2. What is TDS?
TDS is a certain percentage deducted at the time of payment of various such
as Salary, Commission, Rent, Interest on Dividend etc and deducted amount is
remitted to the Government Account. This amount can be adjusted against
tax due.
3. Why TDS?
The concept of TDS envisage the principle of “pay as you earn”. Tax must be
deducted at the time of payment in cash or cheque or credit to the the
payee’s account.
4. Deductor and Deductee
Deductor is a person/company who is liable to deduct the Tax at source, from
payment being made to the party. Deductor is also termed as Employer in
case where the payment are under Salaries.
Deductee is the person, from whom the tax is being deducted or accrued for
deduction is also termed as Employee in cases where the payment are under
Salaries.
5. TDS Rates (under sections)
Sec 192(Salary Income) – No specific rate average rate to be calculated on the
basis of existing slab rate in force.
Sec 194C(Payment/credit to a resident contractor or sub contractor) – 1%(for
HUF individuals) and 2%(for others)
Sec 194I(Rental income received) – 2%(for plant and machinery or
equipments) and 10%(for furniture or fixtures, land and building)
Sec 194Q(Payment/credit pertains to purchase of goods from seller) – 0.1%
aggregate payment/credit during the financial year exceed Rs 50 lakh.
Sec 194J(Professional fees or remunerations to a director) – 10%
6. For Salaries
The income from salaries is required to be computed on estimated basis at
the beginning of each financial year. Income Tax payable on the basis of such
estimated salary income should be deducted at the rate applicable to the
corresponding slab of income every month in equal installment subject to
adjustments depending upon tax saving investments made by the deductee.
7. TDS Rates For Salaries
For Male/Female income For Senior citizens Rates
Between 0 to 1,80,000 Between 0 to 2,50,000 0%
Between 1,80,001 to
5,00,00
Between 2,50,001 to
5,00,000
10%
Between 5,00,001 to
8,00,000
Between 5,00,001 to
8,00,000
20%
Above 8,00,001 Above 8,00,001 30%
8. Tax deduction Number- TAN
All those person who are required to deduct tax at source or collect tax at source
on behalf of income tax department are required to obtain tax deduction
account number or TAN as per the provisions of section 203A of the income-tax
act. It is compulsory to quote TAN in TDS return(including any e-TDS return), and
TDS payment challan and TDS certificates. Failure to apply for TAN or comply
with any of the other provisions of the section attracts a penalty of Rs 10,000.
TAN is a 10 digit alpha numeric number ex: BLRBLRBLRR02933A.
After deduction tax, it is required to file quarterly statements of TDS for the
quarters ending on 31st March, 30th June, 31st September, 31st December in each
Financial year.
9. Types of TDS Certificates
Salaries – Form 16: The certificate should be issued certificate containing the
tax computation details and the tax deduction paid details. This refers to the
details submitted over Form 24Q.
Non-salaries – Form 16A: The certificate should be issued in FORM 16A
containing the tax deducted paid details. Separate certificates should be
prepared for each section. This refers to the details submitted over Form 26Q
and 27Q.
10. Advantages of TDS
It facilitates sharing of responsibilities of tax collection between the deductor
and the tax administration.
It ensures regular inflow of cash resources to the Government.
It acts as a powerful instrument to prevent tax evasion as well as expands the
tax net.
This is designed to make the tax administration more effective, furnishing of
return convenient, reduce compliance cost and bring greater transparency.
