TDS Online Payment: How to Make Income Tax Challan Online Payment

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23 NOVEMBER, 2023

Introduction:

TDS stands for “Tax Deducted at Source”. It is a system implemented by the government to collect taxes at the source of income itself. It is essentially an indirect method of collecting taxes which combines the concepts of “pay as you earn” and “collect as it is being earned.”

As per this concept, any person responsible for making payment of a specified nature (such as salaries, rent, professional fees, contract charges etc.) is required to deduct a certain percentage of tax before making payment to the recipient. The amount so deducted is then required to be deposited into the account of the government within the prescribed due dates. The recipient of income would receive the net amount (i.e., after reducing the TDS). However, the recipient would be entitled to get the credit of the amount of tax so deducted basis the certificate issued by the deductor.

One of the advantages of TDS is that it enables the government to collect taxes in a timely and an efficient manner. It also helps the government in preventing tax evasion by ensuring that tax is deducted at the time the income is generated than at a later date and also obtain the data and information of persons who have received the income.

Eligibility Criteria for TDS payments - Who is supposed to deduct TDS and when?

As mentioned above, any person responsible for making payment of specified nature is required to deduct TDS, if the payment exceeds the specified threshold limit. For instance, an employer is required to deduct TDS from salary paid to the employees, if the salary amount exceeds the threshold limit.

A complete list of such specified payments along with the rate at which TDS should be deducted can be accessed in the TDS rate chart (https://incometaxindia.gov.in/Pages/Deposit_TDS_TCS.aspx).

Benefits of online TDS payment:

With the advancement of technology, online facility for payment of TDS offers far more advantages to the taxpayer as compared to the erstwhile payment method. Hence, one may choose to make TDS payments online vis-à-vis the offline mode. For comparative purpose, we have listed below some of the advantages that the taxpayer may have if they choose online facility vis-à-vis the erstwhile payment method.

Convenience: The entire process of TDS payment can be completed from the comfort of one’s home or office, without the need to visit a bank or post office.
Time saving: Online TDS payment can be completed quickly, without the need to fill out physical forms or stand in long queues. TDS is remitted instantly to the government.
Secure: Online TDS payment is highly secure, as it is protected by advanced encryption technology.
Reduced Paperwork: Making TDS payments online reduces the physical effort involved in doing paperwork. It helps in reducing the wastage of paper and act as an environmentally friendly approach.
Lesser Errors: Online payments reduce the chances of making mistakes as even the slightest errors are highlighted on the online platforms.

How to make TDS payment online?

Option A: Without logging in to the income tax portal

Step 1: Go to the e-Filing portal ‘www.incometax.gov.in’ and under ‘Quick Links’ on left hand side, select ‘e- Pay Tax’.

Step 1- Go to the e-Filing portal - TDS Online Payment

Step 2: Enter the Tax Deduction Account Number (“TAN”) of the person responsible for deducting TDS. TAN is a 10-digit alpha-numeric number allotted by the income tax department to persons responsible for deducting TDS. Also, enter the mobile number for the purpose of OTP verification and thereafter click on ‘Continue’.

Step 2- Enter the Tax Deduction Account Number -TAN- for tds payment

Step 3: After OTP verification, a success message with your TAN and name of the person deducting the tax will be displayed. Click on ‘Continue’ to proceed.

Step 3- Click on Continue to pay advance tax

Step 4: Select assessment year and thereafter click on ‘Proceed’.

Step 4- Select assessment year and click on Proceed to pay tds

Step 5: An exhaustive list detailing the applicable ‘type of payment on which TDS is being deposited’ will appear. Select the correct payment type.

Step 5- Select the correct payment type to pay tds

Step 6: Select the type of Deductee (i.e. Company/Non-Company) and thereafter fill in the accurate details of tax payment under the relevant categories. Click on ‘Continue’.

Step 6- Select the type of Deductee for tds payment

Step 7: A Payment mode page would be displayed. Select the payment mode (Net Banking/ Debit Card/ Pay at Bank Counter/ RTGS/NEFT/Payment Gateway) from the options given and click on ‘Continue’. The online payment of tax can be made via following modes through the Authorised Banks –

Net Banking - No transaction charge/fee is applicable for making tax payment through this mode.
Debit Card - No transaction charge/fee is applicable for making tax payment through this mode.

Pay at Bank Counter - This option cannot be used by a taxpayer being a Company or a person (other than a company) to whom Tax Audit is applicable. Taxpayer can avail this mode to pay taxes at the counter of Authorized banks. No transaction charge/fee is applicable for making tax payment through this mode.
RTGS/NEFT - Under this mode, payment of taxes can be made through any bank having facility for RTGS/NEFT. Bank charges will be applicable as per the terms and conditions prescribed by the respective Originator Bank.
Payment Gateway - This mode provides a wide range of payment options to the taxpayer like net banking, debit card, credit card and UPI available with the payment gateway service provider. The transaction charges if any, will be applicable over and above the tax amount in this mode.

Step 7- Select the payment mode for online tds payment

Kotak offers you a simple and seamless way to make such tax payments in a hassle-free manner. You can use Kotak Net Banking (if you are a Kotak customer) or the Kotak Payment Gateway (if you are not) to make your tax payment on time.

Step 8: Preview and verify the details. In case of any error, edit the requisite details and thereafter re-verify the same and click on ‘Pay Now’.

Step 8- Preview and verify the details to pay tds online

Step 9: Tick the checkbox after previewing the terms and conditions and thereafter click on ‘Submit to Bank’ to continue with the payment. Based on the payment mode selected, you shall be redirected to the respective webpage for completing the payment transaction.

Step 9- click on Submit to Bank to continue with the online tds payment

Step 10: Complete the payment process and thereafter download the Challan Form. Download the Form for future reference purpose.

Option B: Post logging in to the income tax portal

Alternatively, you can also make your tax payment by logging in to your income tax portal by following the below given steps –

Step 1: On the home page of the e-filing portal of the Income tax department, click on ‘Login’ and thereafter enter your TAN based e-filing login credentials.

Step 1- click on Login on home page of the e-filing portal

Step 2: On the Dashboard, under ‘e-File’ select the option ‘e-Pay Tax’.

Step 2- under e-File select the option e-Pay Tax to pay tds online

Step 3: On the ‘e-Pay Tax’ page, click the New Payment option to initiate the online tax payment.

Step 3- click the New Payment option to initiate the online tds payment

Step 4: On the New Payment page, click on ‘Proceed’ under the window ‘Pay TDS’.

Step 4- click on Proceed under the window Pay TDS

From here on, please follow Step 5 to Step 10 (as given above in Option A) to complete your tax payment online.

FAQs on TDS Payment

1. Is TAN mandatory for making TDS payments online?

A TAN is a 10-digit alpha-numeric number that is required to be obtained by all persons who are responsible for deducting tax at source, except in the following cases:

Sale of immovable property (Section 194IA)
Rent paid by persons who are not liable for audit (Section 194IB)
Payment to resident contractors and professionals by persons who are not liable for audit (Section 194M)
Payments made for transfer of a virtual digital asset (Section 194S)

It is compulsory to quote TAN on all TDS payments and also on the TDS certificates issued thereafter.

2. What is the due date for payment of TDS?

Timelines for depositing the TDS are as under:

Month of tax deduction	Due date for depositing TDS
Tax deducted for the months of April – February	By 7^th of the following month
Tax deducted for the month of March	By 7^th April (for tax deducted by government office) By 30^th April (for other deductors)

Month of tax deduction

Due date for depositing TDS

Tax deducted for the months of

April – February

By 7^th of the following month

Tax deducted for the month of March

By 7^th April (for tax deducted by government office)

By 30^th April (for other deductors)

Thus, for example, if TDS is deducted in the month of May, the same needs to be deposited with the government by 7^th of next month – i.e. by 7^th June.

Since this being a statutory due to the government, any failure to deduct/ pay the TDS on time, may attract interest in accordance with the law.

3. What is the interest liability in case of non-deduction or late payment of TDS?

Where any person either fails to deduct the tax at source or after deduction does not deposit the same to the government (either fully or partly), then such person shall be liable for interest exposure at the given rates:

Nature of default	Interest exposure	Period for which interest is to be paid
TDS not deducted (fully/partly)	1% per month or part of month	From the date on which tax is deductible to the date on which tax is actually deducted.
TDS not deposited to the government after deduction (fully or partly)	1.5% per month or part of month	From the date of tax deduction to the date of deposit.

Nature of default

Interest exposure

Period for which interest is to be paid

TDS not deducted (fully/partly)

1% per month or part of month

From the date on which tax is deductible to the date on which tax is actually deducted.

TDS not deposited to the government after deduction (fully or partly)

1.5% per month or part of month

From the date of tax deduction to the date of deposit.

4. In case where TDS payments have been made online, but one has forgotten to download the TDS challan, how can the same be accessed?

In such a case, one can access Challan Receipt for TDS payment by logging into your TAN based account on the Income tax portal.

5. What happens after TDS deduction?

Upon deduction of TDS, a series of subsequent processes are triggered, outlined as follows:

Deposit TDS with Government:After deducting TDS, the same is required to be deposited with the government within the stipulated time as given in Q2.
File TDS Return:The deductor (i.e. the person who has deducted tax at source) is required to file TDS returns (quarterly) where he declares the financial details of all the Deductees for whom tax has been deducted during the quarter. Deductee means “the person from whose income, tax has been deducted”.
Issue of TDS certificates: The Deductor is required to issue TDS certificate to the Deductee in respect of taxes so deducted. The certificate must be issued within specified timelines as prescribed by the government.
Updation of Form 26AS/Annual Information Statement (AIS):When the government receives the amount of TDS and details of deductees via TDS Returns by deductor, it updates the Form 26AS/AIS of the Deductee, wherein all the taxes deposited till date on behalf of the Deductee gets captured.Basis the TDS certificate issued by the deductor and Form 26AS/AIS so generated, the Deductee can claim the credit of TDS available in it while filing its income tax return. This ultimately reduces the tax liability of the Deductee.

6. Can I make TDS payment at a bank branch?

Yes. You can pay TDS offline by making payment over the bank counter at the authorised banks or via RTGS/NEFT. However, you should know that to make TDS payment using any of the modes either online or offline, it is mandatory to generate Challan Reference Number (CRN) on the ‘e-Pay tax’ functionality on the e-filing portal of the Income-tax Department. No manual challans are accepted in case of tax payment over the bank counter.

7. What are the common mistakes which people make while preparing the TDS challan?

The deductor needs to be very careful while preparing the TDS challan. Any mistakes in the TDS challan can lead to shortfall in the TDS credit by the department. Common mistakes which are generally made while making the TDS challan are:

Quoting of incorrect section under which payment is made;
Incorrect Major Head;
Incorrect Minor Head;
Financial Year in which tax is deducted; and
Incorrect Assessment Year

8. In case, I have made an error in the TDS challan, can I rectify the same?

Yes, where an error has been made in the TDS challan, the same can be rectified. Online correction of TDS challan can be carried through ‘TRACES’ (TDS Reconciliation Analysis and Correction Enabling System) Website.

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