How to make correct challan/payment

It is the Duty of the deductor to pay Tax deducted within the prescribed time to the “credit of the Central Government” [Refer section 200].

Points to be considered before making a payment:

1. Type of deductee:

The deductees are of 2 types, namely, “Companies” and “Other than Companies”. Use separate challans for depositing tax deducted at source from company deductees and from non-company deductees [Refer to the instruction in ITNS 281 Challan].

2. Type of payment/section:

Separate Payments {Challans) should be made for each Nature (Type) of Payment. [Refer to the instruction in ITNS 281 Challan].

3. Due date for payment: [Refer Rule 30]
1. Government: Same day when it has been deducted.
2. Non-Government: Within next month 7th, from the date of deduction.
3. In case of entry is by way of a Provision, then within 60 days from the close of financial year.
4. Interest Applicability:
1. If the Deduction has been delayed from the date on which it was supposed to be deducted, then Interest would be payable at 1% per month to the date when it is being paid. [Refer Section 201(1A)]
2. If the payment is being delayed from the due date, then Interest would be payable at 1% per month to the date when it is being paid. [Refer Section 201(1A)]

Steps to make a payment:

1. Accumulate the total of deducted TDS amount and split it according to “Type of Deductee” and “Type of payment”.
2. Calculate interest [if any] with respect to applicability of interest.
3. Prepare a cheque [not post-dated] for the total amount, in the name of “Bank Name – Income tax A/c”. It can also be paid by Cash.
4. Prepare the Challan ITNS 281, as per the splits available in Point no 1.
5. Do not make any mistake. Particularly in mentioning TAN. Quoting false TAN may attract a penalty of Rs. 10,000/- as per section 272BB. [Consequence of wrong TAN]
6. Deposit the Cheque at mentioned bank along with ITNS-281.
7. Collect the Counter Foil for payment, which contains the unique “Challan Identification number Information (CIN)”

Note:

• E-Payment: The challans can also be paid through e-Payment. This can be made by visiting www.tin-nsdl.com and going to “e-Payment of Taxes Online”
• From 01/04/2008, It is mandatory for deductors liable for audit under section44AB in preceding FY to make all tax payments through e-Payment compulsorily.
• Government deductors can make the payment through Transfer Voucher to the treasury.