Purpose: To collect tax at the source from payments made by companies to their suppliers, contractors, and employees.
Applicability: Companies and firms are required to deduct TDS at the time of making specified payments to the supplier or contractor if the total amount paid or credited during the year exceeds the specified limit.
Timeline: TDS is required to be deducted at the time of making the payment. The TDS return is to be filed quarterly, on or before the due date specified for the particular quarter.
Exemption: No TDS is to be deducted if the amount paid or credited to the payee is less than the specified limit, or if the payee is exempt from TDS under the Income Tax Act.
Penalty for non-compliance: If TDS is not deducted or is deducted but not deposited with the government, a penalty of 1% per month or part thereof is levied until the tax is paid.
Due date: The due dates for filing TDS returns are as follows:
For the quarter ending June 30: 31st July
For the quarter ending September 30: 31st October
For the quarter ending December 31: 31st January
For the quarter ending March 31: 31st May
Forms: The TDS return is filed in Form 24Q for salaries and Form 26Q for all other payments.
Reporting Authority: The TDS return is to be filed with the Income Tax Department.
Other details: The TDS return should contain details such as the name and PAN of the deductee, amount paid, TDS amount deducted, and other relevant information. The return can be filed online through the TRACES portal or through the e-filing website of the Income Tax Department.
TDS Payment
Section: Section 194 of the Income Tax Act, 1961
Purpose: To collect tax at source from certain payments made by the company to residents of India.
Applicability: All companies making certain payments such as salaries, interest, rent, professional fees, etc. are required to deduct TDS and make payment to the government.
Timeline: TDS should be deducted at the time of making the payment or credit to the payee's account, whichever is earlier. The TDS amount should be paid to the government by the 7th of the following month in which the deduction is made.
Exemption: There is no exemption from TDS payment for companies. However, certain payments may be exempt from TDS deduction, such as payments made to the government, RBI, and certain other entities.
Penalty for non-payment: If a company fails to deduct TDS or deducts but fails to pay it to the government, it will be liable to pay interest at the rate of 1.5% per month or part of a month until the TDS is paid.
Due Date: The due date for TDS payment by a company is the 7th of the following month in which the deduction is made.
Forms: Companies can use Challan No. 281 to make TDS payments. The challan should include details such as TAN number, amount deducted, type of payment, etc.
Reporting Authority: The TDS payment made by the company is to be reported in the quarterly TDS return in Form 24Q. The return should be filed by the 31st of July, October, January, and May for the respective quarters.
Other Details: Companies are required to obtain a Tax Deduction and Collection Account Number (TAN) and quote it on all TDS challans, returns, and other TDS-related documents. Companies are also required to issue TDS certificates to the payees in Form 16A, specifying the amount of TDS deducted and other relevant details.
