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What is TDS?

TDS which stands for tax deducted at source has been laid down by the Income Tax Act. Under this Act, if any Company or person makes a payment, then they have to deduct tax at source if their payment exceeds a certain threshold limit, which has been specified by the department. The TDS has to be deducted by keeping the prices in mind which has been prescribed by the Tax Department. 


There are a deductor and a deductee in the pROCess. A deductor is a person or Company which makes the payment after deducting TDS, on the other hand, a deductee is that person or firm which accepts or receives the payment. The deductor has to deduct the TDS and submit it to the government, before making any form of payment. The TDS is linked to the PAN and therefore can be deduced in any form, either cash, cheque, credits or any other form of payment. The following are the types of payments in which the TDS has to be deducted:


Interest payments by Banks

Commission payments

Rent payments

Consultation fees

Professional fees



All about TDS Return (Foreign Payments)

In order to file the TDS return filing on Non-resident payments, FORM 27Q is to be filled. This TDS has to be deducted at the time of making payments but other than salary, to the non-residents. This can be deposited by the deductor via challan for the TDS payment before or on the 7th of the next month. The exchange rate is set by the RBI for the TDS on a non-resident. 


Due Dates for filing TDS Returns

1st Quarter (April-June) – Till July 31st

2nd Quarter (July to September)- Till October 31st

3rd Quarter (October to December) - Till January 31st

4th Quarter (January to March) – Till May 31st


Penalties associated

Once the TDS is deposited then the buyer needs to file TDS return by submitting the Form 27Q, else 1.5% interest rate would be applicable from the actual date of deduction to the actual date of payment, every month. Similarly, if the price is not deducted, then with a 1% interest rate is applicable from the due date of deduction to the actual date of deduction every month.

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FAQ - Frequently asked questions

What is the full form of TDS Return Filing?

A TDS Return stands for Tax Deducted at Source Return and is a summary of all the transactions related to TDS made during a quarter.

Are the online forms used for e-TDS return the same as the physical copies?

Yes, the form for online and offline returns are the same.

Where should an individual go to file TDS/TCS returns?

The taxpayer needs to login to the Traces site or visits TIN Facilitation Centers, which are managed by NSDL e-Gov.

What happens if the PANs of the deductees are not available?

All transactions liable for TDS will have tax deduction at a higher percentage of 20% if the Permanent Account Number (PAN) of the payees is not available

What should a deductor do if he or she finds it difficult to file an e-TDS return?

If the deductor finds it difficult to file an e-TDS return, then it can be filed manually.