HOW TO CALCULATE TDS ON CONTRACT EMPLOYEE

What is TDS

TDS is simply Tax Deducted at Source.  As per the Income Tax Act – persons responsible for making payments are required to deduct tax at source at prescribed rates. Instead of receiving tax on your income from you at a later date, the govt wants the payers to deduct tax before hand and deposit it with the govt.

WHAT IS THE RATE OF TDS FOR CONTRACT EMPLOYEE?

S. No	Nature of Payment	TDS Rate if PAN available	TDS Rate if PAN not available
1	Payment / Credit to resident individual or HUF	1%	20%
2	Payment/Credit to any resident person other than individual / HUF	2%	20%
3	Payment/ credit to Transporters	NIL	20%

Note: In case of payment not exceed of Rs 30,000 or aggregate payment during the financial year does not exceed Rs 1,00,000 then any need to deduct the TDS.

Issue of TDS certificate

The Person who deducting TDS he also need to issue Form 16A & 16B issued on quarterly basis. The Details for TDS Deposited can be view by person whose TDS has been deducted by checking Form 26AS.

The certificate is to be issued by following dates:

Quarter	Due date for Non-Government deductor	Due date for Government deductor
April to June	30th July	15th August
July to September	30th October	15th November
October to December	30th January	15th February
January to March	30th May	30th May

What is the procedure for refund of TDS?

There is no specific refund process or form to claim TDS refunds. You must file your income tax returns in the normal manner. The excess of TDS over what you are supposed to pay as tax in the year will be the refund amount due, and this needs to be shown in the returns filed.

What is the penalty for late filing of TDS return? 

• Late filing fee (if you do not file by the deadline)

Rs 200 per day (two hundred) until your return is filed

• Interest (if you do not deposit the TDS amount in time)

Non deduction of tax at source, either in whole or in part then 1% & After deduction of tax, non payment of tax either in whole or in part then 1.5%

• Penalty (if TDS is not filed within one year of the due date)

Assessing officer may direct a person who fails to file the statement of TDS within due date to pay penalty minimum of Rs.10,000 which may be extended to Rs.1,00,000.