Tax Deducted at Source

Company ITR filing is a crucial annual compliance requirement that every company must fulfill. It is highly advisable to file the company ITR by the due date to ensure tax compliance and avoid unnecessary penalties or additional charges associated with late or non-filing of the return. Timely filing not only keeps a company in good standing with tax authorities but also helps mitigate any financial burdens that might arise from delays. This blog aims to provide a comprehensive understanding of the company ITR filing deadline, associated charges, and the e-filing process.

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Overview - Tax Deducted at Source

TDS (Tax Deducted at Source) is a system where income tax is deducted directly from certain types of payments — like salary, rent, commission, professional fees, and interest — by the person making the payment, known as the deductor. This deducted amount is then deposited with the Income Tax Department, linked to the PAN of the recipient (deductee).

Typically, the person earning the income is responsible for paying income tax. However, TDS ensures that tax is collected upfront, reducing the recipient’s final taxable income. The income receiver gets the net payment (after TDS deduction) but must still report the gross income when filing their tax return. The deducted TDS is then adjusted against their total tax liability, and they can claim credit for the amount already paid.

This system helps the government collect taxes in advance, track transactions, and minimize tax evasion. If the taxpayer ends up having no tax liability for the year, the deducted TDS is refunded when the tax return is filed.

What is a TDS Certificate?

A TDS certificate is an official document provided to the person from whom tax has been deducted (deductee). It serves as proof that tax has been deducted and deposited with the Income Tax Department. Under Section 203 of the Income Tax Act, 1961, two key types of TDS certificates are issued:

Form 16 — For Salaried Employees

Issued by employers to salaried individuals.
Contains:
- Income tax computation
- Salary breakdown
- TDS deducted and deposited details
Deadline: Employers must provide Form 16 by May 31st of the next financial year.

Form 16A — For Non-Salaried Individuals

Issued to freelancers, consultants, and other non-salaried professionals.
Contains:
- Tax computation details
- TDS deducted by the payer
- Payment details
Commonly received from banks (TDS on interest) or clients (TDS on professional fees).

Budget 2025 Update: TDS and TCS Rationalisation

The Union Budget 2025 introduced significant changes to Tax Deducted at Source (TDS) and Tax Collected at Source (TCS), aiming to simplify compliance, particularly for middle-income taxpayers. The key updates include increased threshold limits across various TDS sections, reducing the burden of tax deductions on smaller incomes. Here’s a breakdown of the proposed changes:

TDS Threshold Revisions

Section	Current Limit	Proposed Limit
193 – Interest on securities	NIL	₹10,000
194A – Interest other than interest on securities	(i) ₹50,000 for senior citizens; (ii) ₹40,000 for bank, cooperative society, and post office payers; (iii) ₹5,000 for other cases	(i) ₹1,00,000 for senior citizens; (ii) ₹50,000 for bank, cooperative society, and post office payers; (iii) ₹10,000 for other cases
194 – Dividend for individual shareholders	₹5,000	₹10,000
194K – Income from mutual fund units	₹5,000	₹10,000
194B – Winnings from lottery, crossword puzzles, etc. & 194BB – Winnings from horse races	Aggregate exceeding ₹10,000 in a financial year	₹10,000 per single transaction
194D – Insurance commission	₹15,000	₹20,000
194G – Commission or prize on lottery tickets	₹15,000	₹20,000
194H – Commission or brokerage	₹15,000	₹20,000
194I – Rent	₹2,40,000 per financial year	₹6,00,000 per financial year
194J – Professional/technical service fees	₹30,000	₹50,000
194LA – Income from enhanced compensation	₹2,50,000	₹5,00,000
206C(1G) – Remittance under LRS and overseas tour packages	₹7,00,000	₹10,00,000

Key TCS Changes

TCS on education-related remittances: Removed when financed through loans from specified financial institutions (Section 80E).
TCS on the purchase of goods: Completely removed, effective April 1, 2025.
Higher TDS rates: Will only apply to taxpayers who fail to provide PAN.

Key Advantages of TDS

Here’s a breakdown of the main benefits of Tax Deducted at Source (TDS):

Prevents Tax Evasion
TDS ensures taxes are collected at the time of income payment — like salary or interest — reducing the chances of individuals evading taxes.
Steady Government Revenue
By collecting tax throughout the year from salaries, interest, commissions, and more, TDS provides the Government of India with a continuous stream of income, supporting national development and public services.
Wider Tax Net and Fairer System
TDS brings more individuals under the tax umbrella, promoting a more equitable system where a larger segment of the population contributes to the country’s revenue.
Reduces Compliance Burden
It lightens the load for both taxpayers and tax collection agencies. Since the tax is deducted at the source, there’s no need for separate follow-ups or reminders, making the collection process smoother and faster.
Simplifies Tax Filing
Individuals don’t have to worry about calculating taxes separately. With tax deducted beforehand, they only need to report income and claim any refunds (if applicable) while filing their returns — making the process hassle-free.

TDS on Various Types of Income

TDS on Salary

Under Section 192 of the Income Tax Act, 1961, employers deduct tax based on your applicable income tax slab.

Employers collect investment declarations at the start of the year and proofs later to calculate taxable income.
If your income falls under the 30% slab, TDS will be deducted at 30%, and so on.

TDS on Interest Income (Fixed Deposits)

According to Section 194A, banks deduct TDS on interest income if it exceeds ₹10,000 in a financial year (from a single or combined FDs at the bank).
The rates are as follows:

Case	TDS Rate
If PAN is not provided	20%
If PAN is provided	10%
If Form 15G/15H is submitted	No TDS

Form 15G is for individuals (non-senior citizens) with income below the taxable limit.
Form 15H is for senior citizens (60+ years) with no taxable income.

TDS on Interest from Bonds

Under Section 193, TDS is deducted at 10% on interest earned from taxable bonds — including government bonds like the 7.75% Savings (Taxable) Bonds.

Tax-free bonds are exempt from TDS.

TDS on Insurance Commission

For insurance agents and commission earners, Section 194D applies:

Category	TDS Rate
Individual / HUF with PAN provided	5%
Other entities with PAN provided	10%
No PAN provided	20%

No TDS is deducted if the commission is less than ₹15,000 per year.

TDS for Contractors

As per Section 194C, contractors working on projects like construction, advertising, or catering for government bodies or co-operatives face the following rates:

Category	TDS Rate
Individual / HUF	1%
Other entities (firms, companies)	2%
No PAN provided	20%

No TDS on payments below ₹30,000 for a single bill or ₹1,00,000 in total during the financial year.

TDS on Savings Account Interest

No TDS is deducted on savings account interest.
Under Section 80TTA, interest up to ₹10,000 per year is deductible from taxable income.
For senior citizens, Section 80TTB increases this limit to ₹50,000, covering all types of deposits (savings, FDs, etc.).

TDS on Rent

Under Section 194I, individuals or HUFs subject to tax audit must deduct TDS if annual rent exceeds ₹1.8 lakhs. The rates are:

2% for rent on machinery, plant, or equipment
10% for rent on land, buildings, furniture, or fittings

TDS Rules for Individuals and HUFs (Not Liable for Tax Audit)

TDS on Rent (Section 194IB)

Who needs to deduct?
Any individual or HUF not liable for tax audit paying rent exceeding ₹50,000 per month for land, buildings, or both.
Tax Rate:
–5% TDS on rent
-20% if the landlord fails to provide PAN
When to deduct:
- At the time of rent payment for March (or the last month of tenancy if vacated earlier).
Payment Deadline:
- TDS must be deposited to the government within 30 days from the end of the month of deduction using Form 26QC (challan-cum-statement).
TDS Certificate:
- Issue Form 16C to the landlord within 15 days from the due date of TDS payment.

–No TAN (Tax Deduction Account Number) is required for tenants under this section.

TDS on Shares and Mutual Funds

No TDS is applicable on capital gains from shares or mutual funds.

TDS on Property Purchase (Section 194IA)

Buyers purchasing property worth ₹50 lakh or more must deduct 1% TDS on the purchase value.
20% deduction applies if the seller fails to provide PAN.
Payment & Filing:
- Deposit the TDS within 30 days of the month of deduction using Form 26QB.
TDS Certificate:
- The buyer must issue a TDS certificate to the seller within 15 days from the due date of TDS payment.

–No TAN is required for property buyers under this section.

TDS on Brokerage (Section 194H)

Who needs to deduct?
Any person (except individuals or HUFs not liable for audit) paying brokerage or commission to a resident.
Tax Rate:
–5% on brokerage/commission
-20% if PAN is not provided
Exemption:
No TDS if the total brokerage/commission does not exceed ₹15,000 in a financial year.
When to deduct:
- At the time of credit or payment — whichever is earlier.

🔹 Individuals and HUFs under tax audit must also deduct TDS under this section.

TDS on Professional and Technical Fees (Section 194J)

Who needs to deduct?
Any person (except individuals or HUFs not liable for audit) paying fees for professional or technical services to a resident.
Tax Rate:
–10% TDS on fees
-20% if PAN is not provided
Exemption:
No TDS if the total fee does not exceed ₹30,000 in a financial year.
When to deduct:
- At the time of credit or payment — whichever is earlier.

🔹 Individuals and HUFs under tax audit must also deduct TDS under this section.

TDS Refund

If excess TDS is deducted, you can claim a refund by filing your Income Tax Return (ITR).
The due date for most individuals is 31st July of the following financial year.

How to File TDS Payment Online

Follow these steps to complete your TDS payment online smoothly:

Login to the NSDL Tax Payment Portal
- Visit the NSDL website.
Select the Correct Challan
- Choose Challan No./ITNS 281 for TDS/TCS payments.
Choose Deductee Type
- Select either Company Deductee or Non-Company Deductee, based on whom you’re paying.
Enter TAN and Assessment Year
- Provide your Tax Deduction and Collection Account Number (TAN).
- Enter the Assessment Year (the year following the financial year of the transaction).
- For example, if the transaction occurred in FY 2024-25, the AY will be 2025-26.
Select Payment Type
- Choose whether the payment is for Regular Assessment or Self-Assessment.
Provide Payment Details
- Select the Nature of Payment and Mode of Payment (Net Banking/Debit Card).
- Click Submit to proceed.
Verify TAN Details
- If the TAN entered is valid, the Taxpayer’s Name will appear on the confirmation screen.
Complete Payment
- Once confirmed, you’ll be redirected to your Net Banking portal.
- Enter your login credentials and complete the payment.
Generate Challan
- After successful payment, a challan will be generated, displaying:
  - CIN (Challan Identification Number)
  - Payment Details
  - Bank Name

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CERTIFICATE

FSSAI & EATING LICENCES

International Organization for Standardization (ISO)

Government e Marketplace (GeM)

Extended producer responsibility (EPR)

ANNUAL FILINGS

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AUDIT

Property Matters

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Business & Investment Support

website policy

Employment Documents

Other Legal Documents

trade agreement

Safety & Packaging

Import Monitoring System

Other IEC License

Tax Deducted at Source

REGISTER NOW..

Why Should I Use Auriga Accounting For Tax Deducted at Source ;?

book appointment

Resolve all your queries

Complete your ITR Filing

Why Should I Use Auriga Accounting For Tax Deducted at Source ?

book appointment

Resolve all your queries

Complete your ITR Filing

Overview - Tax Deducted at Source

What is a TDS Certificate?

Budget 2025 Update: TDS and TCS Rationalisation

Key Advantages of TDS

TDS on Various Types of Income

TDS Rules for Individuals and HUFs (Not Liable for Tax Audit)

How to File TDS Payment Online

Get more details

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