TDS, or Tax Deducted at Source, is an advanced tax deduction system specially designed and

presented by the Income Tax Department of India. The methodology behind this system is to deduct
a certain percentage of tax at the payment source.

As per the Income Tax Act, any individual or registered firm making the payment must deduct a
certain percentage of the amount as tax at the source, provided that amount is more than the pre-
fixed threshold limits. TDS can only be deducted according to the relevant rates the Income Tax
Department issues. The first party (the individual or firm making the deduction after payment) is the
deductor, and the second party( individual or firm receiving the amount after the deduction) is the
deductee. TDS will be deducted regardless the mode of payment.

The deductor must submit the TDS return to the Income Tax Department on time as a quarterly
statement. The requirements are:-

 Permanent Account Number (PAN of the deductee).

 A summary of the tax paid to the government.

 Challan information of the TDS

 Various other mandatory documents as per the requirements

Please refer to the sample scenario for a better understanding:

 Type of payment – Professional Fee

 Rate of TDS deduction – 10%

 Deductor - M/S ABCD Ltd. Company

 Deductee – Ms. QWERTY

M/S ABCD Ltd. Company is liable to pay Rs. 50,000/- to Ms. Qwerty as her professional fee. In this
scenario, the deductor must deduct Rs. 5,000/- (10% of Rs. 50,000/-) and pay the deductee of Rs.
45,000. And the amount deducted, i.e., Rs. 5,000/-, will be credited to the Government account by
the deductor.

Eligibility Criteria for filing TDS?

An employer or firm that possesses a valid TAN (Tax Collection and Deduction Account Number) can
file a TDS return. An individual who makes specialized payouts under the Income Tax Act is supposed
to deduct TDS and is supposed to deposit the same within the specified time towards the below-
mentioned payments –

 Payment of remuneration or salary.

 Payment towards National Saving Schemes and other similar schemes.

 Payment of the insurance commission

 Income from horse racing.

 Income from the Lottery, puzzles & others.

 Income by way of “Income on Securities”

 What is the Rate of TDS Deduction?

Brief Overview of all the TDS Provisions for F.Y 2022-23 (2023-24)

Exemption Limit
(No TDS to be
Deducted upto
TDS Nature of Payer threshold limit
Section Payment (Deductor) Payee (Deductee) Rate of TDS mentioned)

Section TDS on Salary Any Person Employee(R or NR) Applicable Income Tax Basic GTI
192 Slab Rates exemption limit of
Rs.250000 or
Rs.300000 or
Rs.500000 as the
case may be.

Section TDS on Any Person Employee 10% (If no PAN then Amount is less
192A Premature MMR i.e. 35.535%) than Rs.50000
Withdrawal
from
Provident
Fund

Section TDS on Any Person Any Resident 10% Upto Rs.5000 in a

193 Interest on Person financial year (FY)
Securities for Individual/HUF
in the case of
Debentures.

Section TDS on Domestic Resident Person 10% Upto Rs.2500 in a

194 Dividends Company FY (for Individual)

Section TDS on Any Resident Person 10% Up to Rs.10,000

194A Interest Person(Other (for payments
(Other than than made by banks,
Interest on Individual/HUF cooperative banks
Securities) not liable to or on post office
tax audit in deposits) and up
last PY) to Rs.5000 (for
other cases). [In
case of a senior
citizen, the limit
 Exemption Limit
(No TDS to be
Deducted upto
TDS Nature of Payer threshold limit
Section Payment (Deductor) Payee (Deductee) Rate of TDS mentioned)

of Rs 10,000 shall
increase to Rs.
50,000 w.e.f.
1.4.2018]

Section TDS on Any Person Any Person 30% Up to Rs.10000

194B Winnings
from Lottery
or Crossword
Puzzles

Section TDS on Any Person Any Person 30% Up to Rs.10000

194BB Winnings
from Race
Horses

Section TDS on Any Person Any Person 30% Up to Rs.10000

194BA winning from
Online Games

Section TDS on Any Any Resident  1% (for  Up to

194C Payment to Person(Other Person Individual/HUF) Rs.30000
Contractors than for
 2% (other
Individual/HUF individual
person)
not liable to payment.
tax audit in
 Up to
last PY)
Rs.100000
for total
amount
during a
FY.

Section TDS on Insurance Resident Agent  10% (if Up to Rs.15000

194D Insurance Company deductee is during FY
Commission company)
 Exemption Limit
(No TDS to be
Deducted upto
TDS Nature of Payer threshold limit
Section Payment (Deductor) Payee (Deductee) Rate of TDS mentioned)

 5% (if deductee
is resident
person other
than company)

Section TDS on Any Person Any Resident 5% up to Rs.100000

194DA Payment in Person
Respect of
Life Insurance
Policy

Section TDS on Any Person NR-  20.8% No exemption

194E Payments to limit.
 -  (20%+HEC@4%)
Non-Resident
Sportsmen
Sportsmen or
Sports  -Sports
Association Association

 -
Entertainer

Section TDS on Any Person Any Person 10% Upto Rs.2500

194EE Payment for
Deposit
Under NSS

Section TDS on Any Person Any Person 5% Upto Rs.15000

194G Commission
on Sale of
Lottery
Tickets

Section TDS on Any Any Resident 5% Up to Rs.15000

194H Commission Person(Other Person
or Brokerage than
Individual/HUF
not liable to
 Exemption Limit
(No TDS to be
Deducted upto
TDS Nature of Payer threshold limit
Section Payment (Deductor) Payee (Deductee) Rate of TDS mentioned)

tax audit in
last PY)

Section TDS on Rent Any Any Resident  2% (on rent paid Up to Rs. 240000
194I Person(Other Person for use of during the FY
than machinery, plant
Individual/HUF or equipment)
not liable to
 10% (other
tax audit in
cases)
last PY)

Section TDS on Any Person Any Resident 1% Less than

194IA Payment on (Other than Person Rs.50,00,000
Transfer of person
Immovable referred to in
Property (Not section-194LA)
Being an
Agricultural
Land)

Section TDS on Individual & Any Resident 5% Upto Rs.50000

194IB Payment of HUF(Other Person per month
Rent by than covered
Certain u/s 194 I)
Individuals or
HUF

Section TDS on Any Person Any Resident 10% No exemption

194 IC Payment Person limit
Made Under
Specified
Agreement

Section TDS on Fees Any Any Resident  10% Up to Rs.30000

194J for Person(Other Person during FY (the
 2% (in case of
Professional than separate limit for
payment of fees
or Technical Individual/HUF each kind of
 Exemption Limit
(No TDS to be
Deducted upto
TDS Nature of Payer threshold limit
Section Payment (Deductor) Payee (Deductee) Rate of TDS mentioned)

Services not liable to for technical payment)

tax audit in service{not
last PY) being a
professional
service} or
made to the
business of
operating a call
centre or royalty
paid for sale,
distribution, or
exhibition of
cinematographic
films.

Section TDS on Any Person Any Resident 10% Upto Rs. 2,50,000
194LA Payment of Person
Compensatio
n on
Acquisition of
Certain
Immovable
Property

Section TDS on Other Any Person NR or Foreign Rate as specified in Act No exemption
195 Payments Company or DTAA limit
Made to NR
(Not
Company) or
Foreign
Company

Section TDS on An e- An e-Commerce 1%(Gross amount of Rs 5 lakh is set

194O Payments Commerce participant sale) only for resident
Made to e- operator individuals and
commerce HUF, who has
Participants furnished PAN or
Aadhaar to e-
 Exemption Limit
(No TDS to be
Deducted upto
TDS Nature of Payer threshold limit
Section Payment (Deductor) Payee (Deductee) Rate of TDS mentioned)

commerce
operator.

*R means Resident and NR means Non-Resident

**Note: In the above table, unless other rate like MMR is specified, if PAN is not available then TDS
rate will become 20%.

Due Dates to File TDS Returns

Quarter Duration of Quarter Due Date for TDS Return

First Quarter April 1st to June 30th 31st July 2023

Second Quarter July 1st to September 30th 31st October 2023

Third Quarter October 1st to December 1st 31st January 2024

Fourth Quarter January 1st to March 31st 31st May 2024

*All sums deducted are as per the provisions mentioned under Chapter XVII-B should be deposited by
the 7th of the subsequent month. The tax deducted during the month of March 2024 should only be
deposited by 30th April 2024.

Forms for Filing TDS

There are different types of TDS return forms, depending on the purpose of the deduction:-

Particulars of the payment

TDS on Salary

TDS when the deductee is an International Firm or Non-Resident Indian(NRI)

 Particulars of the payment

TDS on payment made for transferring any immovable property

TDS for Others

Documents Required for TDS Return Filing

Prior to filing your returns, please make sure you meet the following criteria:

 PAN (Permanent Account Number): The PAN of both the deductor (person/entity deducting
TDS) and deductee (person/entity from whom TDS is deducted) is required for TDS return
filing. Please ensure you have linked your Aadhaar card to the PAN card to upload your
returns via EVC.

 TAN (Tax Deduction and Collection Account Number): The TAN of the deductor is essential
for TDS return filing. TAN is a unique 10-digit alphanumeric number allotted by the Income
Tax Department.

 TDS Certificates: Collect TDS certificates (Form 16, 16A, 16B, etc.) issued by the deductor for
each deductee. These certificates contain details of the TDS deducted, such as the amount,
nature of payment, and tax deposited.

 Challan details: Maintain records of the challans used for depositing TDS. This includes
details such as the BSR (Bank Serial Number), date of deposit, challan serial number, and the
amount deposited.

 Deductee details: Gather information about the deductees, including their PAN, name,
address, and the amount of TDS deducted.

 Nature of payment: Determine the nature of payment for which TDS has been deducted,
such as salaries, interest, rent, commission, professional fees, etc.

 TDS rates: Have access to the applicable TDS rates for different types of payments. These
rates are specified by the Income Tax Department and may vary based on the nature of the
payment and the deductee's status.

 Quarterly TDS statements: Maintain quarterly TDS statements, such as Form 24Q, 26Q, 27Q,
or 27EQ, depending on the type of deductor and deductee. These statements contain
consolidated details of TDS deductions made during the quarter.

 Digital Signature Certificate (DSC): In some cases, a digital signature may be required for the
online filing of TDS returns. A DSC is a secure digital key that verifies the authenticity of the
person filing the return.

 Other relevant documents: Keep other supporting documents related to TDS deductions and
payments, such as agreements, contracts, invoices, and any correspondence with the
deductees or the Income Tax Department.
How to File TDS Return Online?

 Visit the official e-filing portal

 Enter your login credentials and press Enter. (Please note, your TAN would be your user ID.)

 Once you log in to the portal, click the Upload TDS tab under the TDS button.

 Upon clicking the TDS button, a form will pop up asking you to enter your details, such as–
TAN, FVU Version, Financial Year, Name of the Form, Particulars of the Quarter, and Upload
Type. Once complete, press validate.

 You can validate the form using a Digital Signature Certificate (DSC) or an Electronic
Verification Code.

 Once you are done with form validation, submit the form. If you have entered all the
information correctly and the form is accepted, you’ll get a provisional/acknowledgment
token number. In case the form is not accepted, you will be provided with a non-acceptance
memo along with the reasons.

Advantages of filing TDS Returns?

As a salaried employee, TDS will be deducted from the salary, if the desired criteria is met. And the
amount deducted mainly depends on how much you earn. Regarding the benefits of tax deductions,
both the taxpayers and the government get benefitted.

 It prevents taxpayers from avoiding paying taxes.

 It makes sure that the source of the Government’s revenue remains steady.

 It widens the base tax collection.

 The system of TDS is convenient for both the deductee and the deductor because the tax is
deducted automatically.

 It reduces the burden of paying huge amounts of taxes. By spreading the total amount of tax
over months, the payment becomes easy.