TDS
February 1, 2024

A Comprehensive Guide on TDS: Monthly Payments, Returns, and Applicable Sections and Rates

Tax Deducted at Source (TDS) is a means of collecting income tax in India, under the Indian Income Tax Act of 1961. TDS is managed by the Central Board for Direct Taxes (CBDT) and is a part of the Department of Revenue managed by the Indian Revenue Service (IRS). It is a method of minimizing tax evasion by deducting tax at the point of income payment.

In this guide, we’ll cover the steps you need to follow for monthly TDS payments, filing of TDS returns, and we’ll provide a list of sections along with the rates of TDS.

Step-by-Step Tutorial on Monthly TDS Payments

TDS payments are typically due on the 7th of the next month. For example, TDS for the month of April would be due on or before May 7th.

Steps for Monthly TDS Payment:

Calculate TDS: Determine the amount that needs to be deducted as TDS from the payments made during the month.
Make Payment Online:
- Visit the official website of the Tax Information Network of the Income Tax Department.
- Go to the e-Payment section and select the relevant challan i.e., ITNS 281.
- Fill in the necessary details like PAN/TAN, the applicable section, nature of payment, the period for which payment is made, and the amount of TDS.
- Select the bank through which payment will be made and proceed to pay.
Generate Challan 281: After 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 challan is proof of payment.
Late Payment Interest: If the TDS payment is delayed, interest will have to be calculated and paid for the period of delay.

Filing of TDS Returns

TDS returns must be filed quarterly. There are different forms for different purposes, such as Form 24Q for salaries, Form 26Q for non-salary deductions, and so on.

Steps for Filing TDS Returns:

Prepare Return: Gather all the TDS certificates and challans for the quarter.
Use Return Preparation Utility (RPU) & File Validation Utility (FVU):
- Download the latest RPU and FVU from the NSDL website.
- Prepare the return using RPU and validate it through FVU.
Correct Errors: If there are any errors, rectify them and validate again.
Submit Return: Once the return is error-free, it can be submitted online through the e-filing portal of the Income Tax Department.
Verification: After submission, the return must be verified. This can be done via digital signature or by generating an EVC (Electronic Verification Code) through net banking.
Acknowledgment: Upon successful submission and verification, an acknowledgment form – Form 16A/16B/16C will be generated. This serves as proof of filing.

List of Sections and Rates of TDS

Here is a simplified list of some common sections of the Income Tax Act and their corresponding TDS rates for the financial year 2023-24:

Section 192: TDS on salary income; the rate as per the individual’s income tax slab.
Section 193: TDS on interest on securities; 10%.
Section 194: TDS on dividend income; 10% if the dividend exceeds INR 5,000.
Section 194A: TDS on interest other than securities (e.g., bank interest); 10% if interest exceeds INR 40,000 (INR 50,000 for senior citizens).
Section 194C: TDS on payment to contractors and sub-contractors; 1% for individuals/HUF, 2% for others if payment exceeds INR 30,000 per contract or INR 1 lakh in aggregate in a year.
Section 194D: TDS on insurance commission; 5% for residents, 20% for non-residents.
Section 194H: TDS on commission or brokerage; 5% if exceeding INR 15,000 per annum.
Section 194I: TDS on rent; 2% for plant & machinery, 10% for land or building or furniture or fitting.

These steps and rates provide a general guideline and could change based on the government’s budgetary updates. It is always advisable to consult the official income tax website or a tax consultant for the latest updates and professional guidance.

A Comprehensive Guide on TDS: Monthly Payments, Returns, and Applicable Sections and Rates