TDS stands for Tax Deducted at Source, a method of tax payment at the point of income’s origin according to the Income Tax Act 1961. The deductor can be a person, institution, or organisation who must withhold an amount equivalent to the tax amount from the receiver’s total earnings.
Following that, the deductor must deposit the tax deducted to the concerned authorities within a stipulated time frame. To make things easier for the deductors, the Income Tax Department allows TDS online payment without any physical visits or paperwork.
Here is a guide to paying the TDS online using the e-portal income tax.
TDS Applicability
Apart from salary income, TDS is also applicable in various other cases, including the following:
- Interest on debentures and securities
- Interest from dividends
- EPF withdrawals before plan expiry or beyond the specified limit
- Contractors, subcontractors, or freelancer payments
- Technical or professional services
- Immovable property transfers
- Insurance commission
- Commission on earnings from brokerage
- Winnings from lotteries, horse races, crosswords, and other game-related wins
- Royalty income
Understanding TAN
TAN stands for Tax Deduction and Collection Account Number, a ten-digit alphanumeric number that authorises an individual or organisation to deduct tax on payments towards receivers. According to Section 203A of the Income Tax Act 1961, every individual or organisation deducting TDS must quote their TAN details in all TDS-related correspondences, including TDS returns, payments, Form 16, etc., except when buying an immovable property.
Applying for TAN
The procedure for TAN application is an online procedure that requires filling up Form 49B. Under Section 192, the deductor must deduct the tax on salary at the time of paying it rather than its accrual. The TDS is deductible at the time of payment itself for arrears and advance payments as well. For all types of payments, a TDS deduction is applicable at the time of payment or income credit, whichever is earlier.
Stepwise Procedure for TDS Payment Online
The TDS payment online facility makes TDS administration a transparent and user-friendly procedure that minimises tax evasion. The e-portal income tax is a common platform where tax officers, taxpayers, and deductors can access uniform data. With the increasing number of taxpayers in India, digitisation has become an important prerequisite for accurate, stable, and speedy tax payments. Follow these steps for TDS payment online:
- Visit the e-portal income tax at www.incometax.gov.in.
- Select ‘e-pay tax’ under ‘Quick Links’ on the left-hand side.
- Enter the deductor’s TAN, mobile number, and OTP.
- Click Continue.
- Post OTP verification, a success message will appear. Confirm the details and click Continue.
- Select the assessment year and click Proceed.
- Select the correct type of payment for depositing TDS.
- Select the Deductee type and fill in the accurate tax payment details under relevant categories.
- Click Continue.
- On the payment page that appears, select the preferred payment mode from debit card, net banking, RTGS, pay at the counter, NEFT, or payment gateway.
- Click Continue.
- After previewing and verifying the details, click ‘Pay Now’.
- Tick the checkbox to accept the terms and conditions and click ‘Submit’ to complete the payment.
- Complete the payment process and download the Challan Form.
Timelines for TDS Payment Online
The last date for TDS payment is the 7th of the next month. For instance, a deductor must pay the TDS for May by 7th June. However, the due date for March is 30th April of the financial year. These timelines apply to all deductors, including government and non-government assessees depositing the treasury challan.
Delay in Filing TDS Return
Under Section 234E, assessees who fail to file the TDS return before the specified due dates are liable to pay a penalty of Rs. 200 per day till submission, not exceeding the total TDS collection amount. This penalty also applies to furnishing form 26QB for the purchase of immovable properties. A delay of over a year attracts a minimum penalty of Rs. 10,000, not exceeding Rs. 1 Lakh.
The TDS payment online facility has made the payment system extremely easy and fast. So, deductors must always pay their TDS on time to avoid any penalties and legal consequences.