Guides · Bookkeeping
TDS basics for a small business
TDS — tax deducted at source — means holding back a slice of certain payments and depositing it with the government on the recipient's behalf. For a small business, the key is knowing when it applies and keeping the records straight.
What TDS is
On specified payments — such as some professional fees, rent, contractor payments, and salaries — the payer deducts a portion as tax before paying, and deposits it with the government against the recipient's account.
The recipient then gets credit for that tax when they file, so TDS is a collection mechanism rather than an extra tax.
The duties that come with it
A business that deducts TDS has to deposit it within the time allowed, file the related returns, and issue the recipient a certificate for the tax deducted. Each step has its own deadline.
Because the rates, thresholds, and deadlines vary by payment type and change from time to time, confirm the current position for each kind of payment rather than assuming.
How Lekha fits
Lekha records the bills and payments a business makes, which is the underlying record TDS decisions and reconciliations draw on. It records and tracks; it does not compute or file your TDS.
Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.
Questions
- What is TDS?
- Tax deducted at source — holding back a portion of certain payments and depositing it with the government on the recipient's behalf, who later gets credit for it.
- Does every payment attract TDS?
- No. TDS applies to specified payments above certain thresholds, such as some fees, rent, and contractor payments. Confirm the current rate and threshold for each type.
- What must a business do after deducting TDS?
- Deposit it within the time allowed, file the related returns, and issue the recipient a certificate for the tax deducted. Each has its own deadline.
This guide is general information, not legal or tax advice. Confirm the current rules and your own circumstances for any specific case.