TDS (tax deducted at source)
What is TDS? Income tax deducted when a payment is made, for example on salaries or on purchases above a limit, and paid to the government.
In plain words
When you make certain payments, such as salary, contractor charges, rent or professional fees, the law asks you to hold back a small slice as tax, deposit it with the government, and report it. The person you paid then claims credit for that tax in their own return. The section, limit and rate depend on the kind of payment and the payee.
Example
Your company pays a painting contractor, also a company, ₹3,00,000 for a job, with GST shown separately on the invoice. Under the contractor section (194C), at an illustrative 2% for companies, you hold back ₹6,000 on the amount before GST and pay the contractor ₹2,94,000 plus GST. You deposit the ₹6,000, generally by the 7th of the next month, and report it in your quarterly TDS return. Your CA confirms the section, the rate and the base. Rates, limits and due dates change; check the current ones and confirm the details with your CA or adviser.
Why it matters
- Cost. Missed or late TDS brings interest and late fees, and the expense can be disallowed in your own tax computation.
- Deadlines. Monthly deposits and quarterly returns repeat all year.
- Risk. Your suppliers and employees get credit only if your return is right.
How Kinnow handles it
People works out TDS on salary under Section 192, old or new regime, from each employee's declaration, and prepares Form 24Q data each quarter and Form 16 data at year end (Payroll Engine). In Account, purchases from one supplier are tracked through the year; once the buyer test is met, Kinnow works out the 194Q deduction of 0.1% on the part above ₹50,00,000 and lists it under Reports. Comply prepares challan and return drafts for you to review and upload. Month-end close asks whether the TDS deducted matches the 26Q preview.
The limits: Kinnow prepares and never files. On contractor running bills from Projects, the section and rate are not yet carried across, so Kinnow flags the bill and deducts nothing until someone states them. With no turnover on file, 194Q deducts nothing and raises one flag a year.
Send us one month of payments to contractors and suppliers. We will show where TDS would be flagged.
Ask for a walkthrough of salary TDS, 194Q and the quarterly return drafts.
Questions
Who has to deduct TDS?
Generally, anyone who makes the listed kinds of payment above the set limits. Which payments, limits and rates apply depends on your business and the payee. Ask your CA for the list that applies to you.
What happens if TDS is deducted or deposited late?
Interest applies for late deduction and late deposit, and a late fee applies to returns filed late. Check the current rates with your CA.
Does Kinnow file the TDS return?
No. Kinnow prepares the data and drafts, and a person reviews them and uploads on the portal. Rates, limits and due dates change; check the current ones and confirm the details with your CA or adviser.