Automating End-to-End TDS Compliance using APIs
What is TDS?
When a payer (deductor) is making a payment of specified nature to another payee(deductee), he/she is required to do a Tax Deduction at Source (TDS) and deposit that amount to the central government. The deductee can claim the TDS amount on the basis of Form 26AS or a TDS certificate (Form 16A) issued by the deductor.
Companies, Government Agencies, and even Individuals are required to deduct the TDS before making the payment to the payee. The deductor needs to have a TAN for depositing and filing the TDS Return.
End-to-end TDS compliance
For deductors to remain TDS compliant, they need to constantly calculate the TDS that needs to be deducted, deposit the amount with the government on the 7th of every month, prepare & file their TDS returns at the end of every quarter, and issue Form16 to their deductees.
The process is tedious at best and requires a lot of manpower for companies due to the sheer volume of transactions where they have to deduct TDS. This is especially true for companies that are liable to deduct TDS under sections 192 (Salary), 194 (Dividends), 194BA(Online Games), 194O (E-Commerce Transactions) & 194S (Transfer of Virtual Digital Assets).
This makes reporting prone to fat-fingering and other errors that can delay the process of filing your TDS Return and can incur interest & penalty costs.
Since we help millions of individuals & businesses stay tax compliant. We have an in-depth understanding of direct & indirect tax compliances. We use these learnings to build mobile & web apps on Quicko & APIs on Sandbox (India’s first End-To-End Tax Compliance API platform).
Advantages of using Sandbox TDS APIs
- Superfast Onboarding
- Readable Documentation
- Easy to integrate APIs using Java & Node JS SDKs
- Reduce Human Errors & save fin-ops costs
- Reduce Interest & Penalties by complying in time
- Great Support
Automating TDS Compliance
Step 1: Tax KYC & Compliance check through our Section 206AB API
Deductors need to verify deductees & their tax identifiers. You can use Tax KYC APIs by Sandbox to verify PAN & TAN in real-time. Additionally, TDS needs to be deducted at a higher rate if the deductee is a specified person u/s 206AB (anyone who has not filed Income Tax Returns in any of the previous two years). You can check if the deductee is a specified person or not using Sandbox API in real-time as well.
Note: This section is not applicable if TDS deduction is under Sections 192, 192A, 194B, 194BB, 194-IA, 194-IB, 194LBC, 194M & 194N.
Step 2: Calculate TDS to be deducted
You can use our TDS Calculator API to see what amount needs to be deducted. This ensures that incorrect deductions do not take place and that TDS payable is determined in an automated manner.
Step 3: Pay TDS
Using our Tax Payment APIs, you can make TDS Payments and fetch challan instantly.
Step 4: Generate the TXT file
You have to make monthly deductions & file TDS Return every quarter. You can use Sandbox Reporting APIs to generate TDS Return. The async APIs can support a large number of payments & deductions.
Here is a flow diagram that explains the process
Step 5: E-Filing TDS Return
As a TIN Facilitation Center, Sandbox APIs can E-File your TDS Return by taking in the TXT & CSI File & generating the FVU in the backend.
Alternatively, you can also file your TDS return using the zip of FVU & Form27A
Step 6: Download Form16
Once E-filing your TDS return, you will be required to provide TDS Certificate to your deductees. You can automate this process by using our Download Form16 API.
Customers like Coinswitch, Airbnb, and Razorpay are solving TDS compliances using Sandbox. Here is how you can get on board.
How to get started with TDS APIs on Sandbox
Sandbox APIs enable seamless integration of Tax Compliance Workflows and all you have to do is Sign up for a free trial or Get in touch with Us!
Reach out to us and we’ll share all the details that you need to seamlessly integrate TDS APIs into your workflows!
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