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TAX Deducted at Source (TDS) has been adopted with the purpose of collecting tax from the source of earning of assesse. According to this concept, an individual (deductor) who is liable to make payment of specified nature to some other person (deductee) shall deduct tax at source and remit the same tax to the Central Government.
TDS has been introduced to collect taxes from the source of earning. As per the Income Tax Act, while someone making a payment is required to deduct tax if payment excessed such levels/limit as specified. Limits or rate of TDS is prescribed by the Tax Department. The TDS is administered by the CBDT, which is come in the preview of the Ministry of finance.
TDS is a Kind of advance tax that must be deducted regardless of the method of payment. Because Tax Deducted at Source is a part of the Income Tax Act, both the Deductee and Deductor the person permanent account number (PAN) are linked to it. In such a case the PAN of the deductee is not uploaded, the Deductor Tax Deducted at Source shall deduct at a rate greater than the following:
Tax Deducted at Source (TDS) IS APPLICABLE:
Below are expenditure & source of income falls under TDS-
In the following circumstances, TDS is not applicable as per the income tax Act:
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Month-wise TDS due date is as follows:
Month | Due date |
April | On or before the Seventh of May |
May | On or before the Seventh of June |
June | On or before the Seventh of July |
July | On or before Seventh August |
Aug | On or before Seventh September |
Sept | On or before Seventh October |
Oct | On or before the Seventh of November |
Nov | On or before the Seventh December |
Dec | On or before Seventh January |
Jan | On or before Seventh February |
Feb | On or before the Seventh March |
Mar |
|
The Dead Line of Quarterly filing of Tax Deducted at Source Returns are as below:
Quarter Period | Quarter | Due date to file TDS return |
April to June | 1st Quarter | On 31st July of the same FY |
July to September | 2nd Quarter | On 31st Oct of the same FY |
October to December | 3rd Quarter | On 31st Jan of the same FY |
January to March | 4th Quarter | On 31st May of the next FY |
Quarter | Quarter Period | Quarter Ending | Due Date |
First Quarter | April 2020 – June 2020 | 30 June 2020 | 31 March 2021 |
Second Quarter | July 2020 – September 2020 | 30 September 2020 | 31 March 2021 |
Third Quarter | October 2020 – December 2020 | 31 December 2020 | 31 January 2021 |
Fourth Quarter | January 2020 – March 2020 | 31 March 2020 | 31 May 2021 |
TDS must be deposited on the government portal using Challan ITNS-281.
Form 16, Form 16A, Form 16 B, Form 16 C are all TDS certificates. TDS certificates must be issued by an individual who deducts TDS from an assessee whose TDS income was deducted at the time of payment.
For example, banks issue Form 16A to the depositor when TDS is deducted from interest on fixed deposits. Form 16 shall be given to the employee by the employer.
Frequency of TDS certificate | Form Type | Certificate issued for | Dead Line |
Yearly | Form 16 | TDS on salary payment | 31st May |
Quarterly | Form 16 A | TDS on non-salary payments | 15 days from due date of filing return |
Every transaction | Form 16 B | TDS on sale of property | 15 days from due date of filing return |
Every transaction | Form 16 C | TDS on rent | 15 days from due date of filing return |
As part of a Special and Detailed Economic Package of COVID-19 Pandemic – Aatmanirbhar Bharat Abhiyaan, the following steps have been taken with regard to TDS and TCS: W.e.f. Fourteen May 2020, the Government has decreased the rate of TDS, dividends, professional fees, rent payments and other non-salary payments (TDS) and the rate of tax collection (TCS) by 25%. These rates shall be effective from 14 May 2020 and shall remain effective until the end of the financial year, i.e. March 2021, please. This action taken by the government would certainly increase the liquidity in the hands of a person who is already struggling with the financial distress caused by this pandemic. Deduction and collection of tax at a lower rate would leave further discretionary income in the hands of the recipient and would have the desired impact of increased cash flows and liquidity in the market. The effect and benefits of the reduction of TDS rates can be understood as follows:
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