TDS Payment Process: A Step-by-Step Guide to Online TDS Payment and Challans

Tax Deducted at Source (TDS) is a critical part of income tax compliance for individuals and businesses in India. Whether you are deducting TDS on salaries, contractor payments, rent, or professional fees, you must deposit the deducted amount with the government on time. Currently, TDS payment has been moved from NSDL e-Payment Portal to the Income Tax portal itself.

This guide will walk you through the entire TDS payment process, explain the different TDS challans, and help you stay compliant without confusion.

What is TDS Payment?

TDS payment is the process of depositing the tax deducted from payments you make (like salary or contractor fees) to the credit of the Central Government. After deducting TDS, you must deposit it within the specified timelines to avoid interest and penalties.

All TDS payments are made using Challan No. ITNS-281, which can be filled and paid online through the Income Tax e-filing portal or through authorized banks.

Key Due Dates for TDS Payment

• Monthly TDS Payment:
  Generally, the TDS deducted in a month must be deposited by the 7th of the following month.
  Example: TDS deducted in April must be paid by May 7th.

• March Payments:
  For TDS deducted in March, the due date is April 30th.

• Quarterly Government Payments (without challan):
  Government offices paying TDS without challan must deposit by the same day of deduction.

Step-by-Step TDS Payment Process Online

Follow these instructions carefully to make TDS payment online:

Step 1: Login to the Income Tax Portal 

• Go to www.incometax.gov.in;

• Login using TAN login credentials.

Step 2: Select Assessment year and proceed by clicking Pay TDS/TCS

• This is the dedicated challan for all TDS/TCS payments.

Step 3: Fill in Required Details

• Select the correct TDS Section

• Tax Applicable: (0020) for Companies, (0021) for Non-Companies

• Type of Payment: TDS Regular Assessment (200) or TDS Demand Payment (400)

• Deductor Details: PAN, Address, Mobile Number, Email

• Financial Year and Assessment Year

• Nature of Payment: Choose the relevant section code (e.g., 94C for contractor payments, 92B for salary)

• Bank Details: Select your bank for net banking payment

Step 4: Submit to Proceed

• Verify all details carefully before submission.

Step 5: Make Payment

• You will be redirected to your bank’s net banking page to complete the payment.

Step 6: Download Challan Receipt

• After successful payment, a challan counterfoil will be generated.

• This acts as proof of payment and must be saved for TDS returns and records.

Different Challans in TDS Payment Explained

Challan No. ITNS-281

• Purpose: Payment of TDS and TCS

• Sections Covered: All TDS deductions (salary, contractor, rent, professional fees)

Other Challans Related to TDS (For Reference):

• Challan No. ITNS-280: Used for self-assessment tax and advance tax (not TDS)

• Challan No. ITNS-282: For payment of securities transaction tax

• Challan No. ITNS-283: Banking cash transaction tax

Remember: For TDS, you must always use Challan 281.

What Happens After Payment?

After making the TDS payment:

1. Update Your TDS Records:

   • Enter challan details in your accounting records.

2. File Your TDS Returns:

   • Quarterly returns must be filed using Form 24Q (for salary) or 26Q (non-salary payments).

   • Mention the challan number and BSR code in the return.

3. Generate TDS Certificates:

   • Form 16 for employees.

   • Form 16A for contractors, professionals, and other deductees.

Common Mistakes to Avoid

• Selecting the wrong nature of payment code

• Entering incorrect PAN/TAN details

• Delayed payments leading to interest at 1.5% per month

• Not downloading the challan receipt

• Filing returns without linking the correct challan

Tips for Hassle-Free TDS Compliance

• Always verify the deductee PAN before deduction.

• Use accounting software or a professional service to track deadlines.

• Reconcile your TDS payments with Form 26AS regularly.

• Keep digital and physical copies of all challans.

• Don’t wait for the due date—pay TDS well in advance.

FAQs

1. Which challan should I use to pay TDS?
Use Challan No. ITNS-281 for all TDS payments.

2. What is the penalty for late TDS payment?
Interest of 1.5% per month or part thereof and possible penalties under the Income Tax Act.

3. Can I pay TDS offline?
Yes, you can submit Challan 281 physically at authorized bank branches, but online payment is recommended.

4. How do I know my payment is successful?
A challan counterfoil with CIN (Challan Identification Number) is generated after payment.

5. What is BSR Code?
Bank Serial Number (BSR Code) is a 7-digit code identifying the bank branch where TDS is deposited.

6. Can I revise a challan after payment?
Some fields can be corrected by submitting a challan correction request to your assessing officer.

7. Do I need to pay TDS every month?
Yes, for most deductors, TDS must be deposited monthly.

8. Is TAN mandatory for TDS payment?
Yes, you cannot deduct or pay TDS without a valid TAN.

9. How do I link challan details in TDS returns?
While filing the return, enter the BSR code, challan serial number, and date of payment.

10. How can I track my TDS payments?
Use the TRACES portal and Form 26AS to track all TDS credits.

Need Help Paying/Filing your TDS?

At Tradeviser, we assist taxpayers in Filing & Payment of TDS Returns professionally—from drafting returns to filing via Expert assistance. Don’t risk a penalty due to a missed or mishandled notice.

Talk to our experts today and respond to your tax notice with confidence.