What is tax deducted at source

What is tax deducted at source?

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TDS (Tax Deducted at Source) is a sure percentage of one’s month to month income that is taxed for payment. As per the Income Tax Act, 1961, each individual or association is obligated to pay taxes if their income is over a specific limit.

TDS deduction applies to various sorts of payments, including –

  • Salary

  • Commission procured.

  • Rent

  • Interest installment by banks.

  • Professional or specialist expenses.


Tax Deducted at Source meaning that it is a sort of advance tax which the Government of India imposes periodically. The overall deducted TDS is guaranteed as a tax refund after a citizen documents the Income Tax Return.

The organization or individual that makes the payment after tax deducted is known as a deductor and the organization or individual accepting the payment is known as the deductee.

The deductor must deduct TDS before setting aside the payment and deposit the equivalent with the public authority. Tax deducted independent of the method of payment–cash, cheque, or credit–and is connected to the PAN of the deductor and deducted. 

Rates for deducting of tax at source

Taxes shall be deducted at the rates indicated in the applicable arrangements of the Act or the First Schedule to the Finance Act. Nonetheless, in case of payment to non-resident people, the retention tax rates determined under the Double Taxation Avoidance Agreements will likewise be thought of

  • TDS Rates

  • Withholding Tax Rates

  • Tax Rates DTAA v. Income-tax Act

Who can Deduct TDS?

The individual creating the payment is subject to TDS deduction. That individual or association is obligated to deduct the total at a predefined rate and deposit it to the Government inside each monetary year.

Tax deducted at source- Types of Penalty Provision

Any taxpayers who are not consenting to the tax deducted rules will be obligated to take care of penalties, typically in the form of fees and interest imposed on the principal taxable amount. 

There are numerous kinds of penalties collected; 

  • The Regulation concerning tax deducted – Levied tax deducted when the real payment is being paid. Any deferral in tax deducted will be exposed to a penalty at 1% premium /month until the entirety is deducted.

  • Regulations concerning TDS payment – Taxpayers are needed to pay the taxable sum to the Government of India by the seventh day of the month which succeeds the tax documents. Episodes of none or late payment will attract a penalty at 1.5% every month (on the total payable sum) till the sum is deposited.

  • Regulations concerning TDS return filing – Tax Deduction at Source profits should be petitioned for the 31st day of January, May, July, and October of every monetary year. Non-filing or late filing of return will draw a penalty of Rs.200 consistently (as per Section 234E of the Income Tax Act of India) till the return is filed. In any case, the penalty ought not to exceed the total sum of tax levied.

Steps to pay Tax Deducted/Collected at source?

Tax deducted at source will be kept to the credit of the Central Government by below-mentioned modes:

  1. Electronic mode: E-Payment is obligatory for

    1. All corporate evaluates; and

    2. All evaluates (other than an organization) to who provisions of segment 44AB of the Income Tax Act, 1961 are material.

  1. Physical Mode: By outfitting the Challan 281 in the approved bank office.

Steps to know deducted TDS amount?

The process to discover if TDS has been deducted and whether it has been credited to a specific taxpayer’s account can be finished online. The means are as follow –

  1. Navigate to the official site of the Income Tax Department of India and select the alternative to enlist as another client.

  2. Enter details of the Permanent Account Number and create a password.

  3. After signing in with the enlisted ID and password, select the alternative to see the tax credit articulation or Form 26AS.

26AS is a tax credit proclamation that conveys a detailed report of TDS deducted during a monetary year.

  1. The site will divert to the page for TDS Reconciliation Analysis and Correction Enabling System, which will show all the details of a citizen’s tax liabilities, including subtleties of Tax Deducted at Source, advance tax paid, and other data.

TDS refund and non-reduction of the pertinent tax

If a citizen pays more tax than what the person in question is lawfully committed to pay, will have the option to file a claim concerning a tax refund. Taxpayers can document the equivalent with their yearly income tax return, and the refund amount will be dispensed alongside the Income Tax Return. 

If a person's yearly income doesn't fall under the taxable limit, they can demand zero deduction on their income too. It tends to be finished using 2 unique strategies

  • Declaring income beneath the fundamental exception limit in Form 15G or 15H will exclude a person from TDS. These forms must be presented each year; in any case, the candidate might be exposed to a tax deduction.

  • Applying for a certificate for the derivation of tax at a lower or NIL rates via Form 13 will likewise enroll as zero TDS under this provision.

11 Dec

Shweta  Sharma
Shweta Sharma

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