment. But, if the individual’s books do not need to be auctioned, TDS does not need to be deducted.


If an individual fails to make TDS payments on time, a charge of 200 INR per day would be lived for late payments till the date of filed returns.