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Tax deducted at source or TDS is essentially a method of collection of tax at the source of the income. Under this, any individual responsible for making specific payments such as interest, salary, rent, commission, etc. is liable to deduct a specified percentage of tax before making the full payment to the other party.
The rules regulating tax deducted at source to be levied and calculated in India has been specified in the Income Tax Act, 1961. Every person liable to deduct TDS is also liable to deposit this TDS amount with the Income Tax Department.
Put it simply, any person who has to make payments of a specified kind such as salary, professional fees, interest, commission, etc. (refers as deductor) to any other entity/person (refers as deductee) will make the payment after deducting the tax. They shall have to forward these deducted tax in the account of the Central Government.
The Central Government ensures that the deductees whose income has been taxed at the source are eligible to get the refund or credit of the amount that was deducted based on Form 26 AS (Annual Statement). This form basically contains all the information about yearly TDS and refunds. Based on this, deductees can file their TDS Return and claim back the tax deducted on their income.
TDS challan is primarily used for depositing the TDS with the government. This is a single challan that taxpayers can use for depositing the taxes collected under the different sections of the Income Tax Act.
In case an individual wants to pay the TDS without challan, the TDS collected must be deposited on the same day when the TDS is collected.
There are mainly two types of TDS Challans as mentioned below-
TDS Challan 280
TDS Challan 280 is a form available on Income Tax India's official website. By using challan 280, payment of income tax can be done either online or offline.
TDS Challan 280 can be used for Income Tax payments for Advance Tax, Surcharge, Regular Assessment Tax, Self-Assessment Tax, and Tax on Distributed Profits or Income.
Payment for Income Tax and Corporation Tax specifically requires Challan No./ITNS 280, irrespective of the mode opted by the individual.
One require following details for Challan 280-
TDS Challan 281
TDS challan 281 is specifically used for depositing TDS or Tax Collected at Source by corporates and Non-corporate entities. This is usually collected by the seller from the buyer during the time of sale of specified goods. TDS Challan 281 can be filed by the taxpayers either online or offline. When the payment is made, a Challan Identification Number (CIN) is issued.
It is the duty of every taxpayer or deductor to pay the tax deducted at source within the prescribed time to the credit of the Central Government. Some of the points to be considered before making a TDS challan payment include-
After the payment, a counterfoil for payment will be given to you, which contains the unique Challan Identification number Information (CIN).
Once done, select the Type and Nature of payment and pay the amount through net banking or debit card. Upon successful completion of the payment, a challan counterfoil will be displayed.