Tax Deducted at Source (TDS)

What is TDS?

Tax Deducted at Source (TDS) is a system introduced by the Income Tax Department to collect tax at the source of income generation. It ensures steady revenue collection and helps in tracking income flow across transactions.

TDS is applicable on various payments such as salary, rent, professional fees, contract payments, and also on the sale of immovable property.

TDS Returns Filing

Entities deducting TDS are required to file quarterly TDS returns. These returns include the details of TDS deducted and deposited, and must be filed within the due dates to avoid penalties.

Who Needs to File TDS Returns?

• Employers deducting TDS on salaries
• Businesses deducting TDS on contractor/vendor payments
• Professionals making payments above specified thresholds
• Property buyers deducting TDS under section 194-IA

Documents Required:

• TAN and PAN of the deductor
• PAN of deductees (employees/vendors)
• Details of TDS payments and challans
• Salary/payment data (if applicable)

TDS on House Property (Section 194-IA)

When an individual buys a property worth more than ₹50 lakhs, they are required to deduct 1% TDS from the total sale value and deposit it with the government. This is applicable even if the buyer is not engaged in business or does not have a TAN.

Key Points

• Applicable for property purchases over ₹50 lakhs
• 1% of the total sale value to be deducted as TDS
• TDS to be deposited using Form 26QB
• Buyer must issue Form 16B (TDS certificate) to the seller