Explain TDS Basics



TDS, short for Tax deductible at source, is a way of indirect tax collection by the government according to Indian tax act, 1961. It is adjusted against the total tax liability of an assessee a percentage of the overall payment is withheld by the source that is making the payments. The source is then responsible to pay the tax to the government on behalf of the assessee.

Income from the following sources is in the subjected to TDS:

  • Salaries
  • Interest in securities
  • Dividends
  • Other interests
  • Winnings from horse races, lotteries etc
  • Payments to nonresident sports association or sports man
  • Payment in respect of rent
  • Insurance commission
  • Deposits under national saving scheme
  • Commissions
  • Payment of compensation on acquisition of certain immovable property.
  • Payment of fee for professional or technical services.
  • Payment to contractors and sub-contractors
  • Payment to offshore fund
  • Payment of NSS, etc


Calculation of TDS on salary:
If the employee don’t hold PAN, he is liable to pay tax as per Slab or at 20%, whichever is higher. Filing e-TDS return online is compulsorily for companies and government as per section 206 of Income tax law. Documents required for filing TDS:

  • TAN: Tax Deduction Account Number.

You should hold a valid TAN. TAN is an alphanumeric number that is issued to individuals for tax deductions on the tax payment made by them according to Indian Tax Act,1961.To register for TAN, you need to fill form number 49B.

  • Valid PAN: Permanent Account Number.
  • TDS statement prepared using RPU (Return Preparation Utility) and validated using FVU (File Validation Utility).


The following tables shows at what percentage is tds charged on income subjected to tds other than salaries.

Particulars Amount
Calculate salary income ****
Add: any other income declared by employee to employer ****
Total: ****
Deductions under section 80C to 80U ***
Net total ****
Tax using Slab rate ****
TDS per month- Tax calculated/12 ****


Under Section Categories Rate of tds(in%)
Section 193 Interest on securities 10
Section 194 Dividend other than dividends referred in section 115-O 10
Section194A Interest other than interest on securities 10
194B& 194BB Wiinings from lotteries, horse races, card games etc 30
194C Payment tp contractor/subcontractor






194D Insurance commission 5 (10% for AY 2016-17)
194EE Payment for deposits in national saving schemes 10 (20 for AY 2016-17)
194G Commission, etc on sale of lottery tickets 5 (10% for AY 2016-17)
194-I Rent


Land, building or furniture




194J Sum paid by way of professional or technical fee or royalty 10
194F Repurchase of units by UTI/Mutual funds 20


Common Errors While Filing TDS Return:

  • Incorrect Personal Information: This is the most common mistake that people do. They fill wrong information in the form. Incorrect information like Name, Address, Bank Account Number etc., may lead to cancellation of form.


  • Mistakes in claiming deductions: section 80C-80U of Tax Act, 1961 provides for several deductions in tax. Many times employer makes mistakes while claiming these deductions.


  • Failure to provide total income information: Assessee often omits incomes from other sources like interest on Fix deposits, income of Minor Child etc.

Related Post: Due Dates for Advance tax payment and Interest Penalty

For any help on TDS Return feel free to consult the tax experts at Taxraahi. You can file TDS Return yourself via our TDS software or get CA’s help on filing income tax return. You can also use the option of Business ReturnBulk Return or Revised Return Filing.

By | 2018-08-08T09:16:46+00:00 June 25th, 2016|Categories: Income tax basics|Tags: , , |0 Comments

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