Understanding TDS: A Quick Guide for Businesses
Tax Deducted at Source (TDS) is a way of collecting tax at the point where income is generated. If your business makes certain payments — salaries, rent, professional fees, contractor payments and more — you are usually responsible for deducting tax and depositing it with the government.
How TDS works
- You deduct tax at the prescribed rate when making an eligible payment.
- You deposit the deducted amount with the government by the due date.
- You file a quarterly TDS return and issue a certificate (such as Form 16 or 16A) to the payee.
Common TDS sections
A few frequently used sections include:
- 194A — interest other than on securities
- 194C — payments to contractors
- 194H — commission or brokerage
- 194I — rent
- 194J — professional or technical fees
Rates depend on the nature of payment and whether the payee’s PAN is available. You’ll find an indicative rate table in our Knowledge Center.
Key deadlines to track
- Payment of TDS: generally by the 7th of the following month.
- Quarterly returns: with due dates through the year.
- Certificates: to be issued to payees after each quarter.
Late deduction, late payment or late filing each attract their own interest or fees, so a simple monthly checklist goes a long way.
Getting it right
TDS mistakes are common but avoidable. If you’d like help setting up a compliant process or filing your returns, get in touch.
This article is for general information only and is not a substitute for advice specific to your circumstances. Please verify rates and due dates against the latest position.