How is Tax Deducted at Source?

TDS is deducted at the source of a person’s income. Incom could be in the form of professional fees, salary, commission, interests and even rent. According to the Income Tax Department, “a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source(…).”

The recipient is paid the net amount after deducting TDS. The deductor then remits the TDS to the central government’s account. 

The recipient will adjust the TDS against their final tax liability. The recipient can claim credit for the TDS based on Form 26AS or the TDS certificate (Form 16/Form 16A). If the income tax liability comes down after the income tax calculation, the taxpayer receives an income tax refund for their TDS payment.

What are TDS rates, and how’re they applicable?

There are varying rates of TDS applicable for varying levels and types of income. Taxes are deducted at the rates specified per the relevant Income Tax Act provisions or the Finance Act’s First Schedule.

For instance, for non-resident individuals, income tax rules also consider tax rates set under double taxation avoidance agreements. The TDS rate chart will help taxpayers assess the rates for fixed payments. The TDS payment must be made to the government account within the due dates by the deductor.

Online Procedure for TDS Payment 

You can make an ePayment of tax by following the below steps.

• Visit NSDL’s Website.
• Select “Services” > “e-payment: Pay Taxes Online” or select the “e-pay taxes” tab.
• You should provide a valid e-payment link to make a tax payment online.
• Select the applicable ePayment challan “Challan No.” under the TDS/TCS section. You will be directed to the e-payment page where you can make your tds payment online.

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