Introduction – Tax Deducted At Source (TDS)
The concept of TDS was introduced with an aim to collect tax from the very source of income. As per this concept, a person (deductor) who is liable to make payment of specified nature to any other person (deductee) shall deduct tax at source and remit the same into the account of the Central Government. The deductee from whose income tax has been deducted at source would be entitled to get credit of the amount so deducted on the basis of Form 26AS or TDS certificate issued by the deductor.
When a person responsible for paying any income deducts Income Tax on income at the time of payment of income, it is called ‘Deduction of Tax at source-TDS’.
- Corporation, Firm, Trust, Society and in some cases of an Individuals (including Proprietary concerns) & HUFs, carrying on business/profession, whose Gross Sales, Turnover or Gross Receipts in the previous year exceeds As. ` 2 Cr. (in case of business) and ` 25 Lac (in case of Professionals), shall also be liable to deduct TDS on all specified payments except payments made for personal purpose.
- TDS has to be compulsorily deducted by the person responsible for paying.
- If the Payee submits a declaration in Form 15G/ 15H in duplicate stating the following, then TDS need not be deducted:
- That his total income is less than basic exemption limit of `. 2.5 Lac.
- Even if his total income exceeds basic exemption limit of ` 2.5 lac but tax payable after deducting rebates u/s 80C is nil.
- Int. on secuty & other loans in case of Senior Citizens (For others in Form 15G). Senior Citizen can also give self declaration in respect of Dividend & NSS. TDS in respect of Contractors/ Sub-contractors under 194C to be deducted if sum exceeds `. 30,000 or `. 75,000 in aggregate in a financial year. Expenditure will be disallowed if TDS is not deducted.
- If deductee does not furnish his PAN then TDS rate will be 20%.
- Any Person receiving any sum or income on which tax is to be deducted at source, shall furnish his PAN to the person responsible for deducting TDS.
- Any person who desires to furnish a declaration in Form 15G or 15H for no deduction of TDS, shall also indicate his PAN on such declaration, otherwise TDS shall be deducted @ 20%.
- Surcharge and cess on TDS in relation to non- salary payments removed.
- In case where tax was deducted but not deposited within the due date, the payment was disallowed for that financial year. It was allowed in the year of actual deposit of tax kan hittas på denna sidan.
- Interest on delay in depositing taxes deducted increased to 1.5% p.m. or part of the month.
- TDS is a scheme of collecting tax in the year in which the income has been earned by the assessee.
- Under the scheme , the person, who is making the payments under the specified sources, is required to deduct tax at source at the prescribed rate.
- The person who deducts tax is known as tax deducter or a payer of income.
- if is the duty of the tax deducter to deposit the TDS into the Govt. treasury within the specified time along with a statement, in the prescribed form.
- if the Tax Deducter does not deduct tax at source or deducted but does not deposited with the Govt. treasury he is treated as assessee in default and is liable for payment of interest. Penalty proceedings may also be initiated.
- The Tad Deducted at Source is regarded as the income of the assessee and it is included in his gross total income
- The Tax deducted at source is adjusted against the final payment of tax if proof of TDS certificate is furnished along with the return of income.
The specified cases where tax is deducted at source are : Salaries, Interest on Securities, Interest other than interest on securities, dividends, winning from lotteries and crossword puzzles, payment to contractor, insurance commission, winning from horse races and also on other sums chargeable under the Act, which are paid to non-resident.
The Tax on Total Income is collected in three ways—
- Deduction of Tax at Source (TDS)
- Advance Tax ; and
- Tax on assessment through demand notice i.e. Direct Payment of Tax.
TDS deduction under various section
- “Salary” [ Sec-192]
- Deduction Of Tax From Interest On Securities [ Section-193]
- Deemed Dividend [ Section-194]
- Interest Other Than Interest On Securities [ Section 194A]
- Winning from Lottery or Crossword Puzzle or Card game and Game of any sort winning from Horse Race [Section 194B]
- Payment To Contractor And Sub-Contractor [ Section 194C]
- Tax Deducted At Source From Insurance Commission [ Section 194D]
- Payments To Non-Resident Sportsmen Or Sports Associations [ Section 194E]
- Commission, Etc., On The Sale Of Lottery Tickets [Section 194G]
- Commission Or Brokerage [ Section 194H]
- Payment Of Rent [ Section 194 I ]
- Fees For Professional Or Technical Services [ Section 194J]
Note:-
Where tax is deducted/collected by government office, it can remit tax to the Central Government without production of income-tax challan. In such case, the Pay and Accounts Officer or the Treasury Officer or the Cheque Drawing and Disbursing Officer or any other person by whatever name called to whom the deductor reports the tax so deducted and who is responsible for crediting such sum to the credit of the Central Government, shall submit a statement in Form No. 24G.to NSDL with prescribed time-limit.
Useful Links for TDS/TCS return related Services
