Tax Deducted at Source (TDS): Meaning, filing, and Due Dates
Tax Deducted at Source or TDS is a part of the income tax. It is the tax that is deducted right at its source by the payer at the time of making the payment. Through TDS, the government deducts tax on certain incomes when they are earned. The applicability of TDS is different for different transactions. This article discusses the TDS provisions in detail. Its meaning, due dates, applicability, etc.
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Budget 2025 Update – Proposed Thresholds for TDS/TCS
Section Particulars Proposed Threshold for TDS/TCS 193 Interest on Securities Rs. 10,000 194A Interest other than on Securities Rs. 1,00,000 for senior citizens
Rs. 50,000 for others when payer is bank, co-operative society, and post office
Rs. 10,000 for others194 Dividend for an individual shareholder Rs. 10,000 194B Winnings from lottery, crossword puzzle Rs. 10,000 per transaction 194BB Winnings from horse race Rs. 10,000 per transaction 194D Insurance Commission Rs. 20,000 194G Income from commission, prize, etc. on lottery ticket Rs. 20,000 194H Commission or Brokerage Rs. 20,000 194I Rent Rs. 50,000 per month/part of a month 194J Fee for professional/technical services Rs. 50,000 194K Income of units of a mutual fund/specified company or undertaking Rs. 10,000 194LA Income by way of enhanced compensation Rs. 5,00,000 206C (1G) Remittance under Liberalized Remittance Scheme and overseas tour program package Rs. 10,00,000
What is TDS?
TDS (Tax Deducted at Source) is a system where tax is deducted by the payer at the time of making payments such as salary, interest, rent, professional fees, commissions, dividends, etc., and directly deposited with the government.
Purpose of TDS:
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Revenue Collection: Ensures steady revenue flow for the government.
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Compliance & Monitoring: Tracks financial transactions and reduces tax evasion.
Key Points:
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The deductor deposits TDS with the government.
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The deductee claims TDS as a credit while filing ITR.
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Filing ITR is mandatory if income exceeds the basic exemption limit, even if TDS has been deducted.
Example (Salary Income):
Without TDS With TDS Salary Income 6,00,000 Total Income 6,00,000 Gross Tax Liability 32,500 Cess @ 4% 1,300 Tax Payable at filing 33,800 – – – – Note: Monthly TDS deducted by employer = Rs. 2817.
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Why TDS Deduction is Done?
Government Perspective:
- Reduces tax evasion.
- Steady revenue throughout the year.
Individual Perspective:
- Tax is spread throughout the year.
- No need to pay a large sum at once.
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TDS Deductor & Deductee
Term Meaning TDS Deductor Person liable to deduct tax (Payer) TDS Deductee Person receiving payment after TDS (Payee) Eligible Persons: Individual, HUF, Firm, Company, Government, Non-Resident, etc.
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Types of Payments Covered Under TDS
Section Nature of Payment Deductor Deductee Rate Exemption Limit 192 Salary Any person Employee Income Tax slab Basic GTI exemption limit 193 Interest on Securities Any person Any Resident 10% Rs. 10,000 194A Interest (other than securities) Any person Resident 10% Rs. 1,00,000 for senior citizens; Rs. 50,000 for others (banks, co-op, post office); Rs. 10,000 for others 194B Lottery / Crossword Any person Any person 30% Rs. 10,000 194BB Horse race winnings Any person Any person 30% Rs. 10,000 194D Insurance Commission Insurance Company Agent 10% (company), 5% (others) Rs. 20,000 194H Commission / Brokerage Any person Any resident 5% Rs. 20,000 194I Rent Any person Any resident 2%-10% Rs. 50,000 per month 194J Professional / Technical Fees Any person Any resident 10% Rs. 50,000 (This table is a summarized version; full details are available in official IT documents.)
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After TDS Deduction: Process Flow
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TDS Deducted → 2. Deposit with Government → 3. File TDS Return → 4. Updation of Form 26AS → 5. Issue of TDS Certificate → 6. ITR Filing & Claim Credit/Refund
Due Dates for TDS Payment:
Month of Deduction Due Date for Payment April 7th May May 7th June June 7th July July 7th August August 7th September September 7th October October 7th November November 7th December December 7th January January 7th February February 7th March March 30th April (non-Govt), 7th April (Govt) Penalty for Default:
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Late Deduction: Interest 1% per month.
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Late Deposit: Interest 1.5% per month.
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Prosecution: Section 276B – imprisonment 3 months to 7 years + fine.
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TDS Certificates
Certificate Form No Due Date Frequency Form 16 24Q 31st May Annually Form 16A 26Q Within 15 days of filing Quarterly Form 16B 26QB Within 15 days of filing Monthly / Each Transaction Form 16C 26QC Within 15 days of filing Monthly / Each Transaction -
Form 26AS
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Annual statement showing all taxes paid and TDS credited against PAN.
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Important to verify 26AS matches TDS certificates.
Mismatch Action:
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Contact the deductor to correct TDS return before filing ITR.
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Claiming TDS Credit
- Download Form 26AS.
- Enter TDS details while filing ITR.
- Reduces total tax liability; may result in tax refund.
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Exemption from TDS
- Resident Citizens: Form 15G (<60 years) & Form 15H (≥60 years)
- Non-Residents: Application under Section 195(3) for non-deduction or lower deduction.
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Key Takeaway
- TDS ensures regular tax collection.
- Keep Form 26AS updated and submit correct forms to avoid penalties.
- Proper tax planning can maximize TDS refund.
