The government has been trying to digitise its tax collection processes in recent years, simplifying procedures for taxpayers. The Indian taxation system relies on Tax Deducted at Source, or TDS, to collect taxes at the point of income generation. TDS payment has significantly improved through government initiatives and portals, becoming more efficient, transparent, and accessible. Technological advancements have made TDS Online Payment an integral part of everyone’s lives. Let’s delve further into the topic for a better understanding.
What is TDS?
TDS is a system introduced by the Income Tax Department to collect taxes at the source of income. It is a method of deducting tax from payments such as salaries, interest, dividends, rent, commission, etc., before the recipient receives the money. The deductor, who can be an individual or an entity, deducts a certain percentage of tax from the payment and remits it to the government on behalf of the recipient. The deductee charged with tax has the right to receive a credit for it.
Timely payment of TDS is essential to avoid penalties. You can pay this tax online or offline. TDS is an indirect way of deducting tax, based on form 26 AS or TDS certificate issued by the deductor. TDS ensures a steady stream of tax revenue for the government and reduces the tax collection burden. It promotes tax compliance by ensuring taxes are deducted at the time of payment and at the source itself.
Updates from Budget 2023
● Section 194 BA – Online gaming income is subject to TDS under section 194 BA.
● Section 196A – As of April 1st, 2023, non-residents who earn income from mutual funds in India can provide a Tax Residency Certificate to get the benefit of TDS at the rate stipulated in the tax treaty rather than 20%.
● Section 192A – Employees without PAN now experience a reduction in the TDS rate on PF withdrawals from the maximum marginal rate to 20%.
● Section 193 – Per Section 193, interest on listed debentures is not exempt from TDS. Hence, the tax authorities must deduct the tax on interest earned from such securities.
● Section 194 N – Since April 1st, 2023, cooperative societies have raised the TDS threshold on cash withdrawals. The tax deduction on cash withdrawals will apply if the amount exceeds Rs 3 crore instead of the previous limit of Rs 1 crore.
TDS Rates by Government
| Particulars | TDS Rates (in %) |
| Section 192A: Payment of the accumulated balance of the provident fund, which is taxable in the hands of an employee. | 10 |
| Section 193: Interest on securities | |
| a) Any debentures or securities issued by or on behalf of any local authority, state or provincial corporation; | 10 |
| b) Debentures issued by a company listed on a recognised stock exchange under the Securities Contracts (Regulation) Act, 1956. | 10 |
| Section 194D: Insurance commission | 5 |
| Section 194BA: Income by way of winnings from any online game | 30 |
| Section 194BB: Income by way of winnings from horse races | 30 |
| Section 194E: Payment to non-resident sportsmen/sports association | 20 |
| Section 194EE: Payment in respect of deposits under the National Savings Scheme | 10 |
| Section 194F: Payment on account of repurchase of the unit by Mutual Fund or Unit Trust of India | 20 |
| Section 194G: Commission, etc., on sale of lottery tickets | 5 |
| Section 194: Dividend | 10 |
| Any Other Income | 10 |
| 2.2 where the company is not a domestic company* | |
| Section 194B: Lotteries, crossword puzzles, card games, and other games of any sort, as well as gambling or betting. | 30 |
| Section 194BA: Income by way of winnings from any online game | 30 |
| Section 194BB: Income by way of winnings from horse races | 30 |
| Section 194E: Payment to the non-resident sports association | 20 |
| Section 194G: Commission, etc., on sale of lottery tickets | 5 |
Online TDS payment procedure
There are two methods of depositing tax deducted or collected at the source.
1. Electronic Mode
TDS must be paid electronically for:
● Corporate assessments
● Assessees other than companies subject to section 44 AB of the Income Tax Act, 1961
2. Physical Mode
● Using this method, the deductor must present Challan 281 at the authorised bank branch.
● A net banking account or debit card of the selected bank is required for e-tax payment. To pay TDS, the deductor must first select a relevant Challan. The Income Tax Department’s Tax Information Network lists banks where one can have a net banking or debit card facility.
Who is eligible to pay TDS online?
Companies, firms, or individuals that pay their employees must deduct TDS from their salaries and remit it to the government. Businesses, professionals, and government entities making specified payments to contractors, professionals, or freelancers or paying rent above a threshold must deduct and pay TDS online. Also, banks and financial institutions paying interest income, as well as entities paying out winnings from lottery income and horse races etc., are required to deduct TDS and pay online.
Conclusion
TDS online price has changed the way taxpayers fulfil their tax duties. The government’s initiatives and people-friendly portals have made the procedure convenient, green, and easy to follow. Embracing this technology has simplified TDS Payment for everyone and has accelerated tax compliance nationwide.
