Tds For Employees: Everything You Need to Understand

The tax deduction is quite a common word for you if you are a working professional or a homemaker. Therefore, tds for employees is not a kind of complex thing to understand for a salaried employee. That’s because this is the major deduction that many employers are aware of. Still, there are a no. of individuals who lack thorough knowledge & significance of TDS. Therefore, this article illustrates the concept of TDS from scratch. One who doesn’t know even about the basics of TDS or who lacks desired TDS knowledge can become crystal clear here. So, let’s start from its basic concept.

What Is TDS?

Tax deducted at Source is the process of tax deduction when the income is generated.TDS is applied at a certain amount which is deducted for a salaried employee. Also, a service receiver pays when he pays the bill amount acceptable with tax. A deductee is the one who receives the in-hand payment with tax deduction. And a deductor is the one who deducts the TDS before paying the amount to a Payee. Thus, a very common example matches with an employee who receives his monthly salary. He receives his final pay with the TDS deduction which is added to his tax liability. Furthermore, any rental, product service, stock income, investment, interest, fee, or commission becomes liable for TDS at a certain amount limit. That’s all that comes under knowing the TDS meaning .

What Are the Types Of TDS?

TDS is deducted in many ways in regular or instant purchases or while taking any outsourced service. But we can categorize the TDS service into two categories. They are;

TDS On Income

TDS on an individual’s income is deducted from the advance income tax under the Income Tax Act rule. The deduction percentage on the income varies depending upon the TDS rule applied through the government tax rule.

TDS On Other Sources

TDS on other sources can include the deduction on rent, brokerage, professional fees, commission, etc. Apart from these, in many other cases from little food to a big product purchase deals with TDS deduction where the buyers get the bill including with TDS amount.

What Is Advance Income Tax?

Advance Income Tax is the system in which a tax deductor pays the tax amount in advance for the financial years in quarters. For eg, if a person holds 12000/- as a tax amount that he needs to pay in advance, he can pay 3000/-per month in every quarter in advance tax submission.

What Is TDS Process?

It’s not obvious to get familiar with the TDS deduction process when you do not belong to the financial niche. Thus, here are the steps involves in the TDS deduction process.

In the TDS process, the deductor gets TDS in professional fees, rent, or another payment bill where he pays the tax excluding the tax amount.
The deductor transfers the same TDS amount to the bank. That is paid through a form-filling approach which is associated with a specific TDS category amount.
In this deduction process, the deductor issues the form to the deductee as income tax proof
After the TDS payment, the deductor files the E-TDS to the NSDL which is further forwarded to the income tax department through the NSDL.
Thus, the deductee can check the tax deduction status from their income tax return issued through the form proof by the deductor in the TDS email login and file the tax return process.

Why TDS Deduction Is Important?

As we have learned that tds deduction for employees is a formal process that works in both regular and irregular payment. While going through employee tds deduction, it is important to know its significance. Thus, here are the listed ways how it is important to implement at every income generation.

Therefore, you may belong to any industry that may relate to a service organization or owning a business. Paying TDS is as important as we you need to generate genuine revenue. Proper regulation in TDS paying maintains the nation’s economy. At the same time, it keeps the public infrastructure & service moving on from the government income. Thus, being an ideal citizen, a professional must pay the TDS amount on time.

What Are Different TDS Return Forms?

While knowing about the TDS Return process attained in TDS compliance. There are listed TDS forms that every professional must be aware of. Thus, here are the listed TDS forms available in the TDS return.

TDS Return Forms

These forms are categorized in two ways. They are TDS Salary & TDS Non-Salary forms. Therefore, the forms included under this;

Form 24Q- For both residential & Non-Residential persons. This is filed quarterly.
Form 26Q- When a resident’s TDS is deducted.
Form 27Q- If TDS is deducted from a non-resident.
Form 26QB- When TDS is deducted on Property sale.
Form 26QC- When TDS deducts on personal rent.
Form 26QD- TDS deducted while paying resident contractors.

Final Words

TDS is a dynamic & vast concept for every industry in their formal, informal, regular, or irregular income generation process. At the same time, it is also one of the important parts of income deduction. Managing TDS calculations are not easy when the employee salary tds rate & TDS rules are dynamic. Therefore, its implementation in the HRMS software Payroll process of an employee is quite an easy process. That can make an automatic deduction of TDS for every employee associated with the rate percentage. Our hihellohr HRMS software holds the same feature. If you look to learn more about the TDS implementation & looking for a managed source in TDS as we have in payroll. You must try HRMS software hihellohr once.