TDS Deduction Policy & Process of Claiming TDS


Table of Contents
 
– WHAT IS TDS? 
– TDS on Professional Services
– TDS Refund Time Period
– How to view TDS Deducted Details?
– Timeline of Issuance of TDS Certificates

WHAT IS TDS? 

TDS stands for tax deducted at source. As per the Income Tax Act, any company or person making a payment is required to deduct tax at source before releasing/ crediting any income to account of receiver. TDS must be deducted at the rates prescribed by the tax department.

The company or person that makes the payment after deducting TDS is called a deductor and the company or person receiving the payment is called the deductee. It is the deductor’ s responsibility to deduct TDS before making the payment and deposit the same with the government. TDS is deducted irrespective of the mode of
payment–cash, cheque or credit–and is linked to the PAN of the deductor and deducted.
TDS is one kind of advance tax. It is tax that is to be deposited with the government periodically and the onus of the doing the same on time lies with the deductor. For the deductee, the deducted TDS can be claimed in the form of a tax refund after they file their ITR.

TDS on Professional Services
 
-Threshold Limit for Deducting Tax

Tax must be deducted in case the payment is greater than Rs. 30,000 during the year. The tax will have to be deducted no matter how small the amount. At Tophawks we deduct TDS on every payment made to Freelancer assuming that during the Financial Year the aggregate amount may cross the threshold limit and deducting TDS at the end of the financial year would not be viable. So, to avoid any compliance related consequences we deduct TDS for every payment that we make. 


– Rate of Deduction of Tax
 
Any payment covered under this section shall be subject to TDS at the rate of 7.5% (in case of availability of PAN)
In case the payee does not furnish his PAN Details then the rate of deduction would be 20%
 
– Time of deduction

The tax should be deducted at the time of passing such entry in the accounts or making the actual payment of the expense, whichever earlier.
 
 
– Time Limit for Payment of Tax

Any TDS deducted for payments made on account of professional services is paid to the Government every 7th  of the succeeding month in which the payment is made.

How Can Deductee claim TDS Amount in case deductee is not assessible to Tax?
 
– There is no separate procedure as such in order to claim a TDS refund due to you apart from filing the Income Tax Return. The tax refund can be claimed only by filing the return of income in the usual manner
– To file the TDS refund online, an individual must first register on the IT department’s website: https://incometaxindiaefiling.gov.in
– After registration, income tax return can be filed by downloading the relevant ITR form. Fill in the requisite details, upload the Form and click on submit
– Upon filing the ITR, an acknowledgement is generated for the ITR submitted, which must be E- Verified 
– E-verification can also be done by using a digital signature, an Aadhaar-based OTP or with the help of net banking account
– However, if you haven’t been able to E-Verify the ITR, then the verification can be completed by sending a signed physical copy of the same to the IT department

TDS Refund Time Period
 
Usually, if the ITR has been filed on time, it takes approximately 3 to 6 months for the refund to be credited in the bank account (This timeline is solely depended on internal process of Income Tax department and may vary). The time it takes for the refund to be credited also depends on the completion of the e-verification.
 
 
 
How to view your TDS deducted details?
 
Follow the given steps to view the details of amount of TDS deducted on your PAN:
 
– Login to https://www.incometaxindiaefiling.gov.in
– In the “My Account Tab” click on View Form 26AS
– Click confirm in the tab appearing
– In the pop-up window, click on I agree and then proceed
– Next click on view tax credit details and select Assessment Year as 2020-21 for Financial Year 2019- 20.
– In the View As drop down select the option HTML and click on View/Download
– Drag down and you can see the desired details
 
TDS Certificates 
 
In case the freelancers require their TDS certificates and they are unable to view the same on the Traces Portal, they can drop an email to our helpdesk team anytime on or after the below mentioned dates along with their PAN Card details to furnish their TDS Certificates as per the request

MonthsDate of Issuance of TDS Certificate
April-June20th August
July-September20th November
October-December20th February
January-March20th June