TDS, or Tax Deducted at Source, is a method used by the Government of India to collect Income Tax. The TDS method ensures that the government gets income tax from the assessee at the moment of transaction, reducing the risk of tax default and ensuring prompt tax collection. TDS and Online TDS Payment are discussed in depth in this article.
The person paying the income deducts TDS. As a result, the tax is deducted from the source of income. The tax deducted is subsequently placed into the income tax department account on behalf of the payment received as a TDS payment by the payer of the income. As a result, the TDS payment is assumed to be a payment of income tax by the recipient at the time of his assessment.
TAN registration, also known as a Tax Deduction and Collection Account Number (TAN), is a ten-digit alphanumeric number that must be obtained by anyone who is responsible for deducting or collecting taxes. All individuals who are obligated to deduct or collect tax at source on behalf of the Income Tax Department must get a TAN.
When is TDS Deduction and TDS Payment required?
The following sources of income are subject to tax deduction at source:
- Salary and all other positive incomes from any source ( Section 192 )
- Securities interest ( Section 193 )
- Other than interest on securities, interest ( Section 194A )
- Contractor and subcontractor payments ( Section 194C )
- Lottery or crossword puzzle winnings ( Section 194B )
- Horse racing winnings ( Section 194BB )
- All payments for acquiring insurance business are covered by the Insurance Commission ( Section 194D )
- Any interest other than interest on securities payable to non-residents who are not corporations or foreign corporations (Section 195 )
- Payment made to a non-resident athlete or sports association/institution. Payments for advertisements and articles on any game/sports in India in newspapers, journals, and so on are included in the case of a non-resident athlete ( Section 194E )
- Payment for contributions made through the NSS [National Savings Scheme] ( Section 194EE )
- Payment for the repurchase of units by a mutual fund or a UTI ( Section 194F )
- Compensation for commissions or brokerage ( Section 194H )
- Rent must be paid ( Section 194I )
- Payment of professional or technical services fees ( Section 194J )
- Commission to Lottery ticket stockists, distributors, buyers, and sellers, including payment or prizes on such tickets (Section 194G )
- Income from foreign currency-purchased units or long-term capital gain from the transfer of such foreign-currency-purchased units ( Section196B )
- Payment of any income to non-residents in the form of interest or dividends on bonds and shares (Section 196C), and so on.
To make an online TDS payment, log in to the e-Tax Payment System and proceed as follows:
1. Choose the appropriate challan online, if applicable.
- ITNS 280 Income Tax Challan
- ITNS 281 Income Tax Challan
- ITNS 282 Income Tax Challan
- ITNS 283 Income Tax Challan
2. Enter its PAN / TAN, whichever is relevant. The legitimacy of the PAN / TAN entered will be checked online.
3. If the PAN/TAN is legitimate, the taxpayer will be able to fill out other challan details such as the accounting head under which the payment is made, the name and address of the TAN, and the bank through which the payment is to be made, among other things.
4. Following the submission of entered data, a confirmation page will be presented. If the taxpayer validates the information on the challan, he or she will be sent to the bank’s net-banking site.
5. The taxpayer will log on to the net-banking site using the user id/password issued by the bank for net-banking purposes and enter payment information on the bank’s website.
6. After a successful payment, a challan counterfoil with the CIN, payment information, and bank name from whence the e-payment was made will be displayed. This counterfoil serves as proof of payment.
TDS, or Tax Deduction at Source, is a method in which tax or TDS is deducted at the source and TDS payments are made online. The tax deduction occurs when certain payments are made, such as rent, interest, commission, and so on. The person making such specified payments is responsible for deducting TDS, making TDS payments, and remitting the balance to the person entitled to such payment.