Here’s a real-world example:
Scenario: Company ABC rents an office for Rs. 80,000/month.
Applicable TDS: 10%.
Calculation: Company ABC deducts Rs. 8,000 (10% of Rs. 80,000) and pays the landlord Rs. 72,000.
Deposit: That Rs. 8,000 goes directly to the government.
Result? The landlord gets slightly less, but their taxes are already partially settled.
Also Read: Tax Evasion
Tax Deducted at Source (TDS) Rules
Like traffic rules, ignoring TDS regulations can get expensive. Here’s the gist:
TDS must be deducted when the payment is due or made, whichever comes first.
Delay in deduction? You pay 1% monthly interest.
Delay in deposit? That’s 1.5% monthly interest until it’s cleared.
All TDS deducted must be deposited by the 7th of the next month.
While TDS is unavoidable, you can still maximise your post-tax earnings with safe and high-yield instruments like Bajaj Finance FDs. With assured returns, you know exactly how much you’ll earn. Check latest FD rates.
When should TDS be deducted, and who is liable to deduct it?
TDS applies to specific payments under the Income Tax Act. But here’s where it gets interesting:
Individuals/HUFs not under audit → No need to deduct TDS (with some exceptions).
On rent above Rs. 50,000/month → 5% TDS applies, even if you’re not under audit.
Forms like 15G/15H → Submit to avoid TDS if your income is below taxable limits.
Example: If you earn Rs. 20,000 in annual bank interest and your total income is below Rs. 4,00,000, filing Form 15G or 15H saves you from unnecessary TDS.
Types of TDS (Tax Deducted at Source)
TDS isn’t just for salaries. It applies across multiple income categories, such as:
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When and how to file TDS returns in India
A. Who needs to file?
Anyone responsible for deducting TDS must file returns.
B. Filing frequency:
Payments must be made by the 7th of the next month.
Returns are quarterly, with deadlines like 31st July, 31st Oct, 31st Jan, and 31st May.
C. Information required:
D. Forms you’ll need:
Form 24Q → Salaries
Form 26Q → All non-salary payments
Form 27Q → Payments to non-residents
Form 26QB → Property sales
Form 26QC → Rent
How to know the deducted TDS amount
Tracking TDS is simple:
Register on the Income Tax Department portal.
Login and go to My Account → View Form 26AS.
Form 26AS will show all TDS entries linked to your PAN.
Redirect to TRACES for detailed reports.
TDS and Income Tax: Differences between them
Basis
|
TDS
|
Income Tax
|
Definition
|
Deducted at source
|
Paid on total income
|
When collected
|
At payment time
|
After calculating annual income
|
Purpose
|
Advance collection
|
Final settlement
|
Who deducts/pays
|
Payer deducts
|
Recipient pays
|
Adjustment
|
Treated as advance tax
|
Final tax after adjusting TDS
|
Uploading TDS statements on the Income Tax website
Steps:
Visit Income Tax e-filing portal.
Login with your TAN.
Navigate → e-File → Income Tax Forms → File Income Tax Forms.
Select the relevant form (24Q/26Q etc.).
Validate with either: