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What Is TDS Challan Payment?

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.

What Is TDS Challan?

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.

Types of TDS Challan

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-

  • Name of the Taxpayer (Companies / Other than Companies)
  • Assessment Year
  • Permanent Account Number
  • Address of the Taxpayer
  • Name of the Bank and Branch

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.

Important Points to Know Before Collecting TDS

  • An individual responsible for collecting taxes through TDS is given Tax Deduction and Collection Account Number (TAN).
  • TAN is a 10-digit alpha-numeric number that is available on the NSDL website.
  • To get your TAN number, you must submit Form No. 49 B along with a specified fee.
  • In case any individual fails to quote TAN on their communications with the Income Tax Department, a fine of Rs. 10,000 will be imposed on them.

How to Make a Correct TDS Challan Payment?

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-

  • Type of Payment It is important to make separate payments or challans for different types of payment.
  • Type of Assess/Deductee The deductees are mainly of 2 types- Companies and Online. While making TDS payment, separate challans should be made for depositing tax deducted at source from company deductees and non-company deductees.
  • Interest Applicability on TDS Payment In case the TDS deduction has been delayed from the date on which it was supposed to be deducted, the Interest would be payable at 1% per month to the date when it is being paid. Whereas in case the payment is being delayed from the due date, then Interest would be payable at 1.5% per month on the date when it is being paid.
  • The Due Date for TDS Payment The due date for filing TDS challan payment after deducting the TDS is-
  • a) In Case of Government Assessee:
    • To be paid on the same day when it has been deducted (in case the tax has to be deposited without challan)
    • To be paid on 7th of the next month (in case the tax has to be deposited with challan)
  • b) In Case of Non-Government Assessee:
    • Tax for the month of March is to be paid on 30th April
    • Tax for any other month is to be paid on 7th day of next month

Steps to Follow to Make TDS Challan Payment

  • One can begin by accumulating the total of deducted TDS amount and divide it on the basis of the type of deductee and type of payment
  • This should be followed by calculating total interest (if any) with respect to the applicability of interest
  • Now prepare the Challan ITNS 281, based on the type of deductee and type of payment
  • Make sure to quote an accurate TAN. Quoting false TAN may cause a penalty of Rs. 10,000/- (as per section 272BB)
  • Finally, deposit the amount via cash or E-payment along with ITNS-281.

After the payment, a counterfoil for payment will be given to you, which contains the unique Challan Identification number Information (CIN).

The Process to File TDS Challan 281 Online

  1. Go to the tax payment system website and select the Challan 281.
  2. Complete the following details on the website
  • Tax Deduction Account Number
  • Full Name (it will be auto-populated as per Income Tax Department database)
  • Assessment Year
  • Other details such as Address, email ID, and Phone Number

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.