A challan is a bill, receipt, or invoice that vouches for the payment made. Tax deducted at source (TDS) is a type of tax that is deducted by the payer or employer from the payment made to the taxpayer. The deductor deposits TDS with the Government of India. The TDS challan is, therefore, a form or receipt that evidences the payment of TDS by the deductor to the concerned government authority. TDS challan generation is critical from the deductor�s point of view because it provides evidence that they have made the payment of TDS deducted by them.
Overview of TDS
Tax deducted at source (TDS) is an amount that is deducted by the payer from the specified payments made before transferring the net payment to the recipient. TDS is liable to be deducted and deposited by the payer with the Government of India within the specified due dates as per the Income Tax Act, 1961, and rules made thereunder.
The following are some of the payments that are subject to TDS deduction:
- Salary
- Bank Interest
- Brokerage
- Commissions
- Payments to contractors
- Payment of Rent
- Remuneration for Directors
- Transfer of immovable properties
- Winnings
If you are making any of the payments specified under the Income Tax Act, 1961 that are subject to TDS, then payment shall be made only after the deduction of TDS. But TDS need not be deducted if you are an individual or HUF and your books are not liable for audit as per the Income Tax Act of 1961.
What is TDS Challan?
Till the year 2004, TDS was deposited, and challans were also given physically or offline. In 2004, the manual process of collecting TDS was disposed of by the government. The Online Tax Accounting System (OLTAS) was introduced to reduce human intervention in tax collection and thereby avoid errors and fraud.
OLTAS facilitated the collection of taxes online as well as provided information regarding taxes collected, deposited, refunded, and so on. OLTAS was developed in such a way that taxpayers can download soft copies of challans for tax deposits. The system issues a single copy of the challan and helps taxpayers track the status of their e-challans deposited in banks through online modes.
The intention of the government with the introduction of OLTAS and the online collection of taxes was that deductors and taxpayers could deposit taxes easily and that no manipulations would take place with respect to the collection of taxes.
Types of TDS Challans
There are three types of challans that are issued by the government of India. They are as follows:
- Challan ITNS 280: This challan is issued upon depositing income tax with the authorities. This can be for depositing self-assessment tax, advance tax, or tax on a regular assessment by the IT authorities.
- Challan ITNS 281: This challan is issued on depositing tax deducted at source (TDS) or tax collected at source (TCS).
- Challan ITNS 282: This challan is issued on the deposit of other types of tax, which include gift tax, wealth tax, Securities Transaction Tax (STT), or any other type of direct tax.
What is TDS Challan 281?
Challan ITNS 281 is when the deductor deposits Tax Deducted at Source (TDS) or Tax Collected at Source (TCS) with the government. Depositing TDS and TCS is required to be done within some due dates specified by the government through the Income Tax Act, 1961, and rules made thereunder.
Due dates are as follows for depositing TDS deducted:
- TDS is due on all payments, except those for the purchase of real estate, on the 7th of the following month.
- TDS deducted on the purchase of property�30th of the following month
- TDS is deducted from all payments made from March 1 to April 30.
If TDS is not deposited within the due dates specified, then an interest penalty of 1.5% shall be levied for the month or part of the month thereof.
Process of Filling TDS Challan 281
There are two ways to file Challan ITNS 281: offline and online.
Offline Method To File TDS Challan
The taxpayer can make the payment by visiting a bank and depositing the money along with a handwritten challan. TDS or TCS payments can be made in cash or by check.On making the deposit, the counterfoil receipt issued by the bank can be used as proof of deposit of the TDS or TCS amount with the government.
Online Method To File TDS Challan
To make the payment, the taxpayer shall visit the official TIN NSDL website: https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp. Here, the taxpayer should select the option Challan No./ITNS 281.
The details that are required to be filled in online before making the payment are as follows:
- Selection of the Deductees: Deductees are the persons or entities on whose behalf the payment has been deducted. This can be for company deductees (0020) or non-company deductees (0021).
- Selection of the assessment year: Select the relevant assessment year for which the payment is being made.
- Tax Deduction Account Number (TAN): A TAN is a ten-digit alphanumeric unique number assigned to individuals who deduct or collect TDS. TAN must be specified during this online process.
- Type of Payment:�Select Code 200 for TDS or TCS in a regular transaction, and select Code 400 when payment is made based on a demand order issued by income tax authorities.
- Nature of Payment: The selection should be made between TDS and TCS.
- Details of Payment: Details such as the amount of tax, surcharge, and penalties or late fees are to be entered in the given spaces. The bank details, such as branch name and date, are also provided.
After filling in the above details, click on “Submit to Bank” to be redirected to the bank�s payment page for making the TDS or TCS payment. After successful payment, the challan counterfoil shall be displayed on the screen, specifying the CIN number, payment details, and bank name. This can be used as evidence for the payment of TDS or TCS.
How to Download TDS Challan?
The following are the steps to download the TDS challan:
- Step 1: Visit the official TIN NSDL website: https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp
- Step 2: Go to the “Services” drop-down and select “OLTAS.”
- Step 3: The OTLAS-Challan Status Inquiry Page will be displayed.
- Step 4: Click on “Download.“
- Step 5: You will be redirected to the “Challan” page, from which you can download a copy of the TDS challan you want.
FAQs on Challan Generation
To give you a better understanding, here are some frequently asked questions about the TDS challan.
Q1. How is TDS Challan 281 different from TDS Challan 280?
TDS challan 281 is for depositing tax deducted at source and tax collected at source, while TDS challan 280 is used for depositing income tax, such as self-assessment tax, advance tax, etc., with the income tax authorities.
Q2. What is the use of the TDS challan?
TDS challans are used to deposit tax with the income tax authorities and can also be used as a counter foil and proof of payment.
Q3. Is PAN required for payment of TDS?
Yes, PAN details are mandatory for the payment of TDS.
Q4. What are the details you can find in an acknowledgment stamp for TDS challan 281,
The acknowledgment stamp shall consist of the CIN, the bank branch�s name, the date of deposit, the BSR, and the serial number.
Q5. Can you deposit different TDS challans using one check?
No. Each challan shall require separate checks.
The deductee will benefit from the TDS amount deducted from his or her payment. The amount of TDS deducted shall be given as a credit, which will help reduce the tax liability for the given financial year.