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Fincash » Tax Deduction at Source

Tax Deduction at Source (TDS)

Updated on November 14, 2019 , 323 views

What is Tax Deduction at Source?

TDS also known as Tax Deduction at Source is a type of tax that is deducted from an individual’s income on a periodic or occasional basis. As per the Income Tax Act, any company or person making a payment is required to deduct TDS if the payment exceeds certain threshold limits. TDS has to be deducted at the rates prescribed by the tax department.

TDS

The company or person receiving the payment is called the deductee and the company or person that makes the payment after deducting TDS is called a deductor. The deductor is responsibility to deduct TDS before making the payment and deposit the same with the government.

Types of Payments Deducted in TDS

  • Salaries

  • Interest payments by banks

  • Commission payments

  • Rent payments

  • Consultation fees

  • Professional fees

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    What is a TDS certificate?

TDS certificates have to be issued by a person deducting TDS to the assessee from whose income TDS was deducted while making payment. Form 16, Form 16A, Form 16 B and Form 16 C are all TDS certificates.

For instance, banks issue Form 16A to the depositor when TDS is deducted on interest from fixed deposits. Form 16 is issued by the employer to the employee.

Form Certificate of Frequency Due date
Form 16 TDS on salary payment Yearly 31st May
Form 16 A TDS on non-salary payments Quarterly 15 days from due date of filing return
Form 16 B TDS on sale of property Every transaction 15 days from due date of filing return
Form 16 C TDS on rent Every transaction 15 days from due date of filing return
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