Tax Deducted at Sources (TDS)
what is tds? how it is calculated in india?
What is TDS?
If an individual has paid excess TDS when compared to the liable tax amount, the payee can file a claim for a refund of the excess amount. The TDS deductions are calculated based on various factors for individuals from different types of income categories.
How TDS Calculated?
Income and expenditure such as salary, lotteries, interests from banks, payment of commissions, rent payment, payments to freelancers, etc. fall under the ambit of TDS. When making payments under these segments, a percentage of the overall payment is withheld by the source that is making the payments. This source, which can be a person or an organization, is known as the Deductor. The person whose payment is getting deducted is called the Deductee. For instance, a deductor is the employer paying salary to an employee (the deductee).
An individual is required to file TDS return in order to receive TDS refunds and to maintain a healthy financial record. The TDS return can be carried out over the internet by visiting the Income Tax India.
The individual will need to sign onto the website by using the existing credential or by registering for the services. There are specific deadlines that an individual will require to follow to ensure the TDS returns are filed within the due time. Depending on the income category, the individual will need to fill up the necessary form and provide required documents for the refund process to begin. Once the individual has registered and submitted the return, he/she will need to validate the TDS Return File. The validation can be done by using the free software provided by the Income Tax Department. If you are wondering about the possibilities of receiving a refund for the excess TDS paid, you will need to file the claim through TDS return to receive a refund for the excess amount.
Challan for TDS
Challan TDS 281
eFiling for TDS Return
- Follow the instruction below for the e-filing of TDS
- The file should be in a clean text ASCII format with ‘txt’ as the filename extension.
- You can also download the free software to prepare the return file using the Return Preparation Utility provided by NSDL or any other third party software.
- Once the file is prepared, validate the file using the File Validation Utility (FVU) provided by NSDL Generated .fvu file can either be submitted at TIN-FC or uploaded at TIN website.
ePayment of TDS
Penalty for Late Filing of TDS Return
If an individual fails to file the TDS Return within due time, he/she will need to pay a fine of Rs.200 per day until the return is filed. The fee is applicable for every day until the fine amount is equal to the total liable TDS amount.
If the taxpayer exceeds one-year time limit to file the TDS return or furnishes incorrect details of PAN, TDS amount, he/she will need to pay a penalty of minimum Rs.10,000 to Rs.1 lakh.