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TDS or Tax Deducted at source is a convenient way to pay a percentage of taxes on income. In this article we will deep dive into TDS calculations and online TDS payments.

What is TDS and how does it affect me?

TDS is governed by sections of the Indian Income Tax Act, 1961. In this article, we will discuss Section 192 of the Income Tax Act, 1961 i.e. TDS on salaries paid. Tax Deducted at Source as the name suggests is an indirect method of collecting tax. You pay and/or collect taxes as income is earned. This makes things simple and convenient for the tax payer.

Who deducts TDS?

The employer takes on the responsibility of tax deductions at the appropriate rates from the employees' salaries under their direction. This tax is calculated at the average rate of income tax based on the rates currently in force. Employers have the authority to deduct the said tax at the time of payment of salary to the employee. TDS payment can then be made online by the employer when the deadline approaches.

TDS Returns

In the event that the employer has deducted more than the required tax amount, the employee is eligible for a TDS Refund. Since TDS is collected at source without calculation of the investment that is eligible for deductions, an employee can declare and submit proof in order to claim tax returns.  One can also file for returns if TDS is paid in excess when compared to the liable tax amount. Online TDS payment can be made easily keeping in mind certain deadlines for the same. Depending on the income category the employee will fill the necessary forms and submit required documents for the process to begin. Online TDS payment due dates are as follows:

  • 15th July
  • 15th October
  • 15th January
  • 15th May

How is TDS calculated?

TDS is calculated annually and is charged at a different rate for different income brackets. According to the indication provide by the 2017 – 2018 budget, the table below provides the tax brackets which are used to calculate tax.

Income brackets and rates

Below is the tax bracket as applicable for individuals under the age of 60:


Annual Income Tax Rates Education Cess Secondary and Higher Education Cess

Up to Rs.2,50,000

Nil

Nil

Nil

Rs.2,50,001-Rs.5,00,000

5%

2% of income tax

1% of income tax

Rs.5,00,001-Rs.10,00,000

Rs.12,500 + 20%

2% of income tax

1% of income tax

Above Rs.10,00,000

Rs.1,12,500 + 30%

2% of income tax

1% of income tax


The below table reflects the tax bracket for individuals above 60 years but below 80 years of age


Annual Income Tax Rates Education Cess Secondary and Higher Education Cess

Up to Rs.3,00,000

Nil

Nil

Nil

Rs.3,00,001-Rs.5,00,000

5%

2% of income tax

1% of income tax

Rs.5,00,001-Rs.10,00,000

Rs.10,00 + 20%

2% of income tax

1% of income tax

Above Rs.10,00,000

Rs.1,10,000 + 30%

2% of income tax

1% of income tax


Below table reflects the tax bracket for individuals above 80 years of age


Annual Income Tax Rates Education Cess Secondary and Higher Education Cess

Up to Rs.5,00,000

Nil

Nil

Nil

Rs.5,00,001-Rs.10,00,000

20%

2% of income tax

1% of income tax

Above Rs.10,00,000 Rs.1,12,500

Rs.1,00,000 + 30%

2% of income tax

1% of income tax


*Note: All above tables reflect rates for the financial year of 2017-'18

 Payment of TDS

TDS can be deducted monthly, quarterly, annually and so on based on the earning of an individual or business. With net banking services offered by almost every bank, it is possible to pay TDS online through the Income Tax Department website. In the cases of failure to pay or late payment, interest is applicable on the amount due. Depositing of TDS has to occur according to the following schedule:

  • Within one week of the month end
  • For March - due date is 30th April

Complicated as it seems, TDS is straightforward, but we are always here to guide and help. If you have any questions, or need to pay TDS online, we can help you. The author can also be reached at contactus@revmystartup.com

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