The tax liability of a person
chargeable to tax is determined according to the provisions of the Income Tax
Act. Such tax is determined on the total income of a person on an annual basis.
Further, the person can discharge his tax liability via any of the
following ways:
·
Advance Tax
·
Self-Assessment Tax
·
TDS (Tax Deducted at Source)
·
TCS (Tax Collected at Source)
·
Tax on Regular Assessment
Therefore, Tax Deducted at Source
(TDS) is one of the modes of collecting income tax under the Income Tax Act,
1961. Thus, the tax is deducted at source by the taxpayer at the prescribed TDS
Rates and at the time of payment of certain specified income to the payee or
deducted. Further, the tax so deducted needs to be deposited with the
government within a specified time period.
The very intent of introducing TDS
was to collect tax from the very source of income. According to this mechanism,
a person (deductor) liable to make a specific type of payment to another person
(i.e. deductee) shall deduct TDS.
Further, the tax so deducted by the
deductor shall be transferred into the account of the Central Government. Also,
the deductee from whose income such a tax has been deducted shall be entitled
to get a credit for the amount so deducted. Such credit is given on the basis
of form 26 AS or TDS certificate issued by the deductor. Thus, TDS is an
indirect way of deducting tax.
Applicability of TDS
Apart from salary, there are
various incomes on which TDS is chargeable. Some of these incomes are as
follows:
v Interest on
securities
v Dividend
v Winnings
from horse races
v Insurance
Commission
v Commission
on the sale of lottery tickets
v The
Commission or brokerage
v Transfer of
immovable property
v Fees for
professional and technical services etc
Why is TAN Important for TDS?
Every assesse who is liable to
deduct TDS needs to have a TAN. TAN stands for Tax Deduction and Collection
Account Number. It is a 10 digit alphanumeric number that needs to be mentioned
in all TDS returns, payments and any other communication with the income tax
department. As per section 203A of the income tax act, 1961, it is mandatory
for all the assesses who are liable to deduct TDS to mention TAN in all the TDS
related documents. If one fails to mention TAN, a penalty is charged for the
same. A person can apply for TAN in form 49B on the NSDL website.
Procedure for TDS Payment Online
There are two modes via which tax
deducted or collected at source can be deposited to the credit of the central
government account.
Electronic Mode
E – payment of TDS is mandatory
for:
1. all
corporate assesses
2. assesses
other than the company to whom the provisions of section 44 AB of the Income
Tax Act, 1961 are applicable
Physical Mode
Through this mode the deductor is
required to furnish challan 281 in the authorized bank branch.
To avail e – tax facility the
deductor needs to have a net banking account or debit card of the selected
bank. Tax Information Network of income tax department lists banks with which
one can have a net banking or debit card facility. Thus to pay TDS online the
deductor first needs to select a relevant Challan. Following is the procedure
that a deductor needs to follow:
1. Login TIN NSDL Portal
To pay TDS online visit the website
of income tax department. Following is the link tin-nsdl.com.
2. Select the Relevant Challan
There are different challans used
for making various tax payments. Select Challan ITNS 281. This challan is used
for depositing TDS/TCS by company or non-company deductee.
3.Fill in the Challan Details
You need to fill the following
details in challan ITNS 281.
v If the
deductee is a company then select ‘(0020) Company Deductee’. But if a deductee
is a person other than the company then select ‘(0021) Non-Company Deductees’.
v Then select
the type of payment. If TDS/TCS is payable by the taxpayer by himself select
‘(200) TDS/TCS Payable by Taxpayer’. However, if TDS is payable via regular
assessment as an outcome of a demand raised by the income tax department choose
‘(400) TDS/TCS Regular Assessment’.
v Select the
type of payment on which TDS is to be paid. Check the TDS rates article for the
nature of payments on which TDS is payable.
v Choose the
mode of payment. Payment can be made via the Net banking or Debit Card of the
taxpayer.
v Enter your
TAN details. These details are used for online verification to check the
validity of TAN. In case the TAN details are not available within the database
of the income tax authorities, the taxpayer would not be allowed to proceed
further.
v Enter the
relevant assessment year. Assessment year is the year following the financial
year for which income is determined and tax payable thereon. For instance, tax
for the income earned during the financial year 2018 – 2019 is payable in the
assessment year 2019 – 2020.
v Fill other
details like address, email id, mobile number, etc
v Enter the
captcha code and hit proceed
4. Confirm Challan Details
Once you submit the data by hitting
the ‘proceed button’ your dashboard displays the screen that asks you to
confirm the challan details previously submitted. Once you go through all the
details thoroughly, you need to confirm that the details entered in the challan
were correct to the best of your understanding.
5. Make TDS Payment
Once you confirm the challan
details, the NSDL portal will redirect you to the net banking page of your
bank. Login to your banking page with the help of your user id and password
details and make the payment of TDS.
Once the payment is made your
dashboard will display a challan counterfoil. This challan counterfoil contains
Challan Identification Number (CIN). It also contains payment details, bank names through which e-payment of
TDS is made. Bank Branch Code (BSR) and date of tender of challan.
Bank Branch Code is a 7 digit code
allotted by RBI to a particular bank branch. The collecting bank branch will
transmit the details to the Tax Information Network (TIN) via Online Tax
Accounting System (OLTAS). OLTAS is an initiative by the income tax department
to receive information and receive records of tax paid through banks. This is
done through online upload of challan details.
6. Online Verification
After making the online payment of
TDS, you can track online the status of the challan deposited in bank in the
‘Challan Status Inquiry” on the NSDL – TIN website. This can be done after
seven days of making the payment. There are two ways in which you can track
your challan:
a. CIN Based View
In this you can use CIN and other
details like BSR code of collecting branch, challan tender date, challan serial
number and the amount, the taxpayer can view the following details:
v BSR Code
v Date of
Deposit
v Challan
Serial Number
v Major Head
Code with description
v TAN/PAN
v Name of
Taxpayer
v Received by
TIN on (i.e. date of receipt by TIN)
v Confirmation
that the amount entered is correct (if amount is entered)
b. TAN Based View
By providing TAN and Challan Tender
Date range for a particular financial year , the taxpayer can view the
following details :
v CIN
v Major Head
Code with description
v Minor Head
Code
v Nature of
Payment
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