{"id":3156,"date":"2020-08-19T12:37:44","date_gmt":"2020-08-19T07:07:44","guid":{"rendered":"https:\/\/razorpay.com\/learn\/?p=3156"},"modified":"2022-09-30T18:18:37","modified_gmt":"2022-09-30T12:48:37","slug":"tax-deducted-at-source-tds","status":"publish","type":"post","link":"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/","title":{"rendered":"TDS &#8211; An All Inclusive Primer for Businesses"},"content":{"rendered":"<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Every employer in India is mandatorily required to deduct tax at source at the time of payment of salary to the employee. Tax Deducted at Source (TDS) on salary payments is governed by Section 192 of the Income Tax Act.\u00a0\u00a0\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">To deduct tax at source on salary payments, an employer needs to obtain Tax deduction and collection Account Number (TAN) from the Income Tax Department and then register themselves as a deductor on TRACES website.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">In this article, we will talk about everything that an employer needs to know about TDS on salary payments and how Razorpay is simplifying it further.\u00a0<\/span><\/p>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_80 counter-hierarchy ez-toc-counter ez-toc-transparent ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69e163e9c3f39\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69e163e9c3f39\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Process-of-TAN-application\" >Process of TAN application<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#TDS-calculation-for-employees\" >TDS calculation for employees<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Inaccuracy-in-TDS-calculations\" >Inaccuracy in TDS calculations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Fuss-about-the-dual-tax-regime\" >Fuss about the dual tax regime<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Razorpays-solution-RazorpayX-Payroll\" >Razorpay&#8217;s solution- RazorpayX Payroll<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#TDS-on-salary-from-more-than-one-employer\" >TDS on salary from more than one employer<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Payment-due-date-for-TDS-on-salary\" >Payment due date for TDS on salary<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Interest-on-late-or-non-TDS-deposition\" >Interest on late or non-TDS deposition<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Due-date-for-filing-TDS-returns\" >Due date for filing TDS returns<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Process-of-TRACES-registration\" >Process of TRACES registration<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Late-filing-or-non-filing-of-TDS-returns\" >Late filing or non-filing of TDS returns\u00a0<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Late-filing-fee-under-section-234E\" >Late filing fee under section 234E<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Penalty-for-non-filing-of-TDS-return-under-section-271H\" >Penalty for non-filing of TDS return under section 271H<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#TDS-certificate-Form-16-to-employees\" >TDS certificate-Form 16 to employees<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/razorpay.com\/payroll\/learn\/tax-deducted-at-source-tds\/#Frequently-Asked-Questions-FAQs\" >Frequently Asked Questions (FAQs)<\/a><\/li><\/ul><\/nav><\/div>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Process-of-TAN-application\"><\/span><span style=\"font-weight: 400;\">Process of TAN application<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">TAN is a 10-digit alphanumeric number. Every person required to deduct tax at source should obtain a TAN and is required to quote the number in all <a href=\"https:\/\/razorpay.com\/learn\/tds-returns\/\">TDS returns<\/a>, TDS payments and any other TDS communication with the IT department.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Not quoting TAN in all TDS-related communications may attract a penalty of Rs 10,000 for a deductor.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">You, as an employer, can take the following steps to obtain TAN:\u00a0<\/span><\/p>\n<ol data-read-aloud-multi-block=\"true\">\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Visit TIN NSDL website and select &#8216;Online Application for TAN (Form 49B)<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Read the guidelines before applying for a TAN. Then, select &#8216;Category of Deductors&#8217; from the dropdown list and click on &#8216;Select&#8217;\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Fill all the mandatory fields (marked with *) in the form and then submit\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">If the data submitted fails any validations, a response indicating errors will be displayed on the screen\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Re-submit the form after rectifying the errors. Once the form is free from all the errors, a confirmation screen will be displayed<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">You may choose to amend the data displayed in the confirmation screen.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Then, choose the &#8216;Confirm&#8217; option to proceed\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">An acknowledgement will be generated on successful payment of Rs 65 (plus GST as applicable)<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Then, send the acknowledgement to NSDL along with requisite documents at <\/span><\/li>\n<\/ol>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">NSDL e-Governance Infrastructure Limited, <\/span><span style=\"font-weight: 400;\">5th floor, Mantri Sterling, <\/span><span style=\"font-weight: 400;\">Plot No. 341, <\/span><span style=\"font-weight: 400;\">Survey No. 997\/8, <\/span><span style=\"font-weight: 400;\">Model Colony, <\/span><span style=\"font-weight: 400;\">Near Deep Bungalow Chowk, <\/span><span style=\"font-weight: 400;\">Pune \u2013 411016<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Also, superscribe the envelope with &#8216;APPLICATION FOR TAN &#8211; Acknowledgement Number&#8217; (e.g. &#8216;APPLICATION FOR TAN &#8211; 88301020000244&#8217;)<\/span><\/p>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"TDS-calculation-for-employees\"><\/span><span style=\"font-weight: 400;\">TDS calculation for employees<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Once the employer obtains TAN, they can deduct tax at source from the employees&#8217; salary. TDS on salary is calculated based on the average rate of income tax applicable to the taxpayer in a particular financial year. This rate is computed on the basis of income tax slab rates in force for that financial year.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Here&#8217;s an example for calculating the average income tax rate:\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Mr Kumar, who is 35 years old, is earning a salary of Rs 70,000 per month. His total income in the financial year 2020-21 is Rs 8,40,000. A standard deduction of Rs 50,000 will be allowed to him. He has also claimed deductions of Rs 1,00,000. Therefore, his salary income chargeable to income tax will be Rs 6,90,000.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">If he opts for the old tax regime, his total tax payable on salary will be Rs 52,250. Therefore the average income tax rate on salary will be 6.22% (52,250\/840,000*100).\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The employer will deduct tax at source (TDS) @ 6.22% of Rs 70,000, i.e. Rs 4,354 every month from Kumar&#8217;s salary.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Please note that the average income tax rate for each employee is different for every financial year and keeps changing based on the estimated income of the employee and the income tax slab rates in force for that year.\u00a0<\/span><\/p>\n<h3 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Inaccuracy-in-TDS-calculations\"><\/span><span style=\"font-weight: 400;\">Inaccuracy in TDS calculations<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">TDS calculations are usually tiresome for employers. They have to consider several factors into considerations like previous employment details of employees, one-time incentives or bonus paid to the employee, changes in the tax-saving declarations and so on. These factors might hamper the accuracy of monthly TDS calculations, especially when such critical computations are done manually on a spreadsheet.\u00a0<\/span><\/p>\n<h3 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Fuss-about-the-dual-tax-regime\"><\/span><span style=\"font-weight: 400;\">Fuss about the dual tax regime<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The <a href=\"https:\/\/razorpay.com\/blog\/dual-tax-regime-compliant-payroll-software-opfin\">dual income tax regime<\/a> was introduced in Budget 2020 by the Finance Minister of India. This scheme allowed employees to opt for a new income tax regime and pay tax at lower rates, but without several exemptions and deductions. This compliance change had impacted payroll processes across businesses.<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Since the new financial year was around the corner, businesses needed an upgrade to a fully automated and compliant payroll software.\u00a0<\/span><\/p>\n<h3 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Razorpays-solution-RazorpayX-Payroll\"><\/span><span style=\"font-weight: 400;\">Razorpay&#8217;s solution- RazorpayX Payroll<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">We, at <a href=\"https:\/\/razorpay.com\/payroll\/\">RazorpayX Payroll<\/a>, strive to simplify payroll management for small businesses.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">RazorpayX Payroll, our payroll software, is an automated <a href=\"https:\/\/razorpay.com\/payroll\/payroll-processing\/\">payroll processing<\/a> software. It is designed to provide non-intrusive payroll service to businesses. It provides accurate TDS calculations after considering disruptive factors, as mentioned previously. The employees can extensively view their TDS calculations as well as download them for future use.\u00a0\u00a0\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The product is also compliant with the dual tax regime. It allows employees to choose the best-suited regime while declaring their tax-saving investments. The product provides the tax calculation under both regimes to the employees based on their income. Then it helps employees to make an informed decision considering their savings and tax liabilities.<\/span><\/p>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"TDS-on-salary-from-more-than-one-employer\"><\/span><span style=\"font-weight: 400;\">TDS on salary from more than one employer<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">You, as an employer, will have to consider the income earned by an employee from any previous employer while calculating TDS. This happens when an employee joins a new organisation within a particular financial year.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">However, the employee must furnish details of the salary received and the TDS deducted thereon.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Take a look at this example.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Ms Riya was employed by A Ltd. till 30th June 2020 (salary being Rs 60,000 per month). She joined D Ltd. on 1st July 2020 where her monthly salary is Rs 90,000 per month.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Tax to be deducted at source by her previous employer &#8211;\u00a0<\/span><\/p>\n<table data-speechify-sentence=\"\">\n<tbody>\n<tr>\n<td><b>Particulars<\/b><\/td>\n<td><b>Tax Deduction by D Ltd.\u00a0<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Taxable salary (Rs 60,000*3)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Rs 1,80,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Tax on salary as per old tax regime (Tax is calculated on monthly basis at annual average tax rate)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Rs 14,688<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>&nbsp;<\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The new employer will deduct TDS as follows.<\/span><\/p>\n<table data-speechify-sentence=\"\">\n<tbody>\n<tr>\n<td><b>Particulars<\/b><\/td>\n<td><b>Tax Deduction by D Ltd.\u00a0<\/b><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Taxable salary (Rs 60,000*3 + Rs 90,000*9)<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Rs 9,90,000<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Tax on taxable salary as per old tax regime<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Rs 1,14,920<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Less: Tax deducted by A Ltd.\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Rs 14,688<\/span><\/td>\n<\/tr>\n<tr>\n<td><span style=\"font-weight: 400;\">Tax to be deducted by D Ltd.\u00a0<\/span><\/td>\n<td><span style=\"font-weight: 400;\">Rs 1,00,232<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Payment-due-date-for-TDS-on-salary\"><\/span><span style=\"font-weight: 400;\">Payment due date for TDS on salary<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The tax deducted at source by the employers must be deposited to the government by 7th of the subsequent month. However, the tax deducted in March will be deposited by the 30th of April.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">For example, the payment due date for TDS in January 2020 was the 7th of February 2020. And, the TDS payment due date for March 2020 was the 30th of April 2020.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">RazorpayX Payroll works on a Direct Deposit model through which it processes payroll and statutory payments right on time, as long as the clients maintain a balance.<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The businesses no more have to worry about the TDS payments. All they have to do is deposit money in their RazorpayX Payroll wallet. The products take care of payments on or before the TDS payment due date every month.\u00a0<\/span><\/p>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Interest-on-late-or-non-TDS-deposition\"><\/span><span style=\"font-weight: 400;\">Interest on late or non-TDS deposition<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Interest @1.5% per month will apply for non-deduction of TDS from the date on which tax was deductible to the date on which tax is deducted. This interest is governed by section 201(1A) of the Income Tax Act.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Also, in case of late TDS deposition, the same interest will apply from the date of deduction to the payment date. The interest is calculated on a monthly basis, so part of a month will also be considered as a full month.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Let&#8217;s say, your TDS liability is Rs 7000, and the date of deduction was the 13th of February 2020. The due date to deposit TDS was the 7th of March 2020. However, TDS was paid on the 17th of May 2020. So, interest under section 201(1A) will be Rs 7,000*1.5% per month*4 months=Rs 420.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The interest will be calculated from the date TDS was deducted, not from the due date of TDS payment.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Do note that the interest should be paid before filing TDS returns.\u00a0<\/span><\/p>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Due-date-for-filing-TDS-returns\"><\/span><span style=\"font-weight: 400;\">Due date for filing TDS returns<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">After depositing the tax to the government, every deductor has to file TDS returns.<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">A TDS return is a quarterly statement to be filed with the income tax department. Various details are required to file TDS returns like TAN, amount of TDS deducted, PAN of deductee, TDS challan information and so on.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">There are different types of TDS returns, depending on the purpose of deduction.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\"><img decoding=\"async\" class=\"size-full wp-image-3165 aligncenter\" src=\"https:\/\/razorpay.com\/learn-content\/uploads\/2020\/08\/Tables-6.png\" alt=\"TDS return filing forms\" width=\"1103\" height=\"346\" srcset=\"https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2020\/08\/Tables-6.png 1103w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2020\/08\/Tables-6-300x94.png 300w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2020\/08\/Tables-6-768x241.png 768w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2020\/08\/Tables-6-1024x321.png 1024w\" sizes=\"(max-width: 1103px) 100vw, 1103px\" \/>An employer needs to file Form 24Q in every quarter for reporting tax deducted on salaries to the government. Here are the due dates for filing Form 24Q.<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\"><img decoding=\"async\" class=\"size-full wp-image-3164 aligncenter\" src=\"https:\/\/razorpay.com\/learn-content\/uploads\/2020\/08\/Tables-5.png\" alt=\"TDS return filing due dates\" width=\"1103\" height=\"346\" srcset=\"https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2020\/08\/Tables-5.png 1103w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2020\/08\/Tables-5-300x94.png 300w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2020\/08\/Tables-5-768x241.png 768w, https:\/\/d6xcmfyh68wv8.cloudfront.net\/learn-content\/uploads\/2020\/08\/Tables-5-1024x321.png 1024w\" sizes=\"(max-width: 1103px) 100vw, 1103px\" \/>However, the income tax department can extend the due dates for filing TDS return based on unavoidable circumstances. For instance, due to COVID-19 outbreak, the due date for furnishing TDS return for FY 2019-20 (Q4) has been extended to the 31st of July 2020 from the 31st of May.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Form 24Q has two annexures, Annexure-I and Annexure-II. Annexure-I only includes details of employer, employees and challans. Whereas, Annexure-II includes details of employees&#8217; salary like basic salary, allowances, incentives, exemptions, and tax deductions.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The submission time of both the annexures is different. The employer has to submit Annexure-I in all the quarters of a financial year. In contrast, Annexure-II has to be filed &amp; submitted in the fourth quarter of the financial year with details of the salaries of all the employees for the entire year.<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">With RazorpayX Payroll, businesses don&#8217;t have to worry about the TDS filings. Our product automatically files TDS statements before the due date, provided the client maintains the wallet balance. Businesses only have to provide TRACES credentials to RazorpayX Payroll, and everything else will be taken care of.\u00a0<\/span><\/p>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Process-of-TRACES-registration\"><\/span><span style=\"font-weight: 400;\">Process of TRACES registration<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">To file TDS returns, the employer needs to register as a deductor on the TDS Reconciliation Analysis and Correction Enabling System (TRACES) website.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The employer can follow these steps to register themselves under TRACES.\u00a0<\/span><\/p>\n<ol data-read-aloud-multi-block=\"true\">\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Visit the <\/span><a href=\"https:\/\/contents.tdscpc.gov.in\/\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">TRACES<\/span><\/a><span style=\"font-weight: 400;\"> website and click on &#8216;Continue&#8217; to proceed further.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Click on &#8216;Register as New User&#8217; and select the type of user as &#8216;Deductor&#8217;.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Then, click on &#8216;Proceed&#8217;.<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Provide &#8216;TAN&#8217; in the respective tab, followed by captcha code to proceed further.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">The financial year, form type, and quarter for which KYC is required will be auto-populated on the screen.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Enter the token number of the Regular (original) TDS statement, corresponding to the financial year, form type, and quarter displayed.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Then, enter CIN\/PAN details related to the details displayed on the screen based on the latest correction statement filed. DO NOT COPY\/PASTE THE DATA.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Fill organisation details such as &#8220;Category of the deductor, PAN of the deductor, PAN of the authorised person and date of birth of the authorised person etc. to proceed further.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Also, choose communication address as per TAN master or as per the last TDS statement filed. Then, provide a mobile number, alternate mobile number, email ID and alternate email ID. The activation codes and link to activate TRACES account will be sent to the primary mobile number and email ID.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Create a User ID (check the availability while creating a User ID) along with the password to proceed further.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">All the details will appear on the confirmation screen. The fields can be edited if any change is required. Click on &#8216;Confirm&#8217; for successful registration on TRACES.<\/span><\/li>\n<\/ol>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Once all the steps are completed, &#8216;Registration request successfully submitted&#8217; message will appear on the screen. The applicant will receive an activation link on their email ID and mobile number followed by an activation code.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">After successful activation, the deductor will be able to log in on TRACES using their user id, password, TAN and the captcha code.\u00a0<\/span><\/p>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Late-filing-or-non-filing-of-TDS-returns\"><\/span><span style=\"font-weight: 400;\">Late filing or non-filing of TDS returns\u00a0<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<h3 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Late-filing-fee-under-section-234E\"><\/span><span style=\"font-weight: 400;\">Late filing fee under section 234E<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">If an employer fails to file TDS return on or before the due date, a penalty of Rs 200 per day shall be payable until the default continues. However, the total penalty will not exceed the TDS amount.\u00a0<\/span><\/p>\n<h3 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Penalty-for-non-filing-of-TDS-return-under-section-271H\"><\/span><span style=\"font-weight: 400;\">Penalty for non-filing of TDS return under section 271H<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">If the TDS return is not filed within 1 year from the due date, the income tax department may direct the employer to pay a minimum penalty of Rs 10,000 which will not exceed Rs 1,00,000. This penalty is in addition to the late filing fee under section 234E. Also, this section covers the cases of incorrect filing of TDS return.\u00a0<\/span><\/p>\n<p style=\"text-align: center;\" data-speechify-sentence=\"\"><b>Suggested Read: <\/b><a href=\"https:\/\/razorpay.com\/blog\/automate-payroll-process-with-payroll-software-opfin\/\"><b>Why Businesses Should Automate Employee Salaries<\/b><\/a><\/p>\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"TDS-certificate-Form-16-to-employees\"><\/span><span style=\"font-weight: 400;\">TDS certificate-Form 16 to employees<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">TDS certificate is issued by a person deducting tax to another person whose tax has been deducted.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Form-16 is a TDS certificate issued by the employers to their employees. Tax deducted by the employer in a financial year as <\/span><b>TDS on salary<\/b><span style=\"font-weight: 400;\"> is reflected in Form-16. This form validates the fact that tax has been deducted and deposited to the government on behalf of an employee. Also, it contains all the information an employee needs to prepare and file their income tax return.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Usually, employers are bound to issue Form-16 every year on or before the 15th of June of the next year. For instance, Form-16 for FY 2019-20 had to be issued to the employees by the 15th of June 2020.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><b><i>However, the due date for issuing Form-16 for FY 2019-20 has been extended to the 15th of August 2020 due to the COVID-19 pandemic.\u00a0<\/i><\/b><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">With RazorpayX Payroll, the Form-16 generation process has been incredibly simplified. The employers are not required to understand the nitty-gritty of downloading TDS certificates from TRACES website. The process is fully automated with RazorpayX Payroll, which also saves a lot of manual effort and time. The employees can access their Form 16s through an intuitive dashboard.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">So, what are you waiting for?\u00a0<\/span><\/p>\n<div style=\"text-align: center;\" data-speechify-sentence=\"\"><a style=\"border-radius: 3px; background: #528FF0; padding: 15px; font-weight: 600; cursor: pointer; text-decoration: none; color: white;\" href=\"https:\/\/razorpay.com\/payroll\/?r=tds\">Try RazorpayX Payroll today<\/a><\/div>\n<div data-read-aloud-multi-block=\"true\">\n<h2 data-speechify-sentence=\"\"><span class=\"ez-toc-section\" id=\"Frequently-Asked-Questions-FAQs\"><\/span><span style=\"font-weight: 400;\">Frequently Asked Questions (FAQs)<\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<ul data-read-aloud-multi-block=\"true\">\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">What does TDS mean?\u00a0<\/span><\/li>\n<\/ul>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">TDS stands for &#8216;Tax Deducted at Source.&#8217; TDS operates on the basis that each person making a specified type of payment to another individual can deduct tax at source at the rates prescribed by the Income Tax Act and deposit the same to the government. You can pay TDS for your business in less than 30 seconds with the <a href=\"https:\/\/razorpay.com\/x\/tds-online-payment\/\">free TDS payment tool<\/a> offered by RazorpayX.<\/span><\/p>\n<ul data-read-aloud-multi-block=\"true\">\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">What is TDS and how is it calculated?<\/span><\/li>\n<\/ul>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">TDS is a mechanism set by the income tax department where the person responsible for making specific payments such as salaries, contractual payments, rent, payments made to professionals and so on.\u00a0<\/span><\/p>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\"><a href=\"https:\/\/razorpay.com\/blog\/tds-rate-chart\/\">TDS rates<\/a> are predetermined in the Income Tax Act for all payments except salaries. TDS on salary is calculated based on the average rate of income tax applicable to a taxpayer in a particular FY.\u00a0<\/span><\/p>\n<ul data-read-aloud-multi-block=\"true\">\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Who is liable to deduct TDS?\u00a0<\/span><\/li>\n<\/ul>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Any business making specified payments is required to deduct TDS at the time of making payments. No TDS will be deducted if any individual or HUF, whose books are not audited under the Income Tax Act, makes any such payments.<br \/>\n<\/span><\/p>\n<ul data-read-aloud-multi-block=\"true\">\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">How is TDS calculated?<\/span><\/li>\n<\/ul>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">TDS on salary is determined based on the taxpayer&#8217;s average income tax rate in a given financial year. This limit is determined for the financial year, depending on the income tax slab applicable.\u00a0<\/span><\/p>\n<ul data-read-aloud-multi-block=\"true\">\n<li style=\"font-weight: 400;\" data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">Who can file TDS returns?<\/span><\/li>\n<\/ul>\n<p data-speechify-sentence=\"\"><span style=\"font-weight: 400;\">TDS return has to be filed by employers and businesses who has a valid TAN and has deducted tax at source from specified payments. <\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Tax Deducted at Source (TDS) operates on the basis that each person making a specified type of payment to another individual will deduct tax at source at the rates prescribed by the Income Tax Act. <\/p>\n","protected":false},"author":151156469,"featured_media":3163,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3476,3404],"tags":[3481],"class_list":{"0":"post-3156","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-payroll-glossary","8":"category-payroll","9":"tag-tax-deducted-at-source-tds"},"_links":{"self":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/3156","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/users\/151156469"}],"replies":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/comments?post=3156"}],"version-history":[{"count":17,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/3156\/revisions"}],"predecessor-version":[{"id":6815,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/posts\/3156\/revisions\/6815"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media\/3163"}],"wp:attachment":[{"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/media?parent=3156"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/categories?post=3156"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/learn.razorpay.in\/learn\/wp-json\/wp\/v2\/tags?post=3156"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}