TDS stands for tax deducted at source. TDS is one kind of advance tax. As per the Income Tax Act, any company or person making a payment is required to deduct tax at the source if the payment exceeds certain threshold limits.
A Deductor is a person responsible for deducting tax.
A Deductee is a person who receives the payment after the deduction of tax.
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 deducted.
TDS is deducted on the following types of payments:
- Salaries – TDS Certificate to employees is Form 16
- Interest payments by banks
- Commission payments
- Rent payments
- Consultation fees
- Professional fees
The deducted TDS can be claimed in the form of a tax refund by the deducted while filing their ITRs.
A TDS return has to be filed quarterly.
The filing frequency of TDS for the financial year 2020-21 for all the deductors
- TDS return has to be filed quarterly using different TDS return forms.
Late filing – Late fee, Penalties and Interest
- A fine of Rs 200 per day until your return is filed. The maximum amount of fine is capped to the amount payable as TDS.
For example: Say that your payable TDS amount is Rs 5000. If the delay period id say suppose 50 days the 20 days x 5,000 = 10,000. Since this is greater than Rs 5,000, you will have to pay only Rs 5,000 as the late filing fee.
- The rate of interest is 1.5% p.m.
For example: Say that your payable TDS amount is Rs 5,000. The delay is 5 months. Then the interest you owe is Rs 5000 x 1.5% p.m. x 5 months = Rs 375.