TDS e-Payment: Step-by-Step Guide to Pay TDS Online

The Indian Government uses a process called Tax Deducted at Source (TDS) to collect taxes from various income categories, including salaries, rent received, commission, interest earned from Fixed Deposits, and other income heads. This type of tax is applicable to individuals and businesses. Hence, it is important to understand TDS for both income recipients and payers in India as it helps to prevent tax evasion.

TDS is a type of income tax and the amount paid as TDS is set by the Income Tax Department. The party deducting the amount is referred to as the deductor. For instance, your company deducts a certain percentage from your income and pays it to the Government as TDS and pays you the remaining amount. In this scenario, your company is the deductor and you are the deductee.The deductor then deposits the TDS payment with the government within a specified date. Whether paying with cash, a cheque or a Credit Card, TDS is connected to the deductor’s PAN. Also read: All about TDS on contractor payments

It is important to remember that TDS does not apply to everyone. It is only applicable when taxable income exceeds the taxable limit. For example, if the interest earned on an FD earns is above ₹40,000, it becomes taxable by 10%. However, if the interest earned is lower than ₹40,000, the interest income is not taxable.The IT Department sets different slabs of TDS depending on the income head, which means the amount you pay in TDS will differ based on your earnings.

• Salaries
• Interest payments by banks
• Commission payments
• Rental income
• Consultation fees
• Professional fees

Additionally, the onus of making the TDS payment falls on the buyer of a property that is valued above ₹ 50 lakhs? Also read: How to pay TDS online on purchase of property

• You get 24*7*365 days of availability for online TDS payment.
• You can pay taxes from any location anytime through your net-banking account.
• You get instant acknowledgement for your TDS online payment.
• You can download and save the TDS payment challan acknowledgement copies for future reference.
• A secure, transparent system significantly reduces the likelihood of corruption and other malpractices, such as the discretionary credit of tax deductions based on manual TDS Certificates.
• Online TDS e-payment makes it environmentally friendly because it saves significant paper.

Now that you are aware of the circumstances for when you need to pay TDS, here’s how you can do so online.

Step 1:

Head to e-Pay Tax portal of the Income Tax Department and choose Challan No. 281 to pay TDS.

Step 2:

Fill the form on your screen with the information listed below:Choose Company Deductees if you are a corporate assessee; otherwise, choose non-Company Deductees.If the taxpayer is paying TDS on his behalf, he should choose TDS/TCS Payable by Taxpayer under the Type of Payment option. Unless otherwise specified, select TDS/TCS Regular Assessment. Select the appropriate TDS category from the menu in the pull-down under the Nature of Payment option.Decide on a payment method. You can use the Net-Banking feature of all reputable banks to make an electronic TDS payment. You can also use Debit Cards provided by banks.Select the Assessment Year from the pull-down option and enter your TAN number. Then, after entering your address and other personal information, click “Proceed.”

Step 3:

The website takes you to a confirmation screen once you click the “Proceed” button. Check all your information to make sure it is accurate. If you find an error, click the “Edit” button to recheck and correct it before clicking the “Submit” button.

Step 4:

Once clicked, the website takes you to the chosen bank’s Net-banking page. Log in using your name and password, then pay the TDS sum. For debit card payments, you must input the card’s information, including its number, name on the card, validity, ATM pin, etc.

You can download your TDS Challan at the time of a payment through OLTAS (Online Tax Accounting System) or the Income Tax portal. Follow these steps:Download through OLTAS:

1. Go to the TIN-NSDL site
2. Select “OLTAS” under the “Services” dropdown menu
3. Click on ‘Challan Status Inquiry’ and select either TAN-based view or CIN-based view

Also read: How to verify TDS challan?

If you do not have internet access, you can deposit TDS offline. Take a look at a few simple steps mentioned below -Step 1: First Download “Challan 281” from the official website of the Income Tax Department.Step 2: Take a printout of this form. Fill in details such as TAN , your full name, residential address etc.Step 3: Submit your payable TDS amount along with the challan to your nearest bank. After TDS challan payment, the bank will issue a stamped receipt after paying the TDS amount.

Any individual, HUF (Hindu Undivided Family) , business, or NRI (Non-Resident Indian) can withhold tax from payments received under the five heads of income or in other ways defined by the Income Tax Act of 1961 . Unless otherwise stated, this clause does not apply to individuals or HUFs making such payments.As an individual or HUF taxpayer, you must deduct TDS at 5% if your monthly rent exceeds ₹ 50,000. Regardless of whether your books require an audit, this applies to all Individual and HUF taxpayers.Employees with an income exceeding the maximum exempt limit must have their employers withhold TDS from their salaries. Employees might provide documentation of purchases and costs that save them money on taxes to lower the employer’s TDS amount.Banks deduct TDS at a rate of 10% from Fixed Deposit interest payments. However, if your yearly income is below the maximum exempt threshold, you can file Forms 15G and 15H to avoid this deduction.When filling your annual income tax returns, you can reclaim any excess TDS your employer, banks, or any other organisation deducted during the year. Also read: How to claim TDS refund?

If a payment does not exceed the TDS deduction cap, it is exempt from TDS. The following payments won’t be subject to TDS if they don’t go above the allotted amount:

• Interest on bank and post office savings, fixed deposit plans, and recurring deposits paid to senior citizen—₹ 50,000
• Rent paid by a non-domestic company or person for land, a building or furnishings and HUF—₹ 2.4 lakhs
• Withdrawals of cash and HUF by residents—₹ 1 Crore (₹ 20 lakhs if the individual or HUF has not submitted an ITR for the previous three years in a row)
• Payment to residents, contractors, and professionals for services rendered or items purchased by residents and HUF—₹ 50 lakhs
• Rent due from one resident person or HUF to another resident person or HUF—₹ 50,000

The Income Tax Department levies the following penalties for failure or delays in submitting your TDS return and payment:

Late Payment Penalty

• If TDS is not paid by the due date, a penalty and interest will be assessed under Section 201A of the Income Tax Act. If all or a portion of the tax is not withheld at source, a 1.5% interest is assessed monthly beginning on the day the tax was deductible and continuing until the day the tax is withheld.

Late Filing Penalty

• Under Section 272A (2) of the Income Tax Act, you must pay ₹ 100 as penalty for each day of defaulted returns, up to the TDS amount in total.
• Not filing your returns by the due date. According to Section 234E of the Income Tax Act, a penalty of ₹ 200 is fined for each day till you file your returns, up to a maximum of the TDS amount.
• As stated in Section 271H of the Income Tax Act, if the deductor fails to file their TDS return by the deadline, a penalty between ₹ 10,000 and ₹ 1 lakh is imposed.
• According to Section 271H of the Income Tax Act, if a deductor submits inaccurate information regarding PAN, challan details, TDS amount, etc., a penalty between ₹ 10,000 and ₹ 1 lakh is fined.

Late Deduction Penalty

If TDS is not deducted or is deducted beyond the due date, a penalty of 1% per month, or a portion thereof, may be assessed on the TDS that should have been deducted. The penalty is determined by dividing the date that TDS should have been deducted by the date that it was deducted.If you don’t know the due date for TDS payments and returns, check it out here.

Non-government tax deductors can deposit TDS online for:1 – Tax deducted for the months April to February – by the 7th of the following month2 – Tax deducted in March – by the 30th of AprilFor example, if you deduct tax in July, the TDS amount can be deposited by the 7th of next month, i.e. by the 7th of August.In the case of tax deducted on purchase of immovable property, the time limit for TDS deposit is the 30th of the following month in which the property is purchased.
For example, if you purchase the property in June, TDS can be deposited by the 30th of July.Ready to make the most of your money? Start your tax planning journey now!