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TDS Online Payment - Details and Guidelines

All corporate and non-corporate tax deduction entities making payments specified under the Income Tax Act, to third parties are required to deduct tax at source (Tax Deducted at Source -TDS) from these payments and deposit them with any designated bank branches authorized with the collection of taxes on behalf of the Government of India. They are also required to furnish TDS returns with third parties' details and challan details on the tax deposit to the IT Department.

The Electronic Filing of Returns of Tax Deducted at Source Scheme, 2003 is applicable to all entities deducting tax, who furnish their TDS return in electronic form. As per this scheme:

  • From June 1, 2003, it is mandatory for corporate entities deducting tax, to furnish their TDS returns in electronic form (e-TDS return).
  • From the F.Y. 2004-2005, it is mandatory for Government entities deducting tax, to furnish TDS returns in electronic form.
  • Entities other than the Government and corporates may file TDS returns in electronic or physical form.

TDS Certificate

Once an individual deposits the TDS with the Income Tax Department, according to the Section 203, the deductor need to allot a TDS Certificate to the concerned individual on behalf of the person for whom the tax payment was done.

Ideally, the TDS Certificate or Form 16/ Form 16A (as applicable) ought to be issued to the individuals on an annual or quarterly basis.

Now, with the ease of making online payment for TDS or e-filing TDS, which is hassle-free, fast and convenient, the process for payment has also been simplified online.

Benefits of TDS Online Payment

  • Availability of 24*7 Payment facility on all 365 days of the year
  • Convenience in terms of time and place for the deductor to make the TDS payment as convenient
  • TDS Online Payment acknowledgement on immediate basis
  • Facility to download the challan acknowledgement copies and save them easily for reference in the future
  • Significant decrease in the chances of corruption and other malpractices like the discretionary grant credit of tax deductions based on manual TDS Certificates etc. due to a secure, transparent system online
  • Also, e-filing TDS makes it environment friendly due to the saving of paper to a great extent and in great quantity

Timelines for TDS Payment

  • The fixed due date for TDS payment to be collected by the deductor is the 7th of the next month. For instance, the deductor is required to pay the TDS for June, either on or before the 7th July.
  • However, it is only for the March month, since it is the financial year end, that the deductor is allowed to pay the deducted TDS amount, either on or before the 30th April of that particular year.
  • The timelines for payment apply to all the deductors, i.e. the non-Government assesses and the Government assesses, those who submit their tax with Challan i.e. the Treasury Challan.
  • The set due date for TDS payment is the same day on which the amount of tax is deducted; this is exclusively for the Government deductors, who make their TDS payment without any challan.
  • In certain specific circumstances, the Assessing officer (AO), with prior approval from the Joint Commissioner, may choose to permit the quarterly TDS payments to be made. Therein, the last date of TDS payment will be the 7th of the next month, from then, post each quarter end and 30th April for the financial year’s last quarter.

Frequently Asked Questions About E-TDS

According to the Income Tax Act, 1961, it is mandatory for all corporate and Government deductors/ collectors to file their TDS/TCS returns through electronic media (i.e. e-TDS/TCS returns). The deductors/collectors, except for corporates or the Government, may choose to file either physically or in electronic form.
All Drawing and Disbursing Officers of the Central and State Governments fall under the Government deductors’ category.
The National Securities Depository Limited, (NSDL), Mumbai, has been appointed by the BDT as the e-TDS/TCS Intermediary.
NSDL has now introduced a freely downloadable returns tool to aid the preparation of e-TDS/TCS returns. One can also develop their own application for this purpose or use third party vendors’ applications. A list of vendors is available on the NSDL-TIN website.
The forms for TDS/TCS returns filing have been notified by the CBDT and are the same for physical and electronic returns. The e-TDS/TCS return is required to be prepared as a clean text ASCII file according to the specified data structure as prescribed by ITD.
It is compulsory to mention the 10 digit reformatted (new) TAN in the e-TDS/TCS returns.
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