TDS

How to Pay Your TDS Online: A Step By Step Guide

Waiting in a queue with heavy files of details for remitting Tax Deduction at source amount is history now. The days of burning night oil for TDS payment preparation are long gone. Pay your TDS online with this step-by-step guide.

Tax Deduction at Source (TDS)

Any taxpayer under the income tax act must pay a proportionate tax amount at a prescribed rate as a Tax Deduction at-Source (TDS). It is one of the modes adopted by the central board of direct taxes under the Income-Tax Act of 1961 to collect income tax. It is obligatory by the Income-Tax Act for an individual or company to deduct a certain percentage of the amount before making a complete payment towards salary, professional services, contractors, interests, and any other income as distinguished under the Income-tax act. This Guide to Pay TDS online will help you understand the complete process.

The deducted amount has to be deposited to the Government within a specific time declared by the Law. Offline payment of TDS was a nightmare for many individuals and companies. Every month going through the hardship of filing TDS was tiresome and time-consuming.

TDS deposit to the Government was offline at designated offices in physical form. The days are gone when you had to struggle to make TDS payments. It is easy now as the entire process has been digitised and made the payment system online.

The online process is simple and effective. Any individual or company deducting TDS needs a PAN and TAN number. A TAN is a 10-digit alphanumeric number given to a person or company deducting TDS. Without a valid TAN, you cannot make payments online or offline.

To deposit the TDS, you must register on the income tax website TIN NSDL PORTAL. On successful registration, they will provide a username and password.

Guide To Paying TDS Online:

Firstly, you need to keep all details of the TDS collected ready in a software format.

It should consist of:

  • Heads of deduction made.
  • The tax amount for each individual or company
  • Financial year and assessment year details.
  • PAN details
  • Tan details
  • Keep your internet banking details or payment methods like debit and credit cards.

Online process

  • Once you open the website, you will receive instructions to enter the user name and password credential to log in.
  • It directs you to the CHALLANS page, where you will find different types of CHALLANS.
  • In the list of CHALLANS, you need to choose TDS CHALLAN 281. It is for individuals and Business companies.
  • You need to fill in the details in challan ITNS 281.
  • Select the appropriate section for details of the taxpayer select if it is an individual; or a company
  • Choose a type of payment payable by the taxpayer or regular assessment.
  • Choose the nature of payment like TDS on salary etc. Refer to the different types and tax percentages at the end of Guide to Pay TDS online.
  • Choose the mode of payment. It can choose via Net banking or a Debit Card of the taxpayer.
  • Type your TAN details for validation. After successful verification approval, you will be allowed to proceed further.
  • Provide details of the assessment year of TDS paid.
  • Provide the details requested, like address and contact details.
  • Type the captcha code carefully and click proceed.
  • It directs you to the confirmation page. Check all the details entered. If found ok, click proceed to the next page for making payments. It will direct you to the banking page.
  • Log in to either net banking or other modes of payment to pay.
  • After successful payment of TDS receipt with Challan Identification Number (CIN) will be displayed. It will include payment bank details and Bank Branch Code of collection bank with the date of Challan generated. You can download and save it for further procedures. 

The receiving bank transfers the payment details to the Tax Information Network (TIN) through OLTAS (Online Tax Accounting System). It enables the Income-tax Department to receive information on taxes paid through the bank.

After seven working days, you can check the Challan status through the NSDL TIN website. You can check it by two methods: 

CIN Method

Enter the CIN with Bank Branch Code on the website. It will ask for information like Challan number, date of deposit, and TDS category.

TAN Method

Choosing a particular period of the financial year and Challan generated date range. You should provide the details like TAN, category of TDS deduction, and TDS Deduction Rate.

All TDS amounts deducted in a month should be paid to the Government by the 7th of the following month. You can seek provision for paying quarterly with the permission and approval of the Commissioner of Income Tax.

Penalty for Delay In Paying TDS

  • You have to pay 1% interest for the period from the date of deduction made to the payment date.
  • Amount not paid after deduction, you pay an interest of 1.5% as a penalty from the date TDS was supposed to be deducted to the date of payment made.

TDS online payment is easy when you know TDS clauses and the rates applied. This Guide to Pay TDS online will provide details of TDS deductions under different clauses with the percentage of Tax deductions.

Use Vakilsearch`s Income tax calculator to decide your taxable profits and report your Individual Tax Return (ITR) with ease.

TDS Rates for Various Sources Of Income

  • Salaries section 192 exempts TDS up to 2,50,000. TDS rates range from a minimum of 5% to a maximum of 30%, depending on salary slabs. Refer to ITA laws.
  • Withdrawal before maturity from EPF of more than Rs 50,000 under section 192A @10%
  • For the interest of more than 10,000 on securities under Section 193, you deduct 10%.
  • When you pay dividends to shareholders more than Rs 5000, under Section 194, you deduct 10%.
  • Section 194 A interest on bank security has 10% TDS deductions.
  • Under section 194 B, winning an amount of more than 10,000 from lotteries attracts 30% TDS.
  • Winning more than ₹10,000 from a horse race attracts a TDS of 30% under section 194BB.
  • Under section 194 C, a single transaction to a contractor of more than ₹30,000 or rupees 1,00,000 during the financial year attracts 2% TDS.
  • Transporter (44AE) declaration with PAN is exempt.
  • Section 194D says if you pay an insurance Commission (15-G-15H allowed) of more than ₹15,000, you deduct 10%.
  • Under section 194DA, if you pay life insurance amounting to more than 1,00,000 rupees, you deduct 5%.
  • For non-resident sportspeople or sports associations, under section 194 E, a TDS of 20% is deducted.
  • Under section 194EE, when NSS interest is more than ₹2500, 10% as TDS will be deducted. 
  • Section 194F says payments on account of the repurchase of units by mutual funds attract a deduction of 20%.
  • If you pay more than Rs 15,000 as commission for a lottery under 194G, you deduct 5% TDS.
  • Section 194H says any income as commission or brokerage of more than Rs 15,000 attracts 5% TDS.
  • Under section 194I (a), a rent of more than Rs 2,40,000 on your property is subject to a TDS of 2%.
  • Section 194I (b) says a rent of Rs 2,40,000 on land, buildings, and furniture attracts a TDS of 10%.
  • Under section 194 IA, transferring immovable property other than agricultural land worth rupees more than 50,00,000 attracts 1% TDS.
  • As per section 194IB, an individual/HUF shall deduct 5% on paying rent.
  • Section 194IC says when you make a payment under a specified agreement, applicable for the financial year 2017-18 onwards, you deduct 10% TDS on the amount you pay.
  • Under 194J(a) and 194J9(b), payments towards fees of more than Rs 30,000 for professional or technical services, call centre, and royalty for sale attract 2% or 10% TDS.
  • Under section 194K, mutual funds should deduct 10% TDS on payment of dividends.
  • Section 194LA says when you make compensation of more than Rs 2,50,000 for the acquisition of immovable property other than agricultural land, you deduct 10%TDS.
  • Section 194LB says, when you pay interest towards an infrastructure debt fund to a non-resident, you shall deduct a TDS of 5%.
  • 194LBA states a business trust shall deduct 10% TDS at the time of payment to its unit holder if the unit holder is a resident, and if a non-resident, then 5% is deducted.
  • 194LBB states investment funds should deduct 10% of the income when it pays its resident unit holders (individuals/HUF), 30% for others, and 40% for a non-resident. 
  • 194LBC section says when you make a payment to an investor for investing in a securitisation trust, deduct a tax of 25% for a resident payee, 25% for an individual/HUF, and 40% for a non-resident.
  • 194LC says when an Indian company pays interest income to a non-resident or foreign company, and the interest is on a foreign currency-approved loan or by issuing long-term infrastructure bonds, it is liable to a 5% TDS deduction
  • According to section 194LD, you deduct a TDS of 5% when you pay an income of interest to a foreign investor on certain bonds and government securities.
  • 194M requires a HUF or an individual to deduct 5% TDS where he makes a payment of more than Rs 50lakh in a year to a contractor or a professional.
  • Under section 194N, with cash withdrawals exceeding Rs 1 crore, a TDS of 2% is deducted.
  • 194O section says an E-commerce operator should deduct 1% TDS of the amount of sale of goods or services or both while crediting the amount to an E-commerce participant.
  • 194P section says a specified senior citizen should submit a declaration containing his income details and pay TDS according to the rates in force. 
  • As per section 194Q, a TDS of 0.1% is deductible on purchasing goods exceeding Rs 50lakh.

Benefits of Paying TDS Online:

  • Saves time and money
  • Trouble maintaining physical and tangible records is avoided. 
  • Avoid mistakes like overwriting and illegible handwriting. 
  • Receive immediate confirmation of payment.
  • Make payment any time 24 X 7 
  • Make a payment from anywhere you are  
  • Fast retrieve of the records at any time
  • Faster and secure

Conclusion

Using online payment for TDS: https://incometaxindia.gov.in/Pages/Deposit_TDS_TCS.aspx is of great help. It is cost-effective as it reduces labour and time drastically compared to the manual payment system. Understanding the different clauses and heads and the different rates will be confusing. It is advisable to take expert guidance from tax advisors, and consultants like Vakilsearch will prove beneficial.

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