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All about Online TDS Payment Challan

Navdisha Sehgal

| Updated: Apr 07, 2021 | Category: Taxation

All about Online TDS Payment Challan

TDS is an abbreviation for tax deducted at source, which is managed by CBIT (Central Board of Indirect Taxes). TDS deducts a certain amount from the payments such as salary, interest, commission, etc., to be paid by the employer before making the full payment. The article talks about the process of TDS Payment Challan online in-depth by discussing Challan 281.

What is TDS Payment Challan?

TDS Payment Challan is a form that is used to deposit TDS (Tax Deducted at Source) or TCS (Tax Collected at Source) to the government. It was introduced to reduce human errors & to facilitate online transactions of tax collection, deposit, or TDS refund. Under the TDS challan, a certain amount is deducted from the payments such as salary, interest, and commission to be paid by the employer before making the full payment.

Every person who makes a TDS Payment challan 281 is also liable to deposit the TDS Challan amount to the IT Department.

What are the pre-requisites for deducting TDS?

An individual responsible for deducting TDS must get TAN, i.e., Tax Deduction and Collection Account Number. TAN is a 10- digit alphanumeric code or number. It can be obtained by depositing Form No – 49 B, which is available on the NSDL website.

Types of TDS Payment Challan

There are three different types of TDS Payment Challan. These are:

  • TDS CHALLAN 280

It is specially designed for depositing the Income Tax. The Income Tax Payments for advance tax, surcharge, regular assessment tax can be made via Challan 280. The mode of payment can be online or offline and must be paid by the depositor, irrespective of the mode of payment.

  • TDS CHALLAN 281

It is used for TDS OR TCS.

Due dates for payment of TDS

1. TDS deducted on payments (excluding property purchase): 7th of the following month

2. TDS deducted on the property purchase : 30th  of the following month

3. TDS deducted in March: 30th  April.

If there is a delay in deposit of tax, interest is levied at the rate of 1.5% / month or part of the month from the date of deduction.

  • TDS CHALLAN 282

It is used for depositing gift tax, transaction or security tax, wealth tax, etc., or other forms of indirect taxes.

Applicability of TDS Challan

TDS is applicable to other incomes apart from salary.

These incomes are:

  • Dividend
  • Interest on securities
  • Insurance commission
  • Brokerage
  • Transfer of immovable property
  • Commission on sale of lottery tickets
  • Winnings from horse race.

Why is TAN important for TDS Payment Challan?

A person liable to deduct tax at the source must obtain TAN (Tax Deduction and Collection Account Number). This is a 10- digit alphanumeric number that needs to be mentioned in all the TDS returns, TDS Payment & any other communication with the income tax department.

Under section 203A of the Income Tax Act, 1961, it becomes mandatory to deduct TDS by all the assesse and mention TAN in all the TDS-related documents.

A penalty may be imposed in case of failure to mention TAN in all TDS-related documents.

What are the modes of TDS Payment Challan?

There are 2 modes of TDS payments:       

  • Online
  • Offline

Online mode

The steps to be followed in the online mode of TDS payment are:

  1. Visit the TIN-NSDL website[1].
  2. Then select e-payments to pay taxes online from the service tab.
  3. Select Challan no. / ITNS 281 from the options available.
  4. The following details have to be entered:
  5. Selection of deductees
  6. Assessment year
  7. TAN details, i.e., Tax Deduction Account Number
  8. Type & nature of payment
  9. Details of payment.
  10. After filling all the details, click on submit.
  11. The party is issued a CIN or Challan Identification Number on the confirmation of payment.

Offline mode

The TDS payment challan can be done by physically visiting the bank and submitting the Challan. After the submission of the Challan, a bank-stamped counterfoil will be issued as proof of payment.

The payment has to be made either by cash or cheque.

How to check the status of TDS Payment Challan

TDS Payment Challan status can be checked online by following these steps:

  • Visit the website of TIN-NSDL.
  • Select CIN OR TAN-based view.
  • Fill in the requisite details to view the status.
  • The tax deductors can download the challan file for a select period to verify the entries filled in the e-TDS or e-TCS Statement.

Conclusion

TDS Challan was introduced to facilitate online transactions and to minimize human error.

The article talks about various types of TDS challan and the processes. It also entails the applicability of TDS and why TAN is important for TDS.

Read our article:How to file TDS Return?

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Navdisha Sehgal

Completed BA LLB from JEMTEC, School of Law, Greater Noida (Affiliated to GGSIP University, New Delhi). I have an experience of about 2 years in various fields of corporate laws, but I have a keen interest in researching on legal issues and to gain knowledge. I always strive to bring the best to work on what I do.

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