TDS Online Payment Procedure with Forms: Ultimate Guide

CA Suchi Sharma

5 years ago

At the point of origin of income, the taxpayers in India have to pay TDS (Tax Deducted at Source) as per the Income Tax Act, of 1961. An amount from the total earnings received by a deductee or receiver is generally withheld by the deductor (person, institution, or organization). This deducted amount is equal to the tax amount, which needs to be credited to the government account within the prescribed time limit.

Latest Update in TDS Payment

Delhi Income Tax Appellate Tribunal ordered TDS late payment Interest that it can not accept as a company expenditure. read more

TDS Applicability in Multiple Forms

Most people in India believe that TDS applies to salaried individuals, but that’s completely wrong. There are multiple scenarios where TDS is applied, such as:

Income earned from the Internet against securities and debentures
Interest Income received from various sources other than securities and debentures
Dividend Income
Money received from EPF (if it is availed before the prescribed withdrawal limit or if the amount withdrawn exceeds the specified limit)
Money sent to freelancers, contractors or subcontractors
Winnings from game shows, lotteries, crossword puzzles or any other game-related winning Insurance or brokerage commission earnings
Earnings from the transfer of Movable property
Profits received from technical or professional services to clients
Income earned against royalty, etc.

Why does TDS at First Place Exist?

It is a well-known fact to everyone that earnings or income received by people in India is subject to tax at the end of the financial year. It is challenging for the central government to maintain cash reserves or national revenue if income earned by citizens is taxed only at the end of the year, Hence, to avoid such a situation, the concept of TDS has been introduced. The introduction of the TDS system helps the Indian government to:

Prevent the evasion of Tax: The TDS mechanism is a masterstroke by the government to receive a portion of the total payable tax from the income at its source point directly with zero delays. This way, the government ensures that people do not hide their actual income and also minimizes tax defaults.

Steady Revenue Source: the imposition of TDS on taxpayers also provides a stable revenue source to the government throughout the fiscal year.

SimplifyTax Return Filing Process: As the tax gets deducted automatically via TDS at source, the taxpayers won’t have to pay any other taxes during return filing, if they do not have any other source of income.

Maintain Timely Collection of Tax: The government ensures a timely collection of taxes by imposing the TDS system.

Provide Convenience to the Taxpayers: Individuals can plan their finances very well as the total tax payment gets spread throughout the year for them via TDS. Lump-sum payment of TDS in a single month is a bit difficult for salaried persons as it strikes their financial obligations hard.

What is TAN in TDS?

TAN stands for Tax Deduction and Collection Number; It is a ten-digit alphanumeric number that is issued to the registered organizations or individuals who are obliged to deduct or collect tax at source against payments made by them.

It is mandatory for all individuals or organizations (bind to deduct tax) to mention the required TAN details to the Income Tax Department in all practices that are relevant to TDS (e.g. TDS returns, issuance of Form 16, TDS payments, etc.), as per the Section 203A of the Income Tax Act 1961. Those who fail to fulfil the above duties are obliged to pay a penalty of INR 10,000.

All the authorized banks in India don’t accept TDS deposits or payments when the TAN details are not mentioned by the depositor.

Point to Note:

In many instances, TAN and PAN are assumed to be the same documents by many people, thinking they can be used interchangeably, which is entirely a false assumption.

One must know that the organizations, individuals or any other entity who is responsible for tax deduction at source must have a TAN, even if they have a PAN. Immovable property buying/selling activity is the only valid exception in this case, where the buyer or deductor is not required to present TAN and can use PAN for TDS payment.

TAN Application Procedure

The TAN application procedure is straightforward and can be done online by submitting the Form 49B.

TDS Deduction

As per Section 192 of the Income Tax Act, the deductor must collect TDS at the time of actual payment of salary to employee accounts rather than accrual time of salary.
If any employee gets salary/wages in advance or arrears on salary are paid in advance, then TDS must be collected at that time too.
Apart from this, for all other payments, TDS must be deducted at the time of Payment or credit or income (whatever falls first).

TDS Online Payment

The online TDS payment facility is driven by the philosophy of “Anytime, Anywhere.”
Thanks to all the online TDS filing, the TDS administration has become easy and transparent for both taxpayers and the government, helping minimize tax scams.
The TDS website is a common platform for everyone, including deductors, taxpayers, and assessment officers to obtain or get hands-on with the same TDS data.
Increasing Digitization is becoming a cornerstone of a speedy, accurate, and stabler TDS system in the country.

How to Make TDS Payment Online?

W.e.f. January 1st, 2014, the government has made it compulsory for all the public & private sector deductors, and other assessees, who are bound to audit under Section 44AB to use the electronic transfer method of making TDS Payments online. For such purpose, such personnel must have an active net banking facility with an authorized bank; the eligible banks are listed on the NSDL-TIN website.

Here is a step-by-step procedure for online TDS payment:

The taxpayers, first, should visit the Income Tax Department E-Payment website. Here is the link for the same: https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
Deductees falling in the category other than company must select (0021), Non-company deductee option. Others must choose (0020) Company Deductee.
Enter TAN details. Entered details must be used for online verification of TAN.
If the entered TAN details are not present in the income tax department database, then the user won’t be allowed to proceed further with the Online Payment.
After submission of TAN, enter the relevant assessment year (AY), which is the immediately following year for the given financial year whose income is being evaluated. For instance, AY for the income earned between April 1st, 2015 to March 31st, 2016 would be AY 2016-17.
Afterwards, enter challan details like name, address, email I.D., and contact details of the TAN holder must also be submitted.
Also, you will need to select the bank through which the TDS will be deposited.
Select the payment type
In case of a normal payment, click on the (200) TDS/TCS Payable by Taxpayer, or if it is a payment against the request raised by the income tax department (e.g., Payment of interest or late fees as per section 234E), then you must click on the (400) TDS/TCS Regular Assessment (Raised by I.T. Department)
Select the payment nature type (e.g. Payment of insurance commissions, fees for professional services or rent), etc.
Confirm all the entered data in the challan by entering it properly and as per the best of your knowledge.
Post confirmation of data, you will be redirected to your bank’s net banking website page.
You must log in with a valid user I.D. and password for the processing of Payment.
Once the payment is successful, the system will display a challan counterfoil.
This particular challan contains CIN (Challan Identification Number) along with other details like bank name, customer name, Bank Branch Code, date of challan, etc.
All the entered challan details are transmitted by your collecting bank to the “Tax Information Network” (TIN) by taking the help of the Online Tax Accounting System (OLTAS).
Challan status can also be verified by you through ‘Challan Status Inquiry” on the NSDL – TIN website after seven days of making Payment via CIN.

Why TDS Certificate Required?

Once the TDS has been deposited with the income tax department, the deductor must issue a TDS certificate to the deductee on behalf of whom the tax payment has been made. The TDS return certificate required or Form 16 / Form 16A is generally issued on an annual or quarterly basis.

Advantages of Online TDS Payment

The online TDS payment facility is available 24/7 throughout the year for taxpayers.
The deductor can make TDS payments anytime, anywhere as per convenience.
Immediate acknowledgement is received by the taxpayer in case of an online TDS payment.
The challan copies can be downloaded instantly and can be saved on the computer for future reference.
Minimal Paperwork with zero hassle.
As Paperwork is completely zero, it leads to better environmental safety.

Time Limit of TDS Payment and Schedule

The last date for making Payment of TDS collected by the deductor is the 7th of the subsequent month. For instance, for the month of July, the deductor is required to make the TDS payment on or before August 7th.
The only exception is the month of March (as it is the last month of a particular financial year) where the TDS deductor is allowed to make TDS payment on or before April 30th for the given year.
All types of deductors (e.g., government and non-government assessee, etc.), who submit ta with Challan (treasury challan) are instructed by the government to follow this particular TDS timeline.
In the case of government deductors making TDS Payments without challan, the due date for Payment of TDS will be the same day when the tax amount has been deducted.
In some cases, the quarterly Payment of TDS might be allowed by the Assessing Officer (AO) by obtaining the prior approval of the Joint Commissioner. If that happens, then the last date for TDS payment would be the 7th of the subsequent month following the given quarter and April 30th for the last quarter of a particular financial year.

E-File TDS Returns

All the corporate deductors are mandated to furnish their TDS returns in electronic format (w,e.f. June 1st, 2003) (e-TDS returns).
W.e.f. In the fiscal year 2004-05, the government deductors have also been enforced to furnish e-TDS returns.
Apart from the government and corporate deductors, other deductors have the option to furnish TDS returns in either electronic or physical format.

How TDS Return Files Online?

The TDS returns need to be filed, on a quarterly basis and the due date for the same is the 31st of the month after the end of the concerned quarter.

TDS return can be filed by a registered taxpayer individual, organization or institution, who operates as a deductee. Quarterly TDS returns are filed by such entities. According to section 201 (A), the interest incurred on delay in Payment of TDS should be furnished by the taxpayers before filing their TDS return.

Some Important Points About TDS Return Forms:

Form 24Q: This form needs to be filed against deductions made from salaries
Form 26Q: This form must be filed for deductions made from payments apart from salary.
Form 27Q: This is a quarterly TDS return form that needs to be filled out by the deductor on behalf of all the deductions made against NRIs
Form 27EQ: This serves as the TCS quarterly return that needs to be filed by the deductor
Form 27A: This form must be attached along with quarterly statements by duly signing it.

Key Points to Remember Concerning TDS Returns

NSDL e-Governance Infrastructure Limited, (NSDL e-Gov), operates as an e-TDS intermediary between the CBDT and the TDS deductors.
TIN Facilitation Centres (TIN-FCs) have been established across the country by NSDL e-Governance to assist TDS deductors in the TDS return filing process.
Both the online and offline formats of file TDS return quarterly are the same.
The e-TDS statements should be structured as per the file format (clean ASCII File), which is similar to the details that are provided by the income tax department.
For easy preparation of TDS returns, the government also offers free downloadable software (Return Preparation Utility – RPU) that has been devised by NSDL.
The TDS deductors can also use third-party TDS tools for preparing and furnishing e-TDS.
All the approved vendor’s details can be seen by taxpayers on the NSDL-TIN website (www.tin-nsdl.com).

Penalties & Consequences for Missing the TDS Payment of Due Dates Penalty

Late In TDS Payment

It is mandatory for deductors to deduct the TDS on the 30th of each month, except for the month of February where it should be deducted on the last day of the month.
In case, TDS is not deducted on the due date (whether in whole or part), the deductor would have to pay interest at a rate of 1% p.m or part thereof, starting from the date of actual deduction.
For instance, if the due date of the TDS payment was July 30th, but it was actually deducted on August 5th, in such a scenario, the TDS deductor would be bound to pay interest for two months, i.e., July and August.

Delay in TDS Payment

As per Section 201 (1A) of the Income Tax Act, if the TDS deductor fails to furnish the deducted TDS payment to the credit of the concerned tax authorities within the given time frame, whether in whole or in part, he/she would be liable to pay interest at a rate of 5% per month or part thereof, starting from the date when TDS was actually deducted till the date TDS was furnished to the credit of the government.
For ease of calculation, the entire calendar month is considered during interest calculation (e.g. a portion of a month will be considered as full while making TDS interest calculation).
This simply means that even a delay of one day can cause interest in two months for TDS deductors.
For instance, suppose for the TDS deducted in the month of July, the Payment has been delayed by a single day and deposited to the credit of the government on August 8th. In such a case, the deductor would be forced to pay interest for two months, i,e, a total of 3% interest.

Apart from interest applicable on TDS late deduction and late Payment, there are some additional provisions for penalty and prosecution too:

Penalty as per Section 221

The defaulter, i.e., the TDS deductor, is liable to pay the penalty, In case he fails to deduct tax, without any proper reason as judged by the Assessing Officer.
In any case, the amount of penalty should not exceed the amount of tax in arrears.

Penalty as per the Section 271C

A penalty that equals the tax amount can be imposed if the deductor fails to deduct the required TDS amount
Although, the authority to levy such penalty lies within the hand of a Joint Commissioner of Income Tax dept only.

Prosecution Proceedings According to Section 276 B

The deductor is liable to receive rigorous imprisonment for 3 months to 7 years, and a fine, in case he/she fails to deposit the deducted TDS amount to the credit of concerned tax authorities without a valid reason.

Late TDS Return Filing

In case, an assessee or deductor fails to furnish a TDS return within the given period, he/she is liable to a penalty of INR 200 per day until a TDS return has been furnished, as per Section 234E of the Income Tax Act.
The total penalty amount should not surpass the total amount of TDS collected.
This penalty is also imposed, in case of purchase of immovable property or furnishing Form 26 Q.B.
Submission of incorrect data such as TAN, Challan Number, TDS Amount, etc. or delay in TDS return filing for more than a year, starting from the due date can attract a minimum penalty of INR 10,000 to 1,00,000.

Procedure to Check/Verify TDS Payment Status

TDS payment status can be checked online by the taxpayer by visiting the online portal of the Centralized Processing Cell.

Here are the detailed steps for the same:

Go to the official TDS CPC website, click on the link https://www.tdscpc.gov.in/app/tapn/tdstcscredit.xhtml
Enter the given captcha code and press the submit button.
Mention details like PAN, fiscal Year, TDS Quarter, TAN, and Return type. Now, click on the “Go” button.
TDS credit details of the taxpayer are showcased on screen.

What is the TDS Return Due Date?

Detailed information about TDS payment due dates and other timelines for filing and depositing TDS/TCS returns is mentioned below in the table. You can also check the late payment and interest charges on late deductions and deposits of TDS.

TDS Filing Due Dates For FY 2023-24

Deduction Month	Quarter Last date	Last date for TDS payment	TDS Return Filing Due date
April	June 30th	May 7th	July 31st
May	“	June 7th	“
June	“	July 7th	“
July	September 30th	August 7th	October 31st
August	“	September 7th	“
September	“	October 7th	“
October	December 31st	November 7th	January 31st
November	“	December 7th	“
December	“	January 7th	“
January	March 31st	February 7th	May 31st
February	“	March 7th	“
March	“	April 30th	“

TDS Online Payment FAQ’s

Q.1 – What are the payment instructions for the Corporate Customer?

The payment instructions for the Corporate Customer are as follows:

Fill the important details which are ad hoc for the payment on the NSDL /Treasury website.
Opt for ICICI Bank for payment.
Make sure you have automatically taken to the Bank’s Corporate Internet Banking site.
Enter the required payment details.
Address the transactions according to the “Company’s Approver Matrix” given by the system.

Q.2 – I tried claiming tax refund by filing ITR but got unsuccessful because of mentioning wrong account number. How can the right account number be submitted to claim the tax refund?

The right bank account number can be submitted by selecting the option of refund reissue. Steps to apply for refund reissue are follows:

Go to the website https://incometaxindiaefiling.gov.in and Login
Go to “My Account” Choose – “Service Request”
Choose Request Type – “ ‘New Request’”
Choose “Refund Reissue” from the requested category.
Update the details of a bank account.
Click → “Submit”.

Q.3 – I got an advance salary from my employer in March 2024 for April of the same year. Is the salary be taxable in A.Y 2024-25?

Yes the salary is taxable in the A.Y. 2024-25. The tax is leviable on salary on due or receipt basis, whichever is earlier. Once taxed on receipt basis in A.Y. 2024-25, it can not be taxed on the due basis for A.Y. 2024-25.

Q.4 – How can I discover the TAN of the deductor?

One can discover the TAN of the deductor in two ways. One is Form 16/16A and the second is 26AS tax credit statement, present on https://www.tdscpc.gov.in/app/login.xhtml TRACES website..

Q.5 – My employer has paid me an extra salary for doing overtime. Is this overtime payment taxable?

Yes, the salary is taxable under the head “Income From Salary” as salary includes overtime payment received from the employer as well.

Q.6 – When can TDS be deducted?

In general, the word “TDS” is used wrt to employer and employee relationship. A TDS is deductible every month from employees’ salary. An employer can deduct TDS while paying salary to the employee based on the income tax rate applicable to the employee. Rest other payments which come under the ambit of TDS deduction are as follows: Payments to contractors, Payment of interest on investments, Payment of rent, Payment for professional or technical services, payment of compensation on procurement of immovable property and so on. TDS on all payments is deductible at certain predefined rates, until and unless it is not tax-exempt.

Q.7 – Is TDS deductible from the payment made to the Government?

No, TDS is not deductible from the payment made to the Government. Further instances when the TDS is not deductible are as follows:

Payment made to the Reserve Bank of India,
Payment made to a corporate body established by or under a Central Act or any law for the time being in force, exempted from income-tax.
Payment made to Mutual Fund stated u/s 10 (clause 23D) when the payment as interest or dividend wrt securities or shares possessed by it or in which it has a profitable interest, or any other income accumulating or originating to it.

Q.8 – When can the TDS refund be claimed?

TDS refund can be claimed when the amount of tax which is payable in a year is less than the amount already deducted as TDS.

When the income of a person is below the minimum taxable limit and yet TDS has been deducted.

Let us take an example. Surendra is an independent contractor who has to pay an income tax of Rs. 40,000 on his net taxable income but Rs. 50,000 has been already deducted as TDS by all his contractees and remitted to the Government revenue. Here, Raj is eligible to claim TDS refund of Rs. 10,000.

Another example is when the income of a person is below the minimum taxable limit and yet TDS has been deducted. Veena provided counselling service to her customers and Rs. 10,000 was deducted at source by her clients. But the total annual income of Veena is only Rs. 1.5 lakhs which is below the minimum taxable limit. So, Veena is eligible to claim TDS refund of Rs. 20,000.

Q.9 – What is the meaning of Form 16 and Form 16A?

When the TDS is deducted, the corporate entity which is deducting the tax issues a certificate reflecting the amount of tax deducted and paid to the Government. Form 16 and Form 16A are those certificates which reflect the amount of payment made, amount of tax deducted and the TDS remitted to the Government.

The difference between the two is that Form 16 is issued on an annual basis by an employer to the employee for the TDS on salary whereas Form 16A is issued every quarter by other deductors who deducts TDS on all payments except the salary.

Q.10 – How can the benefit of tax deducted in advance on income (taxable in coming years) be claimed?

As per some provisions of TDS, TDS has to be deducted at the time of payment or at the time of credit, whichever comes earlier. TDS is deductible on advance payments also.

In the old ITR forms, there was no option to take forward the surplus TDS and so the taxpayers had to showcase the complete TDS as a deduction and claim refund of surplus TDS.

So, to combat the issue, the Schedule of TDS/TCS in the ITR forms now has columns to furnish the details of tax deducted in previous years. One cannot claim credit of TDS applicable to the income which is taxable in subsequent year. Hence, this TDS credit can be taken forward to the coming years and can be claimed in the year when tax is leviable on income.

Q.11 – How is Interest Calculated on delayed payment of TDS?

Let us understand it with an example. Let us suppose the TDS is deducted on 1st August and the due date for remitting the TDS is 7th September. But the tax is deposited on 8th September i.e. one day later from the deadline. Then the interest will leviable from 1st August to 8th September means for 2 months.

Q.12 – What can be done when TDS refund is not received?

In general, the TDS refund is auto processing and gets credited automatically. However, due to any reason, if the TDS is not refunded, the status of the refund can be viewed online by entering the PAN and the A.Y. on the e filing website of the Income Tax department.

Some cases when TDS refund is delayed :

When returns are filed physically.
When returns are filed electronically but ITR-V is not sent on time.
When an incorrect bank account number or address is given.

In the first two cases, you need to wait for sometimes. While in the last case, you must contact your Assessing Officer and ask them to rectify the information.