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What is TDS?

TDS stands for Tax deduction at source. TDS was implemented to curb the evasion of tax by deducting tax at source only. Under this arrangement, the person who is paying money to someone will deduct some amount from amount payable, deposit it to government and the person of whom such sum was deducted shall claim it while filing Income Tax Return.

Rate of TDS

Rate of TDS are prescribed under different sections of Income Tax Act, 1961 and Finance Act. There are various sections which contains the provisions of TDS like 192, 194A, 194C, 194H, 194I, 194J etc.

Due date of Payment of deposit of TDS

TDS deducted during April to Feb 7th of Next Month

TDS deducted during March

30th April

Interest on delayed deposit of TDS

Nature of Default Rate of Interest Period for which interest is to be paid

Non-deduction or lower deduction of TDS

1 % per month or part of month* From the date TDS was deductible to actual date of deduction
Non-payment of TDS 1.5 % per month or part of month* From date of deduction to date of payment

Note: Interest is to be calculated on monthly basis and not based on number of days. Even default of one day attracts interest for whole month.
For example Mr. A has deducted TDS on 1st August. Then the due date is 7th September. Now say Mr. A deposits tax on 8th September (i.e. one day after the due date). Then interest is applicable from 1st August to 8th September i.e. for a period of 2 months. Mr. A now has to pay interest of 1.5% p.m. x 2 months = 3%
*Any delay in payment of tax which is due for payment from 20-03-2020 to 29-06-2020 shall attract interest at the lower rate of 0.75% for every month or part thereof if same is paid after the due date but on or before 30-06-2020.

Due date of filing TDS Return

For Quarter Ending on Due date

30th June

31st July
30th September 31st October
31st December 31st January
31st March 31st May of next financial year*

*For quarter ending 31st march 2020, the due date of TDS return has been extended to 30th June 2020.

Penalty for delayed filing of TDS Return

200 Rs per day subject to maximum of TDS Amount.

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