The tax liability of a person chargeable to tax is determined according to the provisions of the Income Tax Act. Such tax is determined on the total income of a person on an annual basis.
Further, the person can discharge his tax liability via any of the following ways:
- Advance Tax
- Self Assessment Tax
- TDS (Tax Deducted at Source)
- TCS (Tax Collected at Source)
- Tax on Regular Assessment
Therefore, Tax Deducted at Source (TDS) is one of the modes of collecting income tax under the Income Tax Act, 1961. Thus, the tax is deducted at source by the taxpayer at the prescribed TDS Rates and at the time of payment of certain specified income to the payee or deducted. Further, the tax so deducted needs to be deposited with the government within a specified time period.
The very intent of introducing TDS was to collect tax from the very source of income. According to this mechanism, a person (deductor) liable to make a specific type of payment to another person (i.e. deductee) shall deduct TDS.
Further, the tax so deducted by the deductor shall be transferred into the account of the Central Government. Also, the deductee from whose income such a tax has been deducted shall be entitled to get a credit for the amount so deducted. Such credit is given on the basis of form 26 AS or TDS certificate issued by the deductor. Thus, TDS is an indirect way of deducting tax.
Applicability of TDS
- Interest on securities
- Winnings from horse races
- Insurance Commission
- Commission on the sale of lottery tickets
- The Commission or brokerage
- Transfer of immovable property
- Fees for professional and technical services etc
Why is TAN Important for TDS?
Every assessee who is liable to deduct TDS needs to have a TAN. TAN stands for Tax Deduction and Collection Account Number. It is a 10 digit alphanumeric number that needs to be mentioned in all TDS returns, payments and any other communication with the income tax department. As per section 203A of the income tax act, 1961, it is mandatory for all the assesses who are liable to deduct TDS to mention TAN in all the TDS related documents. If one fails to mention TAN, a penalty is charged for the same. A person can apply for TAN in form 49B on the NSDL website.
Procedure for TDS Payment Online
There are two modes via which tax deducted or collected at source can be deposited to the credit of the central government account.
E – payment of TDS is mandatory for:
- all corporate assesses
- assesses other than the company to whom the provisions of section 44 AB of the Income Tax Act, 1961 are applicable
Through this mode the deductor is required to furnish challan 281 in the authorized bank branch.
To avail e – tax facility the deductor needs to have a net banking account or debit card of the selected bank. Tax Information Network of income tax department lists banks with which one can have a net banking or debit card facility. Thus to pay TDS online the deductor first needs to select a relevant Challan. Following is the procedure that a deductor needs to follow:
1. Login TIN NSDL Portal
To pay TDS online visit the website of income tax department. Following is the link tin-nsdl.com.
2. Select the Relevant Challan
There are different challans used for making various tax payments. Select Challan ITNS 281. This challan is used for depositing TDS/TCS by company or non-company deductee.
3. Fill in the Challan Details
You need to fill the following details in challan ITNS 281.
- If the deductee is a company then select ‘(0020) Company Deductee’. But if a deductee is a person other than the company then select ‘(0021) Non-Company Deductees’.
- Then select the type of payment. If TDS/TCS is payable by the taxpayer by himself select ‘(200) TDS/TCS Payable by Taxpayer’. However, if TDS is payable via regular assessment as an outcome of a demand raised by the income tax department choose ‘(400) TDS/TCS Regular Assessment’.
- Select the type of payment on which TDS is to be paid. Check the TDS rates article for the nature of payments on which TDS is payable.
- Choose the mode of payment. Payment can be made via the Net banking or Debit Card of the taxpayer.
- Enter your TAN details. These details are used for online verification to check the validity of TAN. In case the TAN details are not available within the database of the income tax authorities, the taxpayer would not be allowed to proceed further.
- Enter the relevant assessment year. Assessment year is the year following the financial year for which income is determined and tax payable thereon. For instance, tax for the income earned during the financial year 2018 – 2019 is payable in the assessment year 2019 – 2020.
- Fill other details like address, email id, mobile number, etc
- Enter the captcha code and hit proceed
4. Confirm Challan Details
Once you submit the data by hitting the ‘proceed button’ your dashboard displays the screen that asks you to confirm the challan details previously submitted. Once you go through all the details thoroughly, you need to confirm that the details entered in the challan were correct to the best of your understanding.
5. Make TDS Payment
Once you confirm the challan details, the NSDL portal will redirect you to the net banking page of your bank. Login to your banking page with the help of your user id and password details and make the payment of TDS.
Once the payment is made your dashboard will display a challan counterfoil. This challan counterfoil contains Challan Identification Number (CIN). It also contains payment details, bank names through which e-payment of TDS is made. Bank Branch Code (BSR) and date of tender of challan.
Bank Branch Code is a 7 digit code allotted by RBI to a particular bank branch. The collecting bank branch will transmit the details to the Tax Information Network (TIN) via Online Tax Accounting System (OLTAS). OLTAS is an initiative by the income tax department to receive information and receive records of tax paid through banks. This is done through online upload of challan details.
6. Online Verification
After making the online payment of TDS, you can track online the status of the challan deposited in bank in the ‘Challan Status Inquiry” on the NSDL – TIN website. This can be done after seven days of making the payment. There are two ways in which you can track your challan:
a. CIN Based View
In this you can use CIN and other details like BSR code of collecting branch, challan tender date, challan serial number and the amount, the taxpayer can view the following details:
- BSR Code
- Date of Deposit
- Challan Serial Number
- Major Head Code with description
- Name of Taxpayer
- Received by TIN on (i.e. date of receipt by TIN)
- Confirmation that the amount entered is correct (if amount is entered)
b. TAN Based View
By providing TAN and Challan Tender Date range for a particular financial year , the taxpayer can view the following details :
- Major Head Code with description
- Minor Head Code
- Nature of Payment
|Month of Deduction||Due Date for TDS Payment|
|April 2019||7th May 2019|
|May 2019||7th June 2019|
|June 2019||7th July 2019|
|July 2019||7th August 2019|
|August 2019||7th September 2019|
|September 2019||7th October 2019|
|October 2019||7th November 2019|
|November 2019||7th December 2019|
|December 2019||7th January 2020|
|January 2019||7th February 2020|
|February 2019||7th March 2020|
|March 2019||7th April 2020|