Filing your ITR? Know Everything About TDS for Financial Year 2019-20

TDS also called Tax Deducted at Source collects tax at the source from where your income is generated. TDS is used by the Government as a tool to collect taxes. This reduces tax evasion at the source of income. This is done by taxing your income (either partially or wholly) right at the source of income, rather than at a later time.

TDS for Financial Year 2019-20: TDS is applicable on your earnings like salary, interest income, commissions received and so on. Do note that TDS is not applicable on all income and on all transactions.

Where is TDS Deducted?

• Deducted on salary
• Interest income from banks
• Commission and rent payments
• Consultation and Professional Fees.

TDS is just a type of advance tax. It’s deposited with the Government and the job of depositing it, lies with the deductor. You can claim the deducted TDS as a tax refund after filing ITR or Income Tax Returns.

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When is TDS deposited with the Government?

The tax deducted at source must be deposited with the Government by the 7^th of the following month. TDS deducted in the month of August must be paid to the Government by the 7^th of September. But, the TDS which is deducted in the month of March can be deposited up to 30^th April. Tax Deducted at Source must be deposited using the Challan ITNS-281 on the Government Portal.

SEE ALSO:  Where is TDS Deducted?

How can you file TDS?

It’s mandatory to file tax deducted at source for all people who deduct TDS. TDS returns are submitted quarterly after furnishing details like TAN, amount of TDS deducted, PAN of the deductee and type of payment.

Understand TDS certificate before filing TDS. Your Form 16, Form 16A, Form 16B and Form 16C are all TDS certificates. The person who deducts TDS, issues the TDS certificate. Your employer issues the Form 16 to you (employee). Banks also issue the Form 16A to you or any depositor, when they deduct TDS on FD interest.

Let’s understand when to use Form 16 and Form 16A with an example:

Mr Ramesh works as a salaried employee for XYZ Company. The XYZ Company issues Form 16 to Mr Ramesh. It contains the detailed salary break-up and the tax deducted on the same.

What if Mr Ramesh worked as a professional? Well, he would have received professional fees from the Organization, and TDS would be deducted on it. He would have been provided Form 16A.

TDS Rate Chart FY 2019-20:

Income Tax Slabs for Individuals

Income Tax Slabs for Senior Citizens

Income Tax Slabs for Super Senior Citizens

Tax Deducted at Source

Method of TDS Calculation:

Your salary consists of various components and together this makes up the CTC or Cost To Company. The key components of your salary are:

• Basic Salary, House Rent Allowance or HRA, Dearness Allowance, Travel Allowance and Medical Allowance (Travel and medical allowance have been replaced by a standard deduction), special allowances and so on.
• The perquisites or perks include facilities offered by your employer for expenses like fuel, canteen facilities, travel for work or expenses towards hotels.
• You enjoy tax deductions and tax exemptions which are a way to lower the tax burden. You also enjoy the standard deduction of Rs 50,000 a year given under Budget 2019.
• While calculating TDS; standard deductions and other tax exemptions and tax deductions like Chapter V1a deductions (Section 80 deductions) are deducted from annual salary. TDS is computed on the remaining amount.
• You have to submit proof of investments like ELSS fund statements, life and health insurance premium receipts, home loan statements, photocopies of PPF passbook, deposit receipt of 5 year tax saver FD or Sukanya Samriddhi Scheme certificate from the bank and so on to your employer, so that TDS can be calculated, accurately. Your employer computes TDS based on investment proofs and other declarations, deducts taxes from your salary and deposits the amount with the tax authority.

SEE ALSO: Method of TDS Calculation

Items eligible for TDS Exemption:

HRA: If you live in a rented house and pay rent, you get the house rent allowance also called HRA.

Investments and expenses under Section 80C: You get a tax deduction on investments like PPF, NSC, ELSS, SCSS, Sukanya Samriddhi Yojana, premiums paid on life insurance, 5 year tax saver FD, EPF (employee contribution). You also get Section 80C benefits on home loan principal repayment and tuition fees paid up to 2 children for higher education. This is a collective deduction up to Rs 1.5 Lakhs a year.

TDS under Section 80D: This is a tax deduction for premiums paid towards health insurance.

TDS under Section 80TTA: Interest on savings bank account and post office savings scheme enjoy Section 80TTA benefit up to Rs 10,000 a year.

TDS under Section 80U and Section 80DD: This is a deduction for physical disability of tax payer and dependents.

TDS under Section 80DDB: This deals with expenses related to certain specified diseases.

Interest on late payment of TDS:

As per Section 201(A) for the deposit of TDS after due date, you must pay interest. This interest is at the rate of 1.5% a month. This is from the date TDS is deducted, till the actual date of deposit. This is calculated on monthly basis and not on number of days.

Let’s say you had to pay a TDS amount of Rs 10,000 and the date of deduction was 15^th January. You pay TDS on 21^st May. The interest you owe is Rs 10,000 * 1.5% * 5 months = Rs 750.

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