TDS- Tax Deducted at Source

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What is TDS?

A TDS is basically an amount of tax that is deducted by the deductor or employer of an assessee and is deposited to the Department of Income Tax on behalf of him. The rates are mainly set on the basis of the age and income of different individuals.

The full form of TDS is Tax Deducted at Source. According to the Income Tax Act 1961, a  specific amount of money is reduced when a payment like rent, salary, commission, professional fees, interest, etc is made. The person who will make the payment will deduct the tax at the source and the person who will receive the payment or the income has the liability to pay the tax. This lowers tax evasion as the tax will be collected at the time when the payment is being made.

What is TDS? - Lawdef

Types of TDS

Some of the sources of income that qualify the tax deducted at source are mentioned below: –

  • Salary
  • Interest of Bank
  • Amount of money under LIC
  • Commission or brokerage
  • Contractor payments
  • Compensation on immovable property
  • Payments of contactors
  • Deemed dividend
  • Insurance commission
  • Interest on various securities
  • Rent payment
  • Transfer of the immovable property
  • Remuneration paid to the director of a company

When Should It Be Deducted and Who Is Liable To Deduct?

  1. If a person is making any sort of payment that is specified under the Income Tax Act, then TDS will be deducted at the time of making these payments.
  2. However, it will not be conducted if he is an individual or HUF (Hindu Undivided Family).
  3. If a person is getting rent payment either as an individual or HUF and where the amount is more than Rs. 50,000/-, then 5% of it will be deducted.
  4. If a person is a working professional, then his employer will deduct TDS as per the applicable income tax slab rates.
  5. A person will not be required to pay any tax if he submits his investment proof to the employer and his total income that can be taxed is below the taxable threshold.
  6. In case, a person fails to submit the investment proof to his employer and the bank deducts the tax from the source, then he can file a return and claim a refund of the same.

Due Dates Of FY 2020-21 For Filing of Return

The due dates for the payment filing of 2020-21 are as under: –

Quarter Period Due Date
Quarter 1 April 2020- June 2020 31st July 2021
Quarter 2 July 2020- September 2020 31st Oct 2021
Quarter 3 October 2020- December 2020 31st Jan 2021
Quarter 4 January 2021- March 2021 31st May 2021

What is the rate of Tax Deducted at the Source of Salary?

The rates on the salary are as same as the rates of tax slab that are applicable to the individuals. If you are less than 60 years, your liability will be nil if the amount of your income is less than Rs. 2.5 lakh. The individuals who are earning between Rs. 2.5 lakh to Rs. 5 lakh will be subject to the rate of 5% and those who are earning between Rs. 5 lakh to Rs. 10 lakh will be subject to the liability of 20%. The people who are earning above the amount of Rs. 10 lakh will be subject to the rate of 30%.

What is a TDS Certificate?

Form 16, Form 16A, Form 16B and Form 16C are all certificates. These certificates have to be issued by a person who deducts the TDS to the assessee from whose income it was deducted at the time of the payment. For example, the Banks issue Form 16A to the depositor when the tax is deducted on interest from the fixed deposits. Form 16A is issued by an employer to an employee.


✅ What is the advantage of TDS?

It is a steady and uniform source of revenue for the Government. It is also convenient and the burden on the agencies of Tax Collection also reduces.

✅ Is it paid only by the salaried individuals?

No, it is not required to be paid only by a salaried individual but an individual who is having an income of over Rs. 2.5 lakh will have to pay the taxes.

✅ Is a PAN Card required for paying TDS?

Yes, the details of a PAN Card are mandatory.