TAX DEDUCTED AT SOURCE (TDS) INTERVIEW QUESTIONS

1. When should TDS be deducted?

TDS should be deducted at the time of payment or credit, whichever is earlier,
as per the Income Tax Act.

2. What are the due dates for depositing TDS?

For non-salary payments: 7th of the following month.
For salary payments (Section 192): 7th of the next month, except for March
(30th April).

3. How is interest on late payment of TDS calculated?

Interest is charged at:
1% per month for delay in deduction.
1.5% per month for delay in depositing the deducted TDS.

4. What is Form 16?

Form 16 is a certificate issued by the employer to employees, showing the
TDS deducted on salary under Section 192.

5. What is the penalty for not filing TDS returns on time?

A penalty of ₹200 per day is levied under Section 234E until the return is filed,
subject to the maximum amount of TDS payable.

6. How can a deductee verify the TDS deducted?

The deductee can verify TDS through Form 26AS on the Income Tax Portal.

7. Can TDS be refunded?

Yes, if excess TDS is deducted, it can be claimed as a refund by filing the
income tax return.
8. How to Upload TDS statements
Follow the below guide for uploading TDS statements on the Income
Tax Department website:

1. Visit Income Tax website. Login with your TAN.

2. Select e-File > Income Tax Forms > File Income Tax
Forms on the dashboard
3. Select the relevant form and fill in the details
4. Validate the return using either DSC or EVC.
9. What is a TDS Certificate?
Form 16, Form 16A, Form 16B and Form 16C are all
TDS certificates. TDS certificates have to be issued by
a person deducting TDS to the assessee from whose
income TDS was deducted while making payment.

Form Certificate of Frequency Due date

Form TDS on salary

Yearly 31st May
16 payment

Form TDS on non-salary 15 days from due date o

Quarterly
16A payments filing return

Form TDS on sale of Every 15 days from due date o

16B property transaction filing return

Form Every 15 days from due date o

TDS on rent
16C transaction filing return

10. Where do you show TDS on a Balance Sheet

It shows in the Assets section right after the Current
Assets Head.
11. TDS RETURNS
Various types of return forms are as follows:

Form Transactions reported in the

Due date
No return

Q1 – 31st July
Form TDS on all payments except Q2 – 31st October
26Q salaries Q3 – 31st January
Q4 – 31st May

Q1 – 31st July
Form Q2 – 31st October
TDS on Salary
24Q Q3 – 31st January
Q4 – 31st May

Q1 – 31st July
Form TDS on all payments made to Q2 – 31st October
27Q non-residents except salaries Q3 – 31st January
Q4 – 31st May

30 days from the end of the

Form
TDS on sale of property month in which TDS is
26QB
deducted

30 days from the end of the

Form
TDS on rent month in which TDS is
26QC
deducted

12. Types of TDS

Here are some of the income sources that qualify for TDS:

 Salary
 Payments to Contractor
 Commission payments
 Sale of House
 Insurance Commission
 Interest on securities
 Interest other than interest on securities
 Rent Payment
 Professional fees
 Online Gaming
 Winning from games like a lottery, betting, gambling,
crossword puzzle, card, etc.
13. Form 26 AS
It is a summarized annual statement that certain tax credit
information of each tax payer against his PAN.

14. How to deposit TDS

TDS amount required to be paid online though Challan No
281.

15.What is the difference between TAN and PAN?

TAN
1. TAN stands for Tax Deduction Account Number
2. TAN number is a 10 character Alphanumeric number.
The first 4 characters are Letters, Next 5 characters are
Numbers and Last one is a Letter.
3. TAN number linked to a Business or an Organization.
4. In case of TAN number Form no 49B must be filed.
 PAN
1. PAN stands for Permanent Account Number
2. PAN is also a 10 character Alphanumeric numbers.
The first 5 characters are Letters, Next 4 Characters are
Numbers and Last one is a Letter.
3. PAN linked to an Individual or Entity.
4. In case of PAN
Form 49 A filed for an Indians
Form 49 AA filed for Foreignors

15. Due Date for depositing the TDS to the Government

7th of the Next Month/Subsequent Month

16. What is Form 15G and Form 15H

Form 15 G : for resident citizen below 60 years & HUF
Form 15 H : for senior citizen aged 60 years & above 60
years.

17. Who is liable to deduct TDS

Any person (individual,company,partnership etc) making
specified payments under the Income Tax Act is liable to
deduct TDS, except for an Individuals & HUFs whose books
are not required to be audited under sec 44AB.

19.Types of TDS Journal Entries

TDS transactions can be broadly classified into two types:

1. TDS Payable Journal Entry

2. TDS Receivable Journal Entry

1. TDS Payable Journal Entry

TDS payable journal entries refers to the amount
deducted from the specified payments, payable
to the Income Tax Department on behalf of the
service provider. TDS payable is a liability as it is
owed to the Income Tax Department.

Example of TDS Payable Journal Entry

Assume a business makes a
payment of ₹100,000 to a
 contractor, and TDS at 1% is
deducted.

A. Recording the Expense and TDS Deduction

Journal Entry as
Contractor Expense A/C…………Dr 100000
To TDS Payable A/C 1000
To Bank/Cash A/C 99000
In this entry, the contractor expense account is debited at
₹100,000, representing the total expense. In the creditor's
control account, the TDS payable account is credited ₹1,000,
which shows tax deducted, and the bank or cash account is
credited ₹99,000, which shows the net payment made to the
contractor.

B.Payment of TDS to the Government

When the TDS is paid to the government on or before specified due

dates, the TDS payable account is cleared.

Journal Entry

TDS Payable A/C 1000

To Bank/Cash A/C 1000
This entry decreases the TDS payable account on the
liability side and decreases the banks/cash account for ₹
1,000, which shows the payment of TDS to the government

2.TDS Receivable Journal Entry

TDS receivable journal entries refer to the amount withheld by the payer as TDS
and deposited to the Income Tax Department.
A. Example of TDS Receivable Journal Entry
Assume a business receives income of ₹100,000 from a client, and TDS at 10% is
deducted.

Journal Entry

Bank/Cash A/C-------DR. 90000

TDS Recivable A/C----DR. 10000
To Income A/C 100000
The net amount received, which is ₹90,000 is debited to the
bank account and TDS receivable account is debited to the
tune of ₹10,000, which represents tax deducted at source.
The income account is credited directly with ₹100,000, the
total income earned.

B.Adjustment of TDS Receivable Against Tax Liability

On Payment/ Settlement of tax liability, the following entry is made.

Tax Liability A/C----------Dr. 10000

To TDS Receivable A/C 10000

3.Journal Entry for TDS on Purchase

The transaction must be appropriately captured whenever a

business entity is involved in a purchase transaction that attracts
TDS. Thus, if a business buys goods worth ₹200,000, 1% TDS is
applicable.

Purchase A/C--------DR. 200000

To TDS Payable A/c 2000
To Bank/Cash A/C 198000

In this entry, the purchase account is debited by ₹200,000,

representing their total purchase costs. As for TDS, the
Payable account is credited by ₹2,000, which shows TDS
deducted. Export supplies are frequently paid by the buyer
at sight, and the bank/cash account is credited by ₹198,000,
being the net amount received by the supplier.

18. What is TDS and why is it deducted?

Answer: TDS (Tax Deducted at Source) is a mechanism by which tax is
deducted at the source of income, i.e., before the payment is made to the
recipient. It ensures timely collection of taxes and is a way to minimize tax
evasion.

21. Can you explain the difference between TDS and TCS?
Answer: TDS is tax deducted at source by the payer on various types of
income, such as salaries, interest, and commissions. TCS (Tax Collected at
Source) is collected by the seller on the sale of certain goods like scrap,
timber, and minerals. TDS is deducted while making payments, while TCS is
collected at the time of sale.

22. What are the consequences of not deducting TDS or filing TDS returns
late?
Answer: If TDS is not deducted, the payer is liable to pay the tax amount
along with interest and penalty. If TDS returns are filed late, a penalty of ₹200
per day (up to the total TDS amount) can be imposed, and interest will be
levied for delay in payment.

23. When do you deduct TDS for payments to contractors or professionals?

Answer: TDS must be deducted for payments made to contractors or
professionals when the payment exceeds the threshold limit specified under
sections 194C (contractors) or 194J (professional services). The threshold
varies, e.g., ₹30,000 for contractors and ₹30,000 for professional services.

24. How do you calculate TDS for an invoice including GST?

Answer: TDS is calculated on the amount excluding GST. GST is not
considered while calculating TDS. For example, if an invoice has ₹1,00,000 +
₹18,000 GST, TDS is calculated on ₹1,00,000, not ₹1,18,000.

25. How would you manage TDS for payments to non-residents?

Answer: TDS for payments to non-residents depends on the nature of the
payment and the provisions under the Double Taxation Avoidance Agreement
(DTAA). Different rates may apply for various types of income such as
interest, royalty, technical fees, etc.

26. How do you handle TDS corrections in returns?

Answer: If there is a mistake in the TDS return, a correction statement (Form
26/27) should be filed. The correction can be made by providing the correct
PAN, amount, or section details, and the revised return must be filed with the
department.

27.Is there any Software that can be

Used to Prepare e-TDS/TCS returns?
Solution:- NSDL e-Gov provided Return Preparation Utility can be
used to prepare e-TDS/TCS returns. This software is available for
free. Besides, third-party software can also be used for the e-filing of
TDS/TCS like Gen TDS software. Gen TDS is a certified software by
SAG Infotech that can be used to perform any TDS-related tasks
accurately and quickly. Alike software is listed on the NSDL e-Gov -
TIN website i.e. www.tin-nsdl.com.