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TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at the source if the payment exceeds certain threshold limits.
TDS has to be deducted at the rates prescribed by the tax department. The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deducted.
| Section | Nature of Payment | TDS Rate Individual | TDS Rate Domestic Company |
| 192 | Payment of Salary | Normal Slab Rate | N/A |
| 193 | Interest on Securities | 10% | 10% |
| 194 | Income by way of dividend | 10% | 10% |
| 194A | Income from way of Interest other than Interest on Securities | 10% | 10% |
| 194B | Income from winning from lotteries, cards puzzles | 30% | 30% |
| 194BB | Income from way of winning from horses | 30% | 30% |
| 194C | Payment to contractors/sub contractors A: HUF/Individuals B:Others |
1% 2% |
1% 2% |
| 194D | Insurance Commission | 5% | 10% |
| 194H | Commission or brokerage | 5% | 5% |
| 194I | Rent A: Plant and machinery B: Land or building |
2% 10% |
2% 10% |
| 194J | Fees for technical or professional services
A: Sum paid or payable for technical service B: Sum paid or payable towards royalty in the nature of consideration for sale, distribution or exhibition of cinematographic films C: Any other sum |
2% 2% 10% |
2% 2% 10% |
| Quarter | Period | The due date for Filing Form 27Q |
| Q1 | 1st April – 30th June | On or before 31st July |
| Q2 | 1st July – 30th September | On or before 31st October |
| Q3 | 1st October – 31st December | On or before 31st January |
| Q4 | 1st January – 31st March | On or before 31st May |
- It prevents people from evading taxes.
- It ensures a steady source of revenue for the Government.
- The Tax Collection base is widened.
- The burden of responsibility of the Tax Collection Agencies and the
- Deductor are lessened.
- It is convenient for the deductee as Tax is automatically deducted
TDS return filing is a quarterly statement which must be submitted to the Income Tax Department by the deductor (i.e. all persons responsible for deducting TDS). TDS Return contains the details of TDS deducted and deposited by deductor, PAN of deductor and deductee, TDS challan information, type of payment, amount of TDS deducted, etc. The TDS return filing must be done by every assessee who has deducted TDS at prescribed intervals.
An investment proof may be submitted by an employee to his/her employer for the purpose of claiming deductions and, therefore, his taxable income falls below the maximum amount not chargeable to tax. In such cases, no TDS should be deducted by the employer
The deductor being liable to deduct tax and to fileTDS Return form as the supporting document, it is important to note that there are different types of TDS Return Forms available for different situations. The type of TDS Return Form which must be submitted is based on the nature of income of the deductee or the type of deductee who pays the TDS.
| Type of TDS forms | Particulars |
| Form 24Q | TDS statement of salaries |
| Form 26Q | TDS statement on all payments other than salaries |
| Form 27Q | TDS statement on income received from interest, dividends, or any other sum payable to non residents. |
| Form 26QB | TDS on payment for transfer of immovable property |
| Form 27EQ | Statement of collection of tax at source. |